ADOPTED RULES
An agency may take final action on a section 30 days after a proposal has been 
published in the Texas Register. The section becomes effective 20 days after the 
agency files the correct document with the Texas Register, unless a later date 
is specified or unless a federal statute or regulation requires implementation 
of the action on shorter notice.
If an agency adopts the section without any changes to the proposed text, only 
the preamble of the notice and statement of legal authority will be published. 
If an agency adopts the section with changes to the proposed text, the proposal 
will be republished with the changes.

TITLE 1. ADMINISTRATION
PART VII. State Office of Administrative Hearings
CHAPTER 155.Rules of Procedures
1 TAC sec.sec.155.1, 155.3, 155.5, 155.11, 155.13, 155.17, 155.19, 155.21-
155.23, 155.25, 155.27, 155.29, 155.31, 155.33, 155.35, 155.37, 155.39, 155.41, 
155.43, 155.45, 155.47, 155.49, 155.51, 155.53, 155.55
The State Office of Administrative Hearings (SOAH) adopts the repeals of 
sec.sec.155.1, 155.3, 155.5, 155.11, 155.13, 155.17, 155.19, 155.21-155.23, 
155.25, 155.27, 155.29, 155.31, 155.33, 155.35, 155.37, 155.39, 155.41, 155.43, 
155.45, 155.47, 155.49, 155.51, 155.53, and 155.55, concerning rules of 
procedure, without changes to the text published in the October 17, 1997 issue 
of the Texas Register (22 TexReg 10204). 
The repeal of these sections is necessary to allow the concurrent adoption of 
new rules providing a more uniform procedure for hearing processes in cases 
referred to SOAH. 
No comments were received regarding the proposed repeals. 
The repeals are adopted under Government Code, Chapter 2003, which authorizes 
the State Office of Administrative Hearings to conduct contested case hearings; 
Government Code, Chapter 2001, sec.2001.004, which requires agencies to adopt 
rules of practice setting forth the nature and requirements of formal and 
informal procedures; and Senate Bill 331, an Act effective January 1, 1998, 75th 
Legislature, Chapter 605, sec.3, 1997, Texas General Laws 2128 (to be codified 
as an amendment to Chapter 2003 by adding sec.2003.050), which requires SOAH to 
adopt rules governing the procedures, including discovery procedures, that 
relate to a hearing conducted by SOAH. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716727
Phillip A. Holder
Deputy Chief Administrative Law Judge
State Office of Administrative Hearings
Effective date: January 2, 1998
Proposal publication date: October 17, 1997
For further information, please call: (512) 475-4993

1 TAC sec.sec.155.1, 155.3, 155.5, 155.9, 155.11, 155.13, 155.17, 155.19, 
155.21, 155.23, 155.25, 155.27, 155.29, 155.31, 155.33, 155.35, 155.37, 155.39, 
155.41, 155.43, 155.45, 155.47, 155.49, 155.51, 155.53, 155.55, 155.57, 155.59
The State Office of Administrative Hearings (SOAH) adopts new sec.sec.155.1, 
155.3, 155.5,155.13, 155.19, 155.23, 155.25, 155.27, 155.29, 155.31, 155.35, 
155.37, 155.39, 155.41, 155.43, 155.45, 155.47, 155.51, 155.55, and 155.57, 
concerning the rules of procedure governing matters related to the hearing 
process, including discovery, in cases heard by SOAH, with changes to the 
proposed text as published in the October 17, 1997 issue of the Texas Register 
(22 TexReg 10205). SOAH also adopts amendments to sec.155.9, concerning Request 
to Docket a Case, without changes to the text as published in the October 17, 
1997, issue of the Texas Register (22 TexReg 10205). Sections 155.11, 155.17, 
155.21, 155.33, 155.49, 155.53 and 155.59 are adopted without changes to the 
text as published in the October 17, 1997, issue of the Texas Register (22 
TexReg 10205) and will not be republished. The adoption and amendment are 
necessary to comply with new statutory requirements enacted in the 75th 
Legislative Session. Senate Bill 331, an Act effective January 1, 1998, 75th 
Legislature, Chapter 605, sec.3, 1997, Texas General Laws 2128 (to be codified 
as an amendment to Chapter 2003 by adding Section 2003.050) requires the Office 
to adopt rules governing the procedures, including discovery procedures, that 
relate to a hearing conducted by SOAH. The amendment to sec.155.9 concerning 
Request to Docket Case is necessary to remove language referring to a 
requirement in a rule that is being concurrently repealed. 
SOAH's adoption and amendment of the rules meet SOAH's obligation under recent 
legislation to adopt uniform rules by establishing a comprehensive set of 
guidelines concerning the practice and procedure for hearings in all cases 
referred to SOAH by its numerous referring agencies. The newly adopted rules 
will function to provide for a just, fair, and impartial adjudication of the 
rights of the parties under a consistent set of procedures by establishing 
guidelines for contested cases and other adjudicatory matters within SOAH's 
jurisdiction. 
Comments were filed by the Board of Vocational Nurse Examiners (BVNE), the Texas 
State Board of Medical Examiners (BME), the Employees Retirement System of Texas 
(ERS), the Office of Attorney General (OAG), the State Securities Board (SSB), 
the State Board for Educator Certification (SBEC), the Texas Commission for the 
Blind (TCB), the Texas Department of Agriculture (TDA), the Texas Department of 
Health (TDH), the Texas Department of Insurance (TDI), the Texas Lottery 
Commission (TLC), the Texas Natural Resource Conservation Commission (TNRCC), 
the Texas State Board of Examiners of Psychologists (TSBEP), the Texas State 
Board of Pharmacy (TSBP), the Texas State Board of Public Accountancy (TSBPA), 
Texas Utilities Electric Company (TU), the Texas Workers' Compensation 
Commission (TWCC), the Texas Workers' Compensation Insurance Fund (TWCIF), and 
the Law Offices of John D. Pringle (Law Offices). Most of the comments 
recommended changes to the proposed rules or opposed the adoption of a 
particular section. 
A public hearing was held on November 14, 1997. All of the parties that offered 
comments at the public hearing also filed written comments addressing some of 
the issues they addressed at the hearing. Those comments, both oral and written, 
are discussed together infra. 
The following comments were received regarding the proposed new rules in 
general, rather than any specific section. 
Two commenters requested clarification of the scope of the proposed rules. TDA 
assumed agencies would still be able to have their own procedural rules in areas 
not covered by SOAH's rules if their rules were not inconsistent with SOAH's 
rules. TWCC requested clarification that SOAH's intent was to promulgate rules 
to govern cases only from the time SOAH takes jurisdiction to the time SOAH 
loses jurisdiction and that agency procedural rules for the periods before and 
after SOAH has jurisdiction would remain in effect. TWCC requested that either 
sec.155.3 of this title (relating to Application and Construction of this 
Chapter) or the preamble to the rules be modified to reflect that intent. 
SOAH responds that the proposed rules are not intended to affect agency rules 
that pertain to events that occur before SOAH takes jurisdiction or after SOAH 
loses jurisdiction over a case. Agencies may have their own procedural rules in 
areas not covered by the SOAH rules, if those rules do not prevent the operation 
of SOAH rules governing matters related to hearing of cases referred to SOAH. 
For example, the proposed rules do not affect an agency procedure by which a 
party requests referral of a matter to SOAH or a rule specifying deadlines for 
filing exceptions to a proposal for decision. 
SOAH disagrees that sec.155.3 be modified as suggested. First, this preamble, as 
requested, clearly states SOAH's intent. Second, sec.155.1 of this title 
(relating to Purpose and Scope) already makes it clear that the rules apply only 
to matters that have been referred to the Office. 
One commenter suggested that throughout the rules, all references to 
"applicable" law, regulation, or statute be modified to state the "referring 
agency's applicable law or regulation." The commenter observed that parties 
often attempt to introduce law not specifically applicable to the regulatory 
authority of a specific agency. Similarly, another commenter suggested that when 
the proposed rules refer to "statutory provision," "statutes," or "laws," the 
references should be preceded by the phrase "of the referring agency" or other 
language to that effect. Both commenters pointed out that sec.155.3(e) and 
sec.155.31(a) contain such language, while other sections do not. 
SOAH disagrees that the rules should be modified as suggested by these 
commenters. By definition, the law, statutes, and regulations to be applied in a 
particular case are those relevant and applicable to that case, which may 
include, for example, SOAH's statute or statutes common to many state agencies, 
such as the Texas Public Information Act. To restrict the references to the 
referring agencies' law would be unduly restrictive and legally inappropriate. 
SOAH has found no section in the proposed rules in which the omission of the 
requested language would lead to confusion about what law, statutes, or 
regulations should be applied. 
One commenter (TWCC) requested that the rules or the preamble address the need 
for SOAH ALJs to expedite hearings involving issues of preauthorization and 
asked SOAH to consider adding language similar to the current provisions of 
TWCC's rule at 28 Texas Administrative Code, sec.148.4(a). That language 
requires SOAH, unless good cause to the contrary is shown, to make a good faith 
effort to set hearings involving issues of preauthorization for a date not more 
than 30 days after SOAH has received the request for a hearing. 
SOAH respects the need for prompt hearings on issues of preauthorization. SOAH 
intends to expedite hearings in all cases in which such treatment is warranted. 
SOAH disagrees that the rules should be modified to incorporate language similar 
to the provisions of 28 TEX. ADMIN. CODE sec.148.4(a), however. The adoption of 
the proposed amendment to sec.155.9 (relating to Request to Docket Case) allows 
an agency to request the setting of a hearing on the Request to Docket Case 
form. When it files that form, an agency may request that the hearing be 
expedited by indicating the specific hearing date desired or a special request 
to have the hearing set within 30 days. SOAH believes that procedure provides an 
adequate and orderly method of scheduling hearings and identifying all hearings 
in which expedited treatment is warranted.
One commenter (TLC) asked for clarification concerning which of the proposed 
rules apply to hearings that do not fall within the Administrative Procedure Act 
(APA). Section 155.1 (relating to Purpose and Scope) provides that the rules 
apply to all adjudicative matters referred to SOAH. Under this provision, all 
the rules apply to an adjudicative matter that is a non-APA hearing. One purpose 
of this chapter is to provide a readily accessible framework of rules to which 
parties can refer when presenting cases before SOAH. To exempt non-APA hearings 
from certain of those rules would require procedures to be reinvented in such 
cases. The commenter did not identify any rule provision that should not apply 
to non-APA hearings. Nevertheless, SOAH appreciates that some non-APA hearings, 
such as the suspension hearings conducted for TLC, may require different 
procedures. SOAH believes, however, that the better approach is to allow a party 
to move for the modification of a specific rule's procedures when appropriate, 
as is provided by sec.155.3 of this title (relating to Application and 
Construction of this Chapter). 
One commenter (TDA) requested clarification of the effect of the TDA/SOAH 
Memorandum of Understanding that is required by TDA's statute, Texas Agriculture 
Code Annotated, sec.12.032. SOAH responds that provisions of the TDA/SOAH 
Memorandum of Understanding (MOU), adopted by TDA by rule at 4 Texas 
Administrative Code, sec.1.310 are superseded by these rules, to the extent the 
MOU establishes procedural requirements inconsistent with these rules. The MOU 
provides that the TDA rules of procedure control, unless otherwise specifically 
stated in the SOAH rules of procedure or other controlling law, or the judge so 
orders. The SOAH rules of procedure, at sec.155.1 of this title (relating to 
Purpose and Scope), specifically state this chapter will govern the processes 
followed by SOAH in handling all adjudicative matters referred to the Office, 
with certain exceptions. Cases referred by TDA are not among those exceptions. 
Therefore, under the MOU itself, as well as under S.B. 331, this chapter would 
apply to cases referred by TDA. 
COMMENTS RELATING TO sec.155.1. Purpose and Scope: In response to proposed 
sec.155.1(a) a commenter noted that SOAH holds some "due process" hearings, 
which do not require the formality of the APA, and requested that additional 
language be added to this section to allow SOAH to contract with agencies to 
conduct non-APA hearings in conformance with those agencies' rules. SOAH does 
not adopt this recommendation because application of uniform procedural rules 
will provide more consistency and predictability for participants, as envisioned 
by S.B. 331. Moreover, additional language is not needed in sec.155.1(a) because 
that section references all matters referred to SOAH, including contested, non-
APA cases. Finally, proposed sec.155.3 of this title (relating to Application 
and Construction of this Chapter) allows the administrative law judge (ALJ) to 
modify the procedures when appropriate, which could result in less formal 
procedure in some non-APA cases. 
SOAH staff also reconsidered the proposed section of the rule and made a change 
to further clarify the applicability of chapter 159 of this title (relating to 
Rules of Procedure for Administrative License Suspension Hearings).
Three commenters requested modification of sec.155.1(b) so that it adopt by 
reference the procedural rules of a specific agency in addition to TNRCC and 
PUC. TCB argued its hearings concerning its Business Enterprises Program, 
governed by the Randolph-Sheppard Act, 20 U.S.C. sec.107 et seq., must follow a 
different procedural process from the SOAH rules. Therefore, it requested 
adoption of the TCB rules and modification of sec.155.3 of this title (relating 
to Application and Construction of this Chapter) to provide that in instances of 
conflict between the SOAH rules and those of TCB, the TCB rules will prevail. 
SOAH disagrees with this suggestion. A review of applicable federal rules and 
regulations does not indicate any conflicts between federal requirements for the 
Business Enterprises Program and the SOAH rules. The Randolph-Sheppard Act 
merely requires TCB to provide blind licensees dissatisfied with actions 
concerning the vending facility program a "full evidentiary hearing," and to 
then submit the grievances of blind licensees not resolved at the fair hearing 
to an arbitration panel appointed by the Secretary of Education. 20 U.S.C. 
sec.sec.107b(6) and 107d-1(a). The federal regulations require TCB to promulgate 
rules and regulations covering the conduct of full evidentiary hearings that 
have been approved by the Secretary of Education, but they do not contain any 
specific requirements. 34 C.F.R. sec.sec.395.4(a) and 395.13(a). Furthermore, a 
review of the TCB procedural rules indicates only two deviations from the SOAH 
procedures (requirements that the hearing be scheduled within 15 working days of 
TCB's receipt of the request for hearing and that a proposal for decision be 
made within 15 working days after the receipt of the official transcript). These 
are not federal requirements. However, because subsection E of the TCB Business 
Enterprises Manual provides that TCB will arrange for reader or other 
communication services at the hearing, SOAH has modified its originally proposed 
sec.155.43(f) of this title (relating to Making a Record of Contested Case 
Proceedings). 
A second commenter recommended that the procedural rules of TWCC be adopted to 
the extent that they do not conflict with the proposed SOAH rules; however, the 
commenter included no specific rationale for this suggestion. Because the 
legislature in S.B. 331 expressed its intent that SOAH adopt uniform rules of 
procedure and there appears to be no process needs peculiar to TWCC cases which 
cannot be addressed by motion and order, SOAH respectfully declines to adopt any 
specific procedural rules of that agency. 
ERS commented that the legislature gave the ERS Board of Trustees (ERS Board) 
jurisdiction over the administration of a large number of retirement systems. 
Additionally, the legislature had, prior to S.B. 331, conferred broad rulemaking 
authority on the ERS Board to have an orderly and efficient system of procedure 
for the institution, conduct, and determination of contested cases. Moreover, 
the commenter noted that because the ERS Board makes the final decision in 
connection with a claimant's or appellant's administrative proceeding, it is 
imperative that the ERS Board's rules govern procedural matters in contested 
cases. The commenter also requested modification of sec.155.3 of this title 
(relating to Application and Construction of this Chapter) to provide that in 
instances of conflict between the SOAH rules and those of the ERS Board, the 
latter will prevail. SOAH respectfully disagrees that it is necessary to adopt 
the procedural rules of the ERS Board. First, a review of the ERS Board's rules 
at 34 TEX. ADMIN. CODE Chapter 67, indicates that the full contents of only five 
procedural rules, titled Classification of Parties, Parties Defined, Dismissal 
without Hearing, Prehearing Conference, and Order of Procedure, are not 
specifically addressed in the proposed SOAH rules. However, the proposed SOAH 
procedural rules do not limit any party from requesting that an ALJ rule on 
matters in a way specified in those rules, when appropriate. Also, the proposed 
rules do not interfere with a constitutional or statutory fiduciary duty of the 
ERS Board, which still retains final decision making authority and substantive 
rulemaking authority. Second, two ERS Board rules, Intervention and Written 
Motions, have different deadlines from those proposed in the SOAH rules. In both 
instances, the SOAH rules do not significantly change the deadlines nor do they 
have a negative impact on the rights of the parties. More importantly, there is 
a clear benefit in establishing one standard deadline for filing these motions. 
Third, many other agencies make the final decision in their administrative 
proceedings, and S.B. 331 did not distinguish contested cases based on the 
identity of the final decision maker. 
The TNRCC noted problems with SOAH's proposed adoption of the TNRCC and PUC 
procedural rules "in effect January 1, 1998" because such a restriction may 
either (1) result in SOAH needing to adopt every rule changed by the TNRCC and 
PUC after that date or (2) cause rules adopted after that date to not be 
effective in SOAH proceedings. SOAH declines to modify this portion of the rule 
because a fixed effective date of January 1, 1998 clearly establishes what rules 
are applicable and provides some certainty to practitioners appearing in those 
hearings. Additionally, SOAH preserves its ability to seek the procedural 
consistency which is at the heart of S.B. 331 by declining to adopt future rules 
sight unseen. SOAH intends to work with the PUC and TNRCC in future rulemakings 
that SOAH and these agencies may undertake. 
The TNRCC further noted that the Environmental Protection Agency (EPA) and TNRCC 
have negotiated agreements relating to the delegation of authority to manage 
certain permitting programs and that additional procedural rule changes may be 
required to fully accomplish this task. In this context, the TNRCC suggested 
that a regular process should be developed for SOAH to adopt by reference any 
procedural rules the TNRCC adopts after January 1, 1998. SOAH appreciates the 
importance attached to federal delegation of permitting programs. SOAH will work 
cooperatively with the TNRCC to establish a coordinated and efficient process to 
address future rule revisions. 
COMMENTS RELATING TO sec.155.3. Application and Construction of this Chapter: 
Approximately seven commenters noted concerns about sec.155.3(a)(1). 
Specifically, many of these commenters focused on the language authorizing an 
ALJ to "supplement other requirements of law, to promote the fair and efficient 
handling of the case." One concern centered on the lack of statutory authority a 
SOAH ALJ has to supplement "other requirements of law." That commenter and 
another requested clarification of this provision. Several commenters argued 
that this provision gave the ALJ too much discretion and could lead to an 
application of rules on a case-by-case basis, creating uncertainty for all 
parties. One commenter characterized the language as being "vague and 
overbroad." Suggestions to change the language included the following: (1) 
change the language to allow the ALJ to "waive the requirements of this chapter 
to promote the fair and efficient handling of the case;" (2) specify that the 
ALJ may "amend other procedural requirements of law, subject to the requirements 
of due process."
As recognized by one commenter, SOAH's goal is to allow some flexibility in its 
application of the rules when it is necessary for efficiency, tempered by the 
requirements of fairness and due process. Such flexibility is vital given the 
wide area of cases heard by the SOAH judges. Although there is a possibility 
that the ALJ may adopt a modification that causes unforeseeable harm to a party, 
in most instances, such harm could be brought to the ALJ's attention and likely 
be redressed. It is not the intent of SOAH to exceed its statutory authority or 
to adopt any procedure that contravenes an agency's enabling statute. In 
response to the comments, SOAH adopts a suggestion to specify that an ALJ may 
supplement other procedural requirements of law. 
Approximately six commenters expressed reservations about the language in 
sec.155.3(a)(2) providing that "the ALJ shall afford a liberal construction of 
these rules as applied in cases where parties are not all represented by 
counsel." For some commenters, the chief concern was that a liberal construction 
of the SOAH rules for some parties would create unfairness, an equal protection 
problem, or an advantage for the unrepresented, pro se litigant. One commenter 
requested additional clarification of how a party represented by an ombudsman 
under the Texas Workers' Compensation Act would be classified. Another of the 
commenters suggested that licensees may waive representation in order to gain a 
procedural advantage. Another commenter suggested this section is unnecessary 
because sec.155.3(a)(3) provides similar leeway. It is not SOAH's intent to 
afford any one party a procedural advantage in any case. SOAH agrees with the 
commenters and has stricken the subsection. 
Several commenters suggested that in sec.155.3(a)(3) the verb "relax" is not 
sufficiently definite for use in a regulatory context, and one commenter 
suggested it be replaced with "modify," "amend," or "waive." SOAH adopts the 
suggestion and changes the verb to "modify." 
Two commenters expressed concern that allowing an ALJ to relax the rules only if 
doing so does not contravene other applicable statutes affords too much 
discretion to the ALJ and possibly undermines an agency's duly adopted rules and 
policies and, most importantly, its mission. One of these commenters suggested 
that a licensee who chooses to forgo representation by an attorney may be able 
to avoid sanctions for violation of an agency's or board's rules through 
"relaxed treatment." The commenter further suggested that this rule be amended 
to require the ALJ to take into account an agency or board rules, regulation, 
prior decisions, and mission, as well as applicable statutes. Both commenters 
also suggested replacing the term "statute" with that of "law" as defined in 
sec.155.5 of this title (relating to Definitions). If the rule is adopted, one 
commenter requested an amendment to clarify the conditions under which an ALJ 
would modify the rules and how notice would be given to the parties. SOAH 
declines to modify the language of sec.155.3(a)(3), except as noted above. Some 
flexibility is required in the application of the procedural rules when 
appropriate, as contemplated by sec.155.3. The section itself requires that such 
flexibility be limited when exercising it would prejudice parties' rights. SOAH 
is concerned that expanding this section to a consideration of an agency's 
rules, regulations, prior decisions, and mission could compromise the goal: 
efficiency balanced by reasoned consideration of all parties' rights. As to the 
request that SOAH spell out the conditions under which this section will apply, 
SOAH responds by noting that the option of modifying the procedures will 
probably depend on a number of factors which cannot all be confidently 
enumerated at this point, including whether a party moves for such modification 
and what grounds are urged in opposition. A referring agency's policies, 
procedures and mission may be raised as grounds either for or against 
modification. 
A commenter noted that sec.155.3(b), as well as other sections, contains no 
distinction as to what statute is being referred to and requested that this 
section be clarified to state that the enabling statute is being referred to or, 
in situations where more than one statute may apply, the Code Construction Act 
applies. SOAH declines to modify the section as proposed because the broad 
language ensures the inclusion of all applicable statutory provisions. However, 
SOAH agrees with the commenter that any conflict between statutes would be 
resolved using the Code Construction Act, the construction rules for civil 
statutes under the Government Code, and other appropriate statutory construction 
rules and precedent. 
TNRCC is concerned that the language of sec.155.3(c) that permits the TNRCC 
procedural rules to control in the event of conflict with the SOAH rules "will 
create a confusing patchwork of rules that apply to TNRCC cases." However, the 
commenter believes that, with the two agencies working together, the two sets of 
rules can be modified so that there is no overlap. SOAH appreciates the 
opportunity to work with the TNRCC in future rulemaking to address these 
concerns. As to the current proposed rules, SOAH finds that the proposed 
language in this section stating that TNRCC rules control in the event of 
conflict will lessen the confusion for parties before the two agencies. Because 
in sec.155.1(b) of this title (relating to Purpose and Scope) SOAH proposes to 
adopt TNRCC's current procedural rules, parties should rarely, if ever, 
encounter a conflict between a current TNRCC rule and a SOAH rule applicable to 
the same issue. To the extend TNRCC has no procedural rule applicable to a 
situation addressed by a SOAH rule, the SOAH rule would apply. Additionally, the 
SOAH rule would control in the event of a conflict with a TNRCC procedural rule 
adopted by TNRCC after January 1, 1998. It is intended, however, that SOAH and 
TNRCC will work cooperatively in future rulemakings to avoid such conflicts. 
One commenter stated its concern that under sec.155.3(e), a default to the Texas 
Rules of Civil Procedure (TRCP) when the APA and the SOAH rules cannot resolve 
an issue places a burden on administrative attorneys to know three different 
sets of procedural rules. The commenter also argues that some frivolous motions 
may be filed concerning a violation of the TRCP, causing delay. The commenter 
suggested adoption of the TRCP in lieu of the SOAH rules or, alternatively, 
modification of the last sentence in this subsection to eliminate both the 
reference to the TRCP and to the proposed sec.155.53 of this title (relating to 
Consideration of Policy Not Incorporated in Referring Agency's Rules). SOAH 
disagrees that consideration of the TRCP by analogy, when the APA or SOAH rules 
do not provide sufficient guidance, is unduly burdensome. That approach is 
followed in many contested cases currently, often with the parties' concurrence 
or even insistence. Moreover, SOAH does not anticipate frequent or extensive 
reference to the TRCP, nor does it anticipate numerous frivolous motions under 
the guise of using the TRCP. SOAH's sanction authority should deter such 
motions. Finally, SOAH rules are tailored towards an administrative rather than 
a civil practice; thus, SOAH respectfully declines to adopt the TRCP in lieu of 
these proposed procedural rules. 
Another commenter suggested that the section allowing the ALJ to consider case 
law construing the TRCP should be limited to non-jury trials and to authority 
relating specifically to administrative hearings concerning regulatory agencies. 
SOAH respectfully declines to limit its consideration of Texas case law to 
administrative cases; often it is necessary and appropriate to consider non-
administrative case law and precedent. Additionally, case law construing TRCP is 
relevant, whether from jury or non-jury trials. 
COMMENTS RELATING TO sec.155.5. Definitions: One commenter noted that although 
the definition of "ADR or Alternative Dispute Resolution" includes mediation, 
mediated settlement conferences, and arbitration, only procedures for mediated 
settlement conferences are established in sec.155.37 of this title (relating to 
Settlement Conferences). The commenter inquired whether this means cases will 
not be ordered to arbitration or mediation by an ALJ unless the referring agency 
has adopted mediation and/or arbitration procedures within its own rules. 
Another commenter suggested a specific reference be made to include moderated 
settlement conferences in the definitions. First, SOAH finds that the three 
forms of ADR listed in the definitions are not exclusive; they are named because 
they are the types of ADR that have been used at SOAH. SOAH notes that a 
moderated settlement conference could be requested under the Governmental 
Dispute Resolution Act (GDRA), TEX. GOV'T CODE ANN. sec.2008 et seq., or the 
rule as proposed. Therefore, SOAH rejects the suggestion that it add the term 
"moderated settlement conference" to the definition of ADR. Second, a mediated 
settlement conference is a form of mediation, and the guidelines for that 
process are generally applicable to cases that use that specific process. The 
mention of one type of mediation process should not be construed to mean others 
may not be used. An ALJ has the discretion to send a case to any form of ADR 
that may further the state policy to resolve disputes before state agencies as 
fairly and expeditiously as possible, including a moderated settlement 
conference, as articulated in the GDRA, even if a referring agency has not 
adopted rules on ADR. SOAH notes the GDRA does not give an ALJ the authority to 
refer a case to binding arbitration; such a referral could be made only if 
another statute or an agreement between the parties created such a process. 
(See, e.g., Chapter 163 of this title (relating to Arbitration Procedures for 
Certain Enforcement Actions of the Department of Human Services) for procedures 
governing binding arbitration related to nursing home enforcement cases). 
One commenter recommended clarification of the definition of "business days" to 
include state skeleton crew days. SOAH declines to adopt this recommendation 
because the definition applies to all weekdays when an agency is open, including 
a state skeleton crew day, when an agency is required to have enough employees 
on duty to conduct public business. 
One commenter stated that the definition of "law" should include agency 
decisions. SOAH declines to define agency "policy" (presumably including prior 
decisions) as law; the ALJ is required to "consider" agency "policy" under APA 
sec.2001.058. SOAH notes that such an expansion would also be inconsistent with 
sec.155.3(a) and (e) of this title (relating to Application and Construction of 
this Chapter). 
One commenter argued the term "other entity" in the definition of "referring 
agency" was too broad and needed clarification, noting that the term "state 
agency" is defined in TEX. GOV'T CODE, sec.2003.001(3) and that the jurisdiction 
of SOAH should be limited to that definition. SOAH disagrees that the term is 
overly broad because the definition incorporates the language in 
sec.2003.001(3)(A), and the term "other entity" may include the entity 
referenced in sec. 2003.001(3)(B).
One commenter took issue with the phrase "for resolution" in the definition of 
"referring agency" because a case may be referred to SOAH for hearing only, not 
"resolution." After consulting both Black's Law Dictionary and a standard 
American dictionary, SOAH replaces the word "resolution" with "process," to mean 
a series of actions, motions, or occurrences through which a result or effect is 
produced.
COMMENTS RELATING TO sec.155.9. Request to Docket Case: One commenter argued 
that the requirement in sec.155.9(a) for the production of "all pertinent 
documents" could require the submission of hundreds of pages of documents at the 
case's inception, noting that the Texas Rules of Evidence (TRCE) require that 
documents, other than trial exhibits, be filed 14 days before the hearing date. 
Another commenter suggested that it would be more functional to allow the agency 
to submit a form and then to have SOAH assign a docket number before an agency 
is required to file the documents. SOAH notes that the agency is required to 
file "all pertinent documents . . . describing the agency action giving rise to 
a contested case." The intent of this language is to gather the complaint, 
petition, application, or other similar documents that caused a request for a 
hearing, not all documents that will be offered at hearing. This process timely 
affords SOAH necessary information in order to assign the case and process it 
efficiently, and it will not cause the massive submissions the commenter fears. 
One commenter expressed concern that a strict reading of subsection (a) of 
section 155.9 requires the referring agency to supply a copy of the application; 
however, the TNRCC is in the process of creating a rule requiring the applicant 
to provide the application to SOAH. SOAH will work with the TNRCC to ensure that 
a requirement on the applicant to provide the application is incorporated into 
the SOAH rules. 
Another commenter proposed adding the term "aggrieved individual" to the 
definition of who may submit a request to docket a case. SOAH declines to add 
this definition because it is the responsibility, and in most cases the 
prerogative, of the state agency before which an aggrieved individual is 
appearing to request a proceeding to be docketed. (See, TEX. GOV'T CODE ANN. 
sec.2003.021(b)(Vernon 1998), which states that SOAH shall conduct a hearing in 
a contested case before a state agency. Access to the hearing process is 
governed by the APA and the affected agency's organic statute. The proposed 
procedural rule reflects that, in this process, it is the responsibility of the 
agency to request the setting of a hearing, as contemplated by the APA, the 
applicable agency organic statute, and sec.2003.021(b). 
COMMENTS RELATING TO sec.155.13. Venue: Three commenters requested a change in 
proposed sec.155.13 to require hearings to be held in Austin. Their concern was 
the cost of traveling to hearings outside of Austin. This section is not 
intended to change current procedures of setting almost all administrative 
hearings in Austin. This section authorizes the ALJ to designate a neutral 
hearing site, so that one party will not have more ready access to witnesses, 
office equipment, exhibits, etc., than another party. Unless required by law to 
conduct a hearing in another town or city or unless agreed to by all parties, 
ALJs will set hearings outside Austin only after considering such factors as 
legislative restrictions on travel, the amount in controversy, estimated length 
of the hearing, availability of facilities, costs to private parties and 
referring agencies, and location of witnesses. Parties may raise all relevant 
concerns by motion and response. The section has been amended to add these 
factors. 
This section does not preclude a referring agency from requesting a different 
city or county on the Request to Docket Case form if the location is required by 
law or agreed to by the parties. An explanation of the grounds for the request 
should be stated on the form, including a citation to applicable law. Parties 
may nevertheless object to such a setting if they disagree with the referring 
agency's explanation. 
COMMENTS RELATING TO sec.155.19. Computation of Time: Four commenters indicated 
sec.155.19 should be changed to provide uniformity with the TRCP. Those rules 
provide that if the period to act is five days or less, the intervening 
Saturdays, Sundays and legal holidays are not counted. SOAH concurs with this 
comment and has changed the section accordingly. 
COMMENTS RELATING TO sec.155.21. Representation of Parties: Three agencies 
commented on sec.155.21. TWCC noted the proposed section does not address how 
the identity of a claimant will be kept confidential. That concern is addressed 
in the comments to sec.155.23 of this title (relating to Filing Documents or 
Serving Documents on the ALJ). Another commenter said that many times its 
attorneys did not know about a party's representation until just before the 
hearing and suggested the section be changed to require the party's 
representative to notify the opposing party or parties when retained to 
represent a party. SOAH agrees a party's representative should also notify other 
parties of an appearance. However, sec.155.25 of this title (relating to Service 
of Documents on Parties) requires any person filing a document with the Office 
to also serve each party or the party's authorized representative. Thus, the 
notice to all parties will be accomplished without the necessity of stating the 
requirement in two separate sections. 
ERS suggested the section indicates an appellant is not required to attend the 
hearing. That agency prefers its rule, which requires an ALJ to dismiss an 
appeal if an appellant is not represented by an attorney unless the appellant's 
appearance is waived by agreement of all parties. Even if an appellant is 
represented by an attorney, the ALJ must dismiss an appeal if the appellant does 
not give ten days written notice that he will not appear, or unless the 
appearance is waived by all parties. 34 Texas Administrative Code, sec.67.43(b). 
SOAH notes ERS is correct that sec.155.21 would permit an appellant to appear 
solely by authorized representative if the appellant so wished. SOAH notes each 
party has the right to subpoena a witness, pursuant to APA sec.2001.089 and 
sec.155.31(e) of this title (relating to Discovery), if the appellant's own 
attendance at the hearing is needed by either party for the presentation of its 
case. Otherwise, mandating the appearance of an appellant when the person has an 
authorized representative is unnecessary and, in many instances, may be 
expensive or inconvenient, particularly if the appellant has a health problem or 
would need to travel a great distance. Based on an ALJ's authority to issue 
default decisions and a party's right to subpoena a witness, SOAH disagrees that 
an amendment to the section is necessary. 
COMMENTS RELATING TO sec.155.23. Filing Documents or Serving Documents on the 
ALJ: SOAH received numerous comments on this section. Most of the commenters 
expressed concern about sec.155.23(1)(A) because they felt that the words 
"pleadings and other documents" are unclear and need clarification. SOAH agrees 
some clarification is needed and has revised sec.155.23(1)(A) to change "other 
documents" to "other documents requesting action or relief." 
One commenter noted that sec.155.23(1)(A), requiring the original to be filed, 
appears to be in conflict with sec.155.23(5) permitting electronic filing. SOAH 
considers facsimile-transmitted filings to be duplicate originals; they satisfy 
the requirement that originals be filed with the Office. 
Another commenter suggested that sec.155.23(1)(A) be amended to specify where 
the originals of post-proposal for decision documents should be filed. SOAH 
agrees with the comment and amends the section to provide that originals of 
documents filed subsequent to issuance of a proposal for decision should be 
filed with the referring agency and a copy should be filed with SOAH. 
A commenter asked that sec.155.23(1)(C)(iv), the provision requiring an ALJ to 
maintain the tape recording of a hearing until the tapes are released to the 
agency, be amended to require SOAH to create and maintain a copy of the hearing 
tapes before transmitting them to the agency. According to the commenter, there 
have been problems with transmitting tapes. SOAH disagrees with the suggestion. 
It would be burdensome to copy all hearing tapes before forwarding the hearing 
record to all referring agencies. Any isolated problems can be solved by 
improving internal agency controls and, if necessary, improving coordination 
with an agency that has experienced problems. 
TWCC noted that sec.155.23(2) does not address how to handle the hearings where 
the identity of a claimant must be kept confidential under law. SOAH responds 
that sec.155.47 of this title (relating to Public Attendance and Comment at 
Hearing) provides that a hearing is open to the public unless otherwise required 
by law. Further, when a referring agency sends a matter to SOAH, it may specify 
on the "Request to Docket Case" form that the file and/or hearing is 
confidential and cite the applicable law. These procedures or provisions, along 
with provisions of this section that provide a method for filing confidential 
materials, are sufficient to address TWCC's concern. Any additional protection 
could be requested by motion, as needed in a particular case.
Another commenter argued sec.155.23(2) places the burden on an agency to 
determine which matters may be confidential by law. The commenter also argued 
that the confidentiality section may cause hearings to be closed to the public. 
SOAH agrees the party, whether an agency or some other party, asserting a 
document is confidential must comply with filing requirements to protect the 
document from being disclosed. Of course, if a party does not believe something 
is confidential and files it without complying with the section, the opposing 
party could move for restricted access to the document, and the ALJ would 
determine whether restrictions are warranted and authorized by law. Subsection 
155.23(2) is not intended to change substantive law concerning confidentiality 
of documents. Whether a party is required by law to disclose or protect a 
particular type of document remains unchanged. While the commenter may perceive 
this subsection of the rules as imposing a new burden, the subsection is not 
intended to create one. Further, the subsection as proposed will not lead to the 
closing of a hearing. Confidential documents may be offered at hearing in a 
manner that does not divulge their contents before the public.
A commenter requested that sec.155.23(2)(A) be changed to delete the requirement 
that each page of a confidential document be marked "confidential" in cases of 
voluminous filings. SOAH prefers that the section remain as written because it 
will protect pages that might become separated from a cover sheet or that are 
individually copied. However, the commenter raises a valid point. Marking pages 
as "confidential" will be of most benefit when documents are submitted that 
contain both confidential and non-confidential materials. When voluminous 
documents are submitted and every page is claimed to be confidential, a party 
may by motion request relaxation of section of the rules. 
In regard to sec.155.23(2)(B), a commenter said that the materials submitted for 
in camera review should be marked "received." SOAH notes the date of receipt of 
all documents filed with SOAH by stamp or other means.
One commenter expressed concern about the requirement in sec.155.23(2)(B) that a 
party provide a cover letter explaining the nature of the confidential material. 
This section requires the party to "explain the nature of the sealed materials," 
and the commenter asserted the explanation might reveal confidential 
information. 
This section of the rules is not intended to elicit confidential information; 
rather, it is aimed at alerting the ALJ to the reason confidentiality is 
claimed. For example, the explanation may state the materials are "confidential 
trade secrets taken from state tax records" and cite appropriate substantive or 
statutory support for the assertion. An explanation of how the legal authority 
relates to the documents would also be helpful. However, this section is not 
intended to require parties to disclose any confidential information, and 
parties retain great latitude in how they draft the explanatory letter. 
Two agencies commented on sec.155.23(3)(A). One wanted the meaning of the word 
"custodian" clarified, and another suggested that the section could be 
interpreted to require a party to give up its original documents. SOAH responds 
that the word "custodian" is used in its ordinary sense, (i.e., the one having 
possession of, or retaining, the documents). Second, there is no requirement in 
the section that a party give up its original documents. Instead, for example, 
an attorney serving documents may retain a copy and return the original to the 
business, state agency office, or person who provided them to the attorney. 
Two commenters requested that sec.155.23 be amended to provide for transmission 
of documents through Internet transmissions or other electronic transmissions, 
such as electronic mail. SOAH agrees it would be useful for parties to exchange 
documents through Internet or electronic mail. Section 155.25 of this title 
(relating to Service of Documents on Parties) is a more appropriate section for 
outlining this authority. That section, regarding service of documents on 
parties, has been amended by adding subsection (e), allowing electronic 
transmissions upon agreement of the parties. One commenter wanted a presumption 
of receipt added to the section; however, SOAH considers it better policy to 
require the sender to be responsible for confirming receipt. Otherwise, a party 
may not know a document was transmitted or may not know the name of the document 
in order to retrieve it. The transmitter should be able to confirm receipt by 
telephoning the party to whom the document was electronically transmitted. 
Because SOAH currently is not equipped to receive such transmissions, electronic 
transmissions should not be used for filing documents. 
One commenter asked for exceptions to be made for requirements to serve all 
parties with documents filed, found in sec.sec.155.23(3)(A) and 155.25(a) of 
this title (relating to Service of Documents on Parties). The commenter urged 
that there should be exceptions to the requirement that a party provide other 
parties copies of documents filed with SOAH. 
SOAH agrees and changes sec.sec. 155.23(3)(A) and 155.25(a) to provide 
exceptions to the requirement that all parties be served with responses to 
discovery requests, business records and transcripts. Further, under 
sec.155.25(a), by order issued in response to a party's motion, a party may be 
exempt from serving other documents upon parties. 
COMMENTS RELATING TO sec.155.25. Service of Documents on Parties: One commenter 
urged a change to sec.155.25(c)(1)-(2) to eliminate the requirement that the 
referring agency mail notices of hearing and orders by certified mail. Another 
commenter argued that sec.155.25(c)(1), requiring notices of hearing to be made 
by delivery to the "record address" of a party, presented a problem in that 
generally there is no address of record when the notice of hearing is filed, and 
the section requires service by delivery to the record address. Considering 
service effective only if there is actual delivery is more onerous than most 
agencies' statutes require. SOAH agrees sec.155.25(c) should be amended to 
provide for service as required by law. Also, the rewritten section deletes any 
requirement that a referring agency serve prehearing orders or proposals for 
decision. SOAH serves these documents. 
Two commenters requested the 5:30 p.m. filing deadline in sec.155.25(d) be 
changed to an earlier time. One commenter's concern seemed to be that the 
section would invite 5:30 p.m. filings on the eve of a holiday, such as 
Thanksgiving, making a response within three days impossible. SOAH believes the 
concern has been addressed with the revisions to proposed sec.155.19 of this 
title (relating to Computation of Time), excluding weekends and holidays from 
counting days by which a response is due when the period to act is five days or 
less. SOAH has modified sec.155.25(a) and changed sec.155.25(d)(4), however, to 
address electronic mail service, to correspond to sec.155.23(6) of this title 
(relating to Filing Documents or Serving Documents on the ALJ). 
Two commenters referred to the presumptions of time of receipt contained in 
sec.155.25(d). One asked the source of the stated presumptive times of receipt. 
Another wanted the presumptions to be rebutted only to lengthen the time for 
responding and expressed concern that the section would spawn litigation about 
whether the actual receipt date or the presumption receipt date controls for 
determining when responses must be filed. 
The presumptive times were based on SOAH's experience in various types of 
proceedings and will assist ALJs in knowing when it is appropriate to rule on 
requests for relief. Of course, the presumptions can be rebutted by evidence 
showing the actual receipt date differed from the presumed times. The Office 
does not foresee a surge in litigation about the actual filing date. A party may 
rebut the presumption and request the ALJ to reconsider or rescind any decision 
that was made before the expiration of appropriate times for responses.
COMMENTS RELATING TO sec.155.27. Notice of Hearing: One commenter proposed 
changing sec.155.27 to require the ALJ to attend hearings the ALJ cancels when 
notice of the cancellation cannot effectively be given to the public (e.g., when 
notice of the hearing was given by newspaper publication). SOAH's practice is to 
cancel such hearings only when notice is defective. In SOAH's opinion, it would 
be burdensome to require an ALJ to travel to some distant location only to 
explain to the persons present that no hearing will be conducted. If a referring 
agency believes it is important that a state agency representative meet with 
members of the public under these circumstances, it may send a member of its 
staff. 
Another commenter contended SOAH, not the referring agency, is statutorily 
required to send notice of hearing in certain types of cases. While this section 
of SOAH's rules will apply in the majority of cases, SOAH will comply with any 
statute which places responsibility for sending a notice of hearing upon the 
Office. The section has been amended to clarify this intent. 
Two commenters requested that SOAH provide the notice of hearings. SOAH 
disagrees it should issue notice of hearings, unless it is required to do so by 
statute. The party initiating an action is generally more familiar with the 
reasons for the hearing, applicable agency policy, and appropriate statutes and 
rules. Further, the referring agency has control of party addresses and is aware 
if other parties (such as a complaining witness) should receive copies of the 
notice. 
One commenter argued that requiring a reference to the particular sections of 
statutes and rules involved is overbroad, burdensome, and requires significantly 
more than the APA. Of particular concern to the commenter was that it might be 
required to list every possible section a respondent would use in arguing 
exemptions from certain requirements. 
The proposed section exactly tracks APA sec.2001.052, which requires a notice of 
hearing to include a reference to the particular sections of the statutes and 
rules involved. Nevertheless, the language cited has been removed and replaced 
by a reference to APA sec.2001.052. 
Two commenters argued that APA sec.2001.052(b) should be added to this section. 
One of the two commenters also suggested adding that a party's failure to 
request a more definite statement negates the party's ability to allege a due 
process violation. SOAH disagrees with the latter comment because a party may 
not know until an opposing party rests its case that notice was defective, 
making it impossible to have requested a more definite statement before hearing. 
However, SOAH agrees the section lacks completeness by failing to refer to APA 
sec.2001.052(b). The section has been rewritten to refer to the APA provision, 
rather than restating certain portions of the APA. SOAH also has changed the 
citation form from "1 TAC Chapter 155" to "1 Texas Administrative Code, Chapter 
155" to reflect the formal citation style. 
One commenter asked for the section to require a reference to sec.155.55 of this 
title (relating to Failure to Attend Hearing and Default), regarding default 
judgments. As rewritten, the section permits the referring agency to determine 
what statutes and rules are involved in the proceeding. 
One commenter suggested that a subsection be added to provide that the notice of 
hearing and the return receipt ("green") card automatically become part of the 
record. SOAH believes the specific provision may lead to problems when a return 
receipt card has not been returned by the time of the hearing. Moreover, the 
admissibility of exhibits should be addressed in the hearing, rather than 
through notice procedures. 
COMMENTS RELATING TO sec.155.29. Pleadings: One commenter asked for 
clarification concerning whether sec.155.29(a) requires pleadings to be filed in 
all cases. All cases before SOAH require requests for relief to be made through 
filed pleadings, but this section also permits requests for relief to be made on 
the record at a prehearing conference or hearing. 
Another commenter asked that sec.155.29(a)(10) be changed to eliminate the need 
for an affidavit or other proof when filing an agreed motion for continuance. 
This subsection requires a supporting affidavit or "other proof" when the party 
filing the request has asserted "good cause" in the request. Subsection (f) of 
this same section requires motions for continuance to be filed no later than 
five days before the date of hearing unless good cause is demonstrated in the 
motion. 
SOAH does not find a change is necessary. When a party files a motion for 
continuance more than five days before the hearing, the party is not required to 
demonstrate good cause. Also, one could reasonably argue the agreement of all 
parties meets the requirement of being "other proof." At times, an affidavit may 
be more appropriate, even when all parties do agree; (e.g., the parties may have 
repeatedly made last-minute requests for continuance, and the ALJ may have 
admonished the parties to file motions more timely and to show there is good 
cause for any future continuances, even if agreed to by all parties). In such a 
case, a party may be required to demonstrate "good cause" for a late-filed 
motion, even if other parties agree to a continuance. One commenter suggested 
sec.155.29(c) should require parties to file a certificate of conference for all 
motions, except where to do so would be unworkable. SOAH disagrees. The 
subsection requires a party seeking a continuance or seeking to extend an 
established deadline to contact, or attempt to contact, other parties and state 
their positions on the request. While this procedure has proven valuable when 
rescheduling a hearing or extending a filing deadline, SOAH disagrees it should 
be required for all motions. A motion may be too complex to describe by 
telephone, or it may give a party a strategic advantage to know about a motion 
before another party in the same case can be notified. Thus, SOAH declines to 
amend this subsection. 
One commenter requested that sec.155.29(e) be changed to require filing of 
motions to intervene 30 to 45 days prior to the hearing. Particularly because 
the time between issuance of the notice of hearing and the hearing date is 
generally shorter in administrative actions than in civil actions, SOAH believes 
a 20-day period is adequate. A party may request a continuance if surprised by 
an ALJ's granting a request to intervene. 
Three commenters questioned the time in which to file a motion for continuance. 
Two suggested that the motion for continuance should be filed fifteen days 
before the date of the hearing, and the other suggested it should be filed as 
late as the day before the hearing. 
Even though a longer period of time might allow parties more effective use of 
preparation time, SOAH believes the five-day period is appropriate for several 
reasons. Administrative hearings sometimes are set after notice of only ten 
days. Also, parties may not know until near the time of hearing that a key 
witness is ill or has a conflict with the scheduled time. The five-day period 
allows parties to continue good faith settlement negotiations until very near 
the hearing. Of course, a motion for continuance may be filed even nearer the 
hearing, provided there is good cause for the late filing, and a motion filed 
one day before the hearing may inconvenience witnesses who have already begun 
traveling to Austin from other parts of the state. Finally, with the longer 
period of time, the ALJ generally can rule on the motion prior to the time 
scheduled for hearing. 
One commenter suggested sec.155.29(d) require that responses to motions be filed 
within five business days instead of calendar days. The section of this title 
pertaining to Computation of Time, sec.155.19, has been changed. That amendment 
accomplishes the purpose of the commenter's suggestion. 
Section 155.29(h) permits a party to amend pleadings if the amendment does not 
unfairly surprise other parties. This subsection also provides that a pleading 
which "substantially affects" the scope of a hearing may not be filed later than 
ten days before the hearing. Two commenters asked that "unfair surprise" and 
"substantially affects the scope" be clarified. One commenter suggested changing 
sec.155.29(h) to the seven-day threshold found in TRCP. Rather than defining 
specific terms, SOAH changes the proposed section to delete the word "unfairly." 
The term "surprise," included in TRCP 63, has been defined by reviewing courts. 
Further, SOAH modifies the section to allow a party to amend pleadings "at such 
time as not to operate as a surprise to other parties." The use of the phrase 
from TCRP 63 will be a clearer guide to parties. However, SOAH declines to amend 
the section to outline what may "substantially affect" the scope of the hearing. 
Because of the varied nature of hearings SOAH conducts (i.e., for approximately 
60 other state agencies), it is impossible to anticipate all instances when a 
pleading might affect the scope of a hearing. Those determinations will be more 
wisely made on a case-by-case basis. Finally, SOAH agrees to use the seven-day 
period of time for amendment used in TRCP 63. While APA sec.2001.052 requires 
reasonable notice of not less than ten days, sec.2001.051 permits an agency to 
file a more definite and detailed statement not less than three days before the 
date set for hearing. Because a definite statement is not required until so 
short a time before the hearing, amendment of an existing pleading using the 
shorter time should adequately comply with APA notice requirements. 
One commenter suggested adding a provision to sec.155.29(h) to allow for trial 
amendments for issues tried without objection. OAG suggested changing 
sec.155.29(h) because it does not allow a party to delete one or more counts. 
This section allows amendment of a pleading by written filing at any time, 
provided all parties agree and the ALJ consents. SOAH believes this procedure 
affords appropriate due process protection, while at the same time provides 
flexibility during a proceeding. 
COMMENTS RELATING TO sec.155.31. Discovery: One commenter recommended 
sec.155.31(b) should be revised to clarify that the scope of discovery is not 
limited to relevant matters, but also includes discovery of information that 
appears reasonably calculated to lead to the discovery of admissible evidence. 
SOAH concludes no change is necessary. The term "relevant" as used in this 
section includes those matters which appear reasonably calculated to lead to the 
discovery of admissible evidence, consistent with the TRCP. One commenter 
requested that SOAH clarify the purpose of sec.155.31 subsection (c). In 
particular, the commenter requested that SOAH specify what constitutes the 
commencement of the hearing. The purpose of sec.155.31 subsection (c) is to 
allow parties to begin discovery immediately after SOAH receives a request to 
docket the case from the referring agency rather than having the parties await 
an ALJ order permitting discovery to begin. SOAH believes this will promote the 
efficient processing of contested cases. The hearing commences when the ALJ 
first convenes the hearing on the merits of the case. The terms "hearing" and 
"prehearing conference" used in these rules sufficiently distinguish between the 
types of proceedings. SOAH believes that no changes are necessary to further 
clarify the subsection's provisions. 
One commenter (SBEC) recommended sec.155.31(d) should be amended to authorize 
physical examination of individuals and examination of photographs as provided 
for by TRCP 167 and 167a. SOAH concludes no change is necessary at this time. 
Examination of photographs is authorized pursuant to sec.155.31(d), which 
provides for the production and copying of documents and other tangible 
materials. Requests for physical (or mental) examinations of individuals as 
discovery have not historically been raised in SOAH proceedings, though some 
boards have specific statutory authority to order such examinations as a 
condition of holding a license. Consequently, it is not apparent that a section 
addressing this potentially sensitive issue is currently needed. If such 
requests begin to be made on a recurring basis in the future, SOAH will consider 
promulgating a section in its rules tailored to address the specific needs and 
rights of the parties in the context in which the issue arises. 
Several commenters objected to inclusion in sec.155.31(d) of interrogatories and 
requests for admissions among the discovery devices authorized by the 
subsection; two commenters questioned SOAH's authority to authorize these 
devices. SOAH concludes the discovery devices set out in the APA are minimum 
requirements and SOAH may authorize reasonable additional tools. (See, TEX. 
GOV'T. CODE ANN. sec.2001.001). The legislature has directed SOAH to adopt 
procedural rules, "including the discovery procedures," applicable to cases 
heard by SOAH. SOAH believes these additional devices will facilitate efficient 
preparation for hearing. These tools are frequently less expensive than 
depositions, and many practitioners are familiar with them from past experience 
with the procedural rules of several of SOAH's referring agencies as well as the 
TRCP. Several commenters suggested the section should set a maximum number of 
interrogatories. The commenters suggested the TRCP limit of two sets to each 
party, with each set calling for no more than thirty answers. SOAH concurs. 
Section 155.31(d) as adopted, imposes the TRCP limit unless the ALJ imposes a 
different limit based on case-specific circumstances. 
One commenter requested clarification as to how and where discovery is to be 
produced. APA sec.2001.091 generally addresses this issue, and parties may be 
further guided by TRCP 167. 
One commenter also suggested the section should articulate more specific 
procedures applicable to the discovery tools set out in sec.155.31(d). The 
commenter suggested procedures should be outlined for the deeming of admissions. 
SOAH concurs with the commenter that procedures relating to admissions should be 
clarified. The section as adopted establishes procedures similar to the TRCP. In 
view of the extreme consequences that may be attached to admissions being deemed 
and the fact that many parties in cases heard by SOAH are not represented by 
counsel, the section adds a provision authorizing the ALJ to allow withdrawal of 
or amendment to admissions in the interest of justice. With the inclusion of 
procedures relating to admissions, SOAH concludes the discovery procedures are 
appropriately set out in this section of the rules, which establish the 
framework for the discovery process. Additionally, the basic parameters of 
discovery relating to production of documents, entry on land, and depositions 
are set out in the APA, which in turn refers the practitioner to the TRCP for 
further guidance. Section 155.1(e) of this title (relating to Purpose and Scope) 
similarly references the TRCP as interpreted and construed by Texas case law. 
Two commenters asked that sec.155.31(e) be modified to provide that SOAH issue 
subpoenas and commissions to take depositions, rather than the referring agency. 
At a minimum, one of the commenters requested the section be revised to state 
that objections to subpoenas based upon the lack of a showing of "good cause" 
for issuance of the subpoenas would be ruled upon by SOAH and not by the 
referring agency. 
SOAH disagrees that the section should be modified to provide that SOAH issue 
subpoenas or commissions at this time. The purpose of subsection (e) is to 
continue with the general, established practice at SOAH that the referring 
agencies initially issue subpoenas and commissions. This section applies that 
practice uniformly to all the referring agencies for which SOAH conducts 
hearings, with the limited exception of the PUC and the TNRCC, in the event 
sec.155.3(c) and (d) of this title (relating to Application and Construction of 
this Chapter) apply. Historically, SOAH issued subpoenas or commissions for only 
a very small number of its referring agencies based on interagency contract. 
During the last legislative session, the funding mechanism for SOAH was 
modified, obviating the need for individual interagency contracts in most 
instances. SOAH believes that the procedure of the referring agency's issuing 
subpoenas and commissions should now be uniformly applied to all referring 
agencies to the extent provided for in the rules. The general precedure has 
worked efficiently for SOAH, and referring agencies have been able to handle the 
task as a ministerial matter without confusion. Further, SOAH does not believe 
that the section needs to be modified to state that SOAH ALJs will rule on 
objections to the issuance of subpoenas or commissions because subsection (f) of 
this section already contemplates that the SOAH ALJ will rule on motions to 
quash the subpoena or commission based on lack of a showing of good cause or for 
other alleged deficiencies. 
SOAH recognizes the potential conflicts inherent in continuing the established 
practice. For example, one commenter noted an ALJ may deny a request to take a 
deposition, but the referring agency may subsequently issue a subpoena 
compelling the witness to appear at the deposition. An ALJ would have an 
opportunity to correct such conflicts when ruling on a motion to quash. However, 
SOAH will closely monitor the practice to determine if the section should later 
be amended to require SOAH to issue subpoenas and commissions. 
In the alternative, one commenter requested sec.155.31(e) be modified to include 
the following requirements for the filing of subpoenas or commissions: (1) the 
party requesting the subpoena or commission must tender with its request the 
proper amount of fees required under the APA--in the form of a cashier's check 
or money order--or the referring agency will not issue the subpoena or 
commission; (2) the party requesting a subpoena or commission must file a 
subpoena or commission form with the referring agency that contains all the 
necessary information on the form, except for the date and signature, which 
would then be entered by the referring agency; and (3) the party requesting a 
subpoena or commission must file the request some minimum number of days between 
the date of the subpoena or commission and the date for the witness to appear. 
SOAH disagrees that the subsection should be modified to establish specific 
requirements for the referring agency to consider in issuing the requested 
subpoena or commission. In many instances, the referring agencies have already 
established procedures for processing subpoenas and commissions, which may be 
inconsistent with the requested revisions. Nonetheless, to address the concern 
that certain minimum requirements must be meet, SOAH has revised the section to 
expressly state that requests for subpoenas or commissions must comply with the 
APA. 
This commenter (TWCC) further requested that SOAH adopt by reference its 
procedural rule (or, in the alternative, adopt a similar rule) that provides 
that the agency's medical dispute resolution officer who renders a decision in a 
case at the agency level shall not be required to appear and testify at the SOAH 
hearing or at a deposition unless the party requesting such testimony has 
demonstrated good cause why the agency's dispute resolution officer should 
appear and a timely subpoena is thereafter issued. According to the commenter, a 
significant number of such requests would result in a substantial loss of time 
available for the dispute resolution officers to complete their regular job 
duties and would place substantial burdens on agency counsel, who would then 
have to object to the issuance of those subpoenas or commissions. SOAH disagrees 
that the requested changes should be made. Parties are permitted under the APA 
to request issuance of subpoenas and commissions. The APA already requires the 
party requesting issuance of a subpoena to show good cause under sec.2001.089, 
and SOAH believes no modification to the section is necessary to restate that 
requirement. The APA does not, however, establish a good cause requirement for 
the issuance of commission, and therefore, SOAH does not propose to add such a 
requirement in its rules. 
A second commenter (TDI) also urged adoption of its procedural rule regarding 
the issuance of subpoenas because it contained useful provisions, including the 
use of the referring agency's investigative personnel to serve the agency's 
subpoenas. The commenter further urged SOAH to acknowledge that SOAH's proposed 
rules leave in place specific agency rules concerning subpoenas by adding 
language to the section that provides that the rule does not preclude the 
referring agency from issuing subpoenas or commissions according to the agency's 
own rules. As noted above, the intent of sec.155.31(e) is to continue with the 
current established practice regarding issuance of subpoenas and commissions. 
This will necessarily include continued use of the referring agency's 
established procedures for handling the issuance of subpoenas or commissions, 
and the section has been modified to highlight that intention. 
One commenter (TNRCC), although not opposed to sec.155.31(e), suggested that the 
referring agencies and SOAH work together to determine the best process for 
handling these matters because the TNRCC rules require an ALJ to issue subpoenas 
and commissions. SOAH would welcome input by the referring agencies on how to 
develop efficient and fair procedures for all participants. 
One commenter noted that the phrase "discovery requests," referred to in 
sec.155.31(f), was not defined in the proposed rules. SOAH agrees that the 
proposed rule language should be clarified and has revised that section of the 
rules to state that written interrogatories, requests for admission, requests 
and motions for production, and requests for entry upon and examination of real 
property shall initially be served on the party from whom discovery was sought, 
but not filed with SOAH unless directed by the ALJ in a particular case or in 
connection with a discovery dispute. Requests for subpoenas or commissions are 
to be directed to the referring agencies under sec.155.31(e). One commenter 
suggested that sec.155.31(f) be revised to delete the requirement that copies of 
discovery requests and responsive motions be served on all parties. The 
commenter contended that this service requirement could be prohibitively 
expensive and may be unnecessary in most cases. SOAH agrees that this 
requirement should not be automatically mandated in every case, but that the ALJ 
may decide in a particular case that the requirement should be imposed. The 
section has been revised to incorporate these changes. 
Finally, in response to a comment filed with respect to sec.155.31(j), 
subsection (f) has been modified to clarify that answers to discovery requests--
as opposed to objections--need not be filed with SOAH, except in circumstances 
described by the subsection. 
Several commenters suggested the fourteen-day deadline for responding to 
discovery requests found in sec.155.31(g) is inadequate. Most of these 
commenters recommended that SOAH adopt the thirty-day response time contained in 
the TRCP. SOAH concurs with these commenters that a longer response time than 
originally proposed is appropriate to allow the parties to adequately respond to 
discovery requests. SOAH concludes, however, that a thirty-day response time 
would be excessive as a standard feature of administrative hearings and could 
unduly lengthen the hearing process. The section as adopted allows the parties 
twenty days to respond to discovery requests unless the ALJ establishes a 
different response time. SOAH notes that the PUC rules contain a twenty-day 
discovery response time, and that requirement has generally been found to be 
reasonable and appropriate. For the reasons set out in the preamble discussion 
of sec.155.31(i), however, SOAH concludes that parties should be required to 
file objections to discovery requests within ten days of service. 
One commenter also suggested that, in addition to agreed extensions of time to 
answer discovery, parties should also be allowed to timely submit motions for 
extension if they are unable to agree. The motion would be granted upon a 
showing of good cause. SOAH concurs and has amended sec.155.31(g) in accordance 
with the recommendation. 
One commenter suggested sec.155.31(h) is confusing and unworkable in that it 
requires supplementation of discovery responses thirty days in advance of the 
hearing, whereas the APA requires only ten days notice of hearing. SOAH 
concludes, however, that in those cases in which the parties undertake written 
discovery, the parties are normally afforded substantially longer than ten days 
notice of the hearing on the merits. Otherwise, virtually no discovery would be 
feasible. In an appropriate case-specific situation, the ALJ may require 
supplementation at a different time. 
Two commenters suggested that fourteen days is an inadequate period to object to 
discovery requests. They suggest the thirty-day period allowed under the TRCP. 
SOAH disagrees. The section as adopted extends the period for fully responding 
to discovery requests to twenty days in response to concerns that the fourteen-
day response time was unduly burdensome. The parties should, however, normally 
be able to formulate objections to discovery requests in a shorter period of 
time than is necessary to fully respond to a discovery request. Consequently, 
sec.155.31(i) has been modified to require that objections to discovery be filed 
within ten days of receipt of the objected-to request. This will promote timely 
resolution of potential discovery controversies while accommodating a somewhat 
longer time frame for fully responding to appropriate discovery requests. 
Because the obligation to confer before objecting, discussed in the next 
paragraph, has been omitted, shortening the period from fourteen to ten days 
does not deprive the parties of sufficient time to file objections.
Several commenters suggested that parties should be allowed to object to 
discovery without first conferring and that a certificate of conference is 
appropriately required only at the point where a motion to compel is filed. SOAH 
concurs. In view of the relatively short time period for filing an objection and 
because the objection will help to frame the subsequent negotiations of the 
parties, the section has been revised to require a certificate of conference 
only as a prerequisite to securing relief from the ALJ. 
One commenter noted that sec.155.31(j) did not state whether the party filing 
objections must file those objections with SOAH or with the referring agency. 
SOAH disagrees that further clarification of the filing requirement is 
necessary. Pursuant to sec.155.23(1)(A) of this title (relating to Filing 
Documents or Serving Documents on the ALJ), once SOAH assumes jurisdiction over 
a case, pleadings with respect to the case must be filed with SOAH, not with the 
referring agency. (An exception to this filing requirement is found in 
sec.155.31(c), which requires subpoenas and requests for commissions to be filed 
with the referring agency.) 
Several commenters expressed concern that the indexing requirement in 
sec.155.31(k) would be unduly burdensome because respondents frequently ask for 
the agency's entire investigative file, which is sometimes voluminous and may 
contain information deemed confidential by the agency's enabling statute or 
other law. The commenters also believed the indexing requirement may lead to the 
disclosure of confidential information because the proposed section requires the 
index and the accompanying explanation of the claimed privilege to be public 
documents. One of these commenters further suggested that the section be revised 
to require indexing of the confidential documents only to the extent a party has 
requested it and the ALJ has ruled that it is necessary. This commenter 
suggested revisions to clarify that the index and explanations would be public 
documents only to the extent that the underlying documents would be public 
information under the Texas Public Information Act. Similarly, another commenter 
suggested adding "If requested by the ALJ," at the beginning of the last 
sentence to address the concern that the requirement to index was automatic in 
the proposed section and not based on the particular circumstances of the case 
or the referring agency's enabling statutes. 
This section was included to address Texas case law, which provides that any 
party seeking to exclude documents from discovery must specifically plead the 
particular privilege involved and provide evidence supporting that claim. (See, 
Peeples v. Hon. Fourth Supreme Judicial District , 701 S.W.2d 635 (Tex. 1985)). 
Based on that showing, the judge must then determine whether an in camera 
inspection is necessary, and, if so, the party asserting the claim of privilege 
must segregate and produce the documents for inspection by the judge. The 
indexing requirement found in the proposed section assists the ALJ in performing 
these required functions and assists the party seeking protection from discovery 
in compiling, segregating, and specifically pleading the applicable privilege 
involved. Nonetheless, SOAH agrees with these commenters that there may be 
instances in which preparation of an index of alleged confidential documents may 
be unreasonable or inappropriate given the circumstances of the case and the 
particular referring agency's enabling statute. Additionally, SOAH agrees that, 
rather than establishing an automatic requirement to index, the section should 
be revised to permit the ALJ to determine whether an index is necessary, when it 
should be filed, and whether the index and accompanying explanation should be 
public documents. These revisions will address the concerns expressed by the 
commenters by allowing the ALJ to make these decisions after considering the 
circumstances of the case and the applicable statutory provisions or other law.
Several commenters suggested that the five-day deadline would be insufficient to 
compile and provide documents to the ALJ for in camera inspection. SOAH agrees 
that the deadline in the proposed section should be modified and has revised the 
section as noted in the previous paragraph to allow the ALJ to determine if and 
when an index is to be filed. Two commenters believed the proposed section would 
place undue burden on a party seeking to object to discovery requests based on a 
claim of confidentiality or privilege. SOAH acknowledges that this section 
requires the party alleging a claim of confidentiality or privilege to 
specifically plead that privilege and, if required to do so, to index and 
organize or segregate the documents for an in camera review. SOAH disagrees, 
however, that this burden is inappropriately placed on the party asserting a 
privilege. Indeed, according to applicable case law (Loftin v. Martin, 776 
S.W.2d 145 (Tex. 1989); and Peeples, supra), failure of that party to 
specifically plead the privilege and to segregate the documents for the in 
camera review could result in a waiver of the claimed privilege.
Finally, one commenter suggested that the subsection be revised so that the 
indexing requirement is triggered upon a filing of a motion to compel, not upon 
the filing of the initial objection. SOAH agrees that the section should be 
modified to delete the requirement that an index be filed automatically by the 
objecting party. However, because the party filing the motion to compel does not 
have access to the alleged privileged materials, SOAH believes that the index of 
documents could not reasonably be filed with the motion to compel. As discussed 
previously, the section has been revised to clarify that the deadline for filing 
the index, if one is ordered by the ALJ, will be determined by the ALJ. 
Several commenters suggested there should be a deadline for filing motions to 
compel discovery. SOAH concurs. In order to help ensure timely resolution of 
discovery disputes, sec.155.31(l) as adopted requires that any motions to compel 
be filed within ten days of receipt of the pertinent objection or alleged 
failure to comply with discovery. 
One commenter suggested the section should be changed to provide that the 
absence of a motion to compel may (instead of will) be construed as an 
indication the parties have resolved their dispute. Because the provision is 
intended to describe a standard practice, however, SOAH believes the more 
affirmative will more clearly describes the consequence of a party's failure to 
file a motion to compel. 
Two commenters expressed concern that the required certificate of conference 
would indicate the parties actually conferred and were unable to resolve the 
dispute. The commenters suggest the movant should be allowed to aver that it has 
made reasonable, but unsuccessful, attempts to contact opposing counsel. SOAH 
concurs, and sec.155.31(l) has been modified accordingly. 
One commenter questioned whether sec.155.31(m) would create a new requirement to 
file affidavits when responding to a motion for a protective order. If so, the 
commenter suggested the section track TRCP 166b(5), which provides that motions 
for protective orders or responses thereto may have exhibits attached, including 
affidavits, discovery pleadings, or any other documents. SOAH agrees that the 
proposed language should be modified to clarify that affidavits are not required 
in every instance in which a motion for protective order or a response has been 
filed. However, matters which are required by applicable statute or rule to be 
pleaded under oath must be accompanied by an affidavit, and the revision to this 
section does not relieve the party from that requirement. Further, the ALJ has 
broad authority to require such affidavits in specific instances under 
sec.155.15 of this title (relating to Powers and Duties of Judges). 
Another commenter suggested that the words "the movant" in the first sentence of 
sec. 155.31(m) be modified to "a party" because parties other than the movant 
may need to be protected by issuance of a protective order. SOAH agrees the 
language should be changed to indicate that a person or a party may seek relief 
from objectionable discovery requests. 
Finally, a commenter suggested that in sec.155.31(m) the word "necessarily" is 
unnecessary, creates confusion, and should be omitted. SOAH agrees and has 
omitted the word. 
COMMENTS RELATING TO sec.155.33. Orders: One commenter argued the term "broad" 
used in sec.155.33(a) to describe the ALJ's authority to issue orders to 
regulate the conduct of proceedings should be deleted, because that term is not 
used in the statutes describing the powers of an ALJ and requiring the adoption 
of these procedural rules, TEX. GOV'T CODE ANN. sec.2003.042 and sec.2001.050. 
Furthermore, the commenter objected to the language authorizing an ALJ to set 
out additional requirements for participation and to take other steps conducive 
to a fair and efficient process in the case. SOAH rejects these recommendations, 
finding the statutory authority granted the ALJ within the ambit of the 
contested case proceeding is broad. Because the contested cases heard by SOAH 
range from brief, single-issue default matters to complex proceedings involving 
multiple parties and months of hearings, the ALJ's authority to establish 
additional requirements for unique or complex matters must be addressed in this 
section. 
One commenter argued against the last sentence in sec.155.33(c), which permits 
an ALJ to order a severance, because severance is inherently burdensome on a 
small agency. Additionally, the commenter stated the agency, rather than an ALJ, 
should make that decision because of its finality in the context of a SOAH 
proceeding. SOAH notes that an ALJ must consider fairness and efficiency from 
the perspectives of both the referring agency and the other parties, and the 
necessity of severance will be decided after considering both positions. An ALJ 
has the power to rule on a prehearing matter pursuant to TEX. GOV'T CODE ANN. 
sec.2003.042. A severance does not finally decide the merits of an issue; it is 
a procedural decision within SOAH's jurisdiction. 
The same commenter that expressed a concern about the definition of ADR in 
sec.155.5 of this title (relating to Definitions) suggested that sec.155.33(d) 
be modified (or another section to the rules be written) to state that an ALJ 
may order referral of a case to ADR only when the subject agency has adopted ADR 
procedures within its own rules. SOAH disagrees because the policy of this 
state, articulated in the GDRA, is that each state agency, including SOAH, 
develop and use ADR procedures. The section is written to conform to that policy 
and the specific grant of authority to an ALJ to order cases to ADR in TEX. 
GOV'T CODE ANN. sec.2003.042(5) without the restriction proposed by the 
commenter. 
Two commenters complained that sec.155.33(d) does not provide guidance on how, 
when and under what circumstances an ALJ will order a case to ADR. A SOAH ALJ 
has discretion on the issue pursuant to TEX. GOV'T CODE ANN. sec.2003.042(5); as 
with all issues in a case, the parties have the right to request or object to 
ADR and present arguments on the matter. (See, the revisions to proposed 
sec.155.37(a) of this title (relating to Settlement Conferences), which explains 
the methods by which parties may object to a proposed mediated settlement 
conference). 
Three commenters expressed concern that there is no description of how the costs 
of ADR will be apportioned once ordered. SOAH finds that these matters do not 
need to be addressed in this rulemaking. Referring agencies that pay SOAH an 
hourly rate for hearings will be charged the same rate for ADR proceedings or 
other services. For other referring agencies, ADR proceedings in contested cases 
will be treated just like other contested case prehearing procedures, which do 
not generate additional costs. Payment in ADR proceedings where parties have 
agreed to retain a private mediator under sec.155.37(a)(2)(B) will be arranged 
by the parties and that mediator. 
One commenter suggested that sec.155.33(e) be amended to specify that an ALJ may 
issue a final order resolving the contested issues and all requests for relief 
in a case "where authorized by the referring agency," pointing out that its 
enabling statute vests the commenter with final decision making authority, and 
it has not delegated this authority to SOAH. SOAH declines to make this change 
because the first words "where authorized by law" in sec.155.33(e) already 
encompass that concept, (i.e., many referring agencies retain final decision 
making authority, and in all such cases an ALJ would not be authorized by law to 
issue final orders resolving the contested issues and all requests for relief). 
COMMENTS RELATING TO sec.155.35. Certification of Questions to Referring Agency: 
One commenter asked that sec.155.35, permitting the ALJ to certify a question to 
the PUC or TNRCC, be expanded to include all agencies. SOAH disagrees; it 
believes sec.155.35 should be specific to the agencies mentioned in the section. 
Certifying a question is most useful when it may resolve a determinative issue 
in a long, complex proceeding. Some hearings conducted for the PUC and TNRCC 
take several months, and the ALJ may find it more efficient to have direction 
about a particular course of action. Hearings SOAH conducts for other agencies 
rarely last more than two weeks. Determinative issues can most efficiently be 
addressed in a proposal for decision in the shorter cases. Additionally, 
certification of questions to the PUC or TNRCC is provided for by law (TEX. 
GOV'T CODE ANN. sec.sec. 2003.047(f)) and currently is addressed by those 
agencies' rules. SOAH is unaware of other statutory provisions addressing this 
matter for other referring agencies. 
Section 155.35 has been slightly changed in subsection (a)(2) to require the ALJ 
to submit the certified question to the PUC's Chief of the Office of Policy 
Development, rather than to the secretary of the commission. The change is 
consistent with internal, structural changes at the PUC.
COMMENTS RELATING TO sec.155.37. Settlement Conferences: Section 155.37 is 
written to explain procedures for settlement conferences, which are important 
parts of the contested case proceeding under the APA. Section 155.37(a) in 
particular has been proposed to formalize the mediated settlement conference 
(MSC) procedure that has been developed at SOAH and to carry out the legislative 
intent of the GDRA requiring SOAH to develop and use ADR procedures.
Three commenters contended sec.155.37(a) should require all parties to request 
an MSC before an ALJ could order one, to assure the procedure will have some 
chance of success and will not be used as a delaying tactic. One of these 
commenters also expressed skepticism regarding the section's objective that an 
MSC not delay the contested case process. Another commenter asked that language 
be added to sec.155.37(a) to permit parties to file a certificate of conference 
that mediation would be futile (based on prior, extensive negotiations), and two 
commenters asked for additional language to preclude an order for MSC when the 
matter has already been mediated. One commenter also asked for language 
indicating an ALJ will consider agency policy concerning the types of cases that 
may be unsuitable for mediation. 
SOAH notes that an ALJ has authority to order a case to mediation pursuant to 
TEX. GOV'T CODE ANN. sec.2003.042 and sec.2008.053. SOAH disagrees with the 
comment regarding delay because its experience has been that mediations usually 
can be scheduled so as not to delay the contested case setting. Any party may 
object to a request or order for MSC, which objection may be filed in any form 
and be based on any reasons, including those suggested by the commenters. As 
described more fully in response to the comments about sec.155.53 of this title 
(relating to Consideration of Policy Not Incorporated in Referring Agency's 
Rules), ADA sec.2001.058(b) requires SOAH ALJs to consider agency policies, 
which, arguably, could include statements by an agency concerning the types of 
cases that are unsuitable for mediation; however, SOAH notes the legislature has 
declared in the GDRA the state's policy that each state agency, including SOAH, 
develop and use ADR procedures. In response to these comments, SOAH has 
rewritten sec.155.37(a) to describe explicitly a process by which parties may 
raise objections to an MSC. 
One commenter argued since all licensees in disciplinary actions are provided an 
informal settlement conference pursuant to the APA prior to the time a contested 
case is filed, SOAH is without jurisdiction to order any further settlement 
conferences. SOAH disagrees, noting its jurisdiction to hold settlement 
conferences is found in all of the following statutes: TEX. GOV'T CODE ANN. 
sec.sec.2001.056, 2003.042 and 2008.053. Further, SOAH notes that an informal 
settlement conference pursuant to the APA does not require the involvement of a 
third-party neutral, which is a critical component of the mediation process. 
TNRCC suggested that sec.155.37(a)(3) be amended to accurately reflect the role 
of its ADR Office, and the proposed section was rewritten accordingly. One 
commenter argued that sec.sec.155.37(a)(5)(A) and (B) conflict, suggesting that 
adding the phrase "that completely dispose of the case" to modify the words 
"written agreements" in (B) would clarify the situation. The section was 
rewritten to include the phrase. 
COMMENTS RELATING TO sec.155.39. Stipulations: One commenter noted that 
sec.155.39(a), as proposed, stated the parties' stipulations as to factual as 
well as procedural matters were subject to approval by the ALJ. SOAH has changed 
the phrasing, as suggested, to clarify that only the parties' stipulations as to 
procedural matters are subject to ALJ approval. 
COMMENTS RELATING TO sec.155.41. Procedure at Hearing: A commenter suggested the 
term "burden of production" in sec.155.41(b) be changed to "burden of proof" 
because the meaning of the first term is unclear. SOAH agrees the term "burden 
of production" is unclear. The section has been amended to use the term "burden 
of proof." 
Another commenter asserted the proposed section attempts to circumvent statutory 
authority regarding the appropriate placement of a party's burden of proof. SOAH 
disagrees that the section allows the ALJ to place the burden of proof upon a 
party in circumvention of a statute. The first sentence of the section addresses 
only the order in which evidence will be presented. In certain types of cases, 
it is impractical for the party with the burden of proof to proceed first 
because information necessary for presentation of the party's case is in the 
possession of another party. While such instances are uncommon, the proposed 
section allows the ALJ the flexibility to change the usual order of presentation 
to create a clearer record. Thus, SOAH retains the word, "normally," at the 
beginning of sec.155.41(b). 
Another commenter suggested the term "any impracticalities" in sec.155.41(b) is 
too indefinite a standard for an ALJ to consider in placing the burden of proof 
and should be changed to "the requirement that a party prove a negative fact or 
the non-existence of an element of a defense or cause of action." SOAH agrees 
with the recommended change. Because the phrase "any impracticalities associated 
with placing the burden on a party" has been deleted, the last phrase of the 
sentence also has been edited to preserve sentence parallelism.
COMMENTS RELATING TO sec.155.43. Making a Record of Contested Case Proceedings: 
Because of the number of comments received concerning sec.155.43, SOAH has 
revised the section substantially to enable all parties and the ALJ to have 
certainty before the proceeding regarding the means that will be used to make 
the official record, which agency is responsible for what arrangements, and how 
costs will be assessed. The section as revised is intended to allow referring 
agencies to continue to use the method they have previously relied upon for 
making the official record, with the exception of hearings longer than one day. 
For those hearings, the section specifies that the referring agency must arrange 
for a stenographic record, for the reasons discussed infra. For agencies that 
set numerous cases on a docket call lasting more than one day, this requirement 
would not apply unless the hearing in any one docket is set to last longer than 
one day. 
One commenter recommended deleting the provision in sec.155.43(a) that would 
allow the ALJ to waive making a record at a prehearing conference because a 
record would prevent disputes about what occurred during the conference. Another 
commenter suggested adding a provision stating a transcript is not required for 
prehearing conferences. 
SOAH disagrees with the suggestion that a record must be made for all prehearing 
conferences. The section as written allows an ALJ to discuss simple issues with 
the parties, such as a joint request for continuance, in an expedited manner. 
Because the ALJ's order will reflect any action taken, a recording or other 
record is unnecessary. The section as proposed is sufficiently clear that a 
transcript of a prehearing conference is not required. 
One commenter requested the section be amended to require SOAH to record 
hearings on audio cassette tape and to provide suitable equipment for that 
purpose. 
SOAH agrees it would be more cost-effective and practical for ALJs, rather than 
the referring agency, to record hearings, when that means is selected or 
required by rule, because most SOAH hearings are held in the same facility. The 
section has been rewritten to provide for this. However, the section does not 
provide for all hearings to be tape recorded because many agencies prefer to 
have a stenographic or videotaped record. The section is drafted to allow such 
choices by the different referring agencies. One commenter found the proposed 
section inconsistent because it allows the referring agency to choose the means 
of making a record but implies a party can change the referring agency's 
decision by requesting a court reporter and contracting directly with the 
reporter. Other commenters suggested the section be rewritten to require a party 
requesting a court reporter or transcript to make arrangements for that reporter 
and to pay associated costs. 
The section has been rewritten to allow any party, including the referring 
agency, to chose a means of recording the hearing in addition to the method 
provided for by rule for the official record. SOAH agrees the party using a 
court reporter as an additional means of making an unofficial record should be 
responsible for making appropriate arrangements for one and has rewritten the 
section to place that responsibility upon the requesting party. 
The section also has been rewritten to require the referring agency to arrange 
for a court reporter to make the official record for hearings set to last longer 
than one day, unless it files timely notice that another means is desired. 
Arranging for a court reporter in longer hearings already is the practice of 
most referring agencies. It is SOAH's experience that hearings lasting longer 
than one day proceed more efficiently if a court reporter is present to mark 
exhibits and make the official record instead of the ALJ's having to record a 
lengthy hearing using numerous tapes. Further, the lengthier hearings are ones 
more likely to result in need for a transcript at a later time, whether for use 
by the final decision maker or for appeal. Preparing a transcript from a 
stenographic record instead of a tape recording usually is easier and results in 
a better record. A referring agency that believes a stenographic recording of a 
hearing lasting longer than one day is unnecessary or has some other objection 
may raise it in a timely manner before the hearing so that the ALJ may issue an 
order informing all parties an alternate means will be used and so that the ALJ 
may arrange for recording equipment, if necessary. It is SOAH's intent that this 
requirement not impose a cost burden on a referring agency but instead give all 
parties and the ALJ certainty about what means will be used to make the record 
in the various cases heard by SOAH. It is particularly important for out-of-town 
hearings that the ALJ know in advance what means will be used so that recording 
equipment will be available when needed but will not be transported (usually by 
the ALJ) when it is not needed. One commenter noted the section states that both 
the referring agency and SOAH may assess the cost of the transcript. ERS 
suggested SOAH should not be allowed to impose costs on a state agency and 
suggested an ALJ's imposition of costs would abrogate the constitutional duties 
imposed on the agency by Article 16, sec.67 of the Texas Constitution and 
contravene Texas law on fiduciary obligations. Another commenter suggested all 
parties should be required to share the costs when an ALJ requests a transcript. 
SOAH agrees the referring agency should retain sole authority to assess costs 
and should remain responsible for the costs of a transcript when a party 
requests one, in accordance with APA sec.2001.059. This decision is strengthened 
by APA sec.2001.175, which places responsibility for preparing the record for 
appeal upon the referring agency. The section has been rewritten to clarify that 
only the referring agency may assess costs, as authorized in APA sec.2001.059 
and sec.2.001.177. SOAH agrees it is reasonable for all parties to share costs 
when the ALJ requests a transcript, but absent an interagency contract 
addressing transcript costs SOAH will defer to the referring agency's decision 
regarding assessment of costs, in keeping with other amendments to the section. 
If an interagency contract exists that addresses the payment of costs of a 
transcript requested by an ALJ, the contract provisions will control, absent a 
contravening statutory provision. Regardless, because SOAH is aware of the 
importance of controlling costs of the hearing, whether those costs are passed 
on to a referring agency by interagency contract or absorbed by SOAH itself, an 
ALJ will not routinely request preparation of a transcript when no party does 
so. 
Several commenters requested the section be clarified to indicate whether an 
ALJ, by written order, must rule on a request for a transcript or whether a 
party need only request one. 
APA sec.2001.059 does not appear to allow discretion as to whether a transcript 
will be prepared. Thus, an ALJ order should not be necessary when a party 
requests a transcript; that request can be directed to the referring agency. If 
a dispute arises about a referring agency's responsibility, a party may file a 
motion, directed to the ALJ, or if SOAH's proceedings have been completed, 
directed to the referring agency, requesting relief. 
One commenter suggested SOAH should be responsible for arranging for 
interpreters, except that SOAH could charge those parties in appropriate 
circumstances, and the referring agency would be responsible for interpreters 
required under APA sec.2001.055. Also, the TCB requested adoption of its rules, 
one of which requires the agency to provide reader or other communication 
services for blind and sight impaired persons. 
SOAH agrees that sec.155.43 should address the provision of services for blind 
or sight-impaired persons and has amended the section accordingly. While the 
amended section adds a responsibility not specifically imposed by the APA, it is 
in keeping with the intent of the Americans with Disabilities Act, 42 U.S.C. 
sec.sec.12101, et seq. and parallels the responsibility imposed by the APA 
regarding interpreters for deaf and hearing impaired persons. The amendment will 
have the greatest impact in TCB cases, and by its comments, that agency appears 
committed to making these services available. SOAH also agrees the referring 
agency should be responsible for compliance with APA sec.2001.055, and should 
provide interpreters for the deaf and hearing impaired persons. However, SOAH 
disagrees it (SOAH) should be responsible for providing language interpreters 
for parties. No state or federal authority requiring those services to be 
provided was cited. Thus, the requirement for each party to provide its own 
language interpreter remains, and the referring agency's ability to assess costs 
remains.
Another commenter requested the terms "transcript," "official transcript," and 
"reporter's record" be defined. SOAH also notes the section as proposed uses the 
terms "written transcript" and "transcript" interchangeably. To avoid confusion, 
all references to a "written transcript" or "official transcript" have been 
changed to read "transcript." The change is intended to avoid confusion about 
what is meant by the various terms. The proposed section did not use the term 
"reporter's record." 
Also, a provision has been added to sec.155.43 what is adopted as subsections 
(c) and (d)(4) to authorize designation of the official record. When the 
docketed case has not closed before another record is prepared, the ALJ will 
designate the official record. 
COMMENTS RELATING TO sec.155.45. Participation by Telephone: One commenter 
requested sec.155.45 be expanded to allow participation by videoconference as 
well as by telephone. SOAH agrees the section should be so expanded. While SOAH 
is not equipped at this time to hear proceedings using videoconferencing 
equipment, that option would be preferable to telephone conferencing because it 
would allow more effective cross-examination and allow the ALJ to observe a 
witness's demeanor. The proposed section has been amended.
Another commenter suggested the section should more clearly specify the type of 
documentation needed to demonstrate "good cause" for a hearing by telephone 
conference call and suggested the standard be lessened to "cause shown" to avoid 
the necessity of filing an affidavit and to facilitate party participation by 
telephone. SOAH disagrees with the suggestion that the "good cause" standard be 
lessened. The meaning of the standard has been interpreted by courts, and those 
interpretations are accessible to litigants. To use a lesser standard would 
create confusion as to the meaning of the less well-defined term. 
A commenter noted the section uses the phrase, "upon timely motion" but does not 
define what is meant by the term. 
Because sec.155.29 of this title (relating to Pleadings) provides deadlines for 
filing motions and responses to motions, SOAH disagrees with the suggestion that 
the phrase "upon timely motion" should be further defined. A motion filed in 
accordance with that section will be considered timely filed. 
Another commenter objected to the section because it does not provide a method 
for objections to telephone hearings or appearances. Four commenters suggested a 
telephone hearing should not be allowed if any party objects because any hearing 
conducted by telephone would deprive a party of effective cross-examination. The 
ALJ cannot observe a witness's demeanor, ensure the separation of witnesses, or 
control coaching of witnesses by others during a telephone hearing. Commenters 
were particularly concerned about a party whose character and fitness are at 
issue being allowed to testify by telephone. 
Objections to telephone hearings or appearances may be made by motion as 
provided in sec.155.29 of this title (relating to Pleadings). SOAH agrees the 
section should be modified to address some of the other concerns. A provision 
has been added to require the requesting party to demonstrate how appropriate 
safeguards will be met when parties disagree about a telephone appearance. SOAH, 
however, disagrees with commenters who suggested the section be amended to 
preclude participation by telephone unless all parties agree. This method of 
conducting hearings has proven extremely cost-effective and useful in a state as 
large as Texas. In most telephone hearings conducted by SOAH to date, the 
parties have agreed to allow a witness to testify, or a party to participate, by 
telephone. However, parties have on occasion refused to allow a person to 
testify or to participate by telephone when the only apparent reason for 
refusing such participation has been tactical. Of course, observing a witness's 
demeanor is important, but it is not as essential in certain types of cases as 
others. For example, when a person attempts to recover benefits for surgery 
provided, the insurer's expert medical witness may give a deposition in Houston. 
The claimant must either take the deposition of his physician, who, for the sake 
of illustration, may work in El Paso, or subpoena his physician to travel to 
Austin. In many cases the physician's travel costs and hourly rate would exceed 
the amount of the claim. Allowing the claimant's physician to testify by 
telephone from El Paso poses minimal potential for harm, assuming the party can 
assure the ALJ that the witness will be alone when testifying and will not be 
coached. The demeanor of the witness testifying by telephone will be more 
apparent to an ALJ through changes in voice tone and emotional reactions than if 
the witness testifies by deposition. The physician's expertise, as demonstrated 
through medical credentials, coupled with the telephone testimony, can 
adequately apprise the ALJ of the witness's credibility. 
According to one commenter, the word "entire" in the last sentence of 
sec.155.45(a) appears to require a witness to remain on the line until the 
hearing closes. SOAH agrees and strikes the word "entire" from the sentence. A 
witness need not remain on the line for an entire proceeding in order to 
participate in the hearing. 
A commenter suggested the requirement for prefiling exhibits be clarified to 
state the documentary evidence to be offered at a telephone hearing shall be 
served on the parties and filed three days prior to the hearing unless another 
deadline applies. Other commenters suggested exchanging documents at least five 
business days before the telephone hearing would be more adequate and suggested 
the section should allow for exceptions to the requirement, particularly for 
agencies that rely on financial reports created on certain days of the week. 
SOAH disagrees that exhibits should be prefiled more than three days in advance 
of the hearing. Parties may use discovery to obtain documents earlier, if there 
is a need for them. When an exhibit is not obtained through discovery, parties 
generally do not have access to exhibits in advance of a hearing. Thus, the 
three day requirement provides sufficient opportunity to review documents that 
will be offered at hearing. However, SOAH agrees the section should be amended 
to provide a more flexible prefiling requirement and amends the section to allow 
the filing deadline to be changed by written order.
A commenter also noted the word "prehearing" on the last line appeared to be 
missing between the words "or" and "conference." The word "prehearing" has been 
inserted as suggested. 
COMMENTS RELATING TO sec.155.47. Public Attendance and Comment at Hearing: With 
respect to sec.155.47, a commenter asked that SOAH continue its practice of 
allowing members of the public to attend non-confidential hearings. SOAH will 
continue its practice of attempting to provide hearing facilities to accommodate 
all members of the public who wish to attend hearings. The provision allowing an 
ALJ to restrict attendance because of physical limitations of the facility is 
not new to SOAH rules. 
One commenter suggested sec.155.47 should be deleted to prevent undue surprise 
or prejudice to a party. According to the commenter, persons wanting to testify 
should be named as a witness, intervene as a party, or provide comment 
concerning particular issues through rule-making. Another commenter suggested 
the section would unnecessarily delay, complicate and lengthen the hearing 
process. Another commenter suggested the proposed section had no statutory 
support. 
SOAH agrees public comment should be allowed only when specifically authorized 
by law. Therefore, the provision in sec.155.47(c) allowing the ALJ to receive 
public comment in the absence of a statutory requirement has been deleted.
COMMENTS RELATING TO sec.155.51. Evidence: Generally, sec.155.51 is written to 
carry out the legislature's goal that SOAH adopt procedural rules applicable to 
all hearings conducted by the Office. As delineated in the next few paragraphs, 
the Texas Rules of Civil Evidence (TRCE), as described in the APA, apply to 
hearings at SOAH. 
One commenter asked that sec.155.51(a) specify hearings will be governed by the 
rules of evidence as applied in non-jury civil trials. By referencing the APA, 
SOAH believes it accomplished that goal; however, to make the standard more 
accessible to readers, SOAH has revised sec.155.51(a), describing the standard 
in more detail. 
A number of commenters objected to sec.155.51(b) on the exclusion of witnesses 
for failing to track the language in TRCP 267 and TRCE 614, for being overly 
broad, and for failing to specifically exempt from exclusion expert witnesses, 
spouses of parties, and an agency's lead investigator. While SOAH's intention 
was to tailor the section to administrative proceedings, consideration of the 
comments has caused it to revise the section to more closely track the rules 
referenced supra; the revisions accomplish the commenters' goals. 
One commenter suggested that an exception be added to the table of contents or 
index requirement in sec.155.51(d), so there will not be objections over a 
party's indexing of documents received from another party. SOAH rejects this 
concept; the primary purpose of indexing voluminous documents is to provide the 
ALJ with a guide to their contents, and whether one party approves of the index 
written by another party is irrelevant to that purpose. 
One commenter, which traditionally files voluminous business records accompanied 
by an affidavit prior to the hearing pursuant to TRCE 902(10) and serves copies 
of same on the other parties to the case, asked whether the new section will 
require it to offer duplicates of these exhibits to the ALJ and parties at the 
time of hearing. SOAH finds that so long as a party attaches an explanation when 
filing the business records and affidavit that it wishes to have those records 
brought to hearing, the current practice will conform to the section, and the 
commenter will not be required to offer duplicates at the hearing, which would 
merely burden the record. 
TWCC asked SOAH to adopt by reference, or incorporate in a new sec.155.51(e), 
three of its rules that supplement or modify the TRCE and were promulgated by 
TWCC to accomplish goals unique to its internal procedures. SOAH notes the 
comments concern medical disputes referred pursuant to TEX. LABOR CODE ANN. 
sec.413.031. That statute provides medical disputes must first be submitted for 
review by the TWCC Division of Medical Review (Division). The Division's 
decision may be appealed; appeals are referred for hearing by SOAH "in the 
manner provided for a contested case under the APA, Chapter 2001." As described 
more fully infra, SOAH declines to adopt these rules. 
TWCC's first concern relates to 28 Texas Administrative Code, sec.148.21(j), 
which requires its representative to file at SOAH and with all other parties the 
certified record containing all of the documents (usually voluminous medical 
records of 150-500 pages) reviewed by the Division no later than fifteen days 
before the SOAH hearing. It further provides that the certified record shall be 
admitted into evidence, unless a party files a written objection to it no later 
than five days prior to the hearing. TWCC also expressed concern that 
sec.155.51(d)(1) (prohibiting the filing of unduly large exhibits) might 
preclude filing of its certified record altogether, and that sec.155.51(d)(2) 
(requiring indexing of exhibits in excess of 50 pages) would be difficult 
because the records are often from other parties and are not readily susceptible 
to identification in an index. SOAH declines to adopt TWCC's rule by reference 
or exempt TWCC from compliance with sec.155.51(d)(1) and (2) for the following 
reasons: First, because the subject of the hearings referred to SOAH by TWCC 
under TEX. LABOR CODE ANN. sec.413.031(d) is the propriety of the action taken 
by TWCC's Medical Review Division, the certified record from that Division, 
while often voluminous, is relevant and would not be excluded under 
sec.155.51(d)(1), which mainly references non-documentary exhibits. Second, the 
primary purpose of indexing voluminous documents is to provide the ALJ with a 
guide to their contents, and TWCC, whose medical review officer will necessarily 
have reviewed and organized such documents prior to writing the decision that 
forms the basis for referring the case to SOAH, will be in a better position to 
index the documents economically than an ALJ who is new to the controversy. 
Third, TWCC may follow the practice of the previous commenter, which files its 
business records accompanied by an affidavit prior to the hearing and serves 
copies of same on the other parties to the case pursuant to TRCE sec.802(6) and 
sec.902(10). Finally, as mandated by the APA, ALJs must consider objections to 
the evidence by reference to the TRCE. To adopt a rule mandating the admission 
of a certain type of evidence is inconsistent with the rules of evidence. If a 
party wishes to have a deadline established for objections to pre-filed 
evidence, it may by motion so request. TWCC's second concern relates to its rule 
28 Texas Administrative Code, sec.148.18(a), which allows the admission of 
evidence not presented for the Division review at the SOAH hearing only if a 
"good cause" showing is made by the proponent. In essence, TWCC argues this 
standard is necessary so that parties will take the Division's review process 
seriously and present all relevant information at that level. TWCC believes this 
standard is responsible for the fact that only fifteen percent of the Division's 
decisions are appealed to SOAH. SOAH declines to adopt TWCC's rule, noting this 
standard does not appear in the agency's organic statute, TEX. LABOR CODE ANN. 
sec.413.031, or the APA. Under both statutes, the hearing before SOAH is a de 
novo proceeding; the Division does not conduct a formal hearing, take witness 
testimony, or rule on objections to exhibits. Thus, it is appropriate to allow a 
party to have an opportunity to offer evidence in a formal contested case 
process that allows for discovery, witness testimony, and cross-examination. 
SOAH believes parties, which are required to present their requests for review 
to the Division before obtaining a hearing at SOAH, will continue to present 
pertinent information at that stage; trying a contested case under the APA would 
be a waste of time and resources if the dispute could be resolved at the more 
informal agency level. While it is conceivable that a party may withhold 
information at the first level of review, it is not clear what would be gained 
by doing so. Additionally, the burden of proof in a hearing before SOAH 
generally rests with the party against whom the Division issued its decision. 
(See, 28 TEX. ADMIN. CODE sec.148.21(h)). This burden should encourage parties 
to file complete documentation with the Division. While SOAH understands TWCC's 
desire to find some means of encouraging parties to present all relevant 
information to the Division, restriction of the nature of the contested case 
appeal that is provided for by the Labor Code and the APA is not appropriate. 
SOAH believes other factors, such as the informality of the Division process, 
the delay in a final decision created if a party appeals a decision, and the 
expense of a formal contested case hearing, all encourage a party to use the 
Division process and contribute to the low appeal rate. SOAH hears numerous 
cases in which referring agencies have offered some less formal process before a 
SOAH contested case hearing is available, and SOAH's experience is that parties 
rarely withhold information at the informal, referring agency stage when that 
information could be helpful to their cases. This is so even though no other 
referring agency has a rule similar to TWCC's restricting the presentation of 
evidence in the contested case to what was considered at the informal, referring 
agency stage. 
TWCC's third concern, which relates to subsection (b) of its rule that appears 
in 28 TEX. ADMIN. CODE sec.148.18, is a need to limit the parties' right to call 
the medical dispute officer who rendered the Division's decision, by requiring 
the requester to obtain a subpoena based on a showing of good cause why the 
officer should appear. SOAH finds this matter does not need addressing in its 
procedural rules. It notes all of its hearings are governed by the general 
relevancy standards in TRCE sec.401 and sec.402; because the officer's testimony 
could not possibly make the existence of any fact of consequence to a 
determination in a medical dispute more probable or less probable, such 
testimony likely would be inadmissible.
TWCC'S fourth concern relates to its non-evidentiary rule that appears in 28 
TEX. ADMIN. CODE sec.148.8(b), which establishes a procedure mandating the grant 
of TWCC's request to withdraw a case from the SOAH docket without prejudice, 
when the Division withdraws or amends its decision within a certain time period. 
SOAH finds this rule unnecessary; an ALJ will generally grant a motion to 
withdraw a case if, when acting within its statutory powers, the referring 
agency has determined that the matter is not a contested case ripe for review. 
COMMENTS RELATING TO sec.155.53. Consideration of Policy Not Incorporated in 
Referring Agency's Rules: In general, SOAH notes the reason for sec.155.53 is to 
articulate the standards it will apply pursuant to APA sec.2001.058(b). That 
statute, which has been in existence since SOAH began to hear contested cases 
more than five years ago, provides that the SOAH ALJ shall consider applicable 
agency rules or policies, but the referring agency may not supervise the ALJ. 
Over time, SOAH ALJs and the parties who appear before them have encountered 
difficulties when asked to apply agency policies to contested cases in all of 
the areas enumerated in sec.155.53(b). Therefore, the section has been written 
not to limit the types of information that may be considered, but to guide the 
ALJs and the parties in dealing with this difficult issue. 
One commenter thought sec.155.53 will be extremely helpful, providing a "much 
needed road map for the parties," because the above-referenced statute does not 
provide guidance. The commenter suggested SOAH elaborate on the types of 
policies an ALJ will consider, to include policies listed in a notice of hearing 
or similar pleading; knowledge an ALJ may have of a previous agency order 
addressing the issue, even if the order is not presented in that contested case 
proceeding; and master filings by an agency of a set of policies that would 
apply in particular types of cases, to which agency staff could refer in the 
notice of hearing or requests for official notice, thus making inclusion of such 
policies in the record easier for agency staff. SOAH believes that the 
definition of agency policies should remain open-ended, as it is in the statute, 
enabling parties to prove applicable policies on a case-by-case basis, including 
the types of policies enumerated by the commenter. SOAH currently classifies the 
information provided by referring agencies by docket numbers assigned to each 
separate contested case. It believes establishing a formal procedure for the 
filing of master policies for the approximately 60 agencies appearing before 
SOAH (some of which present a number of types of cases, each of which might 
necessitate master filings) would be very cumbersome and would quickly devolve 
into a mass of unclassified documents not readily applicable to any particular 
case. Therefore, SOAH chooses not to create such a formal procedure at this 
time. 
One commenter opposed the section because it does not address how the referring 
agency is to authenticate policy. The commenter also argued against the section 
because the contested case under consideration could itself be a situation where 
agency policy is developed. SOAH disagrees with these comments. First, agencies 
should have the opportunity to authenticate policy in any way that will satisfy 
the general authentication requirement in TRCE sec.901(a). Second, the section 
addresses existing policies, as does APA sec.2001.058. Neither the APA nor the 
section contemplates prohibiting the development of policies for emergent issues 
in contested cases. 
One commenter opposed the section because, in its opinion, the staff of an 
agency can only operate by rules, which are its "policy." Another commenter 
questioned whether an agency can have a policy not expressed in a rule and 
expressed concern about SOAH's consideration of a policy not reflected in a 
rule. The commenter proposed deletion of the section. SOAH understands the 
commenter's position but has the above-referenced statutory mandate to consider 
agency policies in addition to agency rules. The APA uses both terms, suggesting 
that a policy may exist other than in rule form. 
Several commenters argued that sec.155.53 should be stricken entirely and 
another contended all but sec.155.53(a) should be stricken because the section 
alters substantive law by giving the ALJ discretion as to whether or not an 
agency's policy should be applied. SOAH disagrees, because the ALJ's statutory 
mandate is to "consider" agency policies. Thus, the ALJ has discretion when 
considering agency policies, and the purpose of the section is twofold: to set 
guiding principles for the ALJ to use in deciding what weight to give a policy, 
and to inform the parties about the standards the ALJ will apply. Another 
commenter (TDI), while generally approving the criteria listed in sec.155.53(b), 
contended an ALJ should not be able to consider the legal matters listed in 
sec.155.53(b)(6), unless they relate directly to the action before the ALJ. SOAH 
intends that those matters, as well as the agency policy, will be considered on 
a case by case basis. 
One commenter requested that the section be modified to state that the ALJ's 
decision on whether to apply an agency's policy will depend on its admissibility 
under the TRCE, arguing the agency should not be required to prove all of the 
factors listed in sec.155.53(b) unless a party objects to the applicability of 
the policy. In a similar vein, another commenter argued it is unclear whether an 
agency would be required to meet all "six prongs" of the listed factors before 
its policy would be accepted by an ALJ, including whether policies that are not 
rules would be considered. SOAH believes the section already addresses these 
concerns. The listed factors are not exclusive, and they are not set out as 
necessary elements of proof. Section 155.53(b) requires the policy to be 
supported by the evidence, and sec.155.53(b)(1) lists as two of the factors to 
be considered "whether and for what reasons" any party has opposed application 
of the policy in the case. As to the concern expressed about published policies 
that are not rules, SOAH looks to the APA, including sec.2001.004 and 
sec.2001.005, in carrying out its statutory mandate to consider agency policy. 
One commenter took a contrary position, arguing SOAH's requirement that the 
policy be supported by the evidence is inappropriate and should be replaced by 
language requiring the agency to submit a written statement of applicable policy 
within a specific period of time prior to the hearing on the merits. SOAH 
rejects this suggestion because the APA sec.2001.058(b) requirement is not 
limited to considerations of time; the suggested factors listed under 
sec.155.53(b) are not exclusive because the statute is broad, but 
sec.155.53(b)(3) contemplates that an agency's proof could include the duration 
of the policy.
COMMENTS RELATING TO sec.155.55. Failure to Attend Hearing and Default: One 
commenter termed the sec.155.55 "much needed" because of the volume of cases the 
agency litigates and the number of respondents who do not appear for hearings. 
Another commenter, however, suggested the proposed section was unnecessary 
because the APA authorizes state agencies to dispose of cases informally. The 
commenter suggested the entire section be deleted and the following statement be 
substituted, "An agency may dispose of a matter by internal procedure." 
SOAH disagrees with the second comment. Even though an agency may establish a 
procedure for disposing of cases before they are referred to SOAH, the section 
is intended to apply to cases that are referred to SOAH and docketed as 
contested cases. The APA authorizes informal disposition but does not outline a 
default case procedure, as the section does. Moreover, in many cases, whether or 
not a party has defaulted cannot be determined until commencement of a hearing. 
For example, a respondent or applicant may have requested the hearing and may 
have even entered an appearance. In such circumstances, other parties are 
sometimes uncertain whether a default decision may be entered against the 
respondent or applicant who then fails to appear. The section is intended to 
guide parties in those cases.
One agency asked for clarification whether the section would allow proceedings 
at SOAH to be abated when a respondent fails to appear. Abating a hearing while 
an agency default order is obtained avoids the necessity of a proposal for 
decision. 
SOAH agrees the section should be amended to allow proceedings to be abated or 
continued upon a party's request so that a referring agency may obtain an agency 
order without the necessity of a proposal for decision. A provision is added to 
subsection (f) of this section to allow this procedure. However, an abatement or 
continuance must be by ALJ order. An order will complete the record for parties 
who may not have attended the hearing and will allow members of the public or a 
respondent to telephone SOAH and learn the status of the pending case. The 
provision also permits an ALJ to decline a request to abate when abatement would 
unnecessarily delay a case's resolution or prejudice a party's rights. 
Subsection (d) of this section outlines requirements for default when there has 
been no evidence showing a respondent actually received notice of the hearing. A 
commenter suggested that providing notice as required by statute or the 
referring agency's rules should be sufficient. Another commenter requested 
amendment of the proposed section to allow default decisions against non-
licensees who are not required to keep the agency informed of their addresses 
and suggested that sec.155.55(d)(2) be removed in its entirety or that agencies 
who bring cases against non-licensees be exempt from this requirement. 
SOAH agrees the section should be amended to allow referring agencies to obtain 
a default decision against a party who is not required by law to keep the agency 
informed of its most current address. Many agencies are authorized to bring 
actions against non-licensees and deleting sec.155.55(d)(2) will allow those 
agencies to obtain default decisions. 
Another commenter suggested sec.155.55(d)(4) requires an agency to adopt a 
default judgment rule. The commenter suggested the subsection be deleted in its 
entirety. The absence of sec.155.55(d)(4) would not prohibit a party from 
seeking relief prior to entry of an agency's final order, including a remand to 
SOAH for a hearing. Another commenter suggested the standard articulated for 
vacating an agency's default judgement appears to allow the decision to be 
vacated based on a mistake or accident for failure to respond. The commenter 
suggested a better standard would be to require "just cause" for the failure to 
appear. Another commenter inquired whether an ALJ or the referring agency would 
determine when the failure to appear was due to accident or mistake. SOAH agrees 
sec.155.55(d)(4) should be deleted. Based on the authority of agencies to 
dispose of cases informally by default found in APA sec.2001.056, SOAH also 
agrees a referring agency should be not required to have a specific authorizing 
statute in order to obtain a default decision.
Because of due process concerns, whether notice was properly served becomes the 
primary inquiry when a party fails to appear. Administrative hearings sometimes 
commence upon notice of only ten days. When no evidence proves a respondent's or 
applicant's notice of receipt, it is important to determine whether due process 
safeguards have been provided. However, in deleting sec.155.55(d)(4), SOAH finds 
other provisions of law will adequately protect parties. For example, a party 
may file a motion for rehearing not later than the twentieth day after the date 
on which the party or the party's attorney of record is notified of a decision 
or order. APA sec.2001.146. Courts have construed this provision to mean the 
time for filing the motion does not begin to run until the party actually 
receives the order. 
COMMENTS RELATING TO sec.155.57. Summary Disposition: One commenter suggested an 
ALJ has no authority to issue a summary judgment order, asserting a question of 
jurisdiction should be referred by certified question to the referring agency. 
For other errors or failure, the ALJ may order a party to correct. Other 
commenters suggested the only method by which an ALJ may attempt summary 
disposition of a case is in the form of a proposal for decision. 
SOAH disagrees with comments concerning lack of jurisdiction to enter a final 
summary disposition order. For certain referring agencies, SOAH is authorized by 
law to make final decisions. (See, e.g., TEX. LABOR CODE sec.415.034). Also, 
agencies may, by rule, authorize SOAH to issue a final order, rather than a 
proposal for decision. APA sec.2001.058(f). 
Another commenter suggested the proposed section be amended to provide an ALJ 
cannot summarily dispose of a case unless all parties have been notified of the 
intent to resolve a case by summary disposition and allowed reasonable time 
periods for any other party to object to such disposition. 
SOAH agrees that in most cases an ALJ either should act in response to a motion 
or should notify the parties and provide an opportunity to respond when summary 
disposition is contemplated. The notice may prompt referring agencies to amend 
pleadings or issue appropriate notices in order to avoid a summary decision. 
Section 155.57(a) is amended to provide for notice. 
Another commenter suggested the section will create unnecessary interlocutory 
appeals. However, if the section were adopted, the commenter suggested TRCP 166a 
be followed. 
While the section could result in some remands of cases in which the final 
decision maker does not agree with the recommendation to dismiss, in most cases 
the procedure will allow parties to avoid unnecessary hearings. For example, an 
ALJ should not proceed to hear a case when SOAH has no jurisdiction. Summary 
disposition is also appropriate when the requested relief cannot be granted, 
such as when a party requests a state official's proposed action be enjoined. 
SOAH disagrees the procedure outlined in TRCP 166a should replace the proposed 
section. Rule 166a's requirements are more stringent and do not allow the 
flexibility more appropriate in administrative hearings. For example, a motion 
for summary judgement under TRCP 166a must be filed and served at least 21 days 
before the hearing date. Also, a summary judgement pursuant to TCRP 166a is 
based on facts stated by affidavit. SOAH's proposed section permits an ALJ, 
after notifying the parties, to dismiss, or recommend dismissal of, a case for 
lack of jurisdiction or lack of prosecution or to consolidate the case with 
other proceedings. No party motion is necessary. In SOAH's opinion, the proposed 
section's adaptability to various situations is desirable for administrative 
settings. 
ERS asserted it is unclear whether the proposed section allows that agency to 
refer to its rule 34 Texas Administrative Code, sec.67.43(a)(1) in seeking a 
dismissal for failure to prosecute a claim. 
SOAH's proposal of sec.155.57 is a functional substitute for 34 Texas 
Administrative Code, sec.67.43. 
Another commenter suggested the section is unclear because it does not state 
whether a party must file a motion requesting summary disposition, when such a 
motion must be filed, and whether the opposing party may file a response. The 
section does not limit a party to filing a motion at a particular time. While in 
most cases, summary disposition will be initiated by a party's motion, an ALJ 
may also order summary disposition upon considering some fact which the parties 
may not have regarded as dispositive. In such cases, the ALJ will notify the 
parties of the intent to dismiss a case and allow responses. As previously 
stated, motions and responses are governed by sec.155.29 of this title (relating 
to Pleadings), and TRCP 166a does not apply to cases before SOAH. 
A commenter questioned the applicability of a summary judgment procedure under 
current APA provisions which provide a right to an evidentiary hearing. Citing 
Ramirez v. Texas State Board of Medical Examiners , 927 S.W.2d 770 (Tex. App.--
Austin 1996, no writ), the commenter suggested the provision also may prevent 
adequate judicial review under the substantial evidence test.
While a party to a contested case does have a right to an adjudicative hearing, 
APA sec.2001.003(1), Ramirez court advised agencies to look to substantive law 
to determine whether a proceeding is to be considered a contested case. The 
listed factors justifying summary disposition permit disposition of a case when 
no substantive statute authorizes a hearing. If there is no substantive 
authorization or due process requirement for a hearing, the case should be 
dismissed for lack of jurisdiction. If an agency initiates a license revocation 
proceeding but does not set a hearing upon ALJ order to do so, the case should 
be dismissed for lack of prosecution. These examples could be supplemented with 
others but suffice to demonstrate that an evidentiary hearing is not always 
required for every administrative action. 
One commenter proposed the section be amended to include nonsuit. SOAH agrees 
the section should be amended. However, dismissal of part of a case based on a 
party's nonsuit will not affect any other party's claims. The section has been 
amended to allow dismissal of a case by ALJ order based on a party's withdrawal 
of its entire claim. Severance before dismissal may be ordered if other claims 
remain pending. 
A commenter sought clarification as to whether the section would apply to 
voluntary surrenders with prejudice. The section does not restrict the ways in 
which parties may informally resolve cases. ALJs routinely grant motions to 
dismiss in which parties jointly represent that matters between them have been 
resolved and request that the case be dismissed with prejudice. 
One commenter asked that a case not be dismissed for lack of prosecution for one 
year. SOAH disagrees with the recommended change because the section permits 
dismissal of a case pursuant to a statute, rule or ALJ order. When a statute 
requires a hearing to be concluded within a stated time period, allowing the 
case to remain on the docket beyond the statutory deadline would serve no useful 
purpose. To further illustrate, if a case has already been docketed for several 
months, and upon a licensee's request, the ALJ sets a hearing date, an opposing 
party's failure to appear for the hearing should not entitle that party to have 
another chance to prosecute the case at a date of its choice. 
A commenter suggested the term "duplication of proceedings" in sec.155.57(b)(6) 
was unclear and asked whether it referred to a matter previously brought before 
SOAH and properly disposed of or whether it referred to some other proceeding. 
It has been SOAH's experience that agencies sometimes docket cases with similar 
issues, not realizing a related case has been docketed. A typical example would 
be one in which a request for preauthorization of medical care was filed, denied 
by the Texas Workers' Compensation Commission's Medical Review Division, and 
appealed to SOAH. Before the appeal could be heard, another request for the same 
care was filed, denied and appealed. For judicial economy, the two cases should 
be consolidated and one docket should be dismissed. Another example would be 
when more than one party to a case appeals an agency action to SOAH, but the 
appeals are docketed separately. If all issues are the same, the cases should be 
heard together. 
COMMENTS RELATING TO sec.155.59. Proposal for Decision: A commenter suggested 
the section should provide filing deadlines for exceptions and replies. Another 
commenter asserted it is unclear what deadlines will apply for filing exceptions 
and replies. 
SOAH prefers to allow referring agencies to set filing deadlines for exceptions 
and replies. Certain types of cases may require longer filing deadlines and 
others may require shorter deadlines, depending on board schedules and other 
factors. The referring agencies are best equipped to know whether a case should 
be resolved more quickly or whether more time is required to evaluate complex 
issues. Further, the APA provides in sec.2001.062 that a party must be given an 
opportunity to file exceptions and present briefs to the officials who are to 
render the decision. Thus, it is more appropriate for those officials to 
determine the amount of time they wish to allot for filing exceptions and 
replies. 
Another commenter suggested the section be clarified to state whether or not an 
ALJ must rule on exceptions and replies. Also, the commenter stated it is 
unclear whether an ALJ is required to respond to exceptions and replies, because 
the section states an ALJ "may" amend the proposal for decision based on 
exceptions and replies. 
ALJs do not rule on exceptions and replies. The APA provides those documents are 
to be directed to the officials who are to render the final decision. In a SOAH 
case in which the ALJ is not the final decision maker, exceptions and replies 
are the primary methods a party has to communicate directly with the decision 
maker. Similarly, when an ALJ reviews exceptions and has no proposal for 
decision amendments to forward to the referring agency's decision maker, it is 
unnecessary for the ALJ to respond. At times, however, exceptions and replies 
highlight areas requiring amendment. The ALJ should be given discretion to amend 
the proposal for decision when the ALJ deems it is appropriate to do so. If the 
ALJ believes comments other than an amendment are necessary, the ALJ customarily 
will issue a letter to the decision maker, which is copied to all parties. 
One commenter requested amending the section to require the ALJ to prepare a 
proposed order for the final decision maker if the referring agency requires. 
SOAH believes the types of services it provides to agencies should be addressed 
by contract rather than by a section in its rules. A contract will allow for 
greater specificity and clarity about the manner in which services are provided 
and the appropriate charge for those services. For agencies that do not have 
contracts, a standing administrative agreement commonly is used to determine 
whether a proposed order will be submitted with the proposal for decision.
Commenters suggested the section could pose a notice problem if the ALJ is 
allowed to amend the proposal for decision without serving the parties. 
Subsection (c) to which the commenters refer essentially tracks APA 
sec.2001.062(d) SOAH does not forward an amended proposal for decision to the 
referring agency without serving it on the parties. However, SOAH interprets the 
APA section to mean parties are not guaranteed an opportunity to file a second 
round of exceptions and replies after the proposal is amended. 
The rules are adopted under Texas Government Code Annotated, Chapter 2003, which 
authorizes the State Office of Administrative Hearings to conduct contested case 
hearings; APA sec.2001.004, which requires agencies to adopt rules of practice 
setting forth the nature and requirements of formal and informal procedures; and 
Senate Bill 331, an Act effective January 1, 1998, 75th Legislature, Chapter 
605, sec.3, 1997, Texas General Laws 2128 (to be codified as an amendment to 
Chapter 2003 by adding sec.2003.050), which requires SOAH to promulgate 
procedural rules governing the procedures applicable to matters related to the 
hearing, including discovery, in all cases heard by SOAH. 
The adopted rules and amendment to the existing rule affect Texas Government 
Code, Annotated, Chapters 2001 and 2003, and Governmental Dispute Resolution 
Act, 75th Legislature, Chapter 934, sec.1, 1997, Texas General Laws 2932 (to be 
codified at Texas Government Code Annotated, Chapter 2008). 

sec.155.1.Purpose and Scope.
(a) Unless otherwise provided by statute or by the provisions of this chapter, 
this chapter will govern the processes followed by the State Office of 
Administrative Hearings (SOAH) in handling all adjudicative matters referred to 
the Office, including contested cases under the Administrative Procedure Act 
(APA), Texas Government Code Annotated, Chapter 2001. Administrative License 
Suspension cases initiated by the Department of Public Safety are governed by 
Chapter 159 of this title (relating to Rules of Procedure for Administrative 
License Suspension Hearings), and by sections of this chapter made applicable to 
those cases by Chapter 159. 
(b) Subject to further review and possible modification or deletion of this 
subsection, SOAH adopts by this reference those procedural rules of the Public 
Utility Commission of Texas (PUC) and Texas Natural Resource Conservation 
Commission (TNRCC) in effect January 1, 1998, which address the formal contested 
case process in matters referred by those agencies, and which are not 
inconsistent with applicable law. This adoption does not include any PUC or 
TNRCC rules addressing the use of Alternative Dispute Resolution (ADR) processes 
at SOAH, which processes will be governed by the Governmental Dispute Resolution 
Act (GDRA), 75th Legislature, Chapter 934, sec.1, 1997, Texas General Laws 2932 
(to be codified at Texas Government Code, Chapter 2008); SOAH rule provisions 
pertaining to ADR; and interagency contracts, memoranda of understanding, or 
other written agreements with referring entities. 

sec.155.3.Application and Construction of this Chapter.
(a) Administrative hearings in cases conducted by the Office shall be conducted 
in accordance with the APA, when applicable, and with this chapter; provided 
that: 
(1) the administrative law judge (ALJ) may, by order, modify the requirements of 
this chapter and supplement other procedural requirements of law, to promote the 
fair and efficient handling of the case; and 
(2) the ALJ may modify the procedural requirements of this chapter in 
appropriate cases to facilitate resolution of issues, if doing so does not 
prejudice parties' rights or contravene applicable statutes.
(b) If there is any conflict between an agency's rules or prior decisions and 
statutory provisions applicable to the case, and the rules or decisions cannot 
be harmonized with the statute, the statute controls.
(c) If there is any conflict between these rules and the procedural rules of the 
TNRCC adopted in sec.155.1 of this title (relating to Purpose and Scope), the 
TNRCC's rules will control. 
(d) If there is any conflict between these rules and the procedural rules of the 
PUC adopted in sec.155.1 of this title (relating to Purpose and Scope), the 
PUC's rules will control. 
(e) This chapter shall be construed to ensure the just and expeditious 
determination of every matter referred to SOAH. Not all contested procedural 
issues will be susceptible to resolution by reference to the APA and other 
applicable statutes, this chapter, and case law. When they are not, the 
presiding ALJ will consider applicable policy of the referring agency documented 
in the record in accordance with sec.155.53 of this title (relating to 
Consideration of Policy Not Incorporated in Referring Agency's Rules), the Texas 
Rules of Civil Procedure (TRCP) as interpreted and construed by Texas case law, 
and persuasive authority established in other forums, in order to issue orders 
and rulings that are just in the circumstances of the case.

sec.155.5.Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
Administrative law judge, ALJ, or judge-An individual appointed by the chief 
administrative law judge of the Office under Texas Government Code, Chapter 
2003, sec.2003.041.
ADR or Alternative Dispute Resolution-Processes used at the Office to resolve 
disputes outside formal contested case hearing processes, including mediation, 
mediated settlement conferences, and arbitration.
APA-The Administrative Procedure Act (TEX. GOV'T CODE, Chapter 2001).
Arbitration-A form of ADR, governed by an agreement between the parties or 
special rules or statutes providing for the process, in which a third-party 
neutral issues a decision after a streamlined and simplified hearing. 
Arbitrations can be binding or non-binding, depending on the agreement, 
statutes, or rules. (See, 1 Texas Administrative Code, sec.163 (relating to 
Arbitration Procedures for Certain Enforcement Actions of the Department of 
Human Services) for procedural rules specifically governing the arbitration of 
certain nursing home enforcement cases referred by the Texas Department of Human 
Services).
Authorized representative-An attorney authorized to practice law in the State of 
Texas or, if authorized by applicable law, a person designated by a party to 
represent the party.
Business day-A weekday on which state offices are open.
Chief judge or Chief ALJ-The chief administrative law judge of the Office.
Contested case-A proceeding, including, but not restricted to, ratemaking and 
licensing, in which the legal rights, duties, or privileges of a party are to be 
determined by an agency after an opportunity for adjudicative hearing.
Final decision maker-The person or persons authorized by law or delegation to 
render the final decision in a contested case.
Law-The United States and Texas Constitutions, state and federal statutes, state 
agency rules or federal regulations, and relevant case law.
MSC or Mediated settlement conference-A specialized type of mediation during the 
pendency of a contested case at the Office, but outside the formal adversarial 
process, which allows the parties to explore settlement possibilities in a 
confidential setting, with the assistance of an ALJ with no previous or 
subsequent responsibilities in the contested case acting as third-party neutral.
Mediation-A non-adversarial approach to disputes that seeks a collaboratively 
reached consensual solution to conflicts through the assistance of a third-party 
neutral, who guides participants through a confidential process designed to 
facilitate understanding of parties' real interests and conscious exploration of 
alternative solutions.
Office or SOAH-The State Office of Administrative Hearings.
Party-A person or agency named, or admitted to participate, in a case before the 
Office.
Person-Any individual, representative, corporation, or other entity, including 
any public or non-profit corporation, or any agency or instrumentality of 
federal, state, or local government.
Pleading-A written document submitted by a party, or a person seeking to 
participate in a case as a party, which requests procedural or substantive 
relief, makes claims, alleges facts, makes legal argument, or otherwise 
addresses matters involved in the case.
PUC-The Public Utility Commission of Texas.
Referring Agency-A state board, commission, department, agency or other entity 
that refers a contested case or other dispute to SOAH for process.
TNRCC-The Texas Natural Resource Conservation Commission.

sec.155.13.Venue.
To assure that the hearing facility provides a neutral site, hearings shall be 
conducted at the site designated by the Office in accordance with applicable 
law. Unless required by law or unless agreed to by all parties, hearings will be 
conducted outside of Austin only after the ALJ considers all relevant matters 
raised by the parties, including the following factors: legislative restrictions 
on travel, the amount in controversy, estimated length of the hearing, 
availability of facilities, costs to private parties and referring agencies, and 
location of witnesses.

sec.155.19.Computation of Time.
(a) Unless otherwise required by statute, in computing time periods prescribed 
by this chapter or by ALJ order, the day of the act, event, or default on which 
the designated period of time begins to run is not included. The last day of the 
period is included, unless it is a Saturday, a Sunday, an official State 
holiday, or another day on which the Office is closed, in which case the time 
period will be deemed to end on the next day that the Office is open. When these 
rules specify a deadline or set a number of days for filing documents or taking 
other actions, the computation of time shall be by calendar days rather than 
business days, unless otherwise provided in this chapter or ALJ order. However, 
if the period to act is five days or less, the intervening Saturdays, Sundays, 
and legal holidays are not counted. 
(b) Disputes regarding computation of time for periods not specified by this 
chapter or ALJ order will be resolved by reference to applicable law and upon 
consideration of agency policy documented in accordance with sec.155.51 of this 
title (relating to Consideration of Policy Not Incorporated in Referring 
Agency's Rules). 

sec.155.23.Filing Documents or Serving Documents on the ALJ.
The following requirements govern the filing or service on the ALJ of documents 
in contested cases pending before the Office unless modified by order of the 
ALJ.
(1) Place for Filing Original Materials. 
(A) Contested Cases Generally. The original of all pleadings and other documents 
requesting action or relief in a contested case, except contested cases referred 
to the Office by the PUC and the TNRCC, shall be filed with the Office once it 
acquires jurisdiction under sec.155.7 of this title (relating to Jurisdiction). 
Filings and service to the office shall be directed to: Docketing Division, 
State Office of Administrative Hearings, 300 West 15th Street, Room 504, P.O. 
Box 13025, Austin, Texas 78711-3025. The time and date of filing shall be 
determined by the file stamp affixed by the Office. Unless otherwise ordered by 
the ALJ, only the original and no additional copies of any pleading or document 
shall be filed. Unless otherwise provided by law, after a proposal for decision 
has been issued, originals of documents requesting relief, such as exceptions to 
the proposal for decision or requests to reopen the hearing, shall be filed with 
the referring agency, and a copy shall be filed with the Office. 
(B) Cases Referred by the PUC. 
(i) Except for exhibits offered at a prehearing conference or hearing, the 
original of all pleadings and documents in a contested case referred to the 
Office by the PUC shall be filed with the clerk at the PUC in accordance with 
the rules of the PUC. 
(ii) The time and date of filing these materials shall be determined by the file 
stamp affixed by the clerk. 
(iii) The party filing a document with the clerk at the PUC (except documents 
provided in the discovery process that are not the subject of motions filed in a 
discovery dispute) shall serve a copy of the document on the ALJ by delivery on 
the same day as the filing. 
(iv) The court reporter shall serve the transcript and exhibits in a proceeding 
on the ALJ at the time the transcript is provided to the requesting party. The 
Office shall maintain the transcript and exhibits until they are released to the 
PUC by the ALJ. If no court reporter is requested by a party, the Office shall 
maintain the recording of the hearing and the exhibits until they are released 
to the PUC by the ALJ. 
(C) Cases Referred by the TNRCC. 
(i) Except for exhibits offered at a prehearing conference or hearing, the 
original of all pleadings and documents in a contested case referred to the 
Office by the TNRCC shall be filed with the chief clerk at the TNRCC in 
accordance with the rules of the TNRCC. 
(ii) The time and date of filing these materials shall be determined by the file 
stamp affixed by the chief clerk, or as evidenced by the file stamp affixed to 
the document or envelope by the TNRCC mail room, whichever is earlier. 
(iii) The party filing a document with the chief clerk at the TNRCC (except 
documents provided in the discovery process which are not the subject of motions 
filed in a discovery dispute) shall serve a copy of the document on the ALJ by 
delivery on the same day as the filing. 
(iv) The transcript and exhibits in a proceeding shall be served on the ALJ at 
the time the transcript is provided to the requesting party. The Office shall 
maintain the transcript and exhibits until they are released to the TNRCC by the 
ALJ. If no court reporter is requested by a party, the Office shall maintain the 
recording of the hearing and the exhibits until they are released to the TNRCC 
by the ALJ. 
(2) Confidential Materials. 
(A) Filings Generally. A party filing materials made confidential by law shall 
file them in an enclosed, sealed and labeled container, accompanied by an 
explanatory cover letter. The cover letter shall identify the docket number and 
style of the case and explain the nature of the sealed materials. The container 
shall identify the docket number, style of the case, and name of the submitting 
party, and be marked "CONFIDENTIAL & UNDER SEAL" in bold print at least one inch 
in size. Each page of the confidential material shall be marked "confidential." 
(B) Materials Submitted for In Camera Review. A party submitting materials for 
in camera review by the ALJ shall supply them to the ALJ in an enclosed, sealed 
and labeled container, accompanied by an explanatory cover letter copied to all 
parties. The cover letter, addressed to the ALJ, shall identify the docket 
number, style of the case, explain the nature of the sealed materials, and 
specify the relief sought. The container, addressed to the ALJ, shall identify 
the docket number, style of the case, and name of the submitting party, and be 
marked "IN CAMERA REVIEW" in bold print at least one inch in size. Each page for 
which a privilege is asserted shall be marked "privileged." Said materials will 
not be received for filing by the Office unless the ALJ so orders. Unless 
otherwise ordered by the ALJ, materials reviewed in camera will be returned to 
the party that submitted them. 
(3) Documents Produced in Discovery. 
(A) Documents produced in discovery shall be served upon the requesting parties 
and notice of the service shall be given to all parties, but neither the 
documents produced nor the notice of service shall be filed with the Office or 
served on the ALJ, except by order of the ALJ. The party responsible for service 
of the discovery materials shall retain a true and accurate copy of the original 
documents and become their custodian. 
(B) Motions requesting relief in a discovery dispute shall be accompanied by 
only those portions of discovery materials relevant to the dispute. 
(C) If documents produced in discovery are to be used at hearing or are 
necessary to a prehearing motion that might result in a final order on any 
issue, only the portions to be used shall be filed with the Office or offered 
into evidence. 
(4) Time of Filing. Documents may be filed with or served on the Office until 
5:30 p.m. local time on business days, unless otherwise ordered by the ALJ. 
(5) Facsimile Filings. Documents containing 20 or fewer pages, including 
exhibits, may be filed with the Office, or in PUC or TNRCC cases served on the 
ALJ, by facsimile transmission according to the following requirements. 
(A) The quality of the original hard copy shall be clear and dark enough to 
transmit legibly. 
(B) The first sheet of the transmission shall indicate the number of pages being 
transmitted, and shall contain a telephone number to call if there are problems 
with the transmission. 
(C) Neither the original nor any additional copies of facsimile filings should 
be filed with the Office. 
(D) The sender shall maintain the original of the document with the original 
signature affixed. 
(E) The date and time imprinted by the Office's facsimile machine on the 
transaction report that accompanies the document will determine the date and 
time of filing or of service on the ALJ. Documents received after 5:30 p.m. 
local time shall be deemed filed the first day following that is not a Saturday, 
Sunday or other day on which the Office is closed. 

sec.155.25.Service of Documents on Parties.
(a) Service on all parties. Any person filing a document with the Office in a 
case shall, on the same date as the document is filed, provide a copy to each 
party or the party's authorized representative by hand-delivery; by regular, 
certified or registered mail; by electronic mail, upon agreement of the parties; 
or by facsimile transmission; provided however, when a party files a business 
record affidavit, pursuant to Texas Rules of Civil Evidence (TRCE) 902(10), or a 
transcript, the party may give notice of the filing without the necessity of 
providing a copy to each party. By order, the ALJ may exempt a party from 
serving other documents upon all parties. 
(b) Certificate of service. The person filing the document shall include a 
certificate of service that certifies compliance with this section. If a filing 
does not contain a certificate of service or otherwise show service on all other 
parties, and on the ALJ if applicable, the Office may: 
(1) return the filing; 
(2) send notice of noncompliance to all parties, stating the filing will not be 
considered until all parties have been served; or 
(3) send a copy of the filing to all parties. 
(c) Service of notice of hearing. Unless otherwise required by law, service of 
notice of hearing shall be made by the referring agency in the manner required 
by the APA. 
(d) Presumed time of receipt of served documents. The following rebuttable 
presumptions shall apply regarding a party's receipt of documents served by 
another party: 
(1) If a document was hand-delivered to a party in person or by agent, the ALJ 
shall presume that the document was received on the date of filing at SOAH. 
(2) If a document was served by courier-receipted delivery, the ALJ shall 
presume that the document was received no later than the day after filing at 
SOAH. 
(3) If a document was sent by regular mail, certified mail, or registered mail, 
the ALJ shall presume that it was received no later than five days after 
mailing. 
(4) If a document was served by facsimile transmission or by electronic mail, if 
parties have so agreed, before 5:30 p.m. on a business day, the ALJ shall 
presume that the document was received on that day; otherwise, the ALJ shall 
presume that the document was received on the next business day. 
(e) Electronically transmitted documents. By agreement of the parties, documents 
may be served on parties by electronic mail according to the following 
requirements. 
(1) With the exception of documents produced pursuant to a discovery request, 
the sender shall also file the original of the document with the Office. 
(2) The sender has the burden of proving date and time of receipt of the 
document. 

sec.155.27.Notice of Hearing.
(a) Unless applicable law provides otherwise, an agency referring a contested 
case to the Office shall provide notice to all parties in accordance with APA 
sec.2001.052 and shall include a specific citation to 1 Texas Administrative 
Code, Chapter 155. 
(b) An ALJ may issue orders regarding the date, time, and place for hearings, 
and orders affecting the scope of the proceeding. 

sec.155.29.Pleadings.
(a) Content generally. All requests for relief in a contested case not made on 
the record at a prehearing conference or hearing shall be typewritten or printed 
on paper 8 1/2 inches wide and 11 inches long, and timely filed at the Office. 
Photocopies are acceptable, provided all copies are clear and legible. All 
pleadings shall contain or be accompanied by: 
(1) The name of the party seeking relief; 
(2) The docket number assigned to the case by the Office;
(3) The style of the case; 
(4) A concise statement of facts relied upon by the pleader;
(5) A clear statement of the type of relief, action, or order desired by the 
pleader, and identification of the specific grounds supporting the relief 
requested; 
(6) An indication whether a hearing is needed on the relief sought; 
(7) A certificate of service, as required by sec.155.23 of this title (related 
to Filing Documents or Serving Documents on the ALJ);
(8) Any other matter required by statute or rule; 
(9) A certificate of conference, if required; 
(10) Supporting affidavits or other proof, when the party filing the request has 
asserted "good cause" in the request; and 
(11) The signature of the submitting party or the party's authorized 
representative. 
(b) Purpose and effect of motions. To change a setting or obtain a ruling, 
order, or any other procedural relief from the ALJ, a party is required to file 
a motion. Where the provisions of statute or rule do not automatically establish 
a needed procedure, the party seeking to amend or supplement the procedure 
should file a written motion. The mere filing or pendency of a motion, even if 
uncontested, does not alter or extend any time limit or deadline established by 
statute, rule, or order, or any setting by the Office or the ALJ. 
(c) General requirements for motions. Except for motions seeking to intervene or 
be granted party status, to amend a party's pleadings, or to continue a 
scheduled conference or hearing, all motions shall: 
(1) be filed no later than seven days before the date of the hearing; except, 
for good cause demonstrated in the motion, the ALJ may consider a motion filed 
after that time or presented orally at a hearing; and, 
(2) if seeking an extension of an established deadline,
(A) include a proposed date; and 
(B) indicate that the movant has contacted all parties and state whether there 
is opposition to the proposed date, or describe in detail the movant's attempts 
to contact the other parties. 
(d) Responses to motions generally. Except as provided in this subsection, 
responses to motions described in subsection (c) of this section shall be in 
writing, and filed on the earlier of: 
(1) five days after receipt of the motion; or 
(2) the date and time of the hearing. However, responses to written motions 
late-filed (for good cause shown) on the date of the hearing may be presented 
orally at hearing. 
(e) Motions to intervene. Motions for party status shall be filed no later than 
20 days prior to the date the case is set for hearing. Responses to such motions 
shall be filed no later than 7 days after the motion is served on or otherwise 
received by other parties. 
(f) Motions for continuance. Motions for continuance shall:
(1) make specific reference to all other motions for continuance previously 
filed in the case by the movant, 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 ALJ may consider a motion filed after 
that time or presented orally at the hearing;
(3) indicate that the movant has contacted all parties and state whether there 
is opposition to the motion, or describe in detail the movant's attempts to 
contact the other 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 parties contacted agree 
on the proposed new date(s); and 
(5) be served on the other 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 delivery on 
the same date it is filed with the Office, or by overnight delivery on the next 
day, unless the motion demonstrates or the record shows such service is 
impracticable. 
(g) Responses to written motions for continuance. 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. 
(h) Amendment of pleadings. A party may amend its pleadings by written filing at 
such time as not to operate as a surprise to other parties; provided that any 
pleading which substantially affects the scope of the hearing may not be filed 
later than seven days before the date the hearing actually commences, except by 
agreement of all parties and consent of the ALJ. 

sec.155.31.Discovery.
(a) In contested cases, parties shall have the discovery rights provided in the 
APA, the referring agency's statute, and these rules. For cases not adjudicated 
under the APA, discovery shall be allowed as ordered by the ALJ. 
(b) Parties may obtain discovery regarding any matter not privileged or exempted 
by the TRCP, TRCE, or other rule or law, that is relevant to the subject matter 
of the proceeding. 
(c) Discovery may commence when the Office acquires jurisdiction under sec.155.7 
of this title (relating to Jurisdiction). No discovery may be sought after the 
commencement of the contested case hearing on the merits unless permitted by the 
ALJ upon a showing of good cause. 
(d) Parties may obtain discovery by: oral or written depositions; written 
interrogatories to a party; requests of a party for admission of facts and the 
genuineness or identity of documents or things; requests and motions for 
production, examination, and copying of documents and other tangible materials; 
and requests and motions for entry upon and examination of real property.
(1) Unless the ALJ directs otherwise, each party may serve no more than two sets 
of interrogatories to any other party and the number of questions, including 
subsections, in a set of interrogatories shall be limited so as not to require 
more than thirty answers. 
(2) A party may serve upon any other party a written request for the admission 
of the truth of any matters within the scope of subsection (b) of this section 
that relate to statements or opinions of fact or of the application of law to 
fact, including the genuineness of any documents described in the request. 
Copies of the documents shall be served with the request unless they have been 
or are otherwise furnished or are made available for inspection and copying. 
Service shall be in accordance with sec.155.25 of this title (relating to 
Service of Documents on Parties). 
(A) Each matter of which an admission is requested shall be separately set 
forth. The matter is admitted without necessity of an ALJ order unless the party 
to whom the request is directed timely serves upon the party requesting the 
admission a written answer or objection addressed to the request, signed by the 
party or the party's attorney. If objection is made, the reason for the 
objection shall be stated. The answer shall specifically deny the matter or set 
forth in detail the reasons that the answering party cannot truthfully admit or 
deny the matter. A denial shall fairly meet the substance of the requested 
admission, and when good faith requires that a party qualify its answer and deny 
only a part of the matter of which an admission is requested, the party shall 
specify so much of it as is true and qualify or deny the remainder. An answering 
party may not give lack of information or knowledge as a reason for failure to 
admit or deny unless it states that it has made reasonable inquiry and that the 
information known or easily obtainable by it is insufficient to enable it to 
admit or deny. A party who considers that a matter of which an admission is 
requested presents a genuine issue for hearing may not, on that ground alone, 
object to the request; it may, subject to the provisions of sec.2003.0421 of the 
Texas Government Code, deny the matter or set forth reasons why the party cannot 
admit or deny it. 
(B) Any matter admitted under this section is conclusively established as to the 
party making the admission unless the ALJ on motion permits withdrawal or 
amendment of the admission. Subject to the duty to supplement discovery under 
this section, the ALJ may permit withdrawal or amendment of responses and deemed 
admissions upon a showing of good cause for such withdrawal or amendment or in 
the interest of justice, if the ALJ finds that the parties relying upon the 
responses and deemed admissions would not be unduly prejudiced and that the 
presentation of the merits of the action will be subserved thereby. Any 
admission made by a party under this section is for the purpose of the pending 
action only and neither constitutes an admission by the party for any other 
purpose nor may be used against the party in any other proceeding.
(e) Requests for issuance of subpoenas or commissions shall be directed to the 
referring agency. Any such requests shall comply with the APA and the applicable 
agency procedure, if any, regarding issuance of subpoenas or commissions. 
(f) Written interrogatories, requests for admission, requests and motions for 
production, and requests for entry upon and examination of real property shall 
initially be directed to the party from which discovery is being sought. Copies 
of discovery requests and answers to those requests shall not be filed with the 
Office unless directed by the ALJ or when in support of a motion to compel, 
motion for protective order, or motion to quash. 
(g) The ALJ may establish deadlines as necessary for discovery requests and 
responses. If the ALJ does not establish a deadline, responses to discovery 
requests, except for notices of depositions, shall be made within twenty days 
after receipt. Parties may extend response deadlines in accordance with 
sec.155.39 of this title (relating to Stipulations) or by motion submitted to 
the ALJ if the parties are unable to agree. If such motion is timely filed by a 
party, it may be granted for good cause shown. 
(h) A responding party is under a continuing duty to reasonably supplement its 
discovery responses under the circumstances specified in Rule 166b(6) of the 
Texas Rules of Civil Procedure. 
(i) Objections to discovery requests shall be filed within ten days after 
receipt. 
(j) The objections shall be a separate pleading. The discovery request to which 
an objection is being filed shall be stated and the specific grounds for the 
objection shall be separately stated for each question. If an objection pertains 
to only part of a question, that part shall be clearly identified. All arguments 
upon which the objecting party relies shall be presented in full in the 
objection. 
(k) If an objection is founded upon a claim of privilege or exemption under TRCP 
166b(3), the ALJ may require the objecting party to provide an index that lists, 
for each document claimed privileged or exempt from discovery: the date and 
title of the document; the preparer or custodian of the information; to whom the 
document was sent and from whom it was received; and the claimed privilege(s) or 
exemption(s). A full and complete explanation of the claimed privilege or 
exemption shall be provided. The index and explanations may be public documents 
if so determined by the ALJ after review of the index and accompanying 
explanations. The documents claimed to be privileged or exempted from discovery 
shall be provided to the ALJ in camera by the deadline established by the ALJ.
(l) The party seeking discovery shall file a motion to compel within ten days of 
receipt of the pertinent objection or alleged failure to comply with discovery. 
Absence of a motion to compel filed by the party seeking discovery will be 
construed as an indication that the parties have resolved their discovery 
dispute. All motions to compel shall include a certificate of conference: 
(1) averring the parties conferred, negotiated in good faith, and were unable to 
resolve the dispute prior to submitting the dispute to the ALJ for resolution; 
or 
(2) averring the movant has made reasonable, but unsuccessful, attempts to 
contact opposing counsel and succinctly describing the attempts made. 
(m) The ALJ may issue any order in the interest of justice necessary to protect 
the person or party seeking relief from undue burden, unnecessary expense, 
harassment or annoyance, or invasion of personal, constitutional, or property 
rights. Any person or party from whom discovery is sought may file a motion for 
a protective order, specifying the grounds for the protective order. Motions and 
responses may include affidavits, discovery pleadings, or other pertinent 
documents. The ALJ's authority as to such orders extends to, but is not limited 
by, any of the following: 
(1) ordering that requested discovery not be sought in whole or in part, or that 
the extent or subject matter of discovery be limited, or that it not be 
undertaken at the time or place specified; 
(2) ordering that the discovery be undertaken only by such method or upon such 
terms and conditions or at the time and place directed by the ALJ; or 
(3) ordering that for good cause shown, results of discovery be sealed or 
otherwise adequately protected, that their distribution be limited, or that 
their disclosure be restricted. Any order under this paragraph shall be made in 
accordance with the APA, the referring agency's statute, and other applicable 
rule or law. 
(n) An agreement affecting a deposition upon oral examination is enforceable if 
the agreement is recorded in the deposition transcript. Unless the ALJ orders 
otherwise, the parties may, by written agreement: 
(1) provide that depositions be taken at any time or place, upon any notice, and 
in any manner and when so taken may be used like other depositions; and 
(2) modify the procedures provided by these rules for other methods of 
discovery. 

sec.155.35.Certification of Questions to Referring Agency.
(a) Certified Questions In Cases Referred by the PUC. The ALJ may certify to the 
PUC an issue that involves an ultimate finding of compliance with or 
satisfaction of a statutory standard the determination of which is committed to 
the discretion or judgment of the commission by law. 
(1) Issues Eligible for Certification. The following types of issues are 
appropriate for certification: 
(A) the commission's interpretation of its rules and applicable statutes; 
(B) which rules or statutes are applicable to a proceeding; and 
(C) whether commission policy should be established or clarified as to a 
substantive or procedural issue of significance to the proceeding.
(2) Procedure for Certification. The ALJ shall submit the certified issue to the 
Chief of the Office of Policy Development. The secretary shall place the 
certified issue on the commission's agenda to be considered at the earliest time 
practicable that is not earlier than twenty days after its submission. Parties 
may file briefs on the certified issue within thirteen days of its submission. 
The ALJ may abate the proceeding while a certified issue is pending. 
(3) Commission Action. The commission shall issue a written decision on the 
certified issue within thirty days of its submission. A commission decision on a 
certified issue is not subject to motion for rehearing. 
(b) Certified Questions In Cases Referred by the TNRCC. On a motion by a party 
served on the ALJ or on the ALJ's own motion, the ALJ may certify a question to 
the TNRCC at any time during a proceeding. 
(1) Issues Eligible for Certification. Issues regarding commission policy, 
jurisdiction, or the imposition of any sanction by the ALJ that would 
substantially impair a party's ability to present the case are appropriate for 
certification. Policy questions, for certification purposes, include, but are 
not limited to: 
(A) the commission's interpretation of its rules and applicable statutes; 
(B) which rules or statutes are applicable to a proceeding; and 
(C) whether commission policy should be established or clarified as to a 
substantive or procedural issue of significance to the proceeding.
(2) Procedure for Certification. The certified question shall be filed with the 
chief clerk. Within five days after the certified question is filed, parties to 
the proceeding may file briefs or replies. The chief clerk shall provide copies 
of the certified question and any briefs or replies to the general counsel and 
commissioners. 
(A) Upon the request of the general counsel or one or more commissioners to the 
general counsel, the certified question will be scheduled for consideration 
during a commissioners' meeting. The chief clerk shall give the ALJ notice of 
the request. The ALJ may, in his or her discretion, abate the hearing until the 
commission answers the certified question, or continue with the hearing if the 
ALJ determines that no party will be substantially harmed by proceeding while 
awaiting a response. 
(B) If no request to set the question for consideration is received from the 
general counsel by the chief clerk within 15 days after filing, the commission's 
decision is that it does not wish to consider the question. 

sec.155.37.Settlement Conferences.
(a) On party request or in the ALJ's discretion, the ALJ may order that a 
mediated settlement conference ("MSC") be held. 
(1) Parties may object to the proposed ADR process by written response in the 
same manner as to other motions, (See, sec.155.29 of this title, (relating to 
Pleadings) specifically subsection (d) of that section (relating to Responses to 
motions generally). A party may also request review of the case by the Office's 
Alternative Dispute Resolution ("ADR") Coordinator or the Coordinator's designee 
(including ex parte consultation with each party in confidence). The Coordinator 
or designee will make a written recommendation to the ALJ, which shall also be 
served on all parties, about whether the case is appropriate for ADR.
(2) If the request is granted and the parties do not request that a non-SOAH ALJ 
be appointed as mediator, the ALJ will refer the case to the Office's ADR 
Coordinator.
(A) The Office, through the ADR Coordinator, will assign a qualified ALJ to 
serve as mediator. If either party objects promptly and with good cause to the 
mediator appointed, the Office will appoint another qualified ALJ to serve as 
mediator. 
(B) Parties may agree to retain and pay a private mediator who is qualified 
according to Chapter 154 of the Texas Civil Practices & Remedies Code to serve 
as mediator. The ALJ may limit the length of time available to parties to pursue 
this option. 
(i) The parties shall notify the ALJ, by written motion, of their agreement to 
retain a private mediator. That notice must include: the name, address, and 
telephone number of the mediator selected, a statement that the parties have 
entered into an agreement with the mediator as to the rate and method of his or 
her compensation, and an affirmation that the mediator is qualified to serve 
according to TEX. CIV. PRAC. & REM CODE, Chapter 154. 
(ii) Upon notice from the parties that they have agreed to retain a particular 
private mediator, the ALJ will enter an order recessing the adjudicatory 
proceeding for an adequate time to allow the mediation process.
(3) In TNRCC cases, when all the parties agree or the ALJ finds that ADR would 
be appropriate pursuant to the interagency contract between TNRCC and SOAH, the 
case will be sent to TNRCC's ADR Director for disposition in accordance with 
that agency's rules in 30 Texas Government Code, Chapter 40. 
(4) All communications in the MSC are confidential and may not be disclosed 
without the consent of all the parties to the communication.
(5) Agreements reached by the parties will be put in writing and signed by the 
parties before the end of the mediation. These writings may be informal in 
nature. 
(A) Partial agreements that may affect the disposition of the contested case 
must be included in the record of the case. 
(B) Parties may agree that the written agreements that completely dispose of the 
case remain confidential and not become a part of the contested case file if 
there is no requirement of law to the contrary. If an agreement is reached, the 
parties must also agree as to the disposition of the pending contested case. 
(C) Whether a final written agreement reached through an MSC to which a 
governmental entity is a signatory is subject to required disclosure, is 
excepted from required disclosure, or is confidential, shall be determined in 
accordance with applicable law. 
(6) The mediator will not communicate with the ALJ in the case except to report 
in writing whether the matter settled, or to report other stipulations or 
matters that the parties agree be reported. The mediator will not serve as ALJ 
in the case. 
(7) A mediator has no authority to issue orders in a case referred for 
mediation. Deadlines in the underlying case may be extended only by order of the 
ALJ. An MSC is not intended to delay the contested case process.
(b) Settlement discussions off the record are subject to the provisions of TRCE 
408. 
(c) This section is not in derogation of the parties' ability to settle cases 
independently of the Office, or to discuss settlement in a prehearing conference 
set by the ALJ under the authority of sec.155.33 of this title (relating to 
Orders). 

sec.155.39.Stipulations.
(a) The parties may stipulate to any factual matters and, subject to the ALJ's 
approval, agree to any procedural matters. 
(b) Any agreements as to procedural matters that would modify a schedule or 
procedure previously ordered by the ALJ must be stated in a written motion 
submitted promptly after the agreement is reached. 
(c) A stipulation may be filed in writing or entered on the record at the 
hearing. The ALJ may require additional development of stipulated matters. 

sec.155.41.Procedure at Hearing.
(a) The ALJ shall exercise reasonable control over the mode and order of 
presenting preliminary matters, pending motions, opening statements, witness 
testimony and other evidence, oral or written closing argument, and other 
processes in the hearing. 
(b) Normally, the party with the burden of proof will present evidence first. If 
the burden is not ascertainable after reference to statute or consideration of 
referring agency policy adequately documented in the record in accordance with 
sec.155.53 of this title (relating to Consideration of Policy Not Incorporated 
in Referring Agency's Rules), the ALJ will place the burden of proof on a 
specific party or parties, considering such factors as the status of the parties 
(e.g., movant, applicant, appellant, respondent, protestant, intervener); 
parties' relative access to and control over information pertinent to the merits 
of the case; and whether a party would be required to prove a negative.

sec.155.43.Making a Record of Contested Case.
(a) A record of all contested case proceedings will be made. At the ALJ's 
discretion and order, the making of a record of a prehearing conference may be 
waived, and the actions taken at the conference may instead be reflected in a 
written order issued after the conference. For any proceeding in a docket set to 
last no longer than one day, the Office is responsible for making a tape 
recording of the hearing or prehearing conference. 
(1) A referring agency that prefers to arrange for a stenographic recording of 
all docketed proceedings on a regular basis may do so by filing a statement of 
intent to do so. The statement shall be filed with the Director of Docketing and 
the Director of the Central Hearings Panel Division and shall remain in effect 
for all proceedings conducted by the Office on behalf of the referring agency 
unless the statement is revoked in writing. The referring agency shall make 
arrangements for stenographic recording of all proceedings while the statement 
is effective, unless the ALJ waives the requirement for a prehearing conference 
or as provided in subsection (b) of this section.
(2) A referring agency that prefers to make arrangements to videotape all 
docketed proceedings on a regular basis may file a statement of intent to do so, 
as specified in subsection (a)(1) of this section. If a docketed proceeding is 
set to last longer than a day, a referring agency nevertheless is subject to 
subsection (b) of this section. 
(b) For any proceeding in a docket set to last longer than one day, the 
referring agency shall arrange for a court reporter to be present, unless the 
referring agency files notice by the time specified under sec.155.29(c) of this 
title (relating to General requirements for motions) for motions that it prefers 
another means of making the official records and specifies the means desired. 
The court reporter shall prepare a stenographic record of the proceeding but 
shall not prepare a transcript unless a party or the ALJ so requests. 
(c) The tape recording made by the Office under subsection (a) of this section, 
the videotape made by the referring agency under subsection (a) of this section 
if a statement is on file, or the stenographic recording prepared under 
subsection (b) of this section is the official record of the proceeding for 
purposes of all actions within SOAH's jurisdiction. The ALJ may order a 
different means of making a record if circumstances so require and may designate 
that record as the official record of the proceeding. 
(d) Any party may use a means of making an unofficial record of the proceeding 
that is in addition to the means specified in the rules or by the ALJ. 
(1) The party shall file and serve a notice of intent to use an additional means 
at least two days before the proceeding. 
(2) The party shall make all arrangements associated with the additional means.
(3) The ALJ may order that the additional means not be used or that it cease 
being used if it may cause or is causing disruption to the proceeding. 
(4) At the proceeding the ALJ may order that the additional means sought to be 
used shall be the method of preparing the official record of the proceeding and 
dispense with any other means required by this section, unless there is a timely 
objection at the beginning of the proceeding. 
(e) On the written request to the referring agency by a party to a contested 
case or on request of the ALJ, a written transcript of all or part of the 
proceedings shall be prepared by a court reporter from the means used to make 
the official record of the proceeding. If the proceeding has been taped or video 
recorded, the referring agency shall inform the Office of the need to deliver 
the original recording to a court reporter, selected by the referring agency, 
for preparation of the transcript. 
(1) The referring agency may pay the cost of the transcript requested by any 
party or the ALJ, or it may assess the cost to one or more parties in accordance 
with the referring agency's statute, rules, or policy. This section does not 
preclude the parties from agreeing to share the costs associated with the 
preparations of a transcript. 
(2) The original of any transcript prepared shall be filed with the Office. 
(3) When no party requests a transcript but the ALJ requests a court reporter to 
prepare a transcript, the cost shall be handled according to the interagency 
contract between the Office and the referring agency. If no interagency contract 
provisions for court reporting expense exist, the Office shall bear the cost of 
any transcript requested by the ALJ unless the referring agency agrees to pay 
the cost or assesses the cost as provided for in subsection (e)(1) of this 
section. 
(4) Proposed written corrections of purported errors in a transcript shall be 
filed with the Office and served on the parties and the court reporter within a 
reasonable time after discovery of the error. The ALJ may establish deadlines 
for the filing of proposed corrections and responses. The transcript will be 
corrected only upon order of the ALJ. 
(5) A transcript prepared according to these procedures becomes the official 
record of the proceedings for purposes of all actions within SOAH's 
jurisdiction. 
(f) The ALJ shall maintain any exhibits admitted during the proceeding and the 
official record of the proceeding, other than a stenographic record. However, 
the ALJ may allow the court reporter to retain the exhibits and the tape or 
video recording of the proceeding, if applicable, while a transcript is being 
prepared. The exhibits and transcript or recording will be sent to the referring 
agency after issuance of the order or proposal for decisions and consideration 
of any exceptions to the proposal for decision and replies. The ALJ may retain 
the exhibits and transcript or recording to prepare for presentation of the 
proposal for decision to the referring agency, if a presentation is requested by 
the referring agency, or the Office may seek temporary return of the exhibits 
and transcript or recording to enable the ALJ to prepare for that presentation 
if the materials have already been sent to the referring agency. 
(g) The referring agency shall contract with and pay for an interpreter for deaf 
or hearing impaired parties and subpoenaed witnesses in accordance with 
sec.2001.055 of the APA and shall provide reader services or other communication 
services for blind and sight impaired parties and subpoenaed witnesses. Any 
party, including the referring agency, who needs a certified language 
interpreter for presentation of its case shall be responsible for arranging for 
the interpreter to be present. The referring agency may pay the cost of the 
certified language interpreter or may assess the cost on one or more parties in 
accordance with the referring agency's statute or rules.

sec.155.45.Participation by Telephone.
(a) Upon timely motion containing the pertinent telephone number(s), a party may 
request to appear by telephone or videoconferencing or to present the testimony 
of a witness by such methods. The party requesting to appear or present 
testimony by telephone or videoconferencing has the burden to show that good 
cause exists for the granting of the request. Unless all parties agree to the 
request, the requesting party must demonstrate: 
(1) how witnesses will be separated; 
(2) how coaching of witnesses will be prevented; 
(3) why observing a witness's demeanor is not essential to the case; and, 
(4) how the witness's identity will be verified. If the request is granted, a 
party may appear or a witness may testify by telephone or videoconferencing if 
each participant in the hearing has an opportunity to participate in and hear 
the proceeding. 
(b) The ALJ may conduct a prehearing conference by telephone or 
videoconferencing upon adequate notice to the parties, even in the absence of 
party motion. 
(c) All substantive and procedural rights apply to telephone and 
videoconferencing prehearings and hearings, subject only to the limitations of 
the physical arrangement. 
(d) Documentary evidence to be offered at a telephone or videoconferencing 
prehearing conference or hearing shall be served on all parties and filed with 
the Office at least three days before the prehearing or hearing unless the ALJ, 
by written order, amends the filing deadline. 
(e) For a telephone or videoconferencing hearing or prehearing conference, the 
following may be considered a failure to appear and grounds for default if the 
conditions exist for more than 10 minutes after the scheduled time for hearing 
or prehearing conference: 
(1) failure to answer the telephone or videoconference line;
(2) failure to free the line for the proceeding; or 
(3) failure to be ready to proceed with the hearing or prehearing conference as 
scheduled. 

sec.155.47.Public Attendance and Comment at Hearing.
(a) Unless otherwise required by law, all proceedings before the Office are open 
to the public. 
(b) The ALJ retains the authority to remove persons whose conduct impedes the 
orderly progress of the hearing, and to take necessary steps to limit attendance 
due to any physical limitations of the hearing facility.
(c) When required by statute (see, for example in Texas Alcoholic Beverage Code, 
sec.5.435) members of the public shall be allowed to make public comment 
addressing matters pertinent to the issues in the case. Unless otherwise 
provided by law, public comment is not part of the evidentiary record of the 
case unless sworn, subject to cross-examination, offered by a party in 
accordance with the ALJ's orders, and received in accordance with the TRCE as 
made applicable by the APA. 

sec.155.51.Evidence.
(a) APA. Consistent with the APA, the rules of evidence as applied in a non-jury 
civil case in district court govern contested case hearings conducted by the 
Office, except that evidence inadmissible under those rules may be admitted if 
it meets the standards set out in APA sec.2001.081. 
(b) Exclusion of witnesses. At the request of a party, or on the ALJ's own 
motion, the ALJ shall order witnesses excluded from the hearing room so they 
cannot hear the testimony of other witnesses, instructing them not to converse 
about the case with each other or any person other than the attorneys in the 
proceeding, except by permission of the judge, and not to read any report of, or 
comment upon, the testimony in the case while under order of this subsection. 
This does not authorize exclusion of a party who is a natural person or the 
spouse of such natural person, or an officer or employee of a party that is not 
a natural person designated as its representative by the party, or a person 
whose presence is shown by a party to be essential to the presentation of its 
case. 
(c) Prefiled testimony. The ALJ may require that exhibits and testimony of 
witnesses to be called at hearing be reduced to written form, filed at the 
Office prior to hearing, and served on other parties, if the hearing will be 
expedited and the interests of the parties will not be substantially prejudiced. 
(d) Exhibits. 
(1) Exhibits offered into evidence may not be of such a size or nature that they 
unduly encumber the records of the Office. Physical evidence that is bulky, 
dangerous, perishable, or otherwise not suitable for inclusion in agency records 
shall not be offered into the record; instead, proponents shall make reasonable 
efforts to use photographs, recordings, or other mechanical or electronic means 
to substitute for physical evidence that would encumber the Office's records. 
(2) Documents offered into evidence shall be legible, and shall not exceed 8 1/2 
inches by 11 inches unless good cause is shown why they could not be reduced. 
Any document in excess of 50 pages shall be accompanied by a table of contents 
or index. Maps, drawings, blueprints, and other documents not reasonably 
susceptible to reduction shall be rolled or folded so as not to encumber the 
record. The ALJ may exclude exhibits not conforming to this subsection. 
(3) Each exhibit to be offered shall first be tendered for numbering by the ALJ 
or court reporter. Copies of the original exhibit shall be furnished by the 
party offering the exhibit to the presiding ALJ and to each party present at the 
hearing, unless otherwise ordered by the ALJ. 
(4) An exhibit excluded from evidence will be considered withdrawn by the 
offering party, and will be returned to the party, unless the party makes an 
offer of proof in accordance with the TRCE. 

sec.155.55.Failure to Attend Hearing and Default.
(a) If, after receiving notice of a hearing, a party fails to appear in person 
or by representative on the day and time set for hearing or fails to appear by 
telephone in accordance with this chapter, the ALJ may proceed in that party's 
absence and, as authorized by applicable law, may enter a default judgment 
against the defaulting party. 
(b) For purposes of this section, entry of a default judgment means the issuance 
of a proposal for decision or order, where provided by law, against the 
defaulting party in which the factual allegations against that party in the 
notice of hearing are deemed admitted as true without the requirement of 
submitting additional proof. 
(c) Any default judgment entered under this section shall be issued only upon 
adequate proof that proper notice under TEX. GOV'T CODE, Chapter 2001 and 
sec.155.27 of this title (relating to Notice of Hearing) was provided to the 
defaulting party, and such notice includes disclosure, in 10-point, bold-face 
type, of the fact that upon failure of the party to appear at the hearing, the 
factual allegations in the notice will be deemed admitted as true, and the 
relief sought in the notice of hearing may be granted by default. 
(d) This subsection applies to cases where service of the notice of hearing on a 
defaulting party is shown only by proof that the notice was sent to the party's 
last known address as shown on the referring agency's records, with no showing 
of actual receipt by the defaulting party or the defaulting party's agent. Under 
that situation, the default procedures described in subsection (c) of this 
section may be used only when the following circumstances are shown to exist: 
(1) the referring agency's statute or rules authorize service of the notice of 
hearing by sending it to the party's last known address as shown by the 
referring agency's records; and 
(2) there is credible evidence that the notice of hearing was sent by certified 
or registered mail, return receipt requested, to the defaulting party's last 
known address as shown on the referring agency's records.
(e) When motions for rehearing are permitted by applicable law, such motions 
requesting the reopening of the record shall be filed with the referring agency 
and not with the Office, unless otherwise specifically provided by law. 
(f) This section does not preclude the referring agency from informally 
disposing of a case by default under the agency's statute or rules in the event 
the respondent fails to file a timely written response or other responsive 
pleading required by the referring agency's statute or rules. A party may 
request entry of an ALJ order abating or continuing the proceedings to pursue 
informal disposition at the referring agency. 

sec.155.57.Summary Disposition.
(a) In response to a party's motion or after an ALJ notifies the parties of an 
intent to dispose of a case by summary disposition and allows time for 
responses, the ALJ may issue a proposal for decision, or where authorized by law 
a final order, resolving a contested case without evidentiary hearing if the 
pleadings, affidavits, materials obtained by discovery, admissions, matters 
officially noticed, stipulations, or evidence of record shows there is no 
genuine issue as to any material fact and that the moving party is entitled to a 
decision in its favor as a matter of law. 
(b) A contested case referred to the Office, or a portion of the case, is 
subject to dismissal from the Office's docket or a recommendation to the 
referring agency of dismissal for: 
(1) lack of jurisdiction over the matter by the referring agency; 
(2) lack of statute, rule, or contract authorizing the Office to conduct the 
proceeding; 
(3) mootness of the case; 
(4) failure of the moving party to prosecute the case in accordance with 
requirement of statute, rule, or ALJ order; 
(5) failure to state a claim for which relief can be granted; or 
(6) unnecessary duplication of proceedings. 
(c) If a moving party withdraws its entire claim or parties settle all matters 
in controversy, an ALJ may dismiss a matter from the Office's docket by order 
with or without prejudice. The ALJ may order a withdrawn or settled matter 
severed before dismissal, if other related matters in the docket remain in 
controversy. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716728
Phillip A. Holder
Deputy Chief Administrative Law Judge
State Office of Administrative Hearings
Effective date: January 2, 1998
Proposal publication date: October 17, 1997
For further information, please call: (512) 475-4993

PART XV. Texas Health and Human Services Commission
CHAPTER 355.Cost Determination Process
Section 1 of House Bill No. 2913 of the 75th Legislative session amended 
sec.531.021 of the Government Code, designates the Texas Health and Human 
Services Commission [HHSC] as the agency responsible for administration of the 
Medicaid program. On September 1, 1997, HHSC also became responsible for 
adopting reasonable rules and standards to govern the setting of Medicaid rate, 
fees, and charges. Before this date, these functions were performed by three 
agencies: the Texas Department of Health [TDH], the Texas Department of Human 
Services [TDHS], and the Texas Department of Mental Health and Mental 
Retardation [TDMHMR].
Pending the adoption of rules by HHSC, sections of Title 25 of the Texas 
Administrative Code that were originally promulgated by TDMHMR be transferred to 
Chapter 355 of Title 1 of the Texas Administrative Code. These transfers ensure 
initial compliance with H.B. 2913, continuing reimbursement of Medicaid 
providers, and protection of the health and welfare of Medicaid recipients. 
The last column of the table indicates those rules that have relevance to 
matters other than Medicaid rate setting and therefore should not be deleted 
from Title 25.
The rules remaining with TDMHMR that are rendered obsolete will be revised or 
repealed as appropriate in the future in accordance with 1 TAC sec.91.23(d). A 
schedule of the TDMHMR rules transfer is attached. It lists rules that are 
transferred in toto from Title 40 to Title 1 and those which, for the reason 
stated, should appear in both titles. The rules transfer should be effective 
September 1, 1997.
The Texas Register is administratively transferring or duplicating the following 
rules listed in the conversion chart published in this issue under the Tables 
and Graphics Section. The table lists the old rule numbers and the new rule 
numbers that correspond to them.)
Figure 1 TAC Chapter 355)

TITLE 16. ECONOMIC REGULATION
PART III. Texas Alcoholic Beverage Commission
CHAPTER 45.Marketing Practices
SUBCHAPTER D.Advertising and Promotion-All Beverages
16 TAC sec.45.109
The Alcoholic Beverage Commission adopts repeals to sec.45.109, governing 
restocking and rotation of alcoholic beverages. This proposed action was 
originally published in the August 19, 1997, edition of the Texas Register (22 
TexReg 7976).
This rule is repealed to allow for the adoption of a new rule 45.109 governing 
the same subject matter. 
No comments were received about this proposed action.
This repeal is adopted under the Alcoholic Beverage Code, sec.5.31 which 
provides the Texas Alcoholic Beverage Commission with the authority to prescribe 
and publish rules necessary to carry out the provisions of the Alcoholic 
Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.102.20, is affected by this rule.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716681
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

The Texas Alcoholic Beverage Commission adopts new sec.45.109, with changes to 
the proposed text as published in the August 19, 1997, issue of the Texas 
Register (22 TexReg 7976). The rule governs restocking and rotation of alcoholic 
beverages and is adopted to replace the existing rule governing the same 
subject. Changes made to the text on adoption were as follows: In paragraph 
(a)(2) the phrase "members of the manufacturing" was deleted and the phrase "and 
those members of the manufacturing tier authorized to sell to the retail tier 
for all beverages" was added. In paragraph (b) the phrase "members of the 
wholesale tier" was replaced with the phrase "licensees and permittees subject 
to this rule"; the phrase "with the permission of the retailer" was added; and 
the phrase "rearranging or resetting all or part of a retailers shelves or 
displays is prohibited" was replaced with the phrase "and reset or rearrange 
alcoholic beverages." Paragraphs (c) and (d) were added to the adopted rule. 
Paragraph (c), as originally published, was changed to paragraph (e) and the 
phrase "members of the manufacturing and wholesale tier" was changed to 
"licensees and permittees subject to this rule." 
This rule governs the ability of members of the upper tiers of the alcoholic 
beverage industry to restock, rotate and rearrange displays of product in retail 
outlets. Under the previous rule, members of the wholesale tier and those 
members of the manufacturing tier allowed to sell directly to retailers were 
allowed to restock and rotate product, but not rearrange that product.
The majority of comments recommended that members of the upper tiers be allowed 
to participate in rearrangements of alcoholic beverage displays. 
The commission agreed with this recommendation. The level of service provided by 
rearranging stock, as compared with resetting or rotating stock, does not, in 
the commission's view, create a threat to the independence of members of the 
retail tier or, as a general matter, constitute an inducement as that term is 
used in the Alcoholic Beverage Code. 
Several members of the manufacturing tier recommended that all manufacturers be 
allowed to participate in rearranging, restocking or rotating alcoholic 
beverages. The commission disagreed with this recommendation because this 
practice has not been allowed in the past and this has not resulted in harm to 
the interests of members of the alcoholic beverage industry. Further, under the 
three-tier structure erected by the Alcoholic Beverage Code, members of the 
manufacturing tier who are not permitted to sell directly to retailers are 
required to conduct the majority of their business through their authorized 
wholesaler or distributors. The commission concluded that this statutory 
principle should be honored in determining who should be permitted to manipulate 
a retailer's stock. 
Anheuser-Busch, Miller Brewing, Harris County Beer Wholesalers and the Wholesale 
Beer Distributors of Texas recommended that members of the upper tiers should be 
allowed to move a competitor's product in retail displays, at least to the 
extent that product encroached on the assigned space of the moving distributor 
or manufacturer. The commission disagreed with this recommendation. The prior 
rule allowed limited movement of a competitor's encroaching product. Experience 
with that rule, together with discussions with industry members, indicate that 
any rule crafted to allow movement of a competitor's product would suffer from 
differing interpretations throughout the industry. The commission felt that such 
a rule would be unnecessarily difficult to interpret and enforce. Further, 
disputes between competitors about assigned display space does not implicate the 
statutory provisions and principles the commission is obligated to enforce. 
Thus, regulation in this area unnecessarily injects the commission into the 
normal operations of the marketplace. 
Paragraph (c) is adopted to allow members of the upper tiers to participate, 
along with retailers, in the process of organizing and constructing displays of 
alcoholic beverages. These displays are frequently placed outside normal shelves 
or refrigerated boxes. The considerations cited above in regard to the 
provisions of paragraph (a) apply to the provisions of paragraph (c) as well. 
Paragraph (d) is a provision of the prior rule governing this topic which the 
commission concluded should be continued without change in the old rule. No 
comment was received on this paragraph.
Anheuser-Busch, Miller Brewing, The Distilled Spirits Council of the United 
States, the Wine Institute, Fiesta, Inc. and the Wholesale Beer Distributors of 
Texas objected to paragraph (e) as adopted. Each of these recommended that 
manufacturers be allowed to provide schematics to retailers. Several felt that 
the rule should be adopted as it appeared in paragraph (c) of the commission's 
originally published proposal. Others felt that the adopted rule should 
replicate the provisions of repealed 16 TAC sec.45.109(j). 
The commission disagreed with these recommendations for several reasons. First, 
the provisions of repealed 16 TAC sec.45.109(j) were unnecessarily complex, 
resulting in difficulty of enforcement. Further, these provisions unnecessarily 
restricted industry practice in this area and imposed unwarranted restrictions 
on the relationship between manufacturers and their agents in the wholesale 
tier.
Second, the three-tier structure imposed by the Alcoholic Beverage Code mandates 
that retailers have the majority of their interactions with members of the 
wholesale tier. Under the rule as adopted, members of the manufacturing tier 
will be able to use schematics to market their product. They must, however, 
conduct that marketing through their representatives in the wholesale tier. 
Thus, the commission concluded that paragraph (e) as adopted followed the 
principles implicit in the three-tier system without unnecessarily or 
unreasonably harming the economic interests of members of the manufacturing 
tier. 
This new rule is adopted under the Alcoholic Beverage Code, sec.5.31 which 
provides the Texas Alcoholic Beverage Commission with the authority to prescribe 
and publish rules necessary to carry out the provisions of the Alcoholic 
Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.102.20, is affected by this rule. 

sec.45.109. Restocking and Rotation of Alcoholic Beverages.
(a) General.
(1) This rule is enacted pursuant to sec.102.20 of the Alcoholic Beverage Code. 
(2) This rule applies to members of the wholesale tier and those members of the 
manufacturing tier authorized to sell to retailers for all beverages. 
(b) Restocking. Licensees and permittees subject to this rule may, at retail 
premises, with permission of the retailer, stock, rotate, affix prices, and 
reset or rearrange alcoholic beverages they sell, provided products of other 
industry members are not altered or disturbed. 
(c) Licensees and permittees subject to this rule may, at retail premises, with 
permission of the retailer, organize and construct displays of alcoholic 
beverages they sell, provided products of other industry members are not altered 
or disturbed. Such displays must be accessible to the consumer.
(d) The activities permitted by paragraphs (b) and (c) of this rule may only be 
performed during the hours when the sale or delivery of specific alcoholic 
beverages are legal and may also be performed for malt beverages and wine from 
5:00 a.m. to 12:00 noon on Sunday. 
(e) Licensees and permittees subject to this rule may provide shelf plans or 
schematics to retailers. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716682
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

16 TAC sec.45.110
The Texas Alcoholic Beverage Commission adopts repeals to sec.45.110, governing 
practices that may result in exclusion of alcoholic beverages from the 
marketplace. This proposed action was originally published in the August 19, 
1997, edition of the Texas Register, (22 TexReg 7977). 
This rule is repealed to allow for the adoption of a new rule sec.45.110 
governing the same subject mater. No comments were received about this proposed 
action. 
This repeal is adopted under the Alcoholic Beverage Code, sec.5.31 which 
provides the Texas Alcoholic Beverage Commission with the authority to prescribe 
and publish rules necessary to carry out the provisions of the Alcoholic 
Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.sec.102.04, 102.07, 102.12, 
108.04, 108.06, and 109.08, are affected by this rule. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716683
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

The Texas Alcoholic Beverage Commission adopts new sec.45.110, with changes to 
the text as published in the August 19, 1997, edition of the Texas Register (22 
TexReg 7977). The rule governs inducements.
The changes to the text as published are as follows: The second sentence of 
paragraph (c)(4) was added. The second sentence of paragraph (c)(6) was added.
This rule is adopted to partially define the term "inducement" as that term is 
used in sec.sec.102.04(a)(6), 102.07(a)(8), 102.12 and 108.06 of the Alcoholic 
Beverage Code.
Paragraph (c) reflects the commission's conclusion that a practice or pattern of 
conduct that places a retailer's independence at risk constitutes an inducement. 
The three-tier system exists to maintain an economic and operational 
independence between the respective tiers. Accordingly, this paragraph gives 
examples of practices that tend to create an excessive dependence of the 
retailer on the benefits or services given by members of the upper tiers.
Paragraph (d) reflects the commission's conclusion that no single definition of 
inducement can conclusively address every practice or pattern of conduct in the 
complex relationship existing between the tiers of the alcoholic beverage 
industry. Nevertheless, it is the commission's ongoing obligation to determine, 
frequently on a case-by-case basis, whether a given practice constitutes an 
inducement. The commission reasoned that some predictability would be imposed on 
this determinative process by adoption of paragraph (d) which imposes criteria 
by which assessments of inducements are to be made. Accordingly, the decisions 
of those members of the agency's staff required to enforce the Alcoholic 
Beverage Code and of those members of the alcoholic beverage industry, required 
to comply with the Alcoholic Beverage Code would be better informed. 
The Texas Package Stores Association recommended amendment to paragraph (c)(6) 
as originally published. The association pointed out that members of the upper 
tiers routinely offer sponsorship of events, advertising and otherwise 
participate in the activities of retail trade associations. 
The association argued that this practice does not constitute an inducement in 
as much as the benefits offered by members of the upper tiers are offered to 
association members as a class rather than as an attempt to establish an 
unlawful control over the operations of a specific retailer. In support of its 
argument, the association noted that such activities are specifically sanctioned 
by sec.102.04(b)(7) of the Alcoholic Beverage Code with regard to trade 
associations of retailers holding mixed beverage permits. The commission agreed 
with the argument and amended paragraph (c)(6) accordingly. 
The Distilled Spirits Council of the United States, (DISCUS) recommended that 
paragraph (c) not be adopted. This organization argued that the terms contained 
in paragraph (c) were vague and uncertain. Adoption would, therefore, create 
confusion as to the legality of a number of standard practices in the industry. 
In the alternative, DISCUS suggested that the phrase "notwithstanding any other 
provision of these rules" be replaced with the phrase "except as otherwise 
provided in these rules." 
The commission disagreed with this recommendation. The adopted provisions of 
paragraph (c) are taken in large part from the previous rule sec.45.110(b). 
Similarly, the provisions of paragraph (d) were primarily taken from the federal 
rule found at 27 CFR sec.6.153. Accordingly, the terms used in this rule are of 
general familiarity within the alcoholic beverage industry. Further, the 
commission concluded that certain interactions between members of the upper ties 
and members of the retail tier, which are normally innocuous and therefore 
permitted by the commission's rules, could, under certain circumstances, 
constitute an inducement to a specific retailer. In sum, practices that would 
not induce some retailers would induce others. The commission concluded that the 
adopted rule should therefore apply notwithstanding any other rule.
DISCUS further recommended that paragraph (c)(2) not be adopted as that 
provision could be read to ban the commonly accepted practice of selling 
alcoholic beverages in "co-packs." The commission concluded that paragraph 
(c)(2) could not be so construed because the sale of "co-packs" is specifically 
authorized by sec.102.07(a)(5) of the Alcoholic Beverage Code. 
The Texas Package Stores Association, DISCUS, the Licensed Beverage 
Distributors, Anheuser-Busch, Miller Brewing, the Harris County Beer 
Wholesalers, Fiesta, Kroger and the Wholesale Beer Distributors of Texas were 
opposed to paragraph (c)(4) as published, each recommending that this rule be 
relaxed in some way. A number of proposals were offered in substitution for 
paragraph (c)(4). Some argued that members of the upper tiers should be allowed 
to provide retailers with food, beverages and entertainment with no specific 
limit set. Others suggested that limits of $50, $100 or $250 be set. Some 
recommended that benefits provided be limited to food and beverages while others 
argued that benefits provided under this rule should be allowed to extend to 
entertainment activities generally. A number of commentors urged the commission 
to apply any specific limits adopted to each individual recipient rather than to 
each occasion. The commission agreed that it is common practice in the 
marketplace for buyers and sellers to meet and interact over meals or at 
recreational events. The commission concluded that, within reasonable limits, 
this practice was not calculated to constitute an inducement.
The commission recognized the difficulty of setting specific limitations on the 
practices governed by this rule that would be reasonable throughout the state. 
Nevertheless, the commission concluded that some specific limit was necessary 
because a rule providing no limits would be subject to excess and abuse and be 
unnecessarily difficult to enforce.
Accordingly, the commission resolved that members of the upper tiers should be 
allowed to provide up to $300 of food, beverages and entertainment to members of 
the retail tier. The commission concluded that this limit should apply "per 
occasion" rather than "per person." With a per capita measure it would be 
possible for a supplier to provide each employee of a retail license or permit 
holder with $300 worth of food, beverages and entertainment. The commission 
deemed this type of conduct to be excessive and calculated to overcome the 
operational and financial independence of the retailer. 
Anheuser-Busch, DISCUS, Miller Brewing and the Wholesale Beer Distributors of 
Texas were opposed to the adoption of paragraph (d). Each suggested that 
paragraph (d) suffered from vagueness and uncertainty of application and 
interpretation. Accordingly, there would be confusion as to the legality of 
specific trade practices. For the reasons cited above, particularly those 
offered in response to DISCUS comments on paragraph (c), the commission 
disagreed with these suggestions. In the alternative, the Wholesale Beer 
Distributors of Texas recommended that the provisions of paragraphs (c) and (d) 
be combined into one paragraph and made mandatory in that any member of the 
manufacturing or wholesale tier who required a member of the retail tier to 
participate in the described conduct would engage in an illegal inducement. 
Further, the Wholesale Beer Distributors of Texas recommended adoption of a rule 
providing that the furnishing of anything not specifically authorized by the 
Alcoholic Beverage Code or rules of the commission constituted an illegal 
inducement. 
The commission disagreed with these recommendations. The purpose of this rule as 
adopted is to provide examples and guidelines to be used by agency staff and 
industry members in determining whether a specific practice constitutes an 
inducement. To characterize these provisions as requirements would make 
administrative prosecutions of the rule unnecessarily difficult in that the 
provisions of this rule would become elements of action rather than criteria by 
which to weigh evidence in a contested case. 
Further, the commission concluded that a rule mandating that every trade 
practice not specifically authorized by statute or rule was therefore unlawful 
is overly broad, not supported by the Alcoholic Beverage Code and unnecessarily 
restrictive to the alcoholic beverage industry. 
This rule is adopted under the Alcoholic Beverage Code, sec.5.31 which provides 
the Texas Alcoholic Beverage Commission with the authority to prescribe and 
publish rules necessary to carry out the provisions of the Alcoholic Beverage 
Code. This rule is further adopted under the authority of sec.108.04 of the 
Alcoholic Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.sec.102.04, 102.07, 102.12, 
108.04, 108.06, 109.08, are affected by this rule.

sec.45.110. Inducements.
(a) General. This rule is enacted pursuant to sec.sec.102.04, 102.07, 102.12 and 
108.06. 
(b) This rule applies to members of the manufacturing and wholesale tiers for 
all alcoholic beverages. 
(c) Inducements. Notwithstanding any other provision of these rules, practices 
and patterns of conduct that place retailer independence at risk constitute an 
illegal inducement as that term is used in the Alcoholic Beverage Code. Examples 
of unlawful inducements are: 
(1) purchasing or renting shelf, floor or warehouse space from or for a 
retailer; 
(2) requiring a retailer to purchase one product in order to be allowed to 
purchase another product at the same time; 
(3) providing or purchasing, in whole or in part, any type of advertising 
benefitting any specific retailer; 
(4) furnishing entertainment or recreation to retailers or their agents or 
employees. Members of the manufacturing and wholesale tiers may provide food, 
beverages and entertainment to members of the retail tier. Food and beverages 
provided must be consumed in the presence of the manufacturing or wholesale tier 
member. Food, beverages and entertainment provided may not cost more than 
$300.00 per occasion; 
(5) furnishing of service trailers with equipment to a retailer; or 
(6) furnishing transportation or other things of value to organized groups of 
retailers. Members of the manufacturing and distribution tiers may advertise in 
convention programs, sponsor functions or meetings and otherwise participate in 
meetings and conventions of trade associations of general membership.
(d) Criteria for determining retailer independence. The following criteria shall 
be used as a guideline in determining whether a practice or pattern of conduct 
places retailer independence at risk. The following criteria are not exclusive, 
nor does a practice need to meet all criteria in order to constitute an 
inducement. 
(1) The practice restricts or hampers the free economic choice of a retailer to 
decide which products to purchase or the quantity in which to purchase them for 
sale to consumers. 
(2) The retailer is obligated to participate in a program offered by a member of 
the manufacturing or wholesale tier in order to obtain that member's product.
(3) The retailer has a continuing obligation to purchase or otherwise promote 
the industry member's product.
(4) The retailer has a commitment not to terminate its relationship with a 
member of the manufacturing or wholesale tier with respect to purchase of that 
member's products. 
(5) The practice involves a member of the manufacturing or wholesale tier in the 
day-to-day operations of the retailer. For example, the member controls the 
retailer's decisions on which brand of product to purchase, the pricing of 
products, or the manner in which the products will be displayed on the 
retailer's premises.
(6) The practice is discriminatory in that it is not offered to all retailers in 
the local market on the same terms without business reasons present to justify 
the difference in treatment. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716684
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

SUBCHAPTER E.Advertising and Promotion-Malt Beverages
16 TAC sec.45.113
The Texas Alcoholic Beverage Commission adopts repeals to sec.45.113, relaxing 
certain restrictions contained in the Alcoholic Beverage Code. This proposed 
action was originally published in the August 19, 1997, edition of the Texas 
Register (22 TexReg 7978). This rule is repealed to allow for the adoption of a 
new rule sec.45.113 governing the same subject matter. 
No comments were received about this proposed action. 
This repeal is adopted under the Alcoholic Beverage Code, sec.5.31 and 
sec.108.04 which provides the Texas Alcoholic Beverage Commission with the 
authority to prescribe and publish rules necessary to carry out the provisions 
of the Alcoholic Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.sec.102.14, 102.15, 108.05, and 
108.06, are affected by this rule. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716685
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

The Texas Alcoholic Beverage Commission adopts new sec.45.113, with changes to 
the text as published in the August 19, 1997, edition of the Texas Register (22 
TexReg 7978). This rule governs gifts, services and sales of certain items by 
members of the manufacturing and distribution tiers of the beer industry to 
retailers and consumers. 
This rule is adopted to regulate, and place reasonable limits on, goods and 
services that are furnished, given or sold by members of the manufacturing and 
distribution tier to retailers and consumers. 
The Alcoholic Beverage Code mandates that members of the manufacturing and 
distribution tiers may not provide goods and services to members of the retail 
tier to such a degree and such a way as to establish an unreasonable degree of 
economic or administrative control over retail businesses. Practices that tend 
to establish such control are termed inducements in the Alcoholic Beverage Code 
and serve to undermine retailer independence and unfairly exclude competing 
products from the market. In each area governed by this rule, it is the 
intention of the commission to allow normal and innocuous business practices and 
to forbid those practices that tend to allow excessive control of retail 
operations by members of the upper tiers. 
The commission concluded that this regulation should apply to beer rather than 
all malt beverages. Because of definitions contained in sec.1.04(5), (12) and 
(15) of the Alcoholic Beverage Code, all malt beverages containing more than 
four percent alcohol by weight are considered to be liquor. Thus, this category 
of malt beverages in more appropriately regulated by 16 TAC sec.45.117, 
governing manufacturers and distributors of liquor. Section 45.113(b) was 
amended from the originally published version to reflect this distinction. 
The Alcoholic Beverage Code erects a three-tier system for the manufacture, 
distribution and sale of alcoholic beverages. A consequence of this system is 
that members of the retail tier should, in the majority of situations, conduct 
business with members of the distribution tier. Goods and services originating 
in the manufacturing tier should, consistent with three-tier principles, be 
channeled through members of the distribution tier. A noted exception to this 
system is those members of the manufacturing tier who, because of statutory 
provisions, may sell their product directly to retailers. Paragraphs (b)(3), (c) 
and (d)(1) were amended to reflect this approach. 
Paragraph (c) is adopted to define and place limits on items which may be given 
to retailers and consumers. A limit was placed on the value of novelty items to 
insure that items of significant value were not given to members of the retail 
tier. Were this allowed to happen, members of the upper tiers could use the 
provision of such items to gain administrative or economic control of specific 
retailers. 
Paragraph (c) further regulates the ability of members of the manufacturing tier 
to provide alcoholic beverages to consumers through product tests and 
promotional events. The commission concluded that all agents of manufacturers 
and distributors participating in promotions on retail premises are engaging in 
activities regulated by Chapter 73 of the Alcoholic Beverage Code. Accordingly, 
the phrase "purchasers" as contained in the originally published version of 
paragraph (b)(3) was changed to the phrase "all members of the manufacturing and 
distribution tier participating in promotions authorized by this paragraph." 
Several commentors objected to the requirement that participants in bar spending 
promotions hold an agent's beer license. For the reasons stated above, the 
commission disagreed with this objection. The Wholesale Beer Distributors of 
Texas suggested that paragraph (b) be amended to exclude "bar supplies" from the 
definition of novelty items. The commission disagreed with this suggestion 
because of the conclusion that the restrictions contained in paragraph (b)(2) 
are sufficient to insure the economic independence of retailers. Further, the 
term "bar supplies" is unduly restrictive on the activities of industry members. 
A number of items, qualifying as bar supplies, can be provided by members of the 
upper tiers to retailers without threatening retailer independence, offering an 
inducement, or resulting in unfair product exclusion from the marketplace. 
Accordingly, the commission concluded that "novelty items," as defined, could 
also have utilitarian functions. 
Paragraph (c) is adopted to regulate the sale of promotional items to retailers. 
As originally proposed, this provision would allow members of the upper tiers to 
sell equipment to retailers. One commentor pointed out that this rule would 
allow suppliers to underwrite most aspects of a retailers' operations. This 
would allow manufacturers and distributors to exercise an unreasonable amount of 
economic control over retail operations. To address this concern, paragraph (c) 
replaced the term "equipment" with the term "promotional items" and added the 
definition contained in paragraph (c)(1). The commission concluded that the 
definition operates as a limit on the types of items that can be sold under this 
rule, thus restricting the ability of manufacturers and distributors to assume 
excessive economic influence with retailers.
As originally proposed, paragraph (c)(3) would allow items to be sold at the 
cost to the alcoholic beverage manufacturer or distributor. One commentor noted 
that this would allow industry members to sell items below market cost to 
retailers. Thus, the cost of an item to the retailer would be a function of 
which industry members sold it rather than the value of the item itself. The 
commission agreed that this practice would result in unfair competition between 
industry members and an economic dependence by retailers on specific suppliers. 
The commission amended paragraph (c)(3) to address this concern. Paragraph (d) 
addresses the types of signs which may be furnished by members of the upper 
tiers to retailers. The commission concluded that, in the normal course of 
events, supplying signs to retailers did not constitute a means to induce, as 
that term is used in the Alcoholic Beverage Code, or create an excessive 
economic dependence by retailers on suppliers of beer. Accordingly, the 
provisions of this rule apply few restrictions on the ability of suppliers to 
furnish signs to retailers.
Paragraph (d)(1) was amended to add the word "interior." This revision was in 
response to a comment noting that the rule was intended to address interior, 
rather than exterior, signs. As originally proposed, paragraph (d)(2) defined a 
sign as a thing with "no utilitarian purpose other than advertisement." Several 
commentors pointed out that signs frequently serve as clocks, mirrors and 
lights. Paragraph (d)(2) was amended to reflect the commission's agreement with 
this comment.
Paragraph (d)(3) was amended in response to a recommendation by the Wholesale 
Beer Distributors of Texas. That organization pointed out that the terms of 
paragraph (d)(3) as proposed would ban the practice of supplying price cards for 
retailers since such cards benefit specific retailers rather than retailers as a 
class. The provision of price cards to retailers has historically been allowed 
by the commission.
Several noted that the sign rule should not be construed to allow members of the 
upper tiers to engage in decorating or remodeling retail premises. This practice 
would constitute an inducement. The commission agreed with this comment and 
added paragraph (d)(4) to address the situation. 
Paragraph (e) addresses the level of service the commission concluded could be 
provided to retailers by members of the upper tiers without constituting an 
inducement. Paragraph (e)(2), as originally proposed, was deleted from the rule 
as adopted. The commission agreed with several who noted that this provision was 
more logically placed in 16 TAC sec.45.109. Paragraph (e)(3) was adopted in 
response to a suggestion by the Wholesale Beer Distributors of Texas. Furnishing 
retailers with certain components of beer dispensing equipment is a necessary 
adjunct to cleaning that equipment. Further, this practice has historically been 
allowed by the commission and has not, as a general rule, resulted in control of 
retail operations by distributors and manufacturers.
Paragraph (f) allows members of the manufacturing and distribution tiers to make 
gifts to unlicensed charitable organizations. This rule is adopted to allow 
industry members to participate in charitable activities without using that 
participation to unfairly exclude competing products from the market.
This rule is adopted under the authority of the Alcoholic Beverage Code, 
sec.5.31 and sec.108.04 which provides the Texas Alcoholic Beverage Commission 
with the authority to prescribe and publish rules necessary to carry out the 
provisions of the Alcoholic Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.sec.102.14, 102.15, 108.05, 
108.06, are affected by this rule.

sec.45.113. Gifts, Services and Sales.
(a) General.
(1) This rule is promulgated pursuant to sec.108.04 of the Alcoholic Beverage 
Code to relax certain restrictions and prohibitions set forth in sec.sec.102.14, 
102.15 and 108.06 of the code. 
(2) This rule applies to buyers, sellers and consumers of beer. 
(b) Gifts to Retailers and Consumers. Manufacturers and distributors may furnish 
novelty items to retailers and consumers, and beer to consumers.
(1) Novelty items are things designed to advertise or promote a specific product 
or brand. Such items may have a utilitarian function in addition to product 
promotion.
(2) Such items may not exceed a value of $1.00 per unit wholesale cost.
(3) Beer may be purchased for consumers provided that such beverages are 
consumed at retail licensed premises in the presence of the purchaser. Such 
purchases shall not be excessive, prearranged or preannounced. All members of 
the manufacturing and distribution tier participating in promotions authorized 
by this paragraph must hold an agent's beer license.
(4) The administrator may grant specific approval for sampling tests designed to 
determine consumer taste preferences. The administrator may impose such 
conditions as he/she deems necessary.
(5) Manufacturers and distributors may, as a social courtesy, give beer and 
other things of value to unlicensed persons who are not employed or affiliated 
with the holder of a retail license or permit. 
(c) Promotional items sold to retailers. Distributors and members of the 
manufacturing tier authorized to sell to retailers may sell promotional items to 
retailers.
(1) Promotional items are things designed to promote a specific product or brand 
and are further designed for use by the consumer, either on or off the 
retailer's premises. 
(2) Promotional items sold must bear a manufacturer's logo, brand or product 
name. 
(3) Promotional items may not be sold for less than the item manufacturer's 
regularly published wholesale price. Payment must be in cash, paid on or before 
delivery. 
(d) Signs provided to retailers.
(1) Distributors and members of the manufacturing tier authorized to sell to 
retailers may furnish, give or sell interior signs to retailers.
(2) A sign is a thing whose primary purpose is the advertisement of a brand or 
product or the price thereof. 
(3) A sign furnished by a distributor or authorized member of the manufacturing 
tier may not bear the name, logo or trademark of a specific retailer. 
(4) No manufacturer or distributor may paint, improve or remodel a retailer's 
buildings or parts of buildings, inside or out, or finance any improvements 
thereto. 
(e) Services provided to retailers. Distributors and members of the 
manufacturing tier may:
(1) service and repair promotional items and signs furnished or sold under the 
provisions of this rule; 
(2) furnish meeting rooms to retailers on the manufacturer's or distributor's 
licensed premises. In no event shall anything be furnished to retailers except 
samples of the manufacturer's or distributor's product or food provided as a 
courtesy in accompaniment to such samples; and 
(3) furnish and install shanks, washers, hose and hose connections, tap rods, 
tap markers, coil cleaning service necessary for the proper delivery and 
dispensing of draft malt beverages. 
(f) Gifts to unlicensed organizations. Manufacturers and distributors may donate 
money, beer or other things of value to unlicensed civic, religious or 
charitable organizations. 
(1) Beer may only be given for consumption in a wet area.
(2) Advertising of events sponsored by organizations receiving donations shall 
include promotion of the organization sponsor or cause in a manner at least 
equal to or greater than the advertising of the industry donor. 
(3) Distributors and manufacturers authorized to sell to retailers may furnish 
draft beer dispensing equipment for use at temporary events, provided that such 
equipment may not be given in exchange for an exclusive sales privilege. 
(4) Manufacturers, distributors and their employees and agents may not serve or 
dispense malt beverages at temporary events. 
(5) "Unlicensed" means not having a permit or license authorizing the sale or 
service of alcoholic beverages. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716686
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

SUBCHAPTER F.Advertising and Promotion-Liquor (Distilled Spirits and Wine)
16 TAC sec.45.117
The Texas Alcoholic Beverage Commission adopts repeals to sec.45.117, governing 
prizes, premiums and gifts offered to consumers by members of the distilled 
spirits and wine industries. This proposed action was originally published in 
the August 19, 1997, edition of the Texas Register (22 TexReg 7979). 
This rule is repealed to allow for the adoption of a new rule sec.45.117 
governing the same subject matter. 
No comments were received about this proposed action.
This repeal is adopted under the Alcoholic Beverage Code, sec.sec.5.31 and 
102.07 which provides the Texas Alcoholic Beverage Commission with the authority 
to prescribe and publish rules necessary to carry out the provisions of the 
Alcoholic Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.102.07, is affected by this rule.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716691
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

The Texas Alcoholic Beverage Commission adopts new sec.45.117, with changes to 
the text as published in the August 19, 1997, edition of the Texas Register (22 
TexReg 7979). This rule governs gifts, services and advertising specialties 
provided by members of the liquor industry to retailers and consumers. This rule 
is adopted to replace prior rules 16 TAC sec.sec.45.117, 45.118 and 45.119. 
The Alcoholic Beverage Code mandates a three-tier system for the manufacture, 
distribution and sale of alcoholic beverages. A primary tenet of this system is 
the statutory command that members of each tier be allowed to operate without 
unreasonable financial or administrative control by members of other tiers. 
Thus, members of the manufacturing and wholesale tiers may not provide goods and 
services to members of the retail tiers in such a way as to create an 
unreasonable dependence by the retailer on suppliers. Such practices are 
referred to as inducements within the Alcoholic Beverage Code and serve to 
undermine retailer independence and unfairly exclude competing products from the 
market. It is the purpose of this rule to ban such practices while allowing fair 
and reasonable means of product promotion. This rule is further adopted to 
parallel the provisions of 16 TAC sec.45.113 to the extent allowed by statute. 
The commission concluded that such parallel construction promoted ease of 
understanding and consistence of interpretation and application for rules 
applicable to the beer and liquor industries. Section 45.117(a)(2) was amended 
to omit the word "wine." Wine is included in the definition of liquor contained 
in sec.1.04(5) of the Alcoholic Beverage Code and is unnecessary in this rule.
Paragraph (b) governs gifts by members of the upper tiers to consumers. Such 
gifts are allowed, under certain conditions, by sec.102.07(d) of the Alcoholic 
Beverage Code. One member of the industry suggested that restrictions on the 
value of items given, as contained in paragraph (b)(2), be removed. The 
commission disagreed with this suggestion. Product promotions through consumer 
gifts are calculated to encourage consumption of that product. While this is a 
normal commercial activity, unlimited promotional offers encourage excessive 
consumption and, therefore, public intemperance. Further, such promotions tend 
to unfairly exclude competing products from the market insofar as the value of 
items given, in an unregulated market, is a function of the size of the 
providing industry member. The commission concluded that limiting the value of 
such novelty items established a reasonable balance between the need of industry 
members to promote their product and the necessity to avoid the evils described 
above.
The Distilled Spirits Council of the United States (DISCUS) further recommended 
that paragraph (b)(2) be amended to specify that its terms do not apply to items 
given through sweepstakes promotions. The commission disagreed with this 
suggestion. Sweepstakes promotions are specifically governed by sec.102.07(e) of 
the Alcoholic Beverage Code and 16 TAC sec.45.106. Thus, reference to such 
promotions in this rule is superfluous. 
The provisions of paragraph (b)(3) are adopted to allow industry members to 
promote their product by purchasing liquor for consumers. If unregulated, such 
promotions can be used to directly and beneficially affect the profits of 
specific retailers. Such practice would constitute an inducement and undermine 
retailer independence. Further, unregulated conduct in this area would serve to 
promote public intemperance by allowing the provision of free liquor to large 
crowds of consumers. The commission concluded that these effects could be 
avoided by mandating that such promotions may not be excessive, prearranged ro 
preannounced. The commission reasoned that these restrictions would serve to 
keep the affected promotions relatively small in scope. 
DISCUS recommended that paragraph (b)(3) be amended to forbid only 
prearrangement or preannouncement of promotional events to consumers by members 
of the manufacturing and wholesale tiers. The commission disagreed with this 
suggestion. Such a rule would allow suppliers and retailers to cooperate so as 
to maximize the financial benefit of the promotion to the retailer and the 
number of consumers given free liquor. These are the results to be avoided by 
the rule.
The commission further concluded that all agents of manufacturers and 
wholesalers participating in such promotions are engaging in conduct regulated 
by Chapters 35 and 36 of the Alcoholic Beverage Code. Accordingly, the phrase 
"purchasers", as originally published in paragraph (b)(3), was replaced with the 
last sentence of paragraph (b)(3) as adopted. 
Paragraph (b)(4) was added to allow industry members to make social, 
nonprofessional gifts without violating the Alcoholic Beverage Code or the rules 
of the commission. Paragraph (c) allows industry members to give promotional 
items to retailers as allowed by sec.102.07(b) of the Alcoholic Beverage Code. 
DISCUS recommended that the limit on the value of these items be raised from 
$78, as contained in the past rule, to $300. The commission agreed with this 
recommendation except that $87 was the maximum amount allowable according to the 
statutory commands contained in sec.102.07(b) of the Alcoholic Beverage Code. 
Paragraph (d) is adopted because of the commissions' conclusion that the 
practices allowed by this provision would be sufficiently limited so as to not 
constitute inducements to retailers. 
Paragraph (f) allows industry members to participate in charitable and civic 
activities. The limitations contained in paragraph (f)(2) are adopted to insure 
that members of the upper tiers do not use such participation to provide an 
unreasonable benefit to specific retailers. 
This new rule is adopted pursuant to the authority of the Alcoholic Beverage 
Code, sec.5.31 and sec.102.07 which provides the Texas Alcoholic Beverage 
Commission with the authority to prescribe and publish rules necessary to carry 
out the provisions of the Alcoholic Beverage Code.
Cross Reference: Alcoholic Beverage Code, sec.102.07, is affected by this rule. 

sec.45.117.Gifts and Advertising Specialties.
(a) General.
(1) This rule is enacted pursuant to sec.sec.102.07(b), 102.07(d) and 109.58 of 
the Alcoholic Beverage Code.
(2) This rule applies to buyers, sellers and consumers of liquor. 
(b) Gifts to consumers. Manufacturers and wholesalers may furnish gifts to 
consumers.
(1) The gifts shall be offered consistently with the restrictions contained in 
sec.102.07(d) of the Alcoholic Beverage Code. 
(2) The items given may be novelty items of limited value. Such items shall be 
designed to promote a specific product or brand and may have a utilitarian 
function in addition to product promotion. 
(3) Liquor may be purchased for consumers provided that such beverages are 
consumed on retail licensed premises in the presence of the purchaser. Such 
purchases shall not be excessive, prearranged or preannounced. All members of 
the manufacturing and wholesaler tiers participating in promotions authorized by 
this paragraph must hold an agent's permit or manufacturer's agent's permit. 
(4) Manufacturers and wholesalers may, as a social courtesy, provide liquor or 
other things of value to unlicensed persons who are not employed or affiliated 
with the holder of a retail license or permit. 
(c) Gifts to Retailers. Manufacturers and wholesalers may furnish advertising 
specialities to retailers. 
(1) Advertising specialities are things designed to advertise or promote a 
specific product or brand. Such items may have a utilitarian function in 
addition to product promotion.
(2) The total cost of all advertising specialties furnished to a retailer shall 
not exceed $87 per brand per calendar year. Dollar limitations may not be pooled 
to provide a retailer with advertising specialties in excess of the maximum 
permitted under this subsection. 
(d) Service provided to retailer. Manufacturers and wholesalers may service and 
repair items furnished to retailers under the provisions of this rule. 
(e) Gifts to Unlicensed Organizations. Manufacturers and wholesalers may donate 
money, liquor or other things of value to unlicensed civic, religious, or 
charitable organizations.
(1) Liquor may only be given for consumption in wet areas.
(2) Advertising of events sponsored by organizations receiving donations shall 
include promotion of the organization sponsor or cause in a manner at least 
equal to or greater than the advertising of the industry donor.
(3) "Unlicensed" means not having a permit or license authorizing the sale or 
service of alcoholic beverages. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716687
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

16 TAC sec.45.118
The Texas Alcoholic Beverage Commission adopts repeals to sec.45.118, governing 
advertising specialties furnished to retailers by members of the distilled 
spirits and wine industries. This proposed action was originally published in 
the August 19, 1997 edition of the Texas Register (22 TexReg 7980). This rule is 
repealed to allow for the adoption of a new rule sec.45.117 governing the same 
subject matter. No comments were received about this proposed action. 
This repeal is adopted under the Alcoholic Beverage Code, sec.sec.5.31 and 
102.07 which provides the Texas Alcoholic Beverage Commission with the authority 
to prescribe and publish rules necessary to carry out the provisions of the 
Alcoholic Beverage Code.
Cross Reference: Alcoholic Beverage Code, sec.102.07, is affected by this rule.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716688
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

16 TAC sec.45.119
The Texas Alcoholic Beverage Commission adopts repeals to sec.45.119, governing 
relaxation of certain restrictions contained in the Alcoholic Beverage Code. 
This proposed action was originally published in the August 19, 1997, edition of 
the Texas Register (22 TexReg 7981). This rule is repealed to allow for the 
adoption of a new rule sec.45.117 governing the same subject matter.
No comments were received about this proposed action.
This repeal is adopted under the Alcoholic Beverage Code, sec.5.31 and 
sec.102.07 which provides the Texas Alcoholic Beverage Commission with the 
authority to prescribe and publish rules necessary to carry out the provisions 
of the Alcoholic Beverage Code.
Cross Reference: Alcoholic Beverage Code, sec.102.07, is affected by this rule. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716689
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Effective date: January 2, 1998
Proposal publication date: August 19, 1997
For further information, please call: (512) 206-3204

PART IV. Texas Department of Licensing and Regulation
CHAPTER 75.Air Conditioning and Refrigeration Contractor License Law
16 TAC sec.sec.75.10, 75.20, 75.21, 75.22, 75.24, 75.70, 75.80, 75.90
The Texas Department of Licensing and Regulation adopts amendments to 
sec.sec.75.10, 75.20, 75.21, 75.22, 75.24, 75.70, 75.80 and 75.90, and new 
sec.75.26, concerning licensing for air conditioning and refrigeration 
contractors. Sections 75.22, 75.24, 75.26, 75.70, and 75.80 are adopted with 
changes to the proposed text as published in the October 24, 1997, issue of the 
Texas Register (22 TexReg 10489). Sections 75.10, 75.20, 75.21, and 75.90 are 
adopted without changes and will not be republished. 
The changes in sec.75.10 add a definition of "Biomedical Remediation" as it 
pertains to duct cleaning, and defines "Employer" as it pertains to new 
requirements in the Act. The change in sec.75.20 deletes the quarterly time 
designation of exams. The changes in sec.75.21 increase the time period for 
rescheduling notices, add sections which limit a candidate's eligibility for 
taking an examination to every 60 days and disallows the retaking of 
examinations for endorsements and classes while currently licensed or eligible 
for licensing for that endorsement or class. 
One change in sec.75.22 clarifies the license and endorsement required to 
advertise and bid for and work requiring a license under the Act; this is 
adopted as published. The other change in sec.75.22 and the change in sec.75.24 
would have changed the period of time for which a license is issued from three 
years to one year. The Department received comments from the Texas Air 
Conditioning Contractors Association and 155 contractors who objected to 
changing the license period, on grounds that this change would cause confusion 
and make it more difficult to coordinate renewal of insurance coverage with 
license renewals. The Department had received a recommendation from the Air 
Conditioning and Refrigeration Contractors Advisory Board in favor of this 
change, but the preponderance of public comment against the change has convinced 
the Department to retain the three year license period. 
The addition of sec.75.26 establishes rules outlining procedures and 
requirements concerning the sale of refrigerants and equipment containing 
refrigerants as well as the issuance of Certificates of Registration as required 
by amendments to the Act passed by the 75th Legislature. The Department received 
comments from the Texas Air Conditioning Contractors Association and 152 
contractors in favor of a Certificate of Registration that would expire in three 
years and would not be transferable when a holder of a Certificate of 
Registration moved from one employer to another. However, the Department 
received comments from the Texas Apartment Association and the Building Owners 
and Managers Association in favor of a Certificate of Registration without an 
expiration period and transferability when the Certificate holder changed 
employers. The Senator and Representative who sponsored the bill that 
established the Certificate of Registration amendment have stated that this was 
their intent also. The Department has decided to change the proposed rule to 
eliminate an expiration date and to allow the Certificate of Registration to be 
valid when changing from one employer to another if the new employment qualifies 
under the same exempt section of the Act.
The change in sec.75.70 clarifies how a general contractor who wishes to 
advertise air conditioning installation as part of services offered must comply 
with the Act if the general contractor does not employ a licensed air 
conditioning and refrigeration contractor in his business. The Department 
received a comment from one contractor who pointed out that use of the word 
"only" in this section would severely limit enforcement of the provision, and 
the Department is deleting the word from the amended section. 
One change in sec.75.80 would have decreased licensing fees from $125 to $50 if 
the license period were to change from three years to one year. Since the 
Department is withdrawing the proposed change in licensing period, the fee 
change is also withdrawn. The other change in sec.75.80 adds a fee to issue a 
Certificate of Registration as required by amendments to the Act. The change in 
sec.75.90 conforms the rule to the statute and rules for the Texas Commission of 
Licensing and Regulation. 
Justification: sec.75.10. Duct cleaning companies should be informed what type 
of work they can advertise for and perform without a license. The relationship 
of the employer of persons who claim exemption from licensing as maintenance 
employees should be defined in order to simplify procedures for issuance of 
Certificates of Registration. 
Justification: sec.75.20. The statute now requires monthly instead of quarterly 
exams. 
Justification: sec.75.21(e). This clarifies the language. 
Justification: sec.75.21(d). A ten day period to reschedule before the 
examination will allow the Department sufficient time to handle reschedule 
requests for monthly exams. 
Justification: sec.75.21(k). Eligibility for taking examinations is limited to 
every 60 days due to the monthly examination requirement set forth in amendments 
to the Act. A sixty day period will allow the Department sufficient turnaround 
time with respect to examination grades and notification. 
Justification: sec.75.21(l). Disallowing retaking of examinations by those 
already licensed or eligible for licensing is to protect the database of 
examination questions. 
Justification: sec.75.22. Contractors and others should know what they may bid 
and advertise to do. 
Justification: sec.75.26. Suppliers, businesses, and other interested persons 
will know how to comply with the new requirements regarding the purchase of 
refrigerant products. 
Justification: sec.75.70. Clarifies advertising rules for general contractors 
and licensed air conditioning and refrigeration contractors. 
Justification: sec.75.80(f). The fee for registering exemption will allow the 
Department to generate revenue to cover the cost of issuing the Certificates of 
Registration. 
Justification: sec.75.90. The rule conforms to Article 9100 and 16 Texas 
Administrative Code, Chapter 60. 
The amendments will function by increasing program integrity. 
The amendments and new rule are adopted under Texas Revised Civil Statutes 
Annotated, article 8861 (Vernon 1997), which provides the Texas Department of 
Licensing and Regulation the authority to promulgate and enforce a code of rules 
and take action necessary to assure compliance with the intent and purpose of 
the Act. 
The Articles affected by the amendments and new rule are Texas Revised Civil 
Statutes Annotated article 8861 (Vernon 1997) and Texas Revised Civil Statutes 
Annotated article 9100 (Vernon 1991). 

sec.75.22.Licensing Requirements-General.
(a) (No change.) 
(b) It is unlawful to advertise, bid for jobs, or otherwise imply that a person, 
partnership, firm, or corporation will perform air conditioning and 
refrigeration contracting unless licensed with the class and endorsement 
appropriate for the work, or using a license number that is not assigned to that 
person, partnership, firm or corporation. 
(c) Each Class A and Class B air conditioning and refrigeration contractor's 
license shall expire three years after the date of issuance.
(d)-(k) (No change.) 

sec.75.24.Licensing Requirements-Renewal.
(a) (No change.) 
(b) The signed renewal application must include any changes of addresses or 
business affiliation. It must be accompanied by the renewal fee, any applicable 
late fee, and evidence of the insurance requirement if current insurance will 
expire in less than 30 days after renewal. The renewal application and fee 
should be received by the department at least 30 days before the expiration date 
so that the renewal can be processed and returned to the license holder before 
expiration. Each license shall be renewed for a three year period. 
(c) (No change.) 

sec.75.26.Licensing Requirements-Certificates of Registration.
(a) Persons exempt under Article 8861, sec.6(a)(2) and sec.6(a)(4) who will 
purchase refrigerants and equipment containing refrigerants shall provide the 
Department a completed application form requesting a Certificate of 
Registration. The application shall list the name, address, phone number, 
federal certification number, social security number, and employer of the exempt 
person. The Certificate of Registration fee shall accompany the application.
(b) Persons who purchase refrigerants or equipment containing refrigerants 
shall, at the time of purchasing such items, provide a picture identification 
along with the Certificate of Registration. 
(c) A Certificate of Registration shall be invalid if the exempt person ceases 
to be employed as defined under sec.6(a)(2) or sec.6(a)(4) of the Act. However, 
the Certificate of Registration remains valid if the exempt person changes 
employers but continues to perform work that is exempt under the same section of 
the Act. Changes in employer and leaving or re-entering the exempt work category 
must be reported to the Department within 30 days of the change. 
(d) A Certificate of Registration does not replace any other requirement for 
purchasing refrigerant products under the Federal Clean Air Act amendments of 
1990 and federal administrative rules adopted under that section. 
(e) A flammable refrigerant or refrigerant substitute that contains a liquid 
petroleum-based product that has been approved by the Environmental Protection 
Agency, may be sold and used in accordance with rules issued by the 
Environmental Protection Agency. 

sec.75.70.Responsibilities of the Licensee.
(a)-(q) (No change.) 
(r) Unlicensed persons who operate as general contractors and subcontract work 
requiring a license under the Act may not bid or contract for a job that 
consists of work requiring a license under the Act unless the person or company 
has a bona fide employee whose license is assigned to the company. If a general 
contractor advertises that air conditioning, heating, or commercial 
refrigeration work is available as part of a job, the ad must state that air 
conditioning work will be performed by a licensed contractor.

sec.75.80.Fees.
(a) (No change.) 
(b) License Fees. License fees are: 
(1) class A or B license for three years $125; 
(2) class A or B renewal every three years $125; 
(3) late renewal fee $50. 
(c)-(e) (No change.) 
(f) Certificate of Registration fee $25. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 9, 1997.
TRD-9716573
Tommy V. Smith
Executive Director
Texas Department of Licensing and Regulation
Effective date: January 1, 1998
Proposal publication date: October 24,1997
For further information, please call: (512) 463-7348

PART VI. Texas Motor Vehicle Commission
CHAPTER 111.General Distinguishing Numbers
16 TAC sec.sec.111.4, 111.8, 111.9, 111.11
The Texas Motor Vehicle Board of the Texas Department of Transportation adopts 
amendments to sec.111.4, concerning House Trailer, Travel Trailer, Towable 
Recreational Vehicle; sec.111.8, concerning Temporary Cardboard Tags; sec.111.9, 
concerning Metal Dealer License Plates and Temporary Cardboard Tags; and 
sec.111.11, concerning Sanctions. Sections 111.8 and 111.9 were adopted with 
changes to the proposed text as published in the September 5, 1997 issue of the 
Texas Register (22TexReg 8827). The amendments to sec.111.4 and sec.111.11 were 
adopted without changes and will not be republished.
The amendment to sec.111.4 expands the definition of house trailer to include 
the new statutory definition of "towable recreational vehicle" and eliminate 
obsolete language regarding measurements. 
The amendments to sec.111.8 and sec.111.9, creating a new supplemental buyer's 
tag, were adopted to implement the statutory changes in the Texas Transportation 
Code by the 75th Legislature, 1997. These amendments create a new supplemental 
motor vehicle buyer's temporary license tag. The supplemental tag was designed 
and existing temporary tags redesigned for uniformity, making the expiration 
date of the tag the predominant feature. This will allow law enforcement to more 
readily determine validity of the tag. The Board agreed to a voluntary 
compliance date of January 1, 1998, with compliance mandatory on April 1, 1998. 
The Board agreed with the comments received on the proposed design of the 
temporary tags, therefore, sec.111.8 is adopted with changes to the design as 
shown in Appendices B-1 through B-4 and C-1 through C-2. The Board also approved 
new sec.111.8(c) authorizing the director to approve the logo printed on 
temporary plates and to approve and enter into licensing agreements with 
printers for printing temporary plates. New sec.111.8(c) is in response to 
comments that the proposed requirements in sec.111.9(h) and (i) requiring 
dealers to maintain a log of control numbers is burdensome and unnecessary. 
The amendments to sec.111.9 clarified the use of the buyer's tag in that it can 
now be used on a laden commercial vehicle and made provision for the new blue 
supplemental tag. The adopted amendments differed from the proposed text by 
eliminating the proposed requirement that temporary tags contain control numbers 
that must be accounted for by dealers in a log. Section 111.9(j) has been 
revised to refer to sec.111.9(i) instead of sec.111.9(h) as originally 
published. 
The amendments to sec.111.11 reiterate that a supplemental tag may be issued as 
provided by law. 
No comments were received regarding the proposed amendments to sec.111.4 and 
sec.111.11. Comments were received on the proposed amendments to sec.111.8 and 
sec.111.9 which are addressed and responded to as follows. 
Written comments on the proposed amendments to sec.111.8 were submitted from a 
variety of interested persons and automobile dealer associations supporting the 
redesign of the temporary tags to feature the expiration date. Several comments 
encouraged an effective date far enough in the future to allow dealers to 
deplete their present stock of temporary tags and to have new tags printed. 
Supporters of the proposed amendments to sec.111.9 believe the redesign to make 
the expiration date the prominent feature would greatly enhance the ability of 
law enforcement to remove expired tags from the highways. This will result in 
fewer unregistered and uninsured drivers and will expedite the collection of 
sales taxes on vehicles that are sold. 
Negative comments were received regarding sec.111.9, stating the proposed 
temporary cardboard tag requirement for a control number and dealer log was 
needless and burdensome. 
Written comments in favor of the proposed amendments as published were received 
from the El Paso Independent Automobile Dealers Association, Texas Dealer Tag 
Printers, Burrell Printing Company and Dealers Express. 
Written comments against the proposed amendments as published were received from 
the Texas Automobile Dealers Association, James Holman, a franchised dealer, 
Mike Dunagan, attorney for Texas Independent Automobile Dealers Association, and 
David Sapp, attorney. 
After staff revisions eliminating the control numbers and dealer log 
requirements, oral comments in favor of the adoption of the revised amendments 
were received from the Texas Automobile Dealers Association, the Texas 
Independent Automobile Dealers Association, and Burrell Printing Company. 
The amendments are adopted under sec.3.06 of the Texas Motor Vehicle Commission 
Code, Article 4413(36) and (36a), Texas Revised Civil Statutes, which provides 
the Board with the authority to adopt rules necessary and convenient to 
effectuate the provisions of the Code and to govern practice and procedure 
before the agency. 

sec.111.8. Temporary Cardboard Tags.
(a) Motor vehicle, travel trailer, and trailer/semitrailer tags shall be printed 
on not less than six-ply cardboard with bolt holes to be horizontally punched on 
seven-inch centers and vertically punched on 4 1/2-inch centers and the numerals 
in the expiration date shall not be less than two inches high. Motorcycle tags 
shall be printed on not less than six-ply cardboard with bolt holes to be 
horizontally punched on 5 3/4-inch centers and vertically punched on 2 3/4-inch 
centers and the numerals in the expiration date shall not be less than one inch 
high. Homemade cardboard tags or cardboard tags which have buyer's tag 
information printed on one side and dealer's tag information printed on the 
other side are not acceptable.
(b) The following appendices indicate the design and the instructions for 
printing and use of each of the respective temporary tags: 
(1) Appendix A-1 - Dealer (design); Appendix A-2 - Dealer (instructions);
(2) Appendix B-1 - Buyer - Initial (design); Appendix B-2 - Buyer - Initial 
(instructions); 
(3) Appendix B-3 - Buyer - Supplemental (design); Appendix B-4 - Buyer -
Supplemental (instructions); 
(4) Appendix C-1 - Charitable (design); Appendix C-2 - Charitable 
(instructions).
(c) The director may designate the number, size, color, and placement of logos 
to be printed on temporary plates and may enter into licensing agreements with 
printers for their use. 

sec.111.9. Metal Dealer License Plates and Temporary Cardboard Tags.
(a) Metal dealer license plates shall be attached to the rear license plate 
holder of vehicles on which such plates are to be displayed. If the vehicle on 
which a metal dealer plate is to be attached displays Texas multi-year plates 
that have not been validated for the current registration period, such multi-
year plates shall be removed and safeguarded. The multi-year plates should be 
placed back onto the vehicle when it is sold or if the metal dealer plate is 
removed from the vehicle. 
(b) Temporary cardboard tags may be displayed either in the rear window or on 
the rear license plate holder of unregistered vehicles. When displayed in the 
rear window, the tag shall be attached in such a manner that it is clearly 
visible and legible when viewed from the rear of the vehicle. If the vehicle on 
which a temporary cardboard tag is to be attached displays Texas multi-year 
license plates that have not been validated for the current registration period, 
the temporary cardboard tag may be displayed in the rear window as prescribed in 
this subsection or placed over the rear license plate. The multi-year plates 
should not be removed from the vehicle. 
(c) Metal dealer license plates and dealer's temporary cardboard tags may not be 
displayed on laden commercial vehicles being operated or moved upon the public 
streets or highways or on the dealer's service or work vehicles.
(1) Examples of vehicles considered as service or work vehicles are: 
(A) vehicles used for towing or transporting other vehicles;
(B) vehicles, including light trucks used in connection with the operation of 
the dealer's shops or parts department; 
(C) courtesy cars on which courtesy car signs are displayed;
(D) rental and lease vehicles; 
(E) dealer-owned vehicles loaned to schools; and 
(F) any boat trailer owned by a dealer or manufacturer which is used to 
transport more than one boat. 
(2) A light truck is not considered to be a laden commercial vehicle: 
(A) when mounted with a camper unit; or 
(B) when towing a trailer for recreational purposes. 
(3) As used in this subsection, light truck shall have the same meaning as 
defined in the Uniform Act Regulating Traffic on Highways, Texas Civil Statutes 
Annotated, Article 6701d, sec.2. 
(d) Each unregistered vehicle being conveyed utilizing the full mount method, 
the saddle mount method, the tow bar method, or any combination thereof in 
accordance with the Transportation Code, sec.503.029, et seq. (formerly Texas 
Revised Civil Statutes Annotated, Article 6686(a), sec.6), shall have a dealer's 
temporary cardboard tag or a buyer's temporary cardboard tag, whichever is 
applicable, affixed to that vehicle. If the vehicle being transported is of a 
type which is prohibited from operating upon the public streets and highway 
(i.e., off-highway vehicle or self-propelled machine) and, thus, cannot qualify 
for registration, a cardboard tag shall be displayed thereon; and such tag shall 
be marked in bold letters with the notation "For Off Highway Use Only." 
(e) Metal dealer license plates and temporary cardboard tags may be displayed 
only on the type of vehicle for which the general distinguishing number is 
issued and for which a dealer is licensed to sell. Non-franchised dealers may 
not display metal plates on new motor vehicles. 
(f) A buyer's temporary cardboard tag or supplemental tag may not be displayed 
on any vehicle being operated upon the public streets and highways for which a 
sale has not been consummated. 
(g) When an unregistered vehicle is sold to another dealer, the selling dealer 
shall remove a dealer's temporary cardboard tag. In such instances, the selling 
dealer may attach a buyer's temporary cardboard tag to the vehicle; or the 
purchasing dealer may display a dealer's temporary cardboard tag or metal dealer 
plate on the vehicle. In the event a vehicle is consigned from one dealer to 
another, the vehicle shall display the temporary cardboard tag of the dealer to 
which such vehicle was consigned. 
(h) A dealer may have printed red initial temporary buyer's cardboard tags, blue 
supplemental tags and green charitable organization tags according to the 
specifications of Appendices B-1 through C-2. 
(i) A dealer shall maintain a record of all dealer metal plates issued to that 
dealer and as to each vehicle such record shall consist of:
(1) the assigned metal plate number; 
(2) the make; 
(3) the vehicle identification number; and 
(4) the name of the person in control. 
(j) The dealer's record as referenced in subsection (i) of this section, shall 
be available at the dealer's location during normal working hours for review by 
a representative of the department. Dealer metal plates which cannot be 
accounted for shall no longer be valid for use and shall be voided. 
(k) At the expiration of an initial red buyer's temporary cardboard tag, a 
supplemental blue temporary cardboard buyer's tag may be issued as provided for 
in the Transportation Code, sec.503.063. 
(l) A charitable organization tag is valid for a period of 30 days from the date 
of issuance. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716651
Brett Bray
Director
Texas Motor Vehicle Commission
Effective date: December 31, 1997
Proposal publication date: September 5,1997
For further information, please call: (512) 416-4800

TITLE 22. EXAMINING BOARDS
PART IV. Texas Cosmetology Commission
CHAPTER 89. General Rules and Regulations
22 TAC sec.89.1
The Texas Cosmetology Commission adopts sec.89.1, concerning administrative 
penalties, with changes to the proposed text as published in the July 1, 1997, 
issue of the Texas Register (22 TexReg 6152). 
The new rule allows the commission through its Executive Director and its 
enforcement staff to assess administrative penalties against establishments and 
individuals who violate or do not comply with either The Cosmetology Act, 
Article 8451a, Vernon's Texas Civil Statutes, commission rules and regulations, 
and commission orders. 
As required by Government Code sec.2001.0331(1), the commission's reasoned 
justification for this rule is set out in this order which includes the 
preamble, which in turn includes the rule. The reasoned justification is 
contained in this preamble, and throughout this preamble, including how and why 
the commission reached the conclusions it did, why the rule is appropriate, the 
factual policy and the legal bases for the rule, a restatement of the factual 
basis for the rule, a summary of comments received from interested parties, 
names of those groups and associations who commented and whether they were for 
or against adoption of the rule, and the reason why the commission disagrees 
with some of the comments and proposals. 
In formulating the rule, which specifies administrative penalties for violations 
of either the Act or commission rules, the commission carefully and fully 
analyzed its statute and rules, and all the data or information the commission 
has or which was submitted to it during the notice and comment period or at the 
public hearing on the rule held on November 10, 1997. The commission used all of 
this as well as its expertise and experience, including that of its staff, to 
develop an administrative penalty schedule that is fair and reasonable to those 
subject to it. The rule applies the statutory criteria set by the legislature 
for determining the amount of the penalty as follows: 
(1) The seriousness of the violation, including the nature, circumstances, 
extent, and gravity of any prohibited acts, and the hazard or potential hazard 
created to the health, safety or economic welfare of the public; 
(2) the economic harm to property or the environment caused by the violation;
(3) the history of previous violations; 
(4) the amount necessary to deter future violations; 
(5) the efforts to correct the violation; and 
(6) any other matter that justice may require. 
To ensure compliance with these criteria, the commission first looked at other 
states administrative penalty rules for informational purposes. This assisted 
the commission in developing a preliminary range of penalty amounts as well as 
types of violation to be included. Next the commission and its staff developed 
the rule with its specific violations and penalty amounts and published this as 
proposed sec.89.1. One of the key features of the proposed rule (and the final 
adopted rule) was a recognition that some violations were clearly more serious 
than others and that there should be a "step-up" in the amount of the 
administrative penalty for second and third offenses. Following publication of 
the proposed rule, several commentators felt that the proposed administrative 
penalty schedule did not indicate a correlation to the seriousness of the 
violation; that the amount of the penalty for minor violations was unnecessary 
to safeguard the general public and would put an undo economic hardship on the 
active licensees; that the amount of penalties would promote the practice of 
underground cosmetology; and, that the overregulation of the industry would 
impede the opportunity to recruit new people into the industry. As a result of 
these and other comments discussed later in this preamble and reasoned 
justification, the commission decided to consider amending the rule before its 
publication in the Texas Register, even though the commissioners voted in a 
public meeting held on September 8, 1997, to adopt the rule as proposed.
On November 10, 1997, the commission held another meeting to consider amending 
the rule following a public hearing which has been requested by 138 people (even 
though these requests were made after the initial adoption meeting held on 
September 8, 1997). At the November 10, 1997, meeting, numerous persons spoke in 
support of making changes to the rule which would correlate the amount of the 
fine to the seriousness of the violation and address the other concerns 
discussed above. Following the public hearing, the commissioners reviewed each 
proposed penalty for each violation to determine whether some penalty amounts 
should be increased, and others should be decreased. The criteria for this 
review and determination was the statutory criteria listed previously, the 
commissioners expertise and experience (virtually every commissioner save the ex 
officio and one public member have years of experience in the cosmetology 
industry as either licensees, salon owners or beauty schools owners), and the 
written comments and other comments at the public hearing. 
Following this extensive review of each violation and penalty, the commission 
unanimously voted to amend the rule and adopt it as amended. By so acting, the 
commissioners determined that the rule, as amended, set the administrative 
penalties at amounts that were appropriate to safeguard the health, safety, and 
economic welfare of the public. Additionally, the commissioners considered all 
the other statutory criteria and all of the comments and letters concerning the 
rule. The commission believes that the rule adopted with its amendments properly 
correlates the seriousness of the violation with the amount of the penalty, will 
increase the effectiveness of the commission's enforcement program by providing 
for an administrative penalty as opposed to the only prior enforcement options 
(suspension or revocation of license). Further, the new rule for the first time, 
allows the commission to assess administrative penalties against unlicensed 
persons or entities practicing cosmetology. This authority will, in the 
commission's view, curtail the underground practice of cosmetology by allowing a 
mechanism and procedure to prevent the unlicensed practice of cosmetology. 
Finally, the rule will encourage persons to enter the cosmetology industry by 
fostering professionalism and encouraging compliance with the Act, commission 
rules and orders. 
This new rule will fulfill the requirements of Senate Bill 1131, which gives the 
commission authority to access administrative penalties for those persons or 
establishments in violation. 
The effective date of the rule is February 1, 1998. This allows time for the 
commission to fully inform all licensees or certificate holders of the new rule 
by holding "town hall" meetings around the state as well as implement all 
necessary internal procedures and forms. The rule applies only to reports of 
violations issued on or after the effective date of the rule. All violations 
issued prior to February 1, 1998, will be processed and are subject to the 
existing procedures and commission rules. 
During the notice and comment period the commission received 4 form letters 
signed by a total of 73 students stating that the commission needed to have more 
authority to enforce regulations in the cosmetology industry. 
RESPONSE: The commission agrees and believes the rule, as amended, provides 
authority to enforce regulation of the industry by providing a standard, easily 
understood and applied schedule of administrative penalties which are both 
reasonable and sufficient to ensure compliance with the Act, commission rules 
and orders in accordance with the legislative intent in SB1131. 
The commission also received 59 form letters signed by 437 persons stating the 
proposed fines did not indicate a correlation to the seriousness of the 
violation; the fine for minor violations were unnecessary to safeguard the 
public and would create an undue economic hardship to the licensees; the 
schedule would encourage the practice of underground cosmetology; and, the 
overregulation of the industry would impede the opportunity to recruit new 
people into the industry. 
RESPONSE: The commission agrees in part and disagrees in part. Based upon public 
comment and its own detailed review of each violation and penalty therefore, the 
commission voted to amend the rule by increasing the amount of the penalty for 
some violations and decreasing the amount of the penalty for other violations. 
In this way the commission believes that there is a correlation between the 
amount of the penalty and the seriousness of the violation as intended by the 
legislature in SB1131. The commission believes that some administrative penalty 
was appropriate for what are termed minor violations, but reduced the penalty 
amount to achieve the statutory goals discussed elsewhere. Likewise, the 
commission reduced certain penalties for violations attributable to specific 
persons (such as an individual student or licensee as opposed to the salon or 
school owner). The commission believes that the rule, as amended, will not 
promote the underground practice of cosmetology because now, for the first time, 
unlicensed cosmetology practitioners are subject to administrative penalties. 
This should, in turn, foster professionalism and compliance with regulation 
needed to protect the public and encourage new entrants into the profession. The 
factual basis for the rule is that by amending The Cosmetology Act, Article 
8451a, sec.35A, Vernon's Texas Civil Statutes, the legislature gave the 
commission the authority to impose administrative penalties. To ensure 
uniformity of practice and avoid the appearance of favoritism or bias, the 
commission has adopted sec.89.1 (creating an administrative penalty schedule) 
under its statutory authority to adopt rules necessary to carry out the purposes 
of the Act. In exercising this authority, the commission applying its expertise 
and experience, and following notice and comment, and a public hearing, adopted 
an administrative penalty schedule which properly addresses the statutory 
criteria in SB1131 and balances those criteria with the concerns and comments 
from the regulated public and all others who provided input to the commission. 
The rule, by providing for administrative penalties which are appropriate, 
balanced and designed to protect the health and safety of the public ensures 
compliance with the Act, commission rules and orders. The actual amounts of each 
administrative penalty reflect the reasoned judgment expertise and experience of 
the commissioners, and the recommendations of staff and the public who submitted 
specific proposals for the penalty amounts. 
The rule is authorized by SB1131 which specifically grants the commission the 
authority to impose administrative penalties. 
Article 8451a, Version's Texas Civil Statutes, is affected by this adopted rule. 

sec.89.1. Administrative Fines. 
(a) The commission shall set up a schedule of administrative fines in order to 
assess civil penalties. The commission desires to be both consistent and 
equitable and to consider and evaluate each case on an individual basis. The 
actual civil penalty which the commission assesses shall be based on the 
commission's consideration of the factors in The Cosmetology Act (Article 8451a, 
V.T.C.S.), but the fine for any one violation or rule adopted under The 
Cosmetology Act shall not exceed $1,000.
(b) Schedule of Fines: In accordance with Article 8451a, V.T.C.S., the 
commission shall adopt the following fine schedules for the 1st, 2nd and 3rd 
violation of the following practitioner, facility, and independent contractor 
licensing rules. For the 4th and subsequent offenses, the provisions of Article 
8451a, V.T.C.S. will apply:
Figure 1: 22 TAC sec.89.1(b) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 9, 1997.
TRD-9716525
Delores Alspaugh
Interim Executive Director
Texas Cosmetology Commission
Effective date: February 1, 1998
Proposal publication date: July 1, 1997
For further information, please call: (512) 454-4674

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 29.Purchased Health Services
SUBCHAPTER F.Physician Services
25 TAC sec.29.504
On behalf of the State Medicaid Director, the Texas Department of Health 
(department) submits adoption, under federal mandate, of the repeal of 
sec.29.504, concerning special certification for physicians furnishing services 
to pregnant and postpartum women, and children under age 21.
This rule is being repealed to comply with H.R. 2015, the Balanced Budget Act of 
1997, sec.4742, enacted August 5, 1997. Section 4742 repeals Social Security 
Act, sec.1903(I), paragraph 12, which was the basis of sec.29.504, requiring 
special certification requirements for physicians furnishing services to 
pregnant and postpartum women, and children under age 21. 
The repeal of sec.29.504 will not affect the amount, duration, or scope of 
services provided under the Texas Medicaid Program. 
This repeal is adopted in accordance with the Human Resources Code, sec.32.021 
and the Texas Government Code, Chapter 531, which provides the Health and Human 
Services Commission with the authority to adopt rules to administer the state's 
medical assistance program and is submitted by the Texas Department of Health 
under its agreement with the Health and Human Services Commission to operate the 
purchased health services program as authorized under Chapter 15, sec.1.07, Acts 
of the 72nd Legislature. The rule is repealed in compliance with federal 
requirements effective August 5, 1997, the date of enactment. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716752
Susan K. Steeg
General Counsel
Texas Department of Health
Effective date: August 5, 1997
Proposal publication date: N/A
For further information, please call: (512) 458-7236

SUBCHAPTER G.Hospital Services
25 TAC sec.29.601
On behalf of the State Medicaid Director, the Texas Department of Health 
(department) adopts an amendment to sec.29.601, concerning payment for hospital 
services, without changes to the proposed text as published in the August 22, 
1997, issue of the Texas Register (22 TexReg 8330).
The section covers hospital reimbursement for outpatient hospital services 
provided to Medicaid recipients. The Human Resources Code, Chapter 32, requires 
the department to establish the Medicaid reimbursement rate for outpatient 
hospital services. The department determines the amount payable for outpatient 
hospital services through similar methods and procedures used in the Social 
Security Act, Title XVIII, as well as specific reimbursement methodology 
established by the department for these services. The current section specifies 
the Medicaid reimbursement rates for outpatient hospital services during state 
fiscal years 1996 and 1997. This amendment will establish the reimbursement rate 
for these services for periods beyond fiscal year 1997. 
The following comment was received concerning the proposed section. Following 
the comment is the department's response and any resulting change(s). 
COMMENT: One commenter generally supported the section as proposed, but also 
encouraged the department to consider a payment policy that pays hospitals their 
costs. 
RESPONSE: The department recognizes the concern of the commenter regarding the 
proposed section. The department is exploring other payment methods being used 
by other states for outpatient hospital services. Any other payment methods that 
the department considers will be submitted for public review and comment. No 
change was made as a result of this comment. 
The comments were received from the Texas Hospital Association (THA). The 
commenter was generally in support of the rule, but expressed concern about the 
current payment policy. 
The section is adopted under the Human Resources Code, sec.32.021 and Government 
Code, sec.531.021, which provide the Health and Human Services Commission with 
the authority to adopt rules to administer the state's medical assistance 
program and is submitted by the Texas Department of Health under its agreement 
with the Health and Human Services Commission to operate the purchased health 
services program and as authorized under Chapter 15, sec.1.07, Acts of the 72nd 
Legislature, First Called Session (1991). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 15, 1997.
TRD-9716792
Susan K. Steeg
General Counsel
Texas Department of Health
Effective date: January 5, 1998
Proposal publication date: August 22, 1997
For further information, please call: (512) 458-7236

CHAPTER 33.Early and Periodic Screening, Diagnosis, and Treatment
SUBCHAPTER J.Texas Health Steps Medical Case Management
25 TAC sec.sec.33.501-33.507
On behalf of the State Medicaid Director, the Texas Department of Health 
(department), by majority vote of the Texas Board of Health (board) on November 
21, 1997, submits this order finally adopting new sec.sec.33.501-33.507, 
concerning Title XIX Texas Health Steps (THSteps) medical case management 
services provided to Medicaid recipients. New sec.sec.33.501-33.507 are adopted 
with changes to the proposed text as published in the June 20, 1997, issue of 
the Texas Register (22 TexReg 5888). The new sections cover definitions, 
eligible recipients, THSteps medical case management services; service 
limitations; applicant and provider qualifications; application, review, and 
monitoring processes; and reimbursement methodologies. The purpose of these new 
sections is to make available medically necessary THSteps medical case 
management services mandated by the federal Early and Periodic Screening, 
Diagnosis and Treatment (EPSDT) program, and to bring the State of Texas into 
compliance with the terms of the Consent Decree in Frew et al vs. McKinney et 
al.
Changes made to the proposed text result from comments received during the 
comment period. The details of the changes are described in the summary of 
comments that follow. Other minor editorial changes were made for clarification 
purposes. 
The following comments were received concerning the proposed rules. Following 
each comment is the department's response and any resulting change(s). 
Comment: Concerning sec.33.501, several commenters stated that the definition of 
"billable contact" should ensure that THSteps medical case managers provide 
appropriate face-to-face services. 
Response: The department agrees and has amended the definition accordingly.
Comment: Concerning sec.33.501, one commenter asked whether contact by a medical 
professional with others on behalf of a recipient would count as a billable 
contact. 
Response: The definition of "billable contact" in sec.33.501 has been amended to 
emphasize that the case manager must contact the eligible recipient and/or the 
recipient's parent or legal guardian directly. Obtaining information from others 
about the recipient by a medical professional on behalf of the recipient would 
not constitute a billable contact. 
Comment: Concerning sec.33.501, one commenter suggested that the criterion 
"physiological basis" should be added to the definition of "Children with 
Special Health Care Needs (CSHCN)". 
Response: The department believes the phrase "biological basis" in the 
definition of CSHCN subsumes the concept of "physiological basis", and that no 
change is necessary.
Comment: Concerning sec.33.501, one commenter pointed out that the definitions 
of "department" and "EPSDT" were merged in the proposed text. 
Response: This typographical mistake has been corrected by separating the two 
definitions. 
Comment: Concerning sec.33.501, several commenters recommended replacing the 
term "speech language therapy" with "speech language pathology" in the 
definition of "health and health-related services". 
Response: The department believes the broader term "speech language services" 
accurately reflects current professional usage and has amended the definition 
accordingly. 
Comment: Concerning sec.33.501, several commenters recommended the addition of 
"home health, private duty nursing, primary home care, and waiver services" to 
the definition of "health and health-related services". 
Response: The department disagrees because the list of Medicaid-covered services 
changes frequently. "Health and health-related services" has been defined as 
"services... including but not limited to..." to preclude the necessity for rule 
revision every time there are changes to the list of covered services. The Texas 
Medicaid Provider Procedures Manual and the Medicaid bimonthly bulletins will 
inform providers about changes in covered services. 
Comment: Concerning sec.33.501, several commenters recommended that "behavioral 
health screening and treatment" be included in the definition of "health and 
health-related services". 
Response: The department recognizes that THSteps checkups include appropriate 
vision, hearing, developmental, laboratory, and behavioral health screening. 
However, this subchapter addresses only the new THSteps medical case management 
benefit, not the provision of other THSteps services. The Texas Department of 
Mental Health and Mental Retardation has adopted rules at Chapter 409 of this 
title (relating to Medicaid Programs) for administering targeted Medicaid case 
management programs to persons eligible for mental health or mental retardation 
case management services. Section 33.504(a)(3) of this subchapter prohibits 
duplication of case management services already available as an existing 
Medicaid benefit. 
Comment: Concerning sec.33.501, one commenter recommended that the phrase 
"appropriate treatment or referral for specialty care . . ." be added to the 
definition of "medical home". 
Response: The department agrees and has amended the definition accordingly.
Comment: Concerning sec.33.501, several commenters suggested the addition of 
"prevention or treatment of behavioral disorders" to the definition of 
"medically necessary". 
Response: Amendment of the definition of "medically necessary" would be 
inappropriate because this subchapter addresses only the new THSteps medical 
case management benefit, not the provision of other THSteps services. The Texas 
Department of Mental Health and Mental Retardation has adopted rules at Chapter 
409 of this title (relating to Medicaid Programs) for administering targeted 
Medicaid case management programs to persons eligible for mental health or 
mental retardation case management services. Section 33.504(a)(3) of this 
subchapter prohibits duplication of case management services already available 
as an existing Medicaid benefit. 
Comment: Concerning sec.33.501, one commenter recommended that the definition of 
"medically necessary" include assistance to services "for maintenance of 
function or prevention of or slowing of further deterioration." 
Response: The department agrees and has amended the definition accordingly.
Comment: Concerning sec.33.501, one commenter recommended that the definition of 
"medically necessary" include changing the word "handicap" to "disability".
Response: The department agrees and has amended the definition accordingly.
Comment: Concerning sec.33.501, several commenters asked that the definition of 
medically necessary behavioral health care' be added to the section, using the 
definition in the Medicaid managed care request for applications. 
Response: Definition and use of the phrase "medically necessary behavioral 
health care" would be inappropriate because this subchapter addresses only the 
new THSteps medical case management benefit, not the provision of other THSteps 
services. The Texas Department of Mental Health and Mental Retardation has 
adopted rules at Chapter 409 of this title (relating to Medicaid Programs) for 
administering targeted Medicaid case management programs to persons eligible for 
mental health or mental retardation case management services. Section 
33.504(a)(3) of this subchapter prohibits duplication of case management 
services already available as an existing Medicaid benefit. 
Comment: Concerning sec.33.501, several commenters questioned whether the 
requirement of a month's hospitalization in the definition of "medically 
fragile" is too restrictive. 
Response: Since a child with less than a month's total hospitalization per year 
would still be eligible for THSteps medical case management under the less 
stringent categories of "medically complex" or "Children with Special Health 
Care Needs", amendment of the definition is unnecessary. 
Comment: Concerning sec.33.502, several commenters suggested that children 
"determined to have a behavioral health condition or behavioral health risk" 
should be included among those recipients eligible for program benefits. 
Response: The department disagrees because this subchapter addresses only the 
new THSteps medical case management benefit, not the provision of other THSteps 
services. The Texas Department of Mental Health and Mental Retardation has 
adopted rules at Chapter 409 of this title (relating to Medicaid Programs) for 
administering targeted Medicaid case management programs to persons eligible for 
mental health or mental retardation case management services. Section 
33.504(a)(3) of this subchapter prohibits duplication of case management 
services already available as an existing Medicaid benefit. 
Comment: Concerning sec.33.502(4), several commenters asked whether eligible 
recipients who live in areas of the state not served by Medicaid managed care 
may also be referred for THSteps medical case management services by primary 
care, acute care, and specialty physicians. 
Response: Section 33.502(4) authorizes primary care, acute care, and specialty 
physicians to refer eligible recipients who live in any part of the state for 
THSteps medical case management. 
Comment: Concerning sec.33.503, several commenters suggested that "behavioral 
health services" should be added to the list of services available to eligible 
recipients. 
Response: The department disagrees because this subchapter addresses only the 
new THSteps medical case management benefit, not provision of other THSteps 
services. The Texas Department of Mental Health and Mental Retardation has 
adopted rules at Chapter 409 of this title (relating to Medicaid Programs) for 
administering targeted Medicaid case management programs to persons eligible for 
mental health or mental retardation case management services. Section 
33.504(a)(3) of this subchapter prohibits duplication of case management 
services already available as an existing Medicaid benefit. 
Comment: Concerning sec.33.503(2), several commenters suggested that "family 
assessment" should include mental health'. 
Response: The department disagrees because this section adequately authorizes 
the department to develop program policies and procedures to address this 
concern. 
Comment: Concerning sec.33.503(4), several commenters suggested that the term 
Individual Service (ISP)' should be used in place of "Written Service Plan 
(WSP)". 
Response: The department agrees and has amended the section accordingly.
Comment: Concerning sec.33.503(6), one commenter asked if a THSteps medical case 
manager should be involved in medical appeals for denied services. 
Response: Medical appeals for denied services are outside the scope of this 
subchapter. The department has adopted rules at Chapter 36 of this title 
(relating to Medicaid Program Appeals Procedures) which contain uniform 
procedures for the conduct of all Medicaid client appeals. 
Comment: Concerning sec.33.504(a), several commenters asked for clarification 
regarding the differences in benefits of the several Medicaid-funded case 
management services in Texas. 
Response: The department recognizes the necessity of educating providers, 
consumers, and advocates regarding the array of case management service benefits 
in the Medicaid program, and of clarifying how THSteps medical case management 
will fit as a new service for eligible recipients. The department plans to meet 
these needs using a variety of training, educational, and communication 
resources. 
Comment: Concerning sec.33.504(b), many commenters stated that requiring prior 
authorization for case management services after one comprehensive and five 
follow-up visits annually is unreasonable. 
Response: The department disagrees because this prior authorization threshold is 
based on experience from other case management programs which the department 
administers, as well as data from other states. Section 33.504(b) in no way 
limits the total number of additional medical case management services an 
eligible recipient may receive during a year. The section simply requires that 
prior authorization must be obtained for more than six visits in a year.
Comment: Concerning sec.33.504(b), many commenters stated that the prior 
authorization requirement for additional THSteps medical case management 
services after six visits per year was unreasonable because of the numerous 
visits which must be arranged to specialists, often in distant health centers, 
as well as to local providers. 
Response: The department disagrees because many of the services cited as 
examples, such as scheduling appointments and arranging transportation, may 
already be available through an existing THSteps program and therefore cannot be 
duplicated under this subchapter. When these services are covered by another 
benefit, they will not be counted against the limit of six THSteps medical case 
management services before prior authorization is required. 
Comment: Concerning sec.33.504(b), many commenters recommended that the number 
of THSteps medical case management services should be increased to ten, 12, or 
17, before prior authorization is required for children with significant health 
care problems. 
Response: The department recognizes that some children will need more THSteps 
medical case management services than the average, and similarly, some will need 
less. However, the department has not found a methodology to predict any 
specific child's needs. The average of six visits per child per year has been 
selected based on the department's previous experience. Prior authorization is 
simply the process by which the provider documents the need and requests 
approval for additional services for eligible recipients. 
Comment: Concerning sec.33.504(b), one commenter described the experience of 
social workers and nurses working with a team of assistants who provide 
comprehensive case management at an average cost of $163 per child per year 
through a Title V contract (maternal and child health block grant funds). The 
commenter added that assistants provide many administrative case management 
services, and recommended that THSteps medical case management services be 
provided by a team of providers. 
Response: The commenter's experience is consistent with the addition of THSteps 
medical case management to the other Medicaid-reimbursable case management 
benefits available to eligible recipients in Texas to address case management 
needs not currently being met. THSteps medical case management services will 
complement the existing array of Medicaid case management services available in 
Texas, including the benefits of administrative case management. 
Comment: Concerning sec.33.504(b), one commenter suggested that a child with 
multiple medical, social, education, and other service needs may require more 
than six visits annually to receive truly comprehensive medical case management 
services, and asked the department to re-evaluate the rule. 
Response: The department acknowledges that some children will need more than the 
average number of THSteps medical case management services. Additional services 
can be requested with appropriate documentation at any time through the prior 
authorization process described in sec.33.504(c) of this subchapter.
Comment: Concerning sec.33.504(c), many commenters were concerned that requiring 
prior authorization after six visits per year would unnecessarily delay care for 
children who need more than the average number of THSteps medical case 
management services. 
Response: The department disagrees. The system for handling prior authorization 
requests for THSteps medical case management services will be modeled upon one 
of the prior authorization processes already used by the department in other 
programs. The department or its designee responds immediately by telephone to 
telephone requests, or by return fax or electronic response within 24 hours, 48 
hours, or no more than five days. Whatever model is selected will not delay the 
provision of additional approved THSteps medical case management services.
Comment: Concerning sec.33.504(c), many commenters expressed concern that the 
prior authorization process would delay needed services for children who the 
department should expect will need more intensive or more frequent case 
management services because of their medical conditions. 
Response: The department acknowledges that some eligible recipients will need 
additional THSteps medical case management services. The department plans to 
describe to applicants, providers, and eligible recipients the process by which 
prior authorization for additional THSteps medical case management services may 
be requested at any time and may be approved for multiple additional visits, 
depending on the documentation of need. 
Comment: Concerning sec.33.504(c), many commenters suggested that authorizing 
only PCPs or physicians accepting primary care provider responsibilities to 
request prior authorization for additional THSteps medical case management 
services was too restrictive, especially if prior authorization will be required 
after six visits per year. Many commenters recommended that specialists as well 
as primary care providers be allowed to request these additional services.
Response: The department agrees and has amended the section accordingly.
Comment: Concerning sec.33.504(c), several commenters recommended that to 
prevent delays in care, all Medicaid providers be allowed to request prior 
authorization for additional THSteps medical case management services. 
Response: The department disagrees because "all" Medicaid providers would 
include many who provide only a narrow range of services to eligible recipients, 
and who would not have access to the child's complete confidential medical 
records as a necessary resource to document the additional THSteps medical case 
management services requested. For example, pharmacists who fill prescriptions 
and provide pharmaceutical information or providers who supply durable medical 
equipment would not be appropriate requestors of prior authorization for 
additional THSteps medical case management services. 
Comment: Concerning sec.33.505(b)(2), several commenters recommended that the 
term "medically necessary" be used to modify only "medical services", and should 
not be applied to "social, educational, and other services."
Response: The department disagrees. Because Medicaid is a health insurance 
program, reimbursement for THSteps medical case management services requires 
medical necessity justification. 
Comment: Concerning sec.33.505(b)(2)(A), several commenters expressed concern 
that the offices of some case management providers are located out of state, and 
stated that the department should require face-to-face visits.
Response: The department agrees and has amended the section accordingly.
Comment: Concerning sec.33.505(b)(2)(F), one commenter recommended that the 
rules should be amended to require explicit knowledge of community-based systems 
and resources. 
Response: The department disagrees because several explicit requirements in 
sec.sec.33.505(b)(2)(B), 33.505(b)(4)(E), and 33.505(b)(5)(C) require providers 
to have explicit knowledge of, coordination with, and participation in community 
resources and systems. 
Comment: Concerning sec.33.505(b)(11)(A), a few commenters recommended that 
licensed professional counselors be authorized to provide THSteps medical case 
management services. 
Response: The department acknowledges that some licensed professional counselors 
may be able to provide THSteps medical case management services. However, 
because the department has no objective means of evaluating the qualifications 
or clinical experience of these health providers in terms of their medical 
knowledge, expertise, and skills necessary to perform the elements of THSteps 
medical case management, sec.33.505(b)(11)(A) will not be amended. 
Comment: Concerning sec.33.505(b)(11)(C), several commenters recommended that 
the degrees of nurses and social workers should not be restricted to degrees in 
science, nursing, or social work. 
Response: The department agrees, and has amended the section accordingly
Comment: Concerning sec.33.505(b)(11)(C), a few commenters suggested that there 
are parent case managers who are qualified to provide THSteps medical case 
management services, and that this subchapter should be amended to permit their 
reimbursement as providers. 
Response: Although some parents may possess the training and experience 
necessary to provide medical case management services, the department disagrees 
because it does not have an objective methodology to evaluate the medical 
training and experience of parents who do not hold Texas licensure in nursing or 
social work. 
Comment: Concerning sec.33.505(b)(11)(C), one commenter recommended that 
licensed social workers not be allowed to do THSteps medical case management 
unless supervised by a Texas-licensed social worker holding a master's or 
doctorate degree. 
Response: The department disagrees. The department believes the professional 
education and training requirements of sec.33.505(b)(11) are adequate to assure 
that THSteps medical case management services can be provided safely and 
effectively by licensed social workers. 
Comment: Concerning sec.33.505(b)(11)(D), several commenters recommended that 
THSteps medical case managers be allowed to delegate tasks to properly trained 
staff who do not themselves meet the qualifications, and be allowed to bill for 
those services. 
Response: The department recognizes that some tasks may be safely delegated to 
case management assistants on the team. However, because THSteps medical case 
managers must interface professionally with providers of many types of health 
and health-related services on behalf of recipients, the section will not be 
amended. 
Comment: Concerning sec.33.506, numerous commenters stated that health 
maintenance organizations (HMOs) should be allowed neither to apply as providers 
nor to employ case managers who could bill the Medicaid program for providing 
THSteps medical case management services because of the perceived conflict of 
interest. 
Response: The department has addressed potential concerns regarding conflict of 
interest with two safeguards in the rules. Section 33.505(b)(2) requires that 
applicants and THSteps medical case management providers assist "eligible 
recipients to access medically necessary medical, social, educational, and other 
services..." Section 33.506(g) requires approved THSteps medical case management 
providers to comply with monitoring by the department, including clinical and 
record reviews. The department will implement program policies and procedures to 
assure compliance with these two sections. For example, individual THSteps 
medical case management providers will be held professionally responsible for 
the quality of case management services billed to the Texas Medicaid program 
based on professional standards whether or not they are employed by another 
entity. If program monitoring demonstrates inadequate or inappropriate referrals 
for medically necessary services, the department may terminate the provider 
agreement of an approved THSteps medical case management provider, whether the 
provider is an individual or an entity (including HMOs). 
Comment: Concerning sec.33.506, a few commenters recommended that THSteps 
medical case managers be independent of managed care organizations. 
Response: THSteps medical case management, like Medicaid-funded targeted case 
management programs, will be a Medicaid benefit which is not included in the 
Medicaid Managed Care capitation, and eligible recipients have complete freedom 
of choice in selecting the provider of these services from among those approved 
by the department. 
Comment: Concerning sec.33.507, several commenters recommended that the 
department add a contractual methodology for reimbursement of providers. 
Response: The department disagrees because use of a contractual methodology 
results in variable unit costs across the state and would violate the federal 
requirement of statewide uniformity of benefits. 
Comment: Concerning sec.33.507, one commenter stated that the rules do not 
address proper methods of payment. 
Response: The department disagrees because the methodology cited in this section 
gives the department authority to reimburse for THSteps medical case management 
services in a manner consistent with the existing benefits of the Texas Medicaid 
fee-for-service program. 
Comment: A few commenters requested that the department evaluate outcomes of 
THSteps medical case management including measurements of cost savings, consumer 
satisfaction, and morbidity. 
Response: The department acknowledges the importance of evaluation. However, an 
affirmative response to this request does not require amendment of the proposed 
rules. The department intends to actively monitor this new Medicaid service for 
quality and cost effectiveness. 
Comment: A few commenters requested that the rules address provision of services 
statewide, plans to encourage recipients and providers to accept case 
management, and plans for outreach to children of farm workers. 
Response: The department recognizes the importance of these activities. However, 
the Medicaid benefit of THSteps medical case management must be the same for all 
eligible recipients statewide. Specific methodologies for providing services to 
selected groups with special needs will be developed in program policies and 
procedures. 
The comments on the proposed rules received by the department were submitted by 
Advocacy Inc., Any Baby Can, Inc., ARC of Texas, ARC of San Antonio Inc., Bexar 
County Case Management Coalition, Bexar County Legal Aid, Center for Public 
Policy Priorities, Central Texas Network for Children with Special Needs, Inc., 
Consumer Union SW Regional Office, Disability Policy Consortium, Ella Austin 
Health Center, Mental Health Association, NASW/TX Chapter, Parent Case 
Management Project/Amarillo, Parent Case Management Program/West Texas 
Rehabilitation Center, Santa Rosa Health Care, Scott and White Clinic, Society 
for Social Work Administrators in Health Care, Texas Appleseed Project, Texas 
Legal Services Center, TDHCSHCN Advisory Committee, Texas Rural Legal Aid, Inc., 
United Cerebral Palsy of Texas, Inc., department staff, and individuals. All 
commenters were not against the rules in their entirety. However, they expressed 
concerns, asked questions, and suggested recommendations for change as discussed 
in the summary of comments. 
The new sections are adopted under the Human Resources Code sec.32.021, and 
Government Code, sec.531.021, which provide the Health and Human Services 
Commission with the authority to propose rules to administer the state's medical 
assistance program and are submitted by the Texas Department of Health under its 
agreement with the Health and Human Services Commission to operate the EPSDT 
program, and as authorized under Chapter 15, sec.1.07, Acts of the 72nd 
Legislature, First Called Session (1991).

sec.33.501.Definitions.
The following words and terms when used in this subchapter shall have the 
following meanings unless the context clearly indicates otherwise. 
Access- The ability of a Texas Health Steps (THSteps)-eligible recipient to 
obtain health and health-related services, as determined by factors such as the 
availability of THSteps services, their acceptability to the child and family, 
the location of health care facilities and other resources, transportation, 
hours of operation, and length of time to see the provider. 
Applicant - An agency, organization, or individual who applies to the Texas 
Department of Health (department) to provide medically necessary THSteps medical 
case management services under this subchapter and who meets the requirement for 
providers as stated in sec.33.505 of this title (relating to Applicant and 
Provider Qualifications). 
Application process - Completion of an application issued by the department to 
potential applicants for approval to deliver medically necessary THSteps medical 
case management services and the ensuing the department's review and disposition 
of the application. 
Billable contact - A documented face-to-face, home visit or phone contact with 
an eligible recipient by a qualified case manager who provides an eligible case 
management service. Billable contacts include comprehensive visits and follow-up 
visits. 
(A) A comprehensive visit includes a family assessment, identification of the 
recipient's service needs, and development of an Individual Service Plan (ISP) 
in a face-to-face encounter. 
(B) A follow-up visit includes provision and coordination of services, and 
follow-up, as described in sec.33.503 of this title (relating to THSteps Medical 
Case Management Services). Follow-up visits may be conducted either by telephone 
or face-to-face. 
Case manager- A qualified provider of approved Medicaid medical case management 
services. 
Children with Special Health Care Needs (CSHCN) - Children who: 
(A) range in age from birth up to 21 years; 
(B) have a health condition(s) that has a biologic, psychological, and/or 
cognitive basis that has lasted or is anticipated to last for at least a year; 
(C) have a health condition(s) that results in limitation of function, 
activities, or social roles in comparison with healthy age peers in the general 
areas of physical, cognitive, emotional, or social growth and development; and 
(D) need health and health-related services over and above the usual for the 
child's age.
Continuity of care - The degree to which the care of a child is provided by the 
same medical home or primary care provider, the system of care remains stable, 
and services are consistent and unduplicated.
Department - The Texas Department of Health. 
EPSDT - Early and Periodic Screening, Diagnosis and Treatment. See definition 
for Texas Health Steps (THSteps). 
Health condition/health risk - Children who: 
(A) range in age from birth up to 21 years; 
(B) have or are at risk for a medical condition, illness, injury, or disability 
that results in limitation of function, activities or social roles in comparison 
with healthy age peers in the general areas of physical, cognitive, emotional, 
or social growth and development; and 
(C) need health and health-related services over and above the usual for the 
child's age. 
Health and health-related services - Services which are provided to meet the 
comprehensive (preventive, primary, and specialty) health needs of the THSteps-
eligible recipient, including but not limited to well child and dental check 
ups, immunizations, acute care visits, pediatric specialty consultations, 
physical therapy, occupational therapy, audiology, speech language services , 
psychological counseling, pharmaceuticals, medical supplies, durable medical 
equipment, nutritional supplements, prosthetics, eye glasses, and hearing aids. 
Medical home - A physician, primary care provider, or clinic that is known to 
the THSteps-eligible recipient and family as the source for the child's 
preventive and primary care services; continuity of care; access to acute health 
needs 24 hours a day; and appropriate treatment or referral for specialty care, 
other health and health-related services, and THSteps medical case management. 
Medically complex - Children who: 
(A) range in age from birth up to 21 years; 
(B) have a serious, ongoing illness or condition(s) that has lasted or is 
anticipated to last at least a year; 
(C) require daily, ongoing medical treatments and monitoring by appropriately 
trained personnel which may include parents or other family members; and 
(D) require access to a complex array of health and health-related services. 
Medically fragile - Children who: 
(A) range in age from birth up to 21 years; 
(B) have a serious, ongoing illness or condition(s) that has lasted or is 
anticipated to last at least a year or has required at least one month of 
hospitalization in the year; 
(C) require daily, ongoing medical treatments and monitoring by appropriately 
trained personnel which may include parents or other family members; 
(D) require the routine use of a medical technical device to compensate for the 
loss of a body function needed to participate in activities of daily living; and 
(E) live with the ongoing threat to continued life. Medically necessary - 
Services which are: 
(A) reasonably necessary to prevent illness(es) or medical condition(s), to 
maintain function or to slow further functional deterioration, or to provide 
early screenings, interventions, care, and/or provide care or treatment for 
eligible recipients who have medical condition(s) that cause suffering or pain, 
cause physical deformity or limitations in function, threaten to cause or worsen 
a disability, cause illness or infirmity, or endanger life; 
(B) provided at appropriate locations and at the appropriate levels of care for 
the treatment of the medical condition(s); 
(C) consistent with health care practice guidelines and standards endorsed by 
professionally recognized health care organizations or governmental agencies; 
(D) consistent with the diagnosis(es) of the condition(s); and 
(E) no more intrusive or restrictive than necessary to provide a proper balance 
of safety, effectiveness, and efficiency. 
Primary care provider (PCP) - A health care professional licensed in Texas who 
agrees with the child and family to provide the medical home. PCPs may include 
pediatricians, obstetricians, internists, family practice physicians, general 
practice physicians, certified nurse midwives, advanced nurse practitioners and 
physician's assistants practicing within the scope of their respective Texas 
licensure boards. A specialty physician may be a PCP if he/she agrees to provide 
all the benefits of a medical home. 
State - The State of Texas. 
THSteps - A federal program known as EPSDT which is required of states by 
Medicaid for children under 21 years who meet certain economic criteria for 
eligibility. In Texas, EPSDT is called the Texas Health Steps Program. 
THSteps administrative case management - The enhancement service which assists 
eligible recipients to gain access to medically necessary health and health-
related services including informing and outreach functions. 
(A) Informing is the effort to educate the eligible recipients and their 
families concerning the periodic health checkups needed by children at certain 
ages. 
(B) Outreach is the effort to contact eligible recipients and their families 
about missed check ups, and to assist them in overcoming barriers to access 
(such as language, transportation, and/or unfamiliarity with qualified service 
providers). 
THSteps medical case management - The federally allowable enhancement service 
which assists eligible recipients in gaining access to medically necessary and 
appropriate medical, social, educational, and other services.

sec.33.502.Eligible Recipients.
Children eligible for THSteps medical case management services under this 
subchapter must be: 
(1) from one year up to 21 years of age; 
(2) Medicaid eligible in Texas; 
(3) determined to have a health condition/health risk, to have special health 
care needs, to be medically complex, or to be medically fragile; and 
(4) referred by their PCPs, other health provider(s), appropriate local or state 
agency(ies), dentist(s), by themselves, or by their families. 

sec.33.503.THSteps Medical Case Management Services.
THSteps medical case management services, as defined in sec.33.501 of this title 
(relating to Definitions), are provided to assist eligible recipients in gaining 
access to medically necessary medical, social, educational and other services to 
reduce morbidity and mortality among children, to encourage the use of cost-
effective health and health-related care, to make referrals to appropriate 
providers, and to discourage over utilization or duplication of services. 
THSteps medical case management, however, is not a "gatekeeper" function. The 
department shall include the following elements in developing policies and 
procedures to implement THSteps medical case management. 
(1) Screening/intake. The screening/intake process includes recording 
demographic information about the eligible recipient, as well as documenting the 
child's health problem(s) and whether the child has a medical home. 
(2) Family assessment. A family assessment includes an in-depth evaluation of 
all issues that impact the short and long term health and well being of the 
eligible recipient and his/her family. 
(3) Identification of service needs. Providers of medical case management 
services shall assess the medically necessary medical, social, educational and 
other service needs of the eligible recipient. 
(4) Individual Service Plan (ISP) development. The ISP is based upon a 
determination of the medically necessary services to meet the identified service 
needs, and a description of the course(s) of action to meet those needs. The ISP 
is the written summary which documents the services to be accessed, those who 
are responsible for contacting the appropriate service providers, and the time 
frame within which the eligible recipient should access services. In accordance 
with the limits of confidentiality, the ISP shall be sent to the medical home, 
as soon as one has been established, and to the appropriate referring and 
service providers. 
(5) Service provision and coordination. Service provision and coordination is 
the implementation of the service plan and the linkage between the eligible 
recipient, the family, and the providers, including the appropriate use of 
available resources to meet the needs of the eligible recipient.
(6) Follow up. Providers of THSteps medical case management services shall 
ascertain, on an ongoing basis, what services specified in the ISP have been 
received by the eligible recipient, reassess the eligible recipient's needs, 
develop appropriate modifications of the ISP based upon medical evaluations and 
reassessments by other providers, and evaluate the satisfaction of the eligible 
recipient, family and medical home provider with the services provided. 

sec.33.504.Service Limitations.
(a) THSteps medical case management services are not reimbursable if they are 
duplicative of other Medicaid case management services. Case management 
activities associated with the following are not reimbursable as THSteps medical 
case management: 
(1) case management services provided to children participating in THSteps as 
part of an existing service by a provider such as a primary care or specialty 
physician, another professional or health-related provider, or a person 
referring the child to THSteps medical case management services;
(2) administrative case management services provided to THSteps eligible 
recipients by a state health and human service agency, the department, or the 
department's designee for activities necessary for the proper and efficient 
administration of the Medicaid program; and 
(3) targeted case management services and/or case management services provided 
through a 1915(c) Waiver Program; i.e., case management services already 
existing as approved Medicaid services in Texas. 
(b) THSteps medical case management services are reimbursable each year for one 
comprehensive service and up to five coordination/follow up services without 
prior authorization. 
(c) Prior authorization for additional THSteps medical case management services 
must be requested by the eligible recipient's primary care provider (PCP), or by 
another of the eligible recipient's primary care or specialty physicians, or by 
the recipient's dentist. Requests must be properly documented, based on the 
requesting provider's written care plan or the case manager's ISP, and submitted 
to the department for review and disposition.

sec.33.505.Applicant and Provider Qualifications.
(a) In order to become a provider of medically necessary THSteps medical case 
management services, an applicant must be a health service provider of primary, 
preventive and/or tertiary health services or have written letters of agreement 
documenting referral relationships with providers of preventive, primary, and 
tertiary health and health-related services. 
(b) An applicant that has met the requirements of subsection (a) of this section 
must: 
(1) agree to comply with the department rules on medically necessary THSteps 
medical case management and the statutory provisions applicable to the provision 
of medically necessary THSteps medical case management; 
(2) develop and maintain a THSteps medical case management program which assists 
eligible recipients to access medically necessary medical, social, educational, 
and other services and which incorporates the following elements: 
(A) assurance that THSteps medical case management services will be provided in 
locations convenient for the eligible recipient to facilitate face-to-face 
contact; 
(B) a comprehensive resource directory, updated at least annually, which 
contains the names, addresses, and telephone numbers of providers of health and 
health-related services including, but not limited to: physicians; other primary 
care providers; Early Childhood Intervention (ECI); Chronically Ill and Disabled 
Children's Services Program (CIDC); Special Supplemental Nutrition Program for 
Women, Infants and Children (WIC); rehabilitation services; Medicaid Medical 
Transportation Program; the Texas Information and Referral Network; and locally 
active community services; 
(C) written letters of agreement with other Medicaid case management 
providers/applicants for determining when other approved Medicaid case managers 
are providing case management for eligible recipients and can extend that role 
beyond a single case management program or service, as required by subsection 
(b)(5) of this section; 
(D) a written procedure for triage and transfer of eligible recipients to other 
Medicaid case management providers within the same service area; 
(E) an internal evaluation process that includes, but is not limited to, 
assessments of satisfaction of eligible recipients, PCPs, and case managers; 
(F) contacts with community social and education resources; and 
(G) assistance for recipients in accessing THSteps administrative case 
management service providers for needs including: 
(i) completing applications; 
(ii) scheduling timely appointments; 
(iii) arranging for transportation to health and health-related services; or 
(iv) other activities required to effectively carry out the medically necessary 
THSteps medical case management individual service plan.
(3) assure that THSteps medical case management services will be: 
(A) initiated through communication with the eligible recipient's PCP and/or 
referral source as described in sec.33.502 of this title (relating to Eligible 
Recipients); 
(B) committed to securing a PCP, in a timely manner, if one does not exist, who 
will provide a medical home for each eligible recipient accessing THSteps 
medical case management services; 
(C) planned, developed, and evaluated with the input of case manager(s) who meet 
the qualifications defined in this section; and 
(D) provided by qualified THSteps medical case managers as defined in this 
section. 
(4) assure that qualified THSteps medical case managers:
(A) have the opportunity to participate in appropriate Medicaid case management 
and THSteps workshops, seminars, and training; 
(B) assume responsibility for all THSteps medical case management services 
provided to eligible recipients including services by their designated support 
staff;
(C) participate in relevant time/motion or cost studies; 
(D) agree to permit the department or its designee to have access to the THSteps 
medical case management provider's records, and permit direct observation of 
case management activities for the purpose of determining the provider's 
suitability to continue participation as a THSteps medical case management 
provider; and 
(E) participate in local and/or regional case management systems to assure 
cooperation and coordination with local health departments, the department's 
public health region, school districts and other Medicaid-approved case 
management providers as evidenced by: 
(i) participation in community coalition meetings; 
(ii) collaboration in planning case management and service delivery systems; and 
(iii) involvement in resolving case management problems. 
(5) maintain on file interagency letters of agreement which: 
(A) define the scope of case management services of each entity;
(B) describe the population to be served; and 
(C) demonstrate a reciprocal and cooperative relationship with other Medicaid-
approved case management providers. 
(6) share information, within the limits of confidentiality, with the department 
and collaborating agencies to facilitate referral and monitoring of eligible 
recipients; 
(7) comply in a timely manner with all department application, data collection, 
and reporting requirements; 
(8) meet applicable state and federal laws governing participation of providers 
in the Medicaid program; 
(9) sign a Medicaid provider agreement and maintain provider status with the 
department which administers the federal Medical Assistance Program; 
(10) submit reports regarding health and case management services as requested 
by the department; and 
(11) maintain documentation that the THSteps medical case management providers 
meet the following requirements: 
(A) have a minimum of one year of pediatric education and/or work experience in 
accordance with department policy; and 
(B) have received education and training regarding THSteps medical case 
management activities; and 
(C) be Texas-licensed registered nurses (with bachelor's or advanced degrees) or 
Texas-licensed social workers (with bachelor's or advanced degrees) with a 
minimum of one year's medical experience in accordance with department policy, 
and have maintained their professional licenses as determined by their 
respective Texas licensure boards; and 
(D) provide professional services in compliance with federal, state, and local 
laws. 

sec.33.506.Application, Review and Monitoring Processes.
(a) Applications to become a THSteps medical case management provider may be 
obtained by contacting the department, Bureau of Children's Health, Health Care 
Delivery Associateship, 1100 West 49th St., Austin, Texas, 78756-3199, (512) 
458-7700. 
(b) Applications must be typed and must be accompanied by all required 
supporting documentation set out in this subchapter. An original and one copy of 
the application must be submitted to the Bureau of Children's Health at the 
address described in subsection (a) of this section. 
(c) Incomplete applications shall not be considered and shall be returned to the 
applicant. 
(d) All complete applications shall be reviewed by the department staff. The 
review process shall be completed within 60 days following receipt of a 
completed application. 
(e) Applicants meeting all THSteps medical case management provider requirements 
shall be approved by the department. Approved applicants will be notified in 
writing by the department, and the department shall initiate the enrollment 
process. 
(f) Applicants who are not approved will be given written notification of the 
reasons for the department's decision. 
(g) Approved applicants and providers will be monitored on an annual or as 
needed basis. Applicants and/or providers who do not comply with program 
requirements may be terminated, placed on probationary status, referred to 
appropriate professional licensure entities for review, and/or referred for 
fraud and abuse investigation as described in department policies and 
procedures. 

sec.33.507.THSteps Medical Case Management Reimbursement Methodology.
(a) The department will reimburse qualified THSteps medical case management 
providers for billable contacts with eligible recipients.
(b) Providers will be reimbursed based on rates set for other Medicaid case 
management services administered by the department. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716706
Susan K. Steeg
General Counsel
Texas Department of Health
Effective date: January 2, 1998
Proposal publication date: June 20, 1997
For further information, please call: (512) 458-7236

PART II. Texas Department of Mental Health and Mental Retardation
CHAPTER 406.ICF/MR Programs, Reimbursement Methodology
Section 1 of House Bill No. 2913 of the 75th Legislative session amended 
sec.531.021 of the Government Code, designates the Texas Health and Human 
Services Commission [HHSC] as the agency responsible for administration of the 
Medicaid program. On September 1, 1997, HHSC also became responsible for 
adopting reasonable rules and standards to govern the setting of Medicaid rate, 
fees, and charges. Before this date, these functions were performed by three 
agencies: the Texas Department of Health [TDH], the Texas Department of Human 
Services [TDHS], and the Texas Department of Mental Health and Mental 
Retardation [TDMHMR].
Pending the adoption of rules by HHSC, sections of Title 25 of the Texas 
Administrative Code that were originally promulgated by TDMHMR be transferred to 
Chapter 355 of Title 1 of the Texas Administrative Code. These transfers ensure 
initial compliance with H.B. 2913, continuing reimbursement of Medicaid 
providers, and protection of the health and welfare of Medicaid recipients.
The last column of the table indicates those rules that have relevance to 
matters other than Medicaid rate setting and therefore should not be deleted 
from Title 25.
The rules remaining with TDMHMR that are rendered obsolete will be revised or 
repealed as appropriate in the future in accordance with 1 TAC sec.91.23(d). A 
schedule of the TDMHMR rules transfer is attached. It lists rules that are 
transferred in toto from Title 40 to Title 1 and those which, for the reason 
stated, should appear in both titles. The rules transfer should be effective 
September 1, 1997.
The Texas Register is administratively transferring or duplicating the following 
rules listed in the conversion chart published in this issue under the Tables 
and Graphics Section. The table lists the old rule numbers and the new rule 
numbers that correspond to them.)
Figure 1 TAC Chapter 355)

CHAPTER 409.General Reimbursement Methodology for Medical
Assistance Programs
Section 1 of House Bill No. 2913 of the 75th Legislative session amended 
sec.531.021 of the Government Code, designates the Texas Health and Human 
Services Commission [HHSC] as the agency responsible for administration of the 
Medicaid program. On September 1, 1997, HHSC also became responsible for 
adopting reasonable rules and standards to govern the setting of Medicaid rate, 
fees, and charges. Before this date, these functions were performed by three 
agencies: the Texas Department of Health [TDH], the Texas Department of Human 
Services [TDHS], and the Texas Department of Mental Health and Mental 
Retardation [TDMHMR].
Pending the adoption of rules by HHSC, sections of Title 25 of the Texas 
Administrative Code that were originally promulgated by TDMHMR be transferred to 
Chapter 355 of Title 1 of the Texas Administrative Code. These transfers ensure 
initial compliance with H.B. 2913, continuing reimbursement of Medicaid 
providers, and protection of the health and welfare of Medicaid recipients.
The last column of the table indicates those rules that have relevance to 
matters other than Medicaid rate setting and therefore should not be deleted 
from Title 25.
The rules remaining with TDMHMR that are rendered obsolete will be revised or 
repealed as appropriate in the future in accordance with 1 TAC sec.91.23(d). A 
schedule of the TDMHMR rules transfer is attached. It lists rules that are 
transferred in toto from Title 40 to Title 1 and those which, for the reason 
stated, should appear in both titles. The rules transfer should be effective 
September 1, 1997.
The Texas Register is administratively transferring or duplicating the following 
rules listed in the conversion chart published in this issue under the Tables 
and Graphics Section. The table lists the old rule numbers and the new rule 
numbers that correspond to them.)
Figure 1 TAC Chapter 355)

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 7. Memoranda of Understanding
30 TAC sec.sec.7.111-7.116
The Texas Natural Resource Conservation Commission (commission) adopts new 
sec.sec.7.111-7.116, concerning Memoranda of Understanding (MOU) between the 
commission and the following six state agencies: the Texas Department of Mental 
Health and Mental Retardation (MHMR), the Texas Department of Criminal Justice 
(TDCJ), the Texas Parks and Wildlife Department (TPWD), the Texas A&M University 
System (TAMU), the Texas Low-Level Radioactive Waste Disposal Authority 
(TLLRWDA), and the General Services Commission (GSC). These rules are adopted 
with changes to the proposed text as published in the July 29, 1997, issue of 
the Texas Register (22 TexReg 7012). 
EXPLANATION OF ADOPTED RULE
Each MOU will set forth the coordination of program responsibility and 
procedural mechanisms relating to National Flood Insurance Program (NFIP) 
minimum regulations, and requires the state agencies to observe Federal 
Emergency Management Agency minimum floodplain management standards. 
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 rule is to adopt an MOU between the 
commission and each state agency. This MOU will define the jurisdictional 
authority of both agencies and will provide for procedural mechanisms for 
meeting NFIP minimum regulations. The MOU will not burden private real property 
as it does not propose any substantive regulations impacting private real 
property. 
COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW 
The executive director has reviewed the proposed rulemaking and determined that 
it is not an action that may adversely affect a coastal natural resource area 
that is subject to the Coastal Management Program. The proposed rule does not 
govern any of the actions that must be subject to the goals and policies of the 
Program, pursuant to 31 TAC sec.505.11. 
PUBLIC HEARING AND COMMENTS 
No public hearing was held. The comment period closed August 29,1997. The 
commission received no comment letters on the proposal. 
LEGAL AUTHORITY 
The new sections are proposed under the Water Code, sec.5.103, which authorizes 
the commission to adopt rules as necessary for the performance of its functions, 
and Water Code, sec.16.318, which provides authorization for the adoption and 
promulgation of rules which are necessary for the state's participation in the 
NFIP. 

sec.7.111. Adoption of Memoranda of Understanding between the Texas Department 
of Mental Health and Mental Retardation and the Texas Natural Resource 
Conservation Commission.
(a) This rule contains the memorandum of understanding (MOU) between the Texas 
Department of Mental Health and Mental Retardation and the Texas Natural 
Resource Conservation Commission, which sets forth the coordination of program 
responsibility and procedural mechanisms for the National Flood Insurance 
Program (NFIP) minimum regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the Texas Department of Mental Health and Mental Retardation, here 
within called the MHMR, is a state agency with direct responsibility for the 
planning, location, or construction of certain state buildings, roads, or other 
facilities which may be in the floodplains of the state; and 
(6) Whereas, the MHMR shall represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
MHMR's structures and activities in the floodplains of the state; and 
(7) Whereas, the MHMR shall establish a floodplain management plan for all its 
existing and proposed structures and activities in the floodplains of the state; 
and 
(8) Whereas, for purposes of this MOU, the MHMR is responsible for its 
structures and activities in the floodplains of the state as defined by the NFIP 
and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP; and 
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the MHMR and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the MHMR and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the state's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the MHMR floodplain management plan, and provide FEMA with necessary 
programmatic reporting information on such floodplain management plans 
established by the MHMR. 
(4) Provide to the MHMR all current forms, timetables, procedural rules and any 
policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the MHMR those compliance and enforcement issues that FEMA 
may raise relative to floodplain management of the state's floodplains. 
(6) Provide the MHMR with access to the commission's electronic database for all 
current Texas communities participating in the NFIP and other information 
pertaining to designated floodplains. 
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The Texas Department of Mental Health and Mental Retardation agrees to: 
(1) Seek compliance with the FEMA's minimum floodplain management standards in 
the location and construction of its state-owned facilities within identified 
floodplains. 
(2) Ensure state appropriations requests for construction or modification of 
buildings, roads, or other facilities transmitted to the Legislative Budget 
Board and the Governor's Budget and Planning Office shall evaluate flood hazards 
when planning the modification to existing or the location of new facilities 
and, as far as practicable, shall consider the economic, safe and prudent use of 
floodplains in connection with such facilities. 
(3) Consider economic, safe, and prudent use of floodplains in the 
administration of state grant or loan programs involving the construction of 
buildings, structures, roads, or other facilities; and evaluate flood hazards in 
connection with such facilities in order to minimize the exposure of the above 
facilities and upstream and downstream properties to potential flood damage and 
the need for future state expenditures for flood protection and flood disaster 
relief. 
(4) Evaluate flood hazards in connection with lands or properties proposed for 
sale to other public entities or private interests and shall, to the extent 
permitted by state law, attach appropriate restrictions with respect to uses of 
the lands or properties for sale. In carrying out this paragraph, the MHMR may 
make appropriate allowance for any estimated loss in sales price resulting from 
the incorporation of use restrictions in the sale documents. 
(5) Take flood hazards into account when evaluating plans, projects, and 
requests for loans or grants for programs which affect land use planning, 
including state permit programs, and shall encourage land use appropriate to the 
degree of hazard involved. 
(6) Prepare, maintain, and update an inventory of the MHMR's respective state-
owned structures and their contents which are located in identified 100-year 
floodplains. The inventory shall include the replacement costs and/or estimated 
fair market value of each structure and its contents.
(7) From the effective date of this MOU, maintain a permanent record system 
which shows the date, location, and amount of flood losses to MHMR's state-owned 
properties and structures.
(8) In the event of future flood damage to existing state-owned structures, 
evaluate the economic benefits of incorporated flood mitigation measures into 
the rehabilitation of the structure such that FEMA's minimum floodplain 
management standards are met. Where physically possible, economically 
beneficial, and environmentally feasible, federal disaster relief loans or 
grants received by the state will be used to implement mitigation measures to 
reduce the potential for future flood damage. 
(9) Provide the local participating community in which the modification to 
existing or new facility is located all necessary information and data for the 
community to document the project and to update FEMA on flood map changes that 
may be applicable. The MHMR will work with the community to resolve any 
floodplain management issues. 
(10) Provide the executive director of the commission with documentation (rules, 
policies, guidance, etc.) for development, supervision, and monitoring of 
floodplain management plans for projects in the floodplains of the state. 
(11) Provide to the executive director of the commission information about 
modification to existing and new facilities in the floodplains of the state 
required for the annual evaluation of the state's implementation of a State 
Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together to refine the existing process for screening and 
prioritization of project proposals located in the floodplains of the state. 
(2) Coordinate efforts in the development and submission of reports as requested 
by FEMA to demonstrate compliance with the minimum NFIP regulations. 
(3) Communicate and coordinate directly with each other and FEMA on matters 
relating to program/project planning and implementation of MHMR 
activities/projects in the floodplains of the state. 
(4) Meet semi-annually to review and discuss the state's floodplain management 
program. 
(5) Work together to develop criteria for the development of floodplain 
management programs, that satisfy the state floodplain management standards as 
established by the commission. 
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination of this agreement, as hereinafter provided. 
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the Texas Department of Mental Health and Mental Retardation, 
Attn:Executive Director, P.O. Box 12668 Austin, Texas 78711-2668. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 

sec.7.112. Adoption of Memoranda of Understanding between the Texas Department 
of Criminal Justice and the Texas Natural Resource Conservation Commission. 
(a) This rule contains the memorandum of understanding (MOU) between the Texas 
Department of Criminal Justice and the Texas Natural Resource Conservation 
Commission, which sets forth the coordination of program responsibility and 
procedural mechanisms for the National Flood Insurance Program (NFIP) minimum 
regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the Texas Department of Criminal Justice, here within called the 
TDCJ, is a state agency with direct responsibility for the planning, location, 
or construction of certain state buildings, roads, or other facilities which may 
be in the floodplains of the state; and 
(6) Whereas, the TDCJ shall represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
TDCJ's structures and activities in the floodplains of the state; and 
(7) Whereas, the TDCJ shall establish a floodplain management plan for all its 
existing and proposed structures and activities in the floodplains of the state; 
and
(8) Whereas, for purposes of this MOU, the TDCJ is responsible for its 
structures and activities in the floodplains of the state as defined by the NFIP 
and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP. 
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the TDCJ and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the TDCJ and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the state's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the TDCJ floodplain management plan, and provide FEMA with necessary 
programmatic reporting information on such floodplain management plans 
established by the TDCJ. 
(4) Provide to the TDCJ all current forms, timetables, procedural rules and any 
policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the TDCJ those compliance and enforcement issues that FEMA 
may raise relative to floodplain management of the state's floodplains. 
(6) Provide the TDCJ with access to the commission's electronic database for all 
current Texas communities participating in the NFIP and other information 
pertaining to designated floodplains. 
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The Texas Department of Criminal Justice agrees to: 
(1) Seek compliance with the FEMA's minimum floodplain management standards in 
the location and construction of its state-owned facilities within identified 
floodplains. 
(2) Ensure state appropriations requests for construction or modification of 
buildings, roads, or other facilities transmitted to the Legislative Budget 
Board and the Governor's Budget and Planning Office shall evaluate flood hazards 
when planning the modification to existing or the location of new facilities 
and, as far as practicable, shall consider the economic, safe and prudent use of 
floodplains in connection with such facilities. 
(3) Consider economic, safe, and prudent use of floodplains in the 
administration of state grant or loan programs involving the construction of 
buildings, structures, roads, or other facilities; and evaluate flood hazards in 
connection with such facilities in order to minimize the exposure of the above 
facilities and upstream and downstream properties to potential flood damage and 
the need for future state expenditures for flood protection and flood disaster 
relief. 
(4) Evaluate flood hazards in connection with lands or properties proposed for 
sale to other public entities or private interests and shall, to the extent 
permitted by state law, attach appropriate restrictions with respect to uses of 
the lands or properties for sale. In carrying out this paragraph, the TDCJ may 
make appropriate allowance for any estimated loss in sales price resulting from 
the incorporation of use restrictions in the sale documents. 
(5) Take flood hazards into account when evaluating plans, projects, and 
requests for loans or grants for programs which affect land use planning, 
including state permit programs, and shall encourage land use appropriate to the 
degree of hazard involved. 
(6) Prepare, maintain, and update an inventory of the TDCJ's respective state-
owned structures and their contents which are located in identified 100-year 
floodplains. The inventory shall include the replacement costs and/or estimated 
fair market value of each structure and its contents.
(7) From the effective date of this MOU, maintain a permanent record system 
which shows the date, location, and amount of flood losses to TDCJ's state-owned 
properties and structures. 
(8) In the event of future flood damage to existing state-owned structures, 
evaluate the economic benefits of incorporated flood mitigation measures into 
the rehabilitation of the structure such that FEMA's minimum floodplain 
management standards are met. Where physically possible, economically 
beneficial, and environmentally feasible, federal disaster relief loans or 
grants received by the state will be used to implement mitigation measures to 
reduce the potential for future flood damage. 
(9) Provide the local participating community in which the modification to 
existing or new facility is located all necessary information and data for the 
community to document the project and to update FEMA on flood map changes that 
may be applicable. The TDCJ will work with the community to resolve any 
floodplain management issues. 
(10) Provide the executive director of the commission with documentation (rules, 
policies, guidance, etc.) for development, supervision, and monitoring of 
floodplain management plans for projects in the floodplains of the state. 
(11) Provide to the executive director of the commission information about 
modification to existing and new facilities in the floodplains of the state 
required for the annual evaluation of the State's Implementation of a State 
Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together to refine the existing process for screening and 
prioritization of project proposals located in the floodplains of the state. 
(2) Coordinate efforts in the development and submission of reports as requested 
by FEMA to demonstrate compliance with the minimum NFIP regulations. 
(3) Communicate and coordinate directly with each other and FEMA on matters 
relating to program/project planning and implementation of TDCJ 
activities/projects in the floodplains of the state. 
(4) Meet semi-annually to review and discuss the state's floodplain management 
program. 
(5) Work together to develop criteria for the development of floodplain 
management programs, that satisfy the state floodplain management standards as 
established by the commission. 
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination of this agreement, as hereinafter provided.
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the Texas Department of Criminal Justice, Attn: Executive 
Director, P.O. Box 99, Huntsville, Texas 77340. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 

sec.7.113. Adoption of Memoranda of Understanding between the Texas Parks and 
Wildlife Department and the Texas Natural Resource Conservation Commission. 
(a) This rule contains the memorandum of understanding (MOU) between the Texas 
Parks and Wildlife Department and the Texas Natural Resource Conservation 
Commission, which sets forth the coordination of program responsibility and 
procedural mechanisms for the National Flood Insurance Program (NFIP) minimum 
regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the Texas Parks and Wildlife Department, here within called the 
TPWD, is a state agency with direct responsibility for the planning, location, 
or construction of certain state buildings, roads, or other facilities which 
maybe in the floodplains of the state; and 
(6) Whereas, the TPWD shall represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
TPWD's structures and activities in the floodplains of the state; and 
(7) Whereas, the TPWD shall establish a floodplain management plan for all its 
existing and proposed structures and activities in the floodplains of the state; 
and 
(8) Whereas, for purposes of this MOU, the TPWD is responsible for its 
structures and activities in the floodplains of the state as defined by the NFIP 
and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP; and 
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the TPWD and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the TPWD and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the state's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the TPWD floodplain management plan, and provide FEMA with necessary 
programmatic reporting information on such floodplain management plans 
established by the TPWD. 
(4) Provide to the TPWD all current forms, timetables, procedural rules and any 
policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the TPWD those compliance and enforcement issues that FEMA 
may raise relative to floodplain management of the state's floodplains. 
(6) Provide the TPWD with access to the commission's electronic database for all 
current Texas communities participating in the NFIP and other information 
pertaining to designated floodplains. 
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The Texas Parks and Wildlife Department agrees to: 
(1) Seek compliance with the FEMA's minimum floodplain management standards in 
the location and construction of its state-owned facilities within identified 
floodplains. 
(2) Ensure state appropriations requests for construction or modification of 
buildings, roads, or other facilities transmitted to the Legislative Budget 
Board and the Governor's Budget and Planning Office shall evaluate flood hazards 
when planning the modification to existing or the location of new facilities 
and, as far as practicable, shall consider the economic, safe and prudent use of 
floodplains in connection with such facilities. 
(3) Consider economic, safe, and prudent use of floodplains in the 
administration of state grant or loan programs involving the construction of 
buildings, structures, roads, or other facilities; and evaluate flood hazards in 
connection with such facilities in order to minimize the exposure of the above 
facilities and upstream and downstream properties to potential flood damage and 
the need for future state expenditures for flood protection and flood disaster 
relief. 
(4) Evaluate flood hazards in connection with lands or properties proposed for 
sale to other public entities or private interests and shall, to the extent 
permitted by state law, attach appropriate restrictions with respect to uses of 
the lands or properties for sale. In carrying out this paragraph, the TPWD may 
make appropriate allowance for any estimated loss in sales price resulting from 
the incorporation of use restrictions in the sale documents. 
(5) Take flood hazards into account when evaluating plans, projects, and 
requests for loans or grants for programs which affect land use planning, 
including state permit programs, and shall encourage land use appropriate to the 
degree of hazard involved. 
(6) Prepare, maintain, and update an inventory of the TPWD's respective state-
owned structures and their contents which are located in identified 100-year 
floodplains. The inventory shall include the replacement costs and/or estimated 
fair market value of each structure and its contents. 
(7) From the effective date of this MOU, maintain a permanent record system 
which shows the date, location, and amount of flood losses to TPWD's state-owned 
properties and structures. 
(8) In the event of future flood damage to existing state-owned structures, 
evaluate the economic benefits of incorporated flood mitigation measures into 
the rehabilitation of the structure such that FEMA's minimum floodplain 
management standards are met. Where physically possible, economically 
beneficial, and environmentally feasible, federal disaster relief loans or 
grants received by the state will be used to implement mitigation measures to 
reduce the potential for future flood damage. 
(9) Provide the local participating community in which the modification to 
existing or new facility is located all necessary information and data for the 
community to document the project and to update FEMA on flood map changes that 
may be applicable. The TPWD will work with the community to resolve any 
floodplain management issues. 
(10) Provide the executive director of the commission with documentation (rules, 
policies, guidance, etc.) for development, supervision, and monitoring of 
floodplain management plans for projects in the floodplains of the state. 
(11) Provide to the executive director of the commission information about 
modification to existing and new facilities in the floodplains of the state 
required for the annual evaluation of the State's Implementation of a State 
Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together to refine the existing process for screening and 
prioritization of project proposals located in the floodplains of the state. 
(2) Coordinate efforts in the development and submission of reports as requested 
by FEMA to demonstrate compliance with the minimum NFIP regulations. 
(3) Communicate and coordinate directly with each other and FEMA on matters 
relating to program/project planning and implementation of TPWD 
activities/projects in the floodplains of the state. 
(4) Meet semi-annually to review and discuss the state's floodplain management 
program. 
(5) Work together to develop criteria for the development of floodplain 
management programs, that satisfy the state floodplain management standards as 
established by the commission. 
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination. of this agreement, as hereinafter provided. 
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the Texas Parks and Wildlife Department, Attn: Executive 
Director, 4200 Smith School Road Austin, Texas 78744. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 

sec.7.114. Adoption of Memoranda of Understanding between The Texas A&M 
University System and The Texas Natural Resource Conservation Commission. 
(a) This rule contains the memorandum of understanding (MOU) between the Texas 
A&M University System and the Texas Natural Resource Conservation Commission, 
which sets forth the coordination of program responsibility and procedural 
mechanisms for the National Flood Insurance Program (NFIP) minimum regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the Texas A&M University System, here within called the TAMU, is a 
state agency with direct responsibility for the planning, location, or 
construction of certain state buildings, roads, or other facilities which maybe 
in the floodplains of the state; and 
(6) Whereas, the TAMU shall represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
TAMU's structures and activities in the floodplains of the state; and 
(7) Whereas, the TAMU shall establish a floodplain management plan for all its 
existing and proposed structures and activities in the floodplains of the state; 
and 
(8) Whereas, for purposes of this MOU, the TAMU is responsible for its 
structures and activities in the floodplains of the state as defined by the NFIP 
and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP; and
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the TAMU and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the TAMU and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the state's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the TAMU floodplain management plan, and provide FEMA with necessary 
programmatic reporting information on such floodplain management plans 
established by the TAMU. 
(4) Provide to the TAMU all current forms, timetables, procedural rules and any 
policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the TAMU those compliance and enforcement issues that FEMA 
may raise relative to floodplain management of the state's floodplains. 
(6) Provide the TAMU with access to the commission's electronic database for all 
current Texas communities participating in the NFIP and other information 
pertaining to designated floodplains. 
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The Texas A&M University System agrees to: 
(1) Seek compliance with the FEMA's minimum floodplain management standards in 
the location and construction of its state-owned facilities within identified 
floodplains. 
(2) Ensure state appropriations requests for construction or modification of 
buildings, roads, or other facilities transmitted to the Legislative Budget 
Board and the Governor's Budget and Planning Office shall evaluate flood hazards 
when planning the modification to existing or the location of new facilities 
and, as far as practicable, shall consider the economic, safe and prudent use of 
floodplains in connection with such facilities. 
(3) Consider economic, safe, and prudent use of floodplains in the 
administration of state grant or loan programs involving the construction of 
buildings, structures, roads, or other facilities; and evaluate flood hazards in 
connection with such facilities in order to minimize the exposure of the above 
facilities and upstream and downstream properties to potential flood damage and 
the need for future state expenditures for flood protection and flood disaster 
relief. 
(4) Evaluate flood hazards in connection with lands or properties proposed for 
sale to other public entities or private interests and shall, to the extent 
permitted by state law, attach appropriate restrictions with respect to uses of 
the lands or properties for sale. In carrying out this paragraph, the TAMU may 
make appropriate allowance for any estimated loss in sales price resulting from 
the incorporation of use restrictions in the sale documents. 
(5) Take flood hazards into account when evaluating plans, projects, and 
requests for loans or grants for programs which affect land use planning, 
including state permit programs, and shall encourage land use appropriate to the 
degree of hazard involved. 
(6) Prepare, maintain, and update an inventory of the TAMU's respective state-
owned structures and their contents which are located in identified 100-year 
floodplains. The inventory shall include the replacement costs and/or estimated 
fair market value of each structure and its contents.
(7) From the effective date of this MOU, maintain a permanent record system 
which shows the date, location, and amount of flood losses to TAMU's state-owned 
properties and structures. 
(8) In the event of future flood damage to existing state-owned structures, 
evaluate the economic benefits of incorporated flood mitigation measures into 
the rehabilitation of the structure such that FEMA's minimum floodplain 
management standards are met. Where physically possible, economically 
beneficial, and environmentally feasible, federal disaster relief loans or 
grants received by the state will be used to implement mitigation measures to 
reduce the potential for future flood damage. 
(9) Provide the local participating community in which the modification to 
existing or new facility is located all necessary information and data for the 
community to document the project and to update FEMA on flood map changes that 
may be applicable. The TAMU will work with the community to resolve any 
floodplain management issues. 
(10) Provide the executive director of the commission with documentation (rules, 
policies, guidance, etc.) for development, supervision, and monitoring of 
floodplain management plans for projects in the floodplains of the state. 
(11) Provide to the executive director of the commission information about 
modification to existing and new facilities in the floodplains of the state 
required for the annual evaluation of the State's Implementation of a State 
Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together to refine the existing process for screening and 
prioritization of project proposals located in the floodplains of the state. 
(2) Coordinate efforts in the development and submission of reports as requested 
by FEMA to demonstrate compliance with the minimum NFIP regulations. 
(3) Communicate and coordinate directly with each other and FEMA on matters 
relating to program/project planning and implementation of TAMU 
activities/projects in the floodplains of the state. 
(4) Meet semi-annually to review and discuss the state's floodplain management 
program. 
(5) Work together to develop criteria for the development of floodplain 
management programs, that satisfy the state floodplain management standards as 
established by the commission. 
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination of this agreement, as hereinafter provided. 
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the Texas A&M University System, Attn: Executive Director, 
USMS 1586 College Station, Texas 77843. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 

sec.7.115. Adoption of Memoranda of Understanding between The Texas Low-Level 
Radioactive Waste Disposal Authority and The Texas Natural Resource Conservation 
Commission. 
(a) This rule contains the memorandum of understanding (MOU) between the Texas 
Low-Level Radioactive Waste Disposal Authority and the Texas Natural Resource 
Conservation Commission, which sets forth the coordination of program 
responsibility and procedural mechanisms for the National Flood Insurance 
Program (NFIP) minimum regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply, 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the Texas Low-Level Radioactive Waste Disposal Authority, here 
within called the TLLRWDA, is a state agency with direct responsibility for the 
planning, location, or construction of certain state buildings, roads, or other 
facilities which maybe in the floodplains of the state; and 
(6) Whereas, the TLLRWDA shall represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
TLLRWDA's structures and activities in the floodplains of the state; and 
(7) Whereas, the TLLRWDA shall establish a floodplain management plan for all 
its existing and proposed structures and activities in the floodplains of the 
state; and 
(8) Whereas, for purposes of this MOU, the TLLRWDA is responsible for its 
structures and activities in the floodplains of the state as defined by the NFIP 
and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP; and
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the TLLRWDA and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the TLLRWDA and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the State's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the TLLRWDA floodplain management plan, and provide FEMA with necessary 
programmatic reporting information on such floodplain management plans 
established by the TLLRWDA. 
(4) Provide to the TLLRWDA all current forms, timetables, procedural rules and 
any policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the TLLRWDA those compliance and enforcement issues that 
FEMA may raise relative to floodplain management of the state's floodplains. 
(6) Provide the TLLRWDA with access to the commission's electronic database for 
all current Texas communities participating in the NFIP and other information 
pertaining to designated floodplains. 
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The Texas Low-Level Radioactive Waste Disposal Authority agrees to: 
(1) Seek compliance with the FEMA's minimum floodplain management standards in 
the location and construction of its state-owned facilities within identified 
floodplains. 
(2) Ensure state appropriations requests for construction or modification of 
buildings, roads, or other facilities transmitted to the Legislative Budget 
Board and the Governor's Budget and Planning Office shall evaluate flood hazards 
when planning the modification to existing or the location of new facilities 
and, as far as practicable, shall consider the economic, safe and prudent use of 
floodplains in connection with such facilities. 
(3) Consider economic, safe, and prudent use of floodplains in the 
administration of state grant or loan programs involving the construction of 
buildings, structures, roads, or other facilities; and evaluate flood hazards in 
connection with such facilities in order to minimize the exposure of the above 
facilities and upstream and downstream properties to potential flood damage and 
the need for future state expenditures for flood protection and flood disaster 
relief. 
(4) Evaluate flood hazards in connection with lands or properties proposed for 
sale to other public entities or private interests and shall, to the extent 
permitted by state law, attach appropriate restrictions with respect to uses of 
the lands or properties for sale. In carrying out this paragraph, the TLLRWDA 
may make appropriate allowance for any estimated loss in sales price resulting 
from the incorporation of use restrictions in the sale documents. 
(5) Take flood hazards into account when evaluating plans, projects, and 
requests for loans or grants for programs which affect land use planning, 
including state permit programs, and shall encourage land use appropriate to the 
degree of hazard involved. 
(6) Prepare, maintain, and update an inventory of the TLLRWDA's respective 
state-owned structures and their contents which are located in identified 100-
year floodplains. The inventory shall include the replacement costs and/or 
estimated fair market value of each structure and its contents.
(7) From the effective date of this MOU, maintain a permanent record system 
which shows the date, location, and amount of flood losses to TLLRWDA's state-
owned properties and structures. 
(8) In the event of future flood damage to existing state-owned structures, 
evaluate the economic benefits of incorporated flood mitigation measures into 
the rehabilitation of the structure such that FEMA's minimum floodplain 
management standards are met. Where physically possible, economically 
beneficial, and environmentally feasible, federal disaster relief loans or 
grants received by the state will be used to implement mitigation measures to 
reduce the potential for future flood damage. 
(9) Provide the local participating community in which the modification to 
existing or new facility is located all necessary information and data for the 
community to document the project and to update FEMA on flood map changes that 
may be applicable. The TLLRWDA will work with the community to resolve any 
floodplain management issues. 
(10) Provide the executive director of the commission with documentation (rules, 
policies, guidance, etc.) for development, supervision, and monitoring of 
floodplain management plans for projects in the floodplains of the state. 
(11) Provide to the executive director of the commission information about 
modification to existing and new facilities in the floodplains of the state 
required for the annual evaluation of the State's Implementation of a State 
Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together to refine the existing process for screening and 
prioritization of project proposals located in the floodplains of the state. 
(2) Coordinate efforts in the development and submission of reports as requested 
by FEMA to demonstrate compliance with the minimum NFIP regulations. 
(3) Communicate and coordinate directly with each other and FEMA on matters 
relating to program/project planning and implementation of TLLRWDA 
activities/projects in the floodplains of the state. 
(4) Meet semi-annually to review and discuss the state's floodplain management 
program. 
(5) Work together to develop criteria for the development of floodplain 
management programs, that satisfy the state floodplain management standards as 
established by the commission. 
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination. of this agreement, as hereinafter provided. 
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the Texas Low-Level Radioactive Waste Disposal Authority, 
Attn: Executive Director, 7701 North Lamar Blvd, Austin, Texas 78752. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 

sec.7.116. Adoption of Memoranda of Understanding between The General Services 
Commission and The Texas Natural Resource Conservation Commission. 
(a) This rule contains the memorandum of understanding (MOU) between the General 
Services Commission and the Texas Natural Resource Conservation Commission, 
which sets forth the coordination of program responsibility and procedural 
mechanisms for the National Flood Insurance Program (NFIP) minimum regulations. 
(1) Whereas, under 44 CFR sec.60.12 of Rules and Regulations pertaining to the 
NFIP, the State of Texas is regarded as a community and therefore must comply, 
with minimum floodplain management standards established for future state 
developments within identified 100-year floodplains in order to participate in 
the Program; and 
(2) Whereas, floodplain or 100-year floodplain, as these terms are used in the 
MOU, means any land area susceptible to being inundated by water from any source 
by that flood which has a one percent chance of being equaled or exceeded in any 
given year; and 
(3) Whereas, a condition of receiving future federal disaster relief loans and 
obtaining flood insurance coverage for insurable state-owned structures depends 
on the state's compliance with the National Flood Insurance Act of 1968, as 
amended; and 
(4) Whereas, the State of Texas has extensive and continuing programs for the 
construction of buildings, roads, and other facilities and annually acquires and 
disposes of lands in flood hazard areas, all of which activities significantly 
influence patterns of commercial, residential, and industrial development; and 
(5) Whereas, the General Services Commission, here within called the GSC, is a 
state agency with direct responsibility for the planning, location, or 
construction of certain state buildings, roads, or other facilities which maybe 
in the floodplains of the state; and 
(6) Whereas, the GSC may represent the state before the Federal Emergency 
Management Agency, (FEMA), or other federal agencies on matters relating to the 
GSC's structures and activities in the floodplains of the state; and 
(7) Whereas, the GSC will cooperate with other state agencies to establish a 
floodplain management plan for all its existing and proposed structures and 
activities in the floodplains of the state; and 
(8) Whereas, for purposes of this MOU, the GSC in conjunction with other state 
agencies is responsible for its structures and activities in the floodplains of 
the state as defined by the NFIP and related Regulations (44 CFR Chapter 1); and 
(9) Whereas, the Texas Natural Resource Conservation Commission, here within 
known as the commission, is the state agency with primary responsibility for 
implementing the constitution and laws of the state related to floodplain 
management; and 
(10) Whereas, the commission has previously been designated as the State 
Coordinating Agency for the NFIP under the Texas Water Code, sec.sec.16.311 et 
seq.; and 
(11) Whereas, under sec.16.318 of the Texas Water Code, the commission has 
statutory authority to adopt and promulgate reasonable rules which are necessary 
for the state's participation in the NFIP; 
(12) Whereas, consistent with the intent of sec.sec.16.311 et seq. of the Texas 
Water Code, the GSC and the commission are committed to the development and 
implementation of a coordinated floodplain management program for the state; and 
(13) Whereas, consistent with Texas law and public policy, the GSC and 
commission mutually desire to protect and maintain a high quality environment 
and the health of the people of the state; 
(14) Now, therefore, in consideration of the following promises, covenants, 
conditions, and the mutual benefits to accrue to the parties of this MOU, the 
Parties, desiring to cooperate in function and service agree as follows: 
(b) The commission agrees to: 
(1) Provide leadership in developing a broad and unified effort to encourage 
sound and economical utilization of the state's floodplains and, in particular, 
to lessen the risk of flood losses. 
(2) Administer, for the state, the cooperation with FEMA in the planning and 
carrying out of state participation in the NFIP; however, the responsibility for 
qualifying in the NFIP belongs to any interested political subdivision. 
(3) Monitor, through the executive director of the commission, implementation of 
the floodplain management plan developed by the GSC and other state agencies, 
and provide FEMA with necessary programmatic reporting information on such 
floodplain management plans established by the GSC in cooperation with other 
state agencies. 
(4) Provide to the GSC all current forms, timetables, procedural rules and any 
policy documents of the commission for addressing and processing complaints 
related to floodplain management of the state's floodplains. 
(5) Coordinate with the GSC and other state agencies those compliance and 
enforcement issues that FEMA may raise relative to floodplain management of the 
state's floodplains. 
(6) Provide the GSC and other state agencies with access to the commission's 
electronic database for all current Texas communities participating in the NFIP 
and other information pertaining to designated floodplains.
(7) Develop and maintain state guidance for state agency structures and 
activities in the floodplains of the state. 
(c) The General Services Commission agrees to: 
(1) Cooperate with other state agencies to seek compliance with the FEMA's 
minimum floodplain management standards in the location and construction of its 
state-owned facilities within identified floodplains.
(2) Cooperate with other state agencies to consider flood hazards in state 
appropriations request for construction or modification of buildings, roads, or 
other facilities transmitted to the Legislative Budget Board and the Governor's 
Budget and Planning Office shall evaluate flood hazards when planning the 
modification to existing or the location of new facilities and, as far as 
practicable, shall consider the economic, safe and prudent use of floodplains in 
connection with such facilities. 
(3) Cooperate with other state agencies to consider economic, safe, and prudent 
use of floodplains in the administration of state grant or loan programs 
involving the construction of buildings, structures, roads, or other facilities; 
and evaluate flood hazards in connection with such facilities in order to 
minimize the exposure of the above facilities and upstream and downstream 
properties to potential flood damage and the need for future state expenditures 
for flood protection and flood disaster relief. 
(4) Cooperate with other state agencies to evaluate flood hazards in connection 
with lands or properties proposed for sale to other public entities or private 
interests and shall, to the extent permitted by state law, attach appropriate 
restrictions with respect to uses of the lands or properties for sale. In 
carrying out this paragraph, the GSC may make appropriate allowance for any 
estimated loss in sales price resulting from the incorporation of use 
restrictions in the sale documents. 
(5) Cooperate with other state agencies to take flood hazards into account when 
evaluating plans, projects, and requests for loans or grants for programs which 
affect land use planning, including state permit programs, and shall encourage 
land use appropriate to the degree of hazard involved. 
(6) Cooperate with other state agencies to prepare, maintain, and update an 
inventory of the GSC's respective state-owned structures and their contents 
which are located in identified 100-year floodplains. The inventory shall 
include the replacement costs and/or estimated fair market value of each 
structure and its contents.
(7) Cooperate with other state agencies to maintain a permanent record system 
which shows the date, location, and amount of flood losses to GSC's state-owned 
properties and structures. 
(8) Cooperate with other state agencies to evaluate the economic benefits of 
incorporated flood mitigation measures into the rehabilitation of the structure 
such that FEMA's minimum floodplain management standards are met. Where 
physically possible, economically beneficial, and environmentally feasible, 
federal disaster relief loans or grants received by the state will be used to 
implement mitigation measures to reduce the potential for future flood damage. 
(9) Cooperate with other state agencies to provide the local participating 
community in which the modification to existing or new facility is located all 
necessary information and data for the community to document the project and to 
update FEMA on flood map changes that may be applicable. The GSC will work with 
the community to resolve any floodplain management issues. 
(10) Cooperate with other state agencies to provide the executive director of 
the commission with documentation (rules, policies, guidance, etc.) for 
development, supervision, and monitoring of floodplain management plans for 
projects in the floodplains of the state. 
(11) Cooperate with other state agencies to provide to the executive director of 
the commission information about modification to existing and new facilities in 
the floodplains of the state required for the annual evaluation of the State's 
Implementation of a State Floodplain Management Plan. 
(d) Both Parties Agree to: 
(1) Work together and with other state agencies to refine the existing process 
for screening and prioritization of project proposals located in the floodplains 
of the state. 
(2) Coordinate efforts with other state agencies in the development and 
submission of reports as requested by FEMA to demonstrate compliance with the 
minimum NFIP regulations. 
(3) Communicate and coordinate and with other state agencies and FEMA on matters 
relating to program/project planning and implementation of activities/projects 
in the floodplains of the state. 
(4) Meet and with other state agencies semi-annually to review and discuss the 
state's floodplain management program. 
(5) Work and with other state agencies together to develop criteria for the 
development of floodplain management programs, that satisfy the state floodplain 
management standards as established by the commission.
(6) Comply with all relevant state and federal statutes in addition to this MOU 
as it relates to the management of floodplains in the state. 
(7) Cooperate on activities related to the implementation of the "Texas State 
Floodplain Management Plan for State Agencies." 
(e) General Conditions: 
(1) Term of MOU. The Term of this MOU shall be from the effective date until 
termination. of this agreement, as hereinafter provided. 
(2) Notice of Termination. Any party may terminate this MOU upon a 30-day 
written notice to the other party. Both parties agree to fulfill any grant 
commitments in place at the time of termination. Only upon written concurrence 
of both parties can this MOU be modified. 
(3) Cooperation of Parties. It is the intention of the parties that the details 
of providing the services in support of this MOU shall be worked out, in good 
faith, by both parties. 
(4) Nondiscrimination. Activities conducted under this MOU will be in compliance 
with the nondiscrimination provisions as contained in Titles VI and VII of the 
Civil Rights Act of 1964, as amended, the Civil Rights Restoration Act of 1987, 
and other nondiscrimination statutes, namely Section 504 of the Rehabilitation 
Act of 1973, Title IX of the Education Amendments of 1972, the Age 
Discrimination Act of 1975, and the Americans With Disabilities Act of 1992, 
which aggregately provide that no person in the United States shall, on the 
grounds of race, color, national origin, age, sex, religion, marital status, or 
disability be excluded from participation in, be denied the benefits of, or be 
otherwise subjected to discrimination under any program or activity receiving 
federal financial assistance. 
(5) Notices. Any notices required by this MOU to be in writing shall be 
addressed to the respective party as follows: Texas Natural Resource 
Conservation Commission, Attn: Executive Director, P.O. Box 13087, Austin, Texas 
78711-3087 and to the General Services Commission, Attn: Executive Director, 
P.O. Box 13047, Capitol Station , Austin, Texas 78711-3047. 
(6) Effective Date of Agreement. This Agreement is effective upon execution by 
both parties. By signing this Agreement, the signatories acknowledge that they 
are acting under proper authority from their governing bodies. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 15, 1997.
TRD-9716749
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Effective date: January 1, 1998
Proposal publication date: July 29, 1997
For further information, please call: (512) 239-4640

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART X. Texas Water Development Board
CHAPTER 363. Financial Assistance Programs
The Texas Water Development Board (the board) adopts the repeal of existing 
sec.363.511 and new sec.363.511, containing the provisions of a Memorandum of 
Understanding between Texas Water Development Board and Texas Department of 
Housing and Community Affairs, without changes to the proposed text as published 
in the October 31, 1997, Texas Register issue of the (22 TexReg 10618) and will 
not be republished. The new section replaces the expired memorandum of 
understanding and details the responsibility of each agency regarding the 
coordination of funds out of the Economically Distressed Areas Program, 
administered by the board, and the Colonia Fund, administered by the Texas 
Department of Housing and Community Affairs. The board finds that the two 
agencies are administering these two funding programs both of which are 
intending to address the water and wastewater needs of residents living in areas 
that lack financial resource to address those needs. The Memorandum of 
Understanding adopted in this rule will coordinate the use of these two programs 
so as to maximize delivery of the funds and minimize administrative delay in the 
expenditure of the funds in these two programs. 
No comments were received on the proposed amendments. 

SUBCHAPTER E. Economically Distressed Areas Program
Economically Distressed Areas
31 TAC sec.363.511
The repeal is adopted under the authority of the Texas Water Code, sec.6.104 
which requires the board to adopt by rule any memorandum of understanding 
between the board and any other state agency. sec.363.511. Memorandum of 
Understanding between Texas Water Development Board and Texas Department of 
Housing and Community Affairs. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716676
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: December 31, 1997
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

The new section is adopted under the authority of the Texas Water Code, 
sec.6.104 which requires the board to adopt by rule any memorandum of 
understanding between the board and any other state agency. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716674
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: December 31, 1997
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

CHAPTER 371. Drinking Water State Revolving Fund Program Requirements
31 TAC sec.371.24
The Texas Water Development Board (board) adopts new sec.371.24, concerning 
financial assistance to disadvantaged communities through the Drinking Water 
State Revolving Fund, without changes to the proposed text as published in the 
October 31, 1997, issue of the Texas Register (22 TexReg 10620) and will not be 
republished. The new section includes eligibility criteria, the definition of a 
disadvantaged community and provisions for funding. 
The eligibility criteria in sec.371.24(a) is defined as set forth in Texas Water 
Code, sec.15.6041(c). The definition of a disadvantaged community in 
sec.371.24(b)(1), the term of loans in sec.371.24(e) and the total amount of 
subsidies in sec.371.24(f) are set forth pursuant to the Safe Drinking Water Act 
Amendments of 1996, sec.1452. Pursuant to the Texas Water Code, sec.15.602(5) 
and the Safe Drinking Water Act Amendments of 1996, sec.1452, the Board was 
given the authority to establish the criteria for defining a disadvantaged 
community. The adjusted median household income was used as one of the two 
criteria in sec.371.24(b)(2) for defining a disadvantaged community pursuant to 
Texas Water Code, sec.15.602(5), which allows the Board to establish criteria 
based on measures that may include income levels of residents of the area. The 
adjusted median household income is information that is readily available, is 
easily verified and is indicative of the current economic situation of the 
community. The 25% income threshold is a measure already used by the Board to 
establish eligibility for the Economically Distressed Areas Program pursuant to 
the Texas Water Code, sec.16.341(1). 
Household affordability factors were used as the other criteria in 
sec.371.24(b)(2) to define a disadvantaged community because the factors measure 
whether a project is affordable to the customers of the system. The household 
affordability factors indicate the capacity of the customers to support the cost 
of water and/or wastewater service, including debt service, through user 
charges. If the water or combined water and sewer bill exceeds a certain 
percentage of the adjusted median household income, then the project would not 
be affordable to the community without assistance from this program. The 
percentage of the average water or combined water and sewer bill to median 
household income is a methodology used by other states in developing 
affordability guidelines as well as the federal government in determining 
affordability of projects. The 1.0% for water rates used in sec.371.24(b)(2)(A) 
is the percentage used by the Environmental Protection Agency in its User Manual 
for the Municipality's Ability to Pay Computer Model. The 2.0% for water and 
sewer rates in sec.371.24(b)(2)(B) was used because it was recognized that the 
additional cost of sewer services impacts the ability of customers to pay for a 
new project and this percentage was used by another state in developing its 
affordability guidelines. 
The average yearly water and sewer bill defined in sec.371.24(b)(5) and (6) are 
calculated by applying the community's rate structure to the average number of 
gallons of water used in-house per year by the average occupied household. This 
was done to minimize the differences in water usage for individual systems when 
determining the percentage of the water or combined water and sewer bill to the 
adjusted median household income. The average number of gallons used in-house 
for water and sewer in sec.371.24(b)(5) and (6) is the state-wide average of 
domestic water that enters a household and returns via the sewer system, and the 
numbers were based on data submitted by political subdivisions and compiled by 
the Texas Natural Resources Conservation Commission. 
Section 371.24(d) provides that if the cost of the project exceeds the estimated 
cost as listed on the intended use plan, then the additional cost will be funded 
through the Water Supply Account. This was done because of the limited amount of 
funds available for the Drinking Water SRF and the disadvantaged community 
account, and because of the Board's necessity to establish funding lines for 
available funds and its procedure for inviting applications that fall above the 
funding line. If the additional costs were funded from the Drinking Water SRF, 
it would affect the Board's ability to fund all projects above the funding line. 
No comments were received on the proposed new section. 
The new section is adopted under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716675
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: December 31, 1997
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

CHAPTER 375. State Water Pollution Control Revolving Fund
The Texas Water Development Board (the board) adopts amendments to sec.375.17 
and sec.375.52, the repeal of sec.sec.375.19-375.21, and new sec.sec.375.20-
375.22, concerning the State Water Pollution Control Revolving Fund (SRF), 
without changes to the proposed text as published in the October 31, 1997, issue 
of the Texas Register (22 TexReg 10621) and will not be republished. Section 
375.20 is adopted with changes to the proposed text. The amendments, repeals, 
and new sections provide correction of federal requirements and cites and add 
provisions to limit the amount of SRF funds that can be applied for by any one 
loan application. Amendments to sec.375.17, which addresses Capitalization Grant 
Requirements, correct a cite for the Davis-Bacon Act and comply with federal law 
in deleting the Davis-Bacon Act as a federal requirement for funds appropriated 
after 1994. New sec.375.19 addresses the Distribution of Funds and has added a 
requirement to provide public notice of the availability of funds. New 
sec.375.19 further adds a provision to limit a single loan application to no 
more than 25% of the total SRF funds that are available. The funds that are 
available as a result of this section are offered at a 5% lower interest rate 
than funds from other Board programs that serve similar purposes. The lower 
interest rate offsets the effort required by borrowers to comply with the 
additional federal requirements associated with the SRF program. It is 
anticipated that there will be a demand for the SRF funds, and the 25% limit 
should allow for the funding of both large and small projects, while preventing 
a few large borrowers from applying for most or all of the funds available. This 
limitation on loan size is one step in a general Board plan for assessment of 
SRF capacity and demand and for overall improvement in the lending capacity of 
the SRF program. 
New sec.375.20 has been renumbered from the repealed version, addresses the 
Rating Process, and is unchanged in text except for renumbering. New sec.375.21 
has been renumbered from the repealed version, addresses the Intended Use Plan, 
and is unchanged in text. New sec.375.22 has been renumbered from the repealed 
version, addresses Administrative Cost Recovery, and is unchanged in text. 
Amendments to sec.375.52 correct cites to subsections of new sec.375.22, which 
are needed as a result of the renumbering of the new section. 
No comments were received on the proposed amendments. 

Program Requirements
31 TAC sec.sec.375.17, 375.19-375.22
The amendments and new sections are adopted under the authority of the Texas 
Water Code, sec.6.101 and sec.15.605 which provide the Texas Water Development 
Board with the authority to adopt rules necessary to carry out the powers and 
duties in the Water Code and other laws of the State.

sec.375.20. Rating Process. 
(a) The rating process will be used to rate treatment works if a funds shortage 
exists under sec.375.19 of this title (related to Distribution of Funds). The 
rating process is designed to achieve optimum water quality management, 
consistent with public health and water quality goals, and to give consideration 
to the varying populations of the state's political subdivisions. In situations 
where the application includes line work and sewage treatment plant work, and/or 
includes more than one sewage treatment plant, the application will be given the 
rating calculated for the principal project, type of work or the single facility 
which comprises the majority of the cost. The criteria used to rate applications 
and the number of points assignable to each criterion shall be as follows. 
(1) Applications in which the principal project is a sewage treatment plant or 
lines which are at 90% or greater of their rated capacity as reported to the 
commission will receive three points. 
(2) Applications in which the principal project is a sewage treatment plant or 
lines which are 75% or greater but less than 90% of their rated capacity as 
reported to the commission will receive two points.
(3) Applications in which the principal project is a sewage treatment plant or 
lines which are 65% or greater but less than 75% of their rated capacity as 
reported to the commission will receive 1.5 points.
(4) Applications in which the principal project is under a schedule imposed by a 
court order, EPA administrative order, or commission enforcement order which 
requires initiation of construction within 18 months will receive one point. 
(5) Applications in which the principal project is required to meet a higher 
level of treatment than required by their current permit or in which the 
applicant elects not to discharge in order to avoid higher levels of treatment 
will receive 1.5 points.
(6) Applications in which the principal project will provide service to areas 
which have no sewerage systems and which have documented public health problems 
will receive two points. 
(7) Applicants which are proposing to construct nonconventional, innovative, or 
alternative treatment or collection systems will receive one point. 
(8) Applicants having jurisdiction over a population of 1,000 or less will 
receive three points. 
(9) Applicants having jurisdiction over a population greater than 1,000, but 
less than 2,500 will receive 2.5 points. 
(10) Applicants having jurisdiction over a population of 2,500 or greater, but 
less than 10,000 will receive two points. 
(11) Applicants having jurisdiction over a population of 10,000 or greater, but 
less than 100,000 will receive 1.5 points. 
(12) Applicants having jurisdiction over a population of 100,000 or greater will 
receive one point. 
(13) Applicants whose proposed project will create or upgrade a system that 
qualifies as a regional system under the definition of Texas Water Code, 
sec.17.001(24), will receive one point. 
(b) The rating score will be the sum of the points assigned to the application 
under all criteria which are applicable to the application.
(c) In the event more than one applicant receives the same rating score, funding 
will first be made available to the applicant(s) whose sewage treatment plant(s) 
or lines are at the greatest percentage of their rated capacities. 
(d) Where the existing treatment facilities will be abandoned and sewage 
diverted to a different location, the diversion line will be given the rating 
score of the treatment facilities to be abandoned. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716703
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: January 1, 1998
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

31 TAC sec.sec.375.19-375.21
The repeals are adopted under the authority of the Texas Water Code, sec.6.101 
and sec.15.605 which provide the Texas Water Development Board with the 
authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716704
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: January 1, 1998
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

Board Action on Application
31 TAC sec.375.52
The amendment is adopted under the authority of the Texas Water Code, sec.6.101 
and sec.15.605 which provide the Texas Water Development Board with the 
authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716702
Suzanne Schwartz
General Counsel
Texas Water Development Board
Effective date: January 1, 1998
Proposal publication date: October 31, 1997
For further information, please call: (512) 463-7981

TITLE 34. PUBLIC FINANCE
PART I. Comptroller of Public Accounts
CHAPTER 3.Tax Administration
SUBCHAPTER JJ.Cigarette and Tobacco Products Regulation
34 TAC sec.3.1201
The Comptroller of Public Accounts adopts new sec.3.1201, concerning the fee for 
outdoor advertising of cigarettes or tobacco products and the imposition of an 
administrative penalty for a violation of the Act, with changes to the proposed 
text as published in the September 5, 1997, issue of the Texas Register (22 
TexReg 8929). The 75th Legislature, 1997, in Senate Bill 55, amended the Health 
and Safety Code, Chapter 161, to require a purchaser of advertising to be liable 
for a fee based on the gross sales price of any outdoor advertising of 
cigarettes or tobacco products in this state. Additionally, the comptroller was 
authorized to impose an administrative penalty against a purchaser who violates 
a section or rule associated with the Act.
The comptroller made changes to subsection (f)(1), to clarify that records 
relating to the purchase of outdoor advertising should be kept by the purchaser 
for at least four years after the date each report is filed with the 
comptroller. The title of subsection (h) was changed to "Administrative 
remedies" to more accurately describe the information presented in the 
subsection. In addition, the paragraphs under subsection (h) have been 
reorganized and new information has been added regarding notification of 
violations, the administrative hearings process, and the judicial recourse 
process. 
Comments were received from Covington & Burling, a Washington, D.C., law firm, 
concerning the legality of the statute and the rule. Covington & Burling 
contends that the fee on outdoor advertising of cigarettes and tobacco products 
violates the first amendment to the United States Constitution, and the Texas 
Constitution, Article I, sec.8, therefore, the comptroller should not propose 
rules to implement the provisions of the statute. The comptroller disagreed 
since the constitutionality of the statute is an issue under the jurisdiction of 
the state and federal courts. Administrative agencies have no power to determine 
the constitutionality of statutes, Texas Board of Pharmacy v. Walgreen Texas 
Co., 520 S.W.2d 845. The comptroller also believes the proposed rule is 
consistent with the authority granted the comptroller in the Government Code, 
Chapter 2001, and the Health and Safety Code, Chapter 161, as amended by the 
75th Legislature, 1997. Under Government Code, sec.311.021, it is presumed that 
the legislature intended "compliance with the constitution of this state and the 
United States..." See also Linick v. Employers Mutual Casualty Co., 822 S.W.2d 
297.
Covington & Burling also recommended adding language to the rule to exempt 
advertising expense information reported by the cigarette manufacturers from 
disclosure under the Texas Open Records Act (Public Information Act). The 
comptroller rejected this recommendation because there is no statutory authority 
to implement the recommendation. 
Covington & Burling also commented that the definition of "gross sales price" is 
too broad and suggested that the definition be changed to exclude artwork and 
design from the production cost component of gross sales price. The comptroller 
agreed to revise the definition and subsection (a)(2)(A) has been changed to 
clarify the term "gross sales price." 
This new section is adopted under the Tax Code, sec.111.002 and sec.111.0022, 
which provide the comptroller with the authority to prescribe, adopt, and 
enforce rules relating to the administration and enforcement of the provisions 
assigned to the comptroller by law. 
The new section implements the Health and Safety Code, sec.sec.161.121, 161.123, 
161.125 and the Tax Code, sec.154.1142. 

sec.3.1201.Fee for Outdoor Advertising of Cigarettes or Tobacco Products.
(a) Definitions. The following words and terms, when used in this section shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Cigarettes - This term has the meaning assigned by Tax Code, sec.154.001. 
(2) Gross sales price - The sum of: 
(A) production costs, including the cost of layout, paper, materials, printing, 
distribution, and sign installation, but not the cost of design and artwork;
(B) media costs, including the cost for leasing billboards, or any other outdoor 
space where a message or sign is displayed; and
(C) cost of sales or commissions paid to an agency or broker.
(3) Outdoor advertising - A medium, including a structure, display, light 
device, figure, painting, drawing, message, plaque, poster, sign, or billboard, 
that: 
(A) is used to advertise or to inform; 
(B) is visible from the main-traveled way of a street or highway; and 
(C) does not include: 
(i) a medium displayed inside a building, even if the medium is visible from 
outside the building; or 
(ii) a medium that displays the name of the business, unless that medium also 
contains a cigarette or tobacco product trade mark, brand or trade name, or logo 
type. 
(4) Purchase - A transaction, including: 
(A) an installment and credit purchase; 
(B) an exchange of service for service or money; 
(C) a signed contract between a purchaser and a seller; and
(D) any other transaction that is the functional equivalent of a purchase. 
(5) Tobacco product - This term has the meaning assigned by the Tax Code, 
sec.155.001. 
(b) Fee imposed. A fee is imposed on each purchaser of outdoor advertising in an 
amount that is equal to 10% of the gross sales price of any outdoor advertising 
of cigarettes or tobacco products in this state.
(c) Reporting period. A purchaser of outdoor advertising for cigarettes or 
tobacco products shall file a report on or before the 20th day of the month 
following the end of the calendar quarter in which the advertising was 
purchased. 
(1) Except as provided in paragraph (2) of this subsection, the calendar quarter 
report due dates and the corresponding reporting periods are: 
Figure: 34 TAC 3.1201(c)(1)
(2) The first report due will cover the period of September 1, 1997, through 
December 31, 1997. The due date for the report due October 20, 1997, is extended 
to January 20, 1998. 
(d) Report forms. Each purchaser must report the outdoor advertising fee on the 
Texas cigarettes or tobacco products outdoor advertising fee report as 
prescribed by the comptroller. The fact that a purchaser does not receive the 
form or does not receive the correct form from the comptroller for the filing of 
the report does not relieve the purchaser of the responsibility of filing a 
report and paying the required fee. 
(e) Payment of the fee. On or before the 20th day of the month following each 
reporting period, every purchaser shall remit the total fee amount due. 
(f) Records required. 
(1) Invoices, purchase contracts, installment or credit agreements, or any other 
records relating to the outdoor advertising purchase must be kept by the 
purchaser for at least four years after the date each report is filed with the 
comptroller. 
(2) Any records or equipment of any person liable for the fee must be made 
available to the comptroller or the comptroller's representative for examination 
to verify the accuracy of any report made or to determine the fee liability in 
the event no report is filed. 
(3) Each purchaser must maintain records showing: 
(A) the location at which outdoor advertising is displayed in this state; 
(B) the date on which the advertising was purchased; 
(C) the gross sales price paid for outdoor advertising displayed in this state; 
and 
(D) if outdoor advertising is purchased for display in more than one state, 
information to support an allocation to Texas of the appropriate portion of the 
total amount paid. 
(g) Penalty and interest. 
(1) A purchaser who does not file a report as provided by subsection (c) of this 
section, shall pay a penalty of 5.0% of the amount of the fee due and payable. 
If the purchaser does not file the report and pay the fee before the 30th day 
after the date on which the fee or report is due, the person shall pay a penalty 
of an additional 5.0% of the amount of the fee due and payable. 
(2) The provisions of the Tax Code, Chapter 101 and Chapters 111 through 113, 
apply to the administration, payment, collection, and enforcement of fees 
imposed under this section, in the same manner as those chapters and sections 
apply to the administration, payment, collection, and enforcement of taxes 
imposed under the Tax Code, Title 2. 
(h) Administrative remedies. 
(1) A purchaser of outdoor advertising who violates any part of the Health and 
Safety Code, sec.161.123, or a rule adopted under that section, will be subject 
to an administrative penalty and will be notified by certified mail of the 
reasons for the penalty. The recourse for a purchaser who does not agree with 
the imposed administrative penalty will be governed by the provisions of the Tax 
Code, Chapter 111, the Government Code, Chapter 2001, and sec.sec.1.1-1.42 of 
this title (relating to Practice and Procedure).
(2) The administrative penalty for a violation may be in an amount not to exceed 
$5,000. Each day a violation continues or occurs is a separate violation for the 
purpose of imposing a penalty. 
(3) The following factors shall be taken into consideration when an 
administrative penalty is imposed: 
(A) the amount of fees due and owing; 
(B) the attempted concealment of misconduct by the person who committed the 
violation; 
(C) premeditated misconduct by the person who committed the violation; 
(D) intentional misconduct by the person who committed the violation; 
(E) the motive of the person who committed the violation;
(F) prior misconduct of a similar or related nature by the person who committed 
the violation; 
(G) prior written warnings from any government agency or official regarding 
statutes or regulations pertaining to the misconduct; 
(H) violation by the person who committed the violation of an order of the 
comptroller; 
(I) lack of rehabilitative potential or likelihood for future misconduct of a 
similar nature; 
(J) relevant circumstances increasing the seriousness of the misconduct; and 
(K) any other matter justice may require. 
(4) If the comptroller finds that a violation has occurred and imposes an 
administrative penalty, the comptroller shall give notice of the violation by 
certified mail to the permit holder within 15 days of the finding of a 
violation. The notice must include a statement of the rights of the permit 
holder to judicial review. 
(5) If the permit holder does not respond to the written notice of violation 
within 15 calendar days or requests an administrative hearing, a hearing will be 
set. The notice of the setting of the hearing shall be governed by sec.sec.1.1-
1.42 of this title. The permit holder will have 15 days in which to respond to 
the setting of the hearing.
(6) If the comptroller finds that a purchaser of outdoor advertising violates 
this section or Health and Safety Code, Subchapter K, sec.161.123, or a rule 
made pursuant to these sections, the comptroller may impose an administrative 
fine and/or suspend or revoke a permit pursuant to the Tax Code, sec.154.1142. 
(7) An administrative hearing will be held at the office of the Comptroller of 
Public Accounts in Austin, Texas. The recourse for a permit holder who does not 
agree with the administrative decision will be governed by the provisions of the 
Tax Code, Chapter 111; Government Code, Chapter 2001; and sec.sec.1.1-1.42 of 
this title. 
(8) The burden of proof in an administrative hearing pursuant to this rule is by 
a preponderance of the evidence unless otherwise provided by statute. 
(9) A penalty collected under this section shall be deposited in the general 
revenue fund. 
(i) If the purchaser of outdoor advertising does not pay the amount of the 
administrative penalty, the comptroller may refer the matter to the attorney 
general for collection of the amount of the penalty.
(j) Effective date. The fee is imposed on all outdoor advertising of cigarettes 
or tobacco products purchased after August 31, 1997.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 15, 1997.
TRD-9716780
Martin Cherry
Chief, General Law
Comptroller of Public Accounts
Effective date: January 5, 1998
Proposal publication date: September 5, 1997
For further information, please call: (512) 463-3699

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART VII. Texas Commission on Law Enforcement Officer Standards and Education
CHAPTER 211.Administrative Division
37 TAC sec.211.1
The Texas Commission on Law Enforcement Officer Standards and Education adopts 
an amendment to sec.211.1, concerning Definitions, without changes to the 
proposed text as published in the October 3, 1997, issue of the Texas Register 
(22 TexReg 9863). This section is amended to include definitions of the terms 
"Contract Jail" and "Contract Jailer," which will be used in proposed new 
sections regarding contract jailer certification. The Contract Jailer 
Certification program is required by Senate Bill 367, passed during the 75th 
legislative session.
Comments were received questioning whether the definition of "Contract Jail" as 
it appears in the amendments limits the types of inmates that can be held in a 
correctional facility. In response, staff noted that, on the contrary, the 
section merely defines the facilities whose personnel must be certified under 
the new Contract Jailer Certification program. 
Comments were received from BRG Correctional Management Services. 
The Commission is authorized to adopt new rules by Texas Government Code 
Annotated, Chapter 415, sec.415.010. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716747
Edward T. Laine
Chief, Professional Standards and Administrative Operations
Texas Commission on Law Enforcement Officer Standards and Education 
Effective date: March 1, 1998
Proposal publication date: October 3, 1997
For further information, please call: (512) 450-0188

CHAPTER 221.Proficiency Certificates and Other Post-Basic Licenses Division
37 TAC sec.221.33
The Texas Commission on Law Enforcement Officer Standards and Education adopts 
new sec.221.33, concerning firearms instructor proficiency, without changes to 
the proposed text as published in the October 3, 1997, issue of the Texas 
Register (22 TexReg 9864). This section was developed to implement a new program 
to certify firearms instructors for law enforcement. The certificate is not 
mandatory. It is a voluntary certificate which an instructor can obtain to 
demonstrate his or her advanced proficiency in the area of firearms instruction 
for law enforcement. Requirements for issuance of the certificate include 
designation as firearms instructor for an agency or academy; three years 
experience as an officer or firearms instructor; a Commission Instructor 
License; completion of the firearms instructor course; and no prohibitive 
criminal history.
Comments were received regarding this section requesting that the Commission 
consider the National Rifle Association's 40-hour Police Firearm Instructor 
Course as an appropriate substitute for the Commission's firearms instructor 
course. In response, staff noted that the Commission has considered and rejected 
courses offered by the NRA as substitutes for the Commission's course, based on 
testimony offered during the Commission's September 1997 quarterly meeting.
Comments were received from the Gainesville Police Department. 
The Commission is authorized to issue proficiency certificates by Texas 
Government Code Annotated, Chapter 415, sec.415.010. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 12, 1997.
TRD-9716746
Edward T. Laine
Chief, Professional Standards and Administrative Operations
Texas Commission on Law Enforcement Officer Standards and Education 
Effective date: March 1, 1998
Proposal publication date: October 3, 1997
For further information, please call: (512) 450-0188

PART IX. Commission on Jail Standards
CHAPTER 259. New Construction Rules
New Maximum Security Design, Construction, and Furnishing Requirements
37 TAC sec.sec.259.135, 259.136, 259.143
The Commission on Jail Standards adopts amendments to sec.sec.259.135, 259.136, 
and 259.143, concerning New Construction Rules, New Maximum Security Design, 
without changes to the proposed text as published in the October 17, 1997, issue 
of the Texas Register (22 TexReg 10255). 
Adoption of the rule will allow greater flexibility to design professionals and 
the Commission in the placement of and number of sanitary fixtures in county 
jail design. 
The rule functions to allow the placement of showers within a dormitory sleeping 
area or day room space and allows the Commission to determine the sufficient 
number of toilets, lavatories, and showers to be provided in day rooms. 
No comments were received. 
The amendments are proposed under Government Code, Chapter 511, which provides 
the Texas Commission on Jail Standards with the authority to adopt reasonable 
rules and procedures establishing minimum standards for the construction, 
equipment, maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716472
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

New Lockup Design, Construction and Furnishing Requirements
37 TAC sec.sec.259.232, 259.233, 259.239
The Commission on Jail Standards adopts amendments to sec.sec.259.232, 259.233, 
and 259.239, concerning New Construction Rules, New Lockup Design, without 
changes to the proposed text as published in the October 17, 1997, issue of the 
Texas Register (22 TexReg 10256). Adoption of the rule will allow greater 
flexibility to design professionals and the Commission in the placement of and 
number of sanitary fixtures in county jail design. 
The rule functions to allow the placement of showers within a dormitory sleeping 
area or day room space and allows the Commission to determine the sufficient 
number of toilets, lavatories, and showers to be provided in day rooms. 
No comments were received. 
The amendments are proposed under Government Code, Chapter 511, which provides 
the Texas Commission on Jail Standards with the authority to adopt reasonable 
rules and procedures establishing minimum standards for the construction, 
equipment, maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716471
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

37 TAC sec.sec.259.330, 259.331, 259.338
The Commission on Jail Standards adopts amendments to sec.sec.259.330, 259.331 
and 259.338, concerning New Construction Rules, New Medium Security Design, 
without changes to the proposed text as published in the October 17, 1997, issue 
of the Texas Register (22 TexReg 10257). 
Adoption of the rule will allow greater flexibility to design professionals and 
the Commission in the placement of and number of sanitary fixtures in county 
jail design. 
The rule functions to allow the placement of showers within a dormitory sleeping 
area or day room space and allows the Commission to determine the sufficient 
number of toilets, lavatories, and showers to be provided in day rooms. 
No comments were received.
The amendments are proposed under Government Code, Chapter 511, which provides 
the Texas Commission on Jail Standards with the authority to adopt reasonable 
rules and procedures establishing minimum standards for the construction, 
equipment, maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716470
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

37 TAC sec.sec.259.430, 259.431, 259.437
The Commission on Jail Standards adopts amendments to sec.sec.259.430, 259.431 
and 259.437, concerning New Construction Rules, New Minimum Security Design, 
without changes to the proposed text as published in the October 17, 1997, issue 
of the Texas Register (22 TexReg 10258). 
Adoption of the rule will allow greater flexibility to design professionals and 
the Commission in the placement of and number of sanitary fixtures in county 
jail design. 
The rule functions to allow the placement of showers within a dormitory sleeping 
area or day room space and allows the Commission to determine the sufficient 
number of toilets, lavatories, and showers to be provided in day rooms.
No comments were received. 
The amendments are proposed under Government Code, Chapter 511, which provides 
the Texas Commission on Jail Standards with the authority to adopt reasonable 
rules and procedures establishing minimum standards for the construction, 
equipment, maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716469
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

37 TAC sec.259.438
The Commission on Jail Standards adopts an amendment to sec.259.438, concerning 
New Construction Rules, New Minimum Security Design, without changes to the 
proposed text as published in the October 17, 1997, issue of the Texas Register 
(22 TexReg 10259). 
Adoption of the rule will provide consistent minimum security standards. The 
rule functions to provide wall construction for minimum security facilities 
which matches existing and present minimum security construction. 
No comments were received. 
The amendment isproposed under Government Code, Chapter 511, which provides the 
Texas Commission on Jail Standards with the authority to adopt reasonable rules 
and procedures establishing minimum standards for the construction, equipment, 
maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716467
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

New Long-Term Incarceration Design, Construction and Furnishing Requirements
37 TAC sec.sec.259.739, 259.740, 259.747
The Commission on Jail Standards adopts amendments to sec.sec.259.739, 259.740 
and 259.747, concerning New Construction Rules, New Long-Term Incarceration 
Design, without changes to the proposed text as published in the October 17, 
1997, issue of the Texas Register (22 TexReg 10259). Adoption of the rule will 
allow greater flexibility to design professionals and the Commission in the 
placement of and number of sanitary fixtures in county jail design. 
The rule functions to allow the placement of showers within a dormitory sleeping 
area or day room space and allows the Commission to determine the sufficient 
number of toilets, lavatories, and showers to be provided in day rooms. 
No comments were received. 
The amendments are proposed under Government Code, Chapter 511, which provides 
the Texas Commission on Jail Standards with the authority to adopt reasonable 
rules and procedures establishing minimum standards for the construction, 
equipment, maintenance, and operation of county jails. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716468
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

CHAPTER 283. Discipline and Grievances
37 TAC sec.283.1
The Commission on Jail Standards adopts amendments to sec.283.1, concerning 
Discipline and Grievances, without changes to the proposed text as published in 
the October 17, 1997, issue of the Texas Register (22 TexReg 10260). 
Adoption of the rule will allow inmates to sign a waiver for a disciplinary 
hearing regarding major and minor infractions. 
The rule functions to require that an inmate be properly notified prior to 
signing a waiver for a disciplinary hearing, that the waiver contain specific 
items, and prohibit loss of good time as being part of a waiver. 
No comments were received. 
The amendment is proposed under Government Code, Chapter 511, which provides the 
Texas Commission on Jail Standards with the authority to adopt reasonable rules 
and procedures establishing minimum standards for the custody, care, and 
treatment of prisoners. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 8, 1997.
TRD-9716473
Jack E. Crump
Executive Director
Commission on Jail Standards
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 463-5505

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART I. Texas Department of Human Services
CHAPTER 15.Medicaid Eligibility
SUBCHAPTER A.General Information
40 TAC sec.15.105
The Texas Department of Human Services (DHS) adopts amendments to sec.15.105 and 
sec.15.500, concerning description of eligible clients and nonvendor living 
arrangements, in its Medicaid Eligibility chapter. 
The justification for the amendments is to comply with the Balanced Budget Act 
of 1997. The amendments provide continued Medicaid coverage for children who 
were receiving Supplemental Security Income (SSI) benefits as of August 22, 
1996, and were subsequently denied because of the change in disability criteria 
required by Public Law 104-193. 
The amendments will function by ensuring that DHS is in compliance with federal 
law. 
The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendment is adopted in 
compliance with federal requirements effective July 1, 1997. The amendment 
implements sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the Human 
Resources Code. 

sec.15.105. Description of Eligible Clients. 
The Texas Medical Assistance Program provides, under Title XIX (Medicaid) of the 
Social Security Act, certain benefits to all individuals who meet the 
department's definition of eligible recipients. Eligible recipients are: 
(1)-(16) (No change.) 
(17) children who were receiving SSI benefits as of August 22, 1996, and were 
subsequently denied because of the change in disability criteria required by 
Public Law 104-193. This coverage is mandated by Public Law 105-33, the Balanced 
Budget Act of 1997, effective July 1, 1997. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716663
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: July 1, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

SUBCHAPTER F.Budgets and Payment Plans
40 TAC sec.15.500
The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendment is adopted in 
compliance with federal requirements effective July 1, 1997. The amendment 
implements sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the Human 
Resources Code. 

sec.15.500. Nonvendor Living Arrangements. 
(a) The department determines eligibility for individuals and couples (in 
nonvendor living arrangements) who: 
(1) apply for retroactive Medicaid coverage; 
(2) apply for or have eligibility redetermined under the Social Security Act, 
1929(b)(2)(B) or TP51J criteria; 
(3) apply for or have eligibility redetermined under various federally-mandated 
Medicaid Assistance Only (MAO) programs; 
(4) apply for or have eligibility redetermined under home and community-based 
waiver programs. 
(b)-(d) (No change.) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716664
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: July 1, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

SUBCHAPTER D.Resources
40 TAC sec.15.410
The Texas Department of Human Services (DHS) adopts amendments to sec.15.410 and 
sec.15.475, concerning deeming of resources and deeming of income, in its 
Medicaid Eligibility chapter. 
The justification for the amendments is to comply with federal regulations 
effective September 8, 1997. The amendments mandate that an ineligible spouse or 
parent who is absent from a deeming household solely because of active duty 
continues to be a member of the household for income and resource deeming 
purposes for long-term care Medicaid eligibility. 
The amendments will function by ensuring that DHS is in compliance with federal 
regulations. 
The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendment is adopted in 
compliance with federal requirements effective September 8, 1997. 
The amendment implements sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the 
Human Resources Code. 

sec.15.410.Deeming of Resources.
(a)-(b) (No change.) 
(c) Deeming for ineligible spouse or parent absent because of active duty 
military assignment. An ineligible spouse or parent who is absent from a deeming 
household solely because of an active duty military assignment continues to be 
considered a member of the household for resources deeming purposes. If the 
absent service member's intent to continue living in the household changes, 
deeming stops beginning with the month following the month in which the intent 
changed. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716661
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: September 8, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

SUBCHAPTER E.Income
40 TAC sec.15.475
The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendment is adopted in 
compliance with federal requirements effective September 8, 1997. 
The amendment implements sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the 
Human Resources Code. 

sec.15.475.Deeming of Income. 
(a) The following requirements apply: 
(1)-(2) (No change.) 
(3) Deeming only applies in household situations. Unless temporarily absent, 
only those individuals residing in the household are a part of the household for 
deeming purposes. An individual is not a member of the household for deeming 
purposes if he is absent from home for a period which is not a temporary 
absence. A temporary absence exists when an individual (eligible individual or 
child, or ineligible spouse, parent, or child) leaves the household but intends 
to, and does, return in the same month or the following month. If the absence is 
temporary, deeming continues to apply. An ineligible spouse or parent who is 
absent from a deeming household solely because of an active duty military 
assignment continues to be considered a member of the household for income 
deeming purposes. If the absent service member's intent to continue living in 
the household changes, deeming stops beginning with the month following the 
month in which the intent changed. 
(4) (No change.) 
(b)-(d) (No change.) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716662
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: September 8, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

SUBCHAPTER D.Resources
40 TAC sec.15.435
The Texas Department of Human Services (DHS) adopts amendments to 
sec.sec.15.435, 15.460, and 15.475, concerning liquid resources, income 
exemptions, and deeming of income, in its Medicaid Eligibility chapter. 
The justification for the amendments is to comply with the Balanced Budget Act 
of 1997. The amendments exclude from income and resources payments made in the 
class settlement of Susan Walker vs. Bayer Corporation, when determining 
Medicaid eligibility. 
The amendments will function by ensuring that DHS is in compliance with federal 
law. 
The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendment is adopted in 
compliance with federal requirements effective August 5, 1997. The amendment 
implements sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the Human 
Resources Code. 

sec.15.435. Liquid Resources. 
(a)-(q) (No change.) 
(r) Payments from Susan Walker vs. Bayer Corporation lawsuit. Effective August 
5, 1997, Public Law 105-33 excludes payments made in the class settlement of the 
Susan Walker vs. Bayer Corporation lawsuit. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716659
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: August 5, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

SUBCHAPTER E.Income
40 TAC sec.15.460, sec.15.475
The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. The amendments are adopted in 
compliance with federal requirements effective August 5, 1997. The amendments 
implement sec.sec.22.001-22.030 and sec.sec.32.001-32.042 of the Human Resources 
Code. 

sec.15.460.Income Exemptions.
(a) (No change.) 
(b) The Texas Department of Human Services exempts income that a client receives 
from any of the following sources: 
(1)-(35) (No change.) 
(36) payments made in the class settlement of the Susan Walker vs. Bayer 
Corporation lawsuit, as required by Public Law 105-33, effective August 5, 1997.

sec.15.475. Deeming of Income. 
(a) The following requirements apply: 
(1)-(3) (No change.) 
(4) The Texas Department of Human Services (DHS) exempts certain types of income 
that may be received by a client's ineligible spouse, ineligible parent, a 
parent's ineligible spouse, or any ineligible children living in the household. 
The following types of income are not deemed to the client: 
(A)-(FF) (No change.)
(GG) payments made in the class settlement of the Susan Walker vs. Bayer 
Corporation lawsuit, as required by Public Law 105-23, effective August 5, 1997. 
(b)-(d) (No change.) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 11, 1997.
TRD-9716660
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: August 5, 1997
Proposal publication date: N/A
For further information, please call: (512) 438-3765

CHAPTER 20. Cost Determination Process
40 TAC sec.sec.20.102-20.105, 20.111
The Texas Department of Human Services (DHS) adopts amendments to 
sec.sec.20.102, 20.103, 20.104, 20.105, and 20.111, concerning Cost 
Determination Process, without changes to the proposed text published in the 
October 17, 1997, issue of the Texas Register (22 TexReg 10261). The text will 
not be republished. The adoption is submitted concurrently with an adoption by 
the Texas Health and Human Services Commission to amend corresponding provisions 
of Title 1, Chapter 355, Texas Administrative Code. 
Justification for the amendments is that the proposed changes will enable 
providers of DHS services to submit more accurate cost reports by clarifying 
allowable and unallowable costs for cost reporting purposes. The proposed 
changes will also give providers more flexibility to document costs related to 
the 1997 transition year for the cost determination rules. 
The amendments will function by clarifying the intent of the cost determination 
rule provisions. The amendments will clarify current allowable and unallowable 
cost rules in certain areas including related party leases, losses due to theft, 
related party costs determined at actual costs, cost of private aircraft, and 
Medicaid as payor of last resort. Clarifications are also being made to the 
rules regarding the reporting of expenses and revenues, direct voucher payment 
systems, and reporting net interest income after offsetting interest income 
against interest expense. A provision requiring that supportive documentation 
for the 1997 cost report be dated by June 30, 1997 is being deleted. 
In addition, for community-based programs the amendments will, in the 
administrative contract violation section, streamline the appeals process for 
contract cancellation resulting from failure to submit a properly completed cost 
report. The amendments eliminate the informal reconsideration process while 
retaining the provider's right to a formal appeal of the contract cancellation. 
The department received no comments regarding the adoption of the amendments. 
The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 
and 32, which authorizes the department to administer public and medical 
assistance programs; and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The amendments implement the Human Resources Code, sec.sec.22.001-22.030 and 
sec.sec.32.001-32.042. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 9, 1997.
TRD-9716556
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: December 29, 1997
Proposal publication date: October 17, 1997
For further information, please call: (512) 438-3765

CHAPTER 79. Legal Services
SUBCHAPTER E. Advisory Committees
40 TAC sec.sec.79.402-79.404
The Texas Department of Human Services (DHS) adopts amendments to 
sec.sec.79.402-79.404. Section 79.404 is adopted with changes to the proposed 
text as published in the November 7, 1997, issue of the Texas Register (22 
TexReg 10945). Sections 79.402 and 79.403 are adopted without changes and will 
not be republished. 
The justification for the amendments is to comply with state legislation by 
creating the Nursing Facility Administrators Advisory Committee and the 
Alzheimer's Advisory Committee, delete expired committees, and change 
abolishment dates of continued committees. 
The amendments will function by ensuring that there will be responsible and 
consistent operation of the Nursing Facility Administrators Advisory Committee, 
and that there will be more comprehensive planning for and treatment of 
Alzheimer's patients. 
The department received no comments regarding adoption of the amendments, but 
has initiated a minor editorial change to the text of sec.79.404(c)(1) and 
sec.79.404(d)(1) by spelling out Human Resources Code to clarify and improve the 
accuracy of the sections. 
The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs, and 
Human Resources Code sec.32.0246, which requires the appointment of an 
Alzheimer's Advisory Committee; the Health and Safety Code, sec.242.303, which 
established the Nursing Facility Administrators Advisory Committee; and Texas 
Civil Statute, Article 6252-33, which governs operations of advisory committees. 
The amendments implement the Human Resources Code, sec.sec.22.001- 22.030 and 
32.0246; the Health and Safety Code, sec.242.303; and Texas Civil Statute, 
Article 6252-33. 

sec.79.404. Committees Established by the Board.
(a) Aged and Disabled Services Advisory Committee. 
(1) Legal base. The committee's legal base is the Human Resources Code, 
sec.22.009. 
(2) Responsibilities. The committee advises the Board and the department about 
developing policy, programs, and budget for the purpose of affecting immediate 
and long-range plans for services to the aged and persons with disabilities who 
are in institutional or community-based care. 
(3) Structure. 
(A) The committee has members consisting of advocates for the aged and people 
with disabilities, providers, and others with knowledge or interest in the 
program. 
(B) Committee members serve four-year rotating terms, with one-fourth of the 
membership rotating off service each year. 
(4) Abolishment date. The abolishment date is August 31, 2001. 
(b) Client Self-Support Services Advisory Council. 
(1) Legal base. The council's legal base is the Human Resources Code, 
sec.22.009. 
(2) Responsibilities. The council advises the Board and the department about 
programs administered under client self-support, including Aid to Families with 
Dependent Children, Food Stamps, Medicaid, employment services, nutrition 
services, and teen pregnancy prevention, but is not required to review proposals 
previously reviewed and recommended by another advisory committee. 
(3) Structure. 
(A) The council membership has a representative balance of service providers, 
consumer advocates, and others with knowledge or interest in client self-support 
services. 
(B) Representatives of state agencies with an interest or role in the council's 
field of work serve as ex-officio members. Ex-officio members serve until they 
are replaced by the agency they represent. 
(C) Council members serve staggered four-year rotating terms. Membership may be 
reduced through attrition, to not less than six members.
(4) Abolishment date. The abolishment date is August 31, 2001. 
(c) Family Violence Advisory Committee. 
(1) Legal base. The committee's legal base is the Human Resources Code, 
sec.22.009. 
(2) Responsibilities. The committee advises the Board and the department about 
family violence program services, issues, and policy.
(3) Structure.
(A) The committee has 11 regular members representing family violence providers, 
the legal system, law enforcement, other health and human services advocates for 
elderly citizens and children, and formerly battered women. 
(B) Committee members serve four-year, rotating terms, with approximately one-
fourth of the membership rotating off service each year.
(4) Abolishment date. The abolishment date is September 1, 1996. 
(d) Child and Adult Care Food Program (CACFP) Advisory Committee.
(1) Legal basis. The committee's legal base is the Human Resources Code, 
sec.22.009. 
(2) Responsibilities. The committee advises the Board and DHS on policies, 
procedures, and management issues of all child and nutrition programs, including 
the child and adult care food program. 
(3) Structure. 
(A) The committee membership has a representative balance of family day home 
sponsors and providers, directors of adult day care centers and child day care 
centers, concerned citizens, and parents and relatives who participate in the 
CACFP. 
(B) Representatives of state agencies and federal agencies with an interest or 
role in the committee's field of work serve as ex-officio members. Ex-officio 
members serve until they are replaced by the agency they represent. 
(C) Committee members serve four-year rotating terms, with approximately one-
fourth of the membership rotating off service each year.
(D) The committee will meet at least four times per year.
(4) Abolishment date. The abolishment date is August 31, 2000. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Issued in Austin, Texas, on December 9, 1997.
TRD-9716557
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Effective date: January 1, 1998
Proposal publication date: November 7, 1997
For further information, please call: (512) 438-3765