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

TITLE 1. ADMINISTRATION
PART XV. Health and Human Services Commission
CHAPTER 355.Medicaid Managed Care
SUBCHAPTER G.Telemedicine Services
1 TAC sec.355.7001
The Health and Human Services Commission proposes new sec.355.7001, concerning 
the reimbursement for telemedicine services for the Medicaid Program. House Bill 
2386 and House Bill 2017 directed the Health and Human Services Commission to 
establish a system for reimbursing providers of services performed using 
telemedicine. The new Subchapter G, which contains the new section sec.355.7001, 
sets forth definitions related to telemedicine in sec.355.7001(a). The new 
sec.355.7001(b) establishes reimbursement for the attending provider for 
evaluation and management services and for the consulting provider for 
consultation services in accordance with existing Medicaid reimbursement 
methodology. It also stipulates that providers seeking reimbursement for 
telemedicine services must adhere to reimbursement and medical policies adopted 
by the Texas Department of Health for telemedicine services. This new section 
provides definitions, a description of services approved for reimbursement, and 
requirements of providers claiming reimbursement for services performed using 
telemedicine.
Mr. Steve Svadlenak, Director of Medicaid Reimbursement, has determined that for 
the first five-year period the section is in effect, there will be no net fiscal 
implications as a result of administering the new section. The use of 
telemedicine will result in an increase in expenditures due to the reimbursement 
for attending providers but will also result in a decrease in expenditures for 
medical transportation costs. Savings may also result because of earlier 
interventions that telemedicine may effectively provide by allowing clients in 
rural and medically underserved areas to access services more quickly and 
conveniently. The anticipated use of telemedicine is unknown; telemedicine 
networks are only beginning to be developed in the state. Providers must also 
cover hardware, software, and transmission costs. There will be no fiscal impact 
for local governments. 
Mr. Svadlenak has also determined that for the first five-year period the 
section is in effect, the public benefit anticipated as a result of enforcing 
the section will be improved access to health care services for eligible 
recipients. There will be no costs to small businesses or persons complying with 
the section as proposed. There will be no impact on local employment. 
Comments may be submitted to Linda K. Wertz at the Texas Health and Human 
Services Commission, 4900 North Lamar Boulevard, Austin, Texas 78751, (512) 424-
6517. Comments will be accepted for 30 days following publication of this 
proposal in the Texas Register. In addition, a public hearing on the proposed 
sections will be held at 9:00 A.M. on February 19, 1998, in the HHSC Public 
Hearing Room located in the Brown Heatley Building at 4900 North Lamar 
Boulevard, Austin, Texas. Parking will be available at the Texas Department of 
Human Services complex, 701 West 51st Street.
The new rule is proposed under the Texas Government Code, Chapter 531, 
sec.531.033, which authorizes the Commissioner of Health and Human Services to 
adopt rules necessary to carry out the Health and Human Services Commissioner's 
duties under Chapter 531; and under Texas Government Code, sec.531.021, which 
provides the commission with the authority to administer federal medical 
assistance funds.
The new rule implements Government Code, sec.531.021 and Human Resources Code, 
sec.sec.32.001-32.047.

sec.355.7001.Telemedicine Services.
(a) Definitions. The following words and terms, when used in this chapter, will 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Telemedicine - A method of health care service delivery used to facilitate 
medical consultations by physicians to health care providers in rural or 
underserved areas for purposes of patient diagnosis or treatment that require 
advanced telecommunications technologies, including interactive video 
consultation, teleradiology, and telepathology. 
(2) Rural - Area defined as a county with a population of less than 50,000. 
(3) Underserved - Area that meets the definition of Medically Underserved Area 
(MUA) or Medically Underserved Population (MUP) by the U.S. Department of Health 
and Human Services. 
(4) Hub Site Provider - A physician at an accredited medical school, or a 
physician at one of the following entities affiliated with an accredited medical 
school: hospitals, teaching hospitals, tertiary centers, or health clinics. The 
hub site physician will provide consultation and diagnosis, and may develop the 
patient's plan of care and treatment.
(5) Remote Site Provider - A health professional, such as a physician or 
advanced nurse practitioner, that is able to independently bill the Medicaid 
Program, or a Federally Qualified Health Center or Rural Health Clinic. Remote 
site providers must be located in rural or underserved areas. The remote site 
provider is responsible for carrying out or coordinating the plan of care and 
treatment after consulting with the hub site provider.
(b) Reimbursement for Services Performed Using Telemedicine
(1) Hub site providers can bill for consultation services provided using 
telemedicine. Remote site providers can bill for evaluation and management 
services provided using telemedicine. 
(2) Telemedicine services are reimbursed in accordance with the existing 
Medicaid reimbursement methodology. 
(3) Providers seeking reimbursement for telemedicine services must provide and 
bill for the service in the manner prescribed by the Texas Department of Health. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801122
Marina Henderson
Executive Deputy Commissioner
Health and Human Services Commission
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 424-6576

TITLE 16. ECONOMIC REGULATION
PART II. Public Utility Commission of Texas
CHAPTER 22.Practice and Procedure
SUBCHAPTER O.Rulemaking
16 TAC sec.sec.22.281, 22.282, 22.284
The Public Utility Commission of Texas proposes amendments to sec.22.281, 
relating to Initiation of Rulemaking; sec.22.282, relating to Notice and Public 
Participation in Rulemaking Procedures; and sec.22.284, relating to Informal 
Information Gathering. The proposed amendments to sec.22.281, will remove the 
reference to the position of secretary of the commission in subsection (a)(2), 
as this function is no longer performed by the secretary, and correct references 
to Texas Register procedures. The amendment to subsection (b) will clarify 
commission procedures. The proposed amendments to sec.22.282, will provide the 
commission with more flexibility in rulemaking procedures; ensure that public 
hearings are requested in a timely manner in order to allow the commission to 
fully review and consider all public comment; and conform subsection (e) with 
sec.22.71(h)(1) of this title (relating to Filing of Pleadings and Other 
Materials). The proposed amendment to sec.22.284 is to clarify commission 
policy. Project Number 18484 has been assigned to these proposed amendments.
Paula Mueller, deputy chief, Office of Regulatory Affairs, has determined that 
for each year of the first five-year period the proposed sections are in effect 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the sections. 
Ms. Mueller also has determined that for each year of the first five years the 
proposed sections are in effect the public benefits anticipated as a result of 
enforcing the sections will be more clearly stated commission procedural 
requirements and ensuring that the commission receives all public comment in 
time to fully consider it in the rulemaking process. There will be no effect on 
small businesses as result of enforcing these sections. There is no anticipated 
economic cost to persons who are required to comply with the sections as 
proposed. Ms. Mueller also has determined that for each year of the first five 
years the proposed sections are in effect there will be no impact on employment 
in the geographical area affected by implementing the requirements of the 
section. 
Comments on the proposed amendments (16 copies) may be submitted to the Filing 
Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 
13326, Austin, Texas 78711-3326, within 30 days after publication. The 
Appropriations Act of 1997, HB 1, Article IX, Section 167 requires that each 
state agency review and consider for readoption each rule adopted by that agency 
pursuant to the Government Code, Chapter 2001 (Administrative Procedure Act). 
Such reviews shall include, at a minimum, an assessment by the agency as to 
whether the reason for adopting or readopting the rule continues to exist. The 
commission invites specific comments regarding whether the reason for adopting 
these rules continues to exist in considering these proposed amendments. All 
comments should refer to Project Number 18484. 
These amendments are proposed under the Public Utility Regulatory Act, Texas 
Utilities Code Annotated sec.14.002 and sec.14.052 (Vernon 1998) (PURA), which 
provides the Public Utility Commission with the authority to make and enforce 
rules reasonably required in the exercise of its powers and jurisdiction, 
including rules of practice and procedure. 
Cross Index to Statutes: Public Utility Regulatory Act sec.14.002 and 
sec.14.052. 

sec.22.281. Initiation of Rulemaking. 
(a) Petition for Rulemaking. Any interested person may petition the commission 
requesting the adoption of a new rule or the amendment of an existing rule. 
(1) (No change.) 
(2) Upon receipt of a petition for rulemaking, the [secretary of the] commission 
shall submit a notice for publication in the <nl>"In Addition"<ol> 
[miscellaneous documents] section of the Texas Register. The notice shall 
include a summary of the petition, the name of the individual, organization or 
entity that submitted the petition, and notification that a copy of the petition 
will be available for review and copying in the commission's central records. 
Comments on the petition shall be due three weeks from the date of publication 
of the notice. Failure to publish a notice of a petition for rulemaking in the 
Texas Register shall not invalidate any commission action on the petition for 
rulemaking. 
(3) (No change.) 
(b) Commission Initiated Rulemaking. The commission may initiate rulemaking 
proceedings on its own motion [or on the motion of the commission general 
counsel]. Nothing in this section shall preclude the [commission general counsel 
or] commission staff from consideration or development of new rules or 
amendments to existing rules without express direction from the commission. 

sec.22.282.Notice and Public Participation in Rulemaking Procedures. 
(a)-(b) (No change.) 
(c) Public Comments. Prior to the adoption of any rule, the commission shall 
afford all interested persons reasonable opportunity to submit data, views, or 
arguments in writing. Written comments must be filed within 30 days of the date 
the proposed rule is published in the Texas Register unless the commission 
establishes a <nl>different<ol> [later] date for submission of comments. The 
commission may also establish a schedule for reply comments if it determines 
that additional comments would be appropriate or helpful in reaching a decision 
on the proposed rule.
(d) Public Hearing. The commission may schedule workshops or public hearings on 
the proposed rule. <nl>An<ol> [In the case of substantive rules,] opportunity 
for public hearing shall be granted if requested by at least 25 persons, by a 
governmental subdivision or agency, or by an association having at least 25 
members. <nl>The request for public hearing must be made no later than 30 days 
after the date the proposed rule is published in the Texas Register, unless the 
commission establishes a different date for requesting a public hearing.<ol> 
(e) Staff Recommendation. Staff's final recommendation shall be submitted to the 
commission and filed in central records at least <nl> six<ol> [seven] days prior 
to the date on which the commission is scheduled to consider the matter, unless 
some other date is specified by the commission. Staff will notify all persons 
who have filed comments concerning the proposed rule of the filing of staff's 
final recommendation. 
(f) Final Adoption. [During the Open Meeting at which the commission considers 
the proposed rule for final action, the commission may allow interested persons 
to present oral comments in response to the staff's final recommendation.] 
Following consideration of comments, the commission will issue an order 
adopting, adopting as amended, or withdrawing the rule within six months after 
the date of publication of the proposed rule or the rule is automatically 
withdrawn. 

sec.22.284.Informal Information Gathering. 
(a) The commission, <nl>or<ol> [the general counsel, and] the commission staff 
may use informal conferences and consultations as a means of obtaining the 
viewpoints and advice of interested persons concerning a contemplated 
rulemaking. 
(b) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 20, 1998.
TRD-9800862
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 936-7308

TITLE 22. EXAMINING BOARDS
PART XVII. Plumbing Examiners
CHAPTER 365.Renewals
22 TAC sec.365.5
The Texas State Board of Plumbing Examiners proposes an amendment to sec.365.5. 
This section specifies that a medical gas license holder must take at least two 
additional hours of medical gas continuing education to renew their medical gas 
endorsement. The amendment states that individuals with a medical gas 
endorsement must take Board approved continuing education within the three-year 
period of their medical gas endorsement and that the license holder may not 
count the same continuing education class twice towards meeting the requirements 
for renewal of the medical gas endorsement. 
Jim Fowler, Chief Fiscal Officer, Texas State Board of Plumbing Examiners, has 
determined that for the first five-year period the rule is in effect there will 
be no effect to state or local government as a result of enforcing the rule. 
Mr. Fowler also has determined that each year of the first five years the rule 
is in effect the change in public benefit will be a higher quality of plumbers 
performing medical gas work. There will be no effect on small businesses. There 
is no anticipated economic cost to persons who are required to comply with the 
rule. 
Comments may be submitted to Gilbert Kissling, Administrator, Texas State Board 
of Plumbing Examiners, 929 East 41st Street, P.O. Box 4200, Austin 78765-4200. 
The amendment to sec.365.5 is proposed under and effect Texas Revised Civil 
Statutes Annotated Article 6243-101, sec.5(a) and sec.12B (Vernon Supp. 1998). 
No other statute, article, or code is affected by this proposed amendment. The 
proposed amendment has been reviewed by legal counsel and found to be within the 
state agency's authority to adopt.

sec.365.5.Renewals.
(a)-(e) (No change.)
(f) Any license holder with a medical gas endorsement must <nl> complete a Board 
approved medical gas continuing education class within the three-year period<ol> 
[take at least two additional classroom hours of continuing education within the 
third year] of the endorsement [period]. The [additional] classroom hours shall 
consist of instruction of the most current edition of the <nl>National Fire 
Protection Association (NFPA) 99C, Standard on Gas and Vacuum Systems, and the 
changes therein. No license holder with a medical gas endorsement may count the 
same medical gas continuing education class twice towards meeting the continuing 
education requirements for renewal of the medical gas endorsement on a plumbing 
license<ol> [NFPA99C and the changes therein]. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801063
Robert L. Maxwell
Chief of Field Services/Investigations
Plumbing Examiners
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 458-2145, Ext. 233

PART XXII. Texas State Board of Public Accountancy
CHAPTER 501.Professional Conduct
22 TAC sec.501.47
The Texas State Board of Public Accountancy proposes an amendment to sec.501.47, 
concerning Firm Names. The proposed amendment to sec.501.47 lists character or 
grade of service as being misleading if included in a firm's name when not based 
upon verifiable facts; states that if a firm name includes a geographic area or 
a non-owner firm employee's name it may be misleading or deceptive if full 
disclosure of relevant facts is not made; states that a firm name which implies 
special expertise is intended or likely to create false or unjustified 
expectations of favorable results; clarifies that limited liability partnerships 
and companies must include that as part of their firm names; and states that at 
least two licensees must be involved full time in the practice in order to use 
company, group or associates. 
William Treacy, Executive Director, has determined that for the first five-year 
period the rule is in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering this rule. 
Mr. Treacy also has determined that during the first five-year period the rule 
is in effect the anticipated public benefit as a result of enforcing or 
administering the rule will be increased disclosure and more accurate disclosure 
to the public through the firm name. There is no effect on small businesses. 
There is no anticipated economic cost to persons required to comply with the 
section as proposed. 
Comments on the proposal may be submitted to Amanda Birrell, General Counsel, 
333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701-3900. 
The amendment is proposed under Texas Civil Statutes, Article 41a-1, sec.6, 
which provides the Texas State Board of Public Accountancy with the authority to 
make such rules as may be necessary or advisable to effectuate the purposes of 
the law. 
The rule implements Texas Civil Statutes, Article 41a-1, sec.6. 

sec.501.47.Firm Names.
(a) No certificate or registration holder shall engage in the practice of public 
accountancy using a [professional or] firm name [or designation] that includes 
descriptive words relating to the quality of services offered or that is 
misleading about the legal form of the firm, or about the persons who are 
partners, officers, or shareholders of the firm, or about any other matter, 
provided, however, that names of one or more former partners or shareholders may 
be included in the name of a firm or its successor. 
(b) A [professional or] firm name [or designation] will be considered to be 
misleading if: 
(1) the name contains a misrepresentation of facts; 
<nl>(2)<ol> <nl>the name indicates character or grade of service which is not 
based upon verifiable facts; <ol>
<nl>(3)<ol> [(2)] the name is likely to mislead or deceive because it fails to 
make full disclosure of relevant facts;<nl> the following are examples, but are 
not inclusive:<ol> 
<nl>(A)<ol> <nl>the name contains a geographic area; and <ol>
<nl>(B)<ol> <nl>the firm name includes a non-owner firm employee. <ol>
<nl>(4)<ol> [(3)] the name is intended or likely to create false or unjustified 
expectations of favorable results;
<nl>(5)<ol> [(4)] the name implies special expertise; 
(6) the name implies educational or professional attainment or licensing 
recognition of the firm and/or of its owners, partners, or shareholders which 
are not supported in fact;
<nl>(7)<ol> [(5)] the name of the firm that is incorporated does not include the 
words "corporation," "incorporated," "professional corporation," or "company," 
or in each case, an abbreviation thereof, as a part of the firm name; [and] the 
words "professional corporation," or "PC" are not included with the firm name 
each time it is used; <nl>and the name of a firm organized under the limited 
liability partnership rules does not include the words "professional limited 
liability company" or " professional limited liability partnership" as 
appropriate, or an abbreviation thereof as part of the firm name; <ol> 
<nl>(8)<ol> [(6)] the name includes the designation "and company," "company," 
[or] <nl>"group,"<ol>[or] "associates" or "and associates" or abbreviations 
thereof <nl> or similar names implying more than one employed member of the 
firm<ol> unless there are at least two licensees involved <nl>full time<ol> in 
the practice; 
<nl>(9)<ol> [(7)] the name of a firm that is a partnership or professional 
corporation fails to contain the personal name or names of one or more 
individuals presently or previously a partner, officer, or shareholder thereof; 
<nl>(10)<ol> [(9)] the name of a firm that is a sole proprietorship fails to 
contain the name of the sole proprietor; or 
<nl>(11)<ol> [(10)] the name contains other representations or implications that 
in reasonable probability will cause a person of ordinary prudence to 
misunderstand or be deceived. 
(c) A partner surviving the death or withdrawal of all other partners may 
continue to practice under a partnership name for up to two years after becoming 
a sole practitioner. 
(d) The name of any former partner or former shareholder may not be used in a 
registered firm name during the period of sanction when the former partner or 
former shareholder has been prohibited from practicing public accountancy or 
prohibited from using the title "CPA" or "PA". 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801104
William Treacy
Executive Director
Texas State Boad of Public Accountacy
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 305-7845

CHAPTER 511.Certification of CPA
22 TAC sec.511.57
The Texas State Board of Public Accountancy proposes an amendment to sec.511.57, 
concerning Definition of Accounting Courses. 
The proposed amendment to sec.511.57 includes up to six semester hours of 
management information systems as an accounting core course and adds up to 12 
hours of management information systems as another accounting course.
William Treacy, Executive Director, has determined that for the first five-year 
period the rule is in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering this rule. 
Mr. Treacy also has determined that during the first five-year period the rule 
is in effect the anticipated public benefit as a result of enforcing or 
administering the rule will be the recognition that some courses being taken by 
applicants are important enough to be included in required courses. There is no 
effect on small businesses. There is no anticipated economic cost to persons 
required to comply with the section as proposed. 
Comments on the proposal may be submitted to Amanda Birrell, General Counsel, 
333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701-3900. 
The amendment is proposed under Texas Civil Statutes, Article 41a-1, sec.6, 
which provides the Texas State Board of Public Accountancy with the authority to 
make such rules as may be necessary or advisable to effectuate the purposes of 
the law. 
The rule implements Texas Civil Statutes, Article 41a-1, sec.6.

sec.511.57.Definition of Accounting Courses.
The board will accept not fewer than 30 passing semester hours of accounting 
courses (without repeat), taken at a recognized educational institution shown on 
official transcripts, or accepted by a recognized educational institution for 
purposes of obtaining a baccalaureate degree or its equivalent, of which 20 
semester hours must be in core accounting courses, in the following subject 
areas: 
(1) accounting core courses: 
(A) intermediate accounting, advanced accounting; 
(B) cost accounting; 
(C) auditing, internal accounting control and evaluation; 
(D) report writing (principally writing financial reports, internal control 
reports, and management letters); 
(E) financial statement analysis; 
(F) accounting theory; 
(G) up to six semester hours of income tax; 
(H) accounting for governmental and/or other nonprofit organizations; and 
(I) <nl>up to six semester hours of<ol> accounting systems<nl>, including 
management information systems<ol>; 
(2) other accounting courses: 
(A) income tax accounting (not to exceed 12 semester hours, including hours in 
paragraph (1)(G) of this section);
<nl>(B)<ol> <nl>accounting systems, including management information systems 
(not to exceed 12 semester hours, including hours in paragraph (1)(I) of this 
section);<ol> 
<nl>(C)<ol> [B] accounting consultation; 
<nl>(D)<ol> [(C)] accounting for specialized businesses or industries (such as 
fiduciaries, banks, etc.); 
<nl>(E)<ol> [(D)] an accounting internship program (not to exceed 3 semester 
hours) which meets the following requirements:
(i) the accounting knowledge gained is equal to or greater than the knowledge 
gained in a traditional accounting classroom setting;
(ii) the employing firm provides the faculty coordinator and the student with 
the objectives to be met during the internship; 
(iii) the internship is approved by the faculty advisor; 
(iv) the employing firm provides a significant accounting work experience with 
adequate training and supervision of the work performed by the student; 
(v) the employing firm provides an evaluation of the student at the conclusion 
of the internship, provides a letter describing the duties performed and the 
supervision to the student, and provides a copy of the documentation to the 
faculty coordinator and the student; 
(vi) the student keeps a diary comprising a chronological list of all work 
experience gained in the internship;
(vii) the student writes a paper demonstrating the knowledge gained in the 
internship; and 
(viii) the student and/or faculty coordinator provides evidence of all items 
upon request by the board; 
<nl>(F)<ol> [(E)] any other course which is principally accounting or auditing 
in nature but which may be designated by some other name (and the verification 
of which is obtained in writing from the particular college or university). 
After the November 1997 examination, elementary accounting may not be considered 
under this title. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801105
William Treacy
Executive Director
Texas State Board of Public Accountancy
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 305-7845

CHAPTER 527.Quality Review
22 TAC sec.527.3
The Texas State Board of Public Accountancy proposes an amendment to sec.527.3, 
concerning Definitions. 
The proposed amendment to sec. 527.3 adds "Special Reports" to the definitions. 
Special reports is listed under sec. 527.4 of this title (relating to Quality 
Review Program) as a type of practice or activity which would make one subject 
to Quality Review. 
William Treacy, Executive Director, has determined that for the first five-year 
period the rule is in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering this rule. 
Mr. Treacy also has determined that during the first five-year period the rule 
is in effect the anticipated public benefit as a result of enforcing or 
administering the rule will be an improved understanding of the applicability of 
the Quality Review Program. There is no effect on small businesses. There is no 
anticipated economic cost to persons required to comply with the section as 
proposed.
Comments on the proposal may be submitted to Amanda Birrell, General Counsel, 
333 Guadalupe, Tower III, Suite 900, Austin, Texas, 78701-3900. 
The amendment is proposed under Texas Civil Statutes, Article 41a-1, sec.6, 
which provides the Texas State Board of Public Accountancy with the authority to 
make such rules as may be necessary or advisable to effectuate the purposes of 
the law, and sec.15B, which authorizes the board to enact rules for the Quality 
Review Program.
The rule implements Texas Civil Statutes, Article 41a-1, sec.6 and sec.15B.

sec.527.3. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
<nl>Special reports<ol><nl>-Include reports issued in connection with the 
following:<ol>
<nl>(A)<ol> financial statements that are prepared in conformity with a 
comprehensive basis of accounting other than generally accepted accounting 
principles;
<nl>(B)<ol> specified elements, accounts, or items of a financial statement; 
<nl>(C)<ol> compliance with aspects of contractual agreements or regulatory 
requirements related to audited financial statements; 
<nl>(D)<ol> financial presentations to comply with contractual agreements or 
regulatory provisions;
<nl>(E)<ol> financial informationpresented in prescribed forms or schedules that 
require a prescribed form of auditor's reports; and 
<nl>(F)<ol> internal audits by a firm for a client or a governmental entity. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801108
William Treacy
Executive Director
Texas State Board of Public Accountancy
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 305-7845

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 13.Health Planning and Resource Development
Data Collection
25 TAC sec.sec.13.11, 13.13, 13.15, 13.17, 13.18, 13.19
The Texas Department of Health proposes amendments to sec.sec.13.11, 13.13, 
13.15, 13.17, 13.18 and 13.19, concerning hospital financial and utilization 
reporting and the reporting of charity care and community benefits data from 
nonprofit hospitals. The amendments will implement Senate Bills 788 and 802, 
75th Legislature, 1997, which amend the Health and Safety Code, Chapter 311, and 
will correct inconsistencies with the enabling legislation. 
Section 13.11 revises the purpose of the rules to accurately reflect statutory 
responsibilities. Section 13.13 includes a reformat of the definition of 
"nonprofit hospitals" for clarity. Section 13.15 establishes an exemption to 
hospital financial and utilization reporting. Section 13.17 establishes 
additional nonprofit hospital reporting requirements for the annual report of 
the community benefits plan, revises the standards for the provision of charity 
care and community benefits, specifies and clarifies revised time lines for 
nonprofit hospital charity care and community benefits reporting, includes 
requirements for nonprofit hospitals to post charity care notices, expands the 
definition of "nonprofit hospital" for purposes of charity care and community 
benefits reporting, deletes a reporting exemption for nonprofit hospitals in a 
specified county, and provides revisions to existing rule language for 
clarification purposes. Section 13.18 revises the time frame for implementing 
compliance activities for hospitals failing to report financial and utilization 
data, incorporates language consistent with the statute for department 
implementation of noncompliance activities for hospitals failing to report, and 
provides revisions to existing rule language for clarification purposes. Section 
13.19 corrects an inconsistency with the enabling legislation regarding 
confidentiality of data. 
Dora McDonald, Chief, Bureau of State Health Data and Policy Analysis, has 
determined that for the first five-year period the sections are in effect, there 
will be implications to state or local government as a result of administering 
or enforcing the sections as proposed. For fiscal years ending on or after 
January 1, 1998, public hospitals that are owned or operated by a political 
subdivision or municipal corporation of the state, including hospital districts 
and authorities, will be required to report charity care and community benefits 
information. Based on a survey of several hospitals, it is estimated that the 
cost of implementing these rules will range from $1,200 to $10,000 for each 
public hospital. This estimate is based on direct costs associated with 
reporting under these sections. Additional indirect costs incurred such as 
computer system adaptations, the scope of a hospital's community benefit 
planning activities undertaken, and the development and implementation of 
revised charity care policies have not been identified and will vary from 
hospital to hospital. There is no measurable cost to the state of implementing 
this new data collection function; however, these activities will modify the 
workload for the department in terms of the collection, processing, and follow-
up required to gather this information. 
Ms. McDonald also has determined that for each year of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
the sections as proposed will be the availability of information necessary to 
assess the level of charity care and community benefits provided by nonprofit 
and public hospitals. Economic costs to small businesses will occur if the 
"nonprofit hospital" is an investor-owned Medicaid disproportionate share 
hospital with fewer than 100 employees or less than $1 million in annual gross 
receipts. The adverse economic impact to these small businesses will be the cost 
of reporting under these sections since these hospitals have not previously been 
required to report. The cost will be an estimated $1,200 to $10,000 based on a 
survey of hospitals. The department does not expect these rules to cause the 
cost of compliance per employee, per hour of labor or per $100 of sales of 
services to be different between a small business or a large business; however, 
due to the possibility of a higher volume of charity care performed and reported 
by a large hospital, the total costs of compliance for a large hospital may be 
closer to the high end of the range and the total cost for a small hospital may 
be closer to the lower end. The costs to persons who are required to comply with 
the sections as proposed will be an estimated $1,200 to $10,000 for reporting. 
There is no anticipated impact on local employment.
Comments on the proposal may be submitted to Ann Henry, Bureau of State Health 
Data and Policy Analysis, 1100 West 49th Street, Austin, Texas 78756-3199, (512) 
458-7261, Fax (512) 458-7344. Comments will be accepted for 30 days following 
the publication of this proposal in the Texas Register. 
The amendments are authorized under the Health and Safety Code, sec.104.042(a) 
which authorizes the Board of Health to adopt rules relating to the collection 
and dissemination of data from health care facilities necessary to facilitate 
health planning and resource development; sec.311.032(b) which mandates the 
adoption of rules on the collection and reporting of hospital financial and 
utilization data; and sec.12.001 which provides the Board of Health with the 
authority to adopt rules for the performance of every duty imposed by law on the 
Texas Board of Health, the Texas Department of Health and the Commissioner of 
Health. 
These amendments affect the Health and Safety Code, Chapters 104 and 311.

sec.13.11.Purpose.
The purpose of the sections in this chapter is to implement Health and Safety 
Code, Chapter 104, Subchapter D, which requires the department to adopt rules 
covering the collection of data from health care facilities, such as hospitals, 
and the dissemination of data to facilitate health planning and resource 
development; Health and Safety Code, Chapter 311, <nl>Subchapters <ol> 
[Subchapter] C <nl>and D relating to<ol> [which requires the department to adopt 
rules covering] the collection and reporting of hospital financial [,] 
<nl>and<ol> utilization [, and patient discharge] data including data regarding 
the provision of levels of charity care by certain nonprofit hospitals, and the 
submission <nl> of an annual report<ol> of a community benefits plan by certain 
nonprofit hospitals.

sec.13.13.Definitions.
The following words and terms, when used in these sections, shall have the 
following meanings, unless the context clearly indicates otherwise.
Nonprofit hospital--
<nl>(A)<ol> <nl> A hospital that is organized as a nonprofit corporation or a 
charitable trust under the laws of this state or any other state or country and 
is: <ol>
<nl>(i)<ol> <nl> eligible for tax-exempt bond financing; or <ol>
<nl>(ii)<ol> <nl> exempt from state franchise, sales, ad valorem, or other state 
or local taxes. <ol>[A hospital that is eligible for tax-exempt bond financing; 
or exempt from state franchise, sales ad valorem, or other state or local taxes; 
and organized as a nonprofit corporation or a charitable trust under the laws of 
this state or any other state or country. For purposes of these sections, a] 
<nl>(B)<ol> <nl> A <ol>"nonprofit hospital" shall not include a hospital that: 
<nl>(i)<ol> [(A)] is exempt from state franchise, sales, ad valorem, or other 
state or local taxes; 
<nl>(ii)<ol> [(B)] does not receive payment for providing health care services 
to any inpatients or outpatients from any source including, but not limited to, 
the patient or any person legally obligated to support the patient, third-party 
payers, Medicare, Medicaid, or any other federal, state, or local indigent care 
program; payment for providing health care services does not include charitable 
donations, legacies, bequests, or grants or payments for research; and 
<nl>(iii)<ol> [(C)] does not discriminate on the basis of inability to pay, 
race, color, creed, religion, or gender in its provision of services. [; or]
<nl>(C)<ol> [(D)] <nl>A "nonprofit hospital" does not include a hospital 
that<ol> is located in a county with a population under 50,000 where the entire 
county or the population of the entire county has been designated as a health 
professional shortage area.

sec.13.15. Survey Forms.
(a)-(c) (No change.) 
<nl>(d)<ol> <nl> A hospital may, but is not required to, provide the data 
required by subsection (b) of this section if the hospital:<ol>
<nl>(1)<ol> <nl> is exempt from state franchise, sales, ad valorem, or other 
state or local taxes; and <ol>
<nl>(2)<ol> <nl>does not seek or receive reimbursement for providing health care 
services to patients from any source, including:<ol>
<nl>(A)<ol> <nl> the patient or any person legally obligated to support the 
patient; <ol>
<nl>(B)<ol> <nl>a third party payor; or <ol>
<nl>(C)<ol> <nl> Medicaid, Medicare, or any other federal, state, or local 
program for indigent health care.<ol>

sec.13.17.Duties of Nonprofit Hospitals <nl>under Health and Safety Code, 
Chapter 311.<ol>
(a) <nl>Annual report<ol> [Report] of the [annual] community benefits plan. 
(1) [For reports required to be submitted to the Texas Department of Health 
(department) on or after September 1, 1995, the] <nl>The <ol> annual report of 
the community benefits plan may be filed <nl>with the department<ol> on a 
hospital or hospital system basis. 
(2) <nl>For fiscal years ending prior to January 1, 1998, a<ol> [A] nonprofit 
hospital or hospital system shall file an annual report of the community 
benefits plan, as required by Health and Safety Code, sec.311.046 <nl>as it 
existed prior to 1997 legislative amendments made by SB 788,<ol> with the 
department no later than 120 days after the hospital's or hospital system's 
fiscal year ends. <nl>For fiscal years ending on or after January 1, 1998, a 
nonprofit hospital or hospital system shall file an annual report of the 
community benefits plan with the department no later than April 30 of the 
following year.<ol> 
(3) The nonprofit hospital's or hospital system's annual report of the community 
benefits plan must include, at a minimum<nl>:<ol>
<nl>(A)<ol> the hospital's or hospital system's mission statement<nl>;<ol> [,] 
<nl>(B)<ol> a disclosure of the health care needs of the community that were 
considered in developing the community benefits plan<nl>;<ol> [, and] 
<nl>(C)<ol> a disclosure of the amount and types of community benefits, 
including charity care, actually provided. Charity care shall be reported as a 
separate item from other community benefits<nl>;<ol> 
<nl>(D)<ol> <nl> a statement of its total operating expenses computed in 
accordance with generally accepted accounting principles for hospitals from the 
most recent completed and audited prior fiscal year of the hospital; and <ol>
<nl>(E)<ol> <nl> a completed worksheet that computes the ratio of cost to charge 
for the fiscal year referred to in subparagraph (D) of this paragraph and that 
includes the same requirements as Worksheet 1-A adopted by the department in 
August 1994 for the 1994 "Annual Statement of Community Benefits Standard". <ol>
<nl>(4)<ol> <nl> For fiscal years ending prior to January 1, 1998, the nonprofit 
hospital's or hospital system's annual report of the community benefits plan 
must include the items listed in paragraphs (3)(A), (3)(B) and (3)(C) of this 
subsection. For fiscal years ending on orafter January 1, 1998, the nonprofit 
hospital's or hospital system's annual report of the community benefits plan 
must include the items listed in paragraphs (3)(A)-(3)(E) of this subsection. 
<ol>
<nl>(5)<ol> <nl> For fiscal years ending on or after January 1, 1998, in 
addition to the annual report of the community benefits plan, a nonprofit 
hospital or hospital system shall file a completed worksheet as required by 
paragraph (3)(E) of this subsection no later than ten working days after the 
date the hospital or hospital system files its Medicare cost report. <ol>
(b) Annual statement of community benefits standard. 
(1) [For statements required to be submitted to the department on or after 
September 1, 1995, the] <nl>The<ol> annual statement of community benefits 
standard may be filed <nl>with the department<ol> on a hospital or hospital 
system basis. 
(2) <nl>For fiscal years ending prior to January 1, 1998, a<ol> [A] nonprofit 
hospital or hospital system shall file an annual statement with the department 
no later than 120 days after the [end of the] hospital's or hospital system's 
fiscal year <nl>ends<ol> [stating which of the standards for providing community 
benefits have been satisfied].<nl> For fiscal years ending on or after January 
1, 1998, a nonprofit hospital or hospital system is required to file an annual 
statement with the department no later than 120 days after the hospital's or 
hospital system's fiscal year ends; however, the department will accept the 
annual statement as part of the acceptance of the annual report of the community 
benefits plan<ol>. The annual statement filed under this subsection shall be 
based on the most recently completed and audited prior fiscal year <nl> of the 
hospital and shall state which of the standards for providing community benefits 
has been satisfied<ol>. A nonprofit hospital or hospital system may elect to 
provide community benefits according to any of the following standards: 
(A) charity care and government-sponsored indigent health care are provided at a 
level which is reasonable in relation to the community needs, as determined 
through the community needs assessment, the available resources of the hospital 
or hospital system, <nl>and<ol> the tax-exempt benefits received by the hospital 
or hospital system, and other factors that may be unique to the hospital or 
hospital system, such as the hospital's or hospital system's volume of Medicare 
and Medicaid patients; 
[(B) charity care and government sponsored indigent health care are provided in 
an amount equal to at least 4.0% of the hospital's or hospital system's net 
patient revenue;] 
<nl>(B)<ol> [(C)] charity care and government-sponsored indigent health care are 
provided in an amount equal to at least 100% of the hospital's or hospital 
system's tax-exempt benefits, excluding federal income tax; 
[(D) prior to January 1, 1996, charity care and community benefits are provided 
in a combined amount equal to at least 5.0% of the hospital's or hospital 
system's net patient revenue, provided that charity care and government-
sponsored indigent health care are provided in an amount equal to at least 3.0% 
of net patient revenue;] or 
<nl>(C)<ol>[(E)] [ beginning with the hospital's or hospital system's fiscal 
year starting after December 31, 1995,] charity care and community benefits are 
provided in a combined amount equal to at least 5.0% of the hospital's <nl>or 
hospital system's<ol> net patient revenue, provided that charity care and 
government sponsored indigent health care are provided in an amount equal to at 
least 4.0% of net patient revenue.
(3) For purposes of satisfying paragraph <nl>(2)(C) <ol> [(2)(E)] of this 
subsection, a hospital or hospital system may not change its existing fiscal 
year unless the hospital or hospital system changes its ownership or corporate 
structure as a result of a sale or merger.
(4) A nonprofit hospital or hospital system shall use the form developed by the 
department for reporting under this section [and shall submit the form as part 
of the annual report of the community benefits plan]. 
(5) The department will accept written revisions of the annual statement of 
community benefits standard for 30 days after the filing date. 
(6) A nonprofit hospital that has been designated as a disproportionate share 
hospital under the state Medicaid program in the current fiscal year or in 
either of the previous two fiscal years shall be deemed in compliance with these 
standards. 
(7) A hospital that satisfies paragraphs (2)(A) or (6) of this subsection shall 
be excluded in determining a hospital system's compliance with the standards 
provided in paragraphs (2)(B) <nl>and (2)(C)<ol> [- (E)] of this subsection. 
(c) Reporting. 
(1) The department shall notify nonprofit hospitals in writing that the annual 
report of a community benefits plan and the statement of community benefits 
standard must be filed <nl>in accordance with these rules<ol> [within 120 days 
after the end of the hospital's or hospital system's fiscal year. The 
notification will include a form to be used by nonprofit hospitals or hospital 
system to file the annual statement of community benefits standard]. 
(2)-(3) (No change.) 
(4) All hospitals or hospital systems shall report [ to the department] any 
change of ownership [or control] which may effect the nonprofit status of the 
hospital or hospital system <nl>to the Bureau of State Health Data and Policy 
Analysis at the department.<ol>
(d) (No change.) 
<nl>(e)<ol> <nl> Charity care notice. Each hospital shall provide, to each 
person who seeks any health care service at the hospital, notice, in appropriate 
languages, if possible, about the charity care program and how to apply for 
charity care. Such notice shall also be conspicuously posted in the general 
waiting area, the waiting area for emergency services, in the business office, 
and in such other locations as the hospital deems likely to give notice of the 
charity care program. <ol>
<nl>(f)<ol> [(e)] Exemptions. 
[(1) A nonprofit hospital that is located in a county with a population under 
110,000 which has a hospital district created pursuant to Section 5, Article IX, 
Texas Constitution, and Chapter 136, Acts of the 55th Legislature, 1957, shall 
not be required to comply with one or more of the standards set forth in 
subsection (c) of this section. This exemption expires with a hospital's fiscal 
starting on or after September 1, 1996.] 
[(2)] A nonprofit hospital is exempt from the reporting requirement in 
subsection (c) of this section if the hospital is located in a county with a 
population under 50,000 and in which the entire county or the population of the 
entire county has been designated as a "health professional shortage area" 
during the current or any previous fiscal <nl> year<ol> and has continued to 
maintain that designation. 
<nl>(g)<ol> <nl>For purposes of this section only, a nonprofit hospital shall 
include a nonprofit hospital as defined in sec.13.13 of this title (relating to 
Definitions) and: <ol>
<nl>(1)<ol> <nl> a Medicaid disproportionate share hospital; or <ol>
<nl>(2)<ol> <nl> a public hospital that is owned or operated by a political 
subdivision of municipal corporation of the state, including a hospital district 
or authority. <ol>

sec.13.18.Noncompliance with Reporting Requirements.
(a) Data reporting. 
[(1) A hospital that does not time submit requested data to the Texas Department 
of Health (department) according to the requirements and procedures established 
in these sections is subject to a civil penalty of not more than $500 for each 
day of noncompliance, under the provisions of Health and Safety Code, Chapter 
104.] 
<nl>(1)<ol> [(2)] If a hospital does not submit a completed survey form to the 
<nl>Texas Department of Health (department) <ol> [department] within the 60-day 
reporting period established in sec.13.15 of this title (relating to Survey 
Forms), the department may institute the following procedures. 
(A) The department will notify the entity in writing by certified mail, return 
receipt requested, that the entity is in noncompliance with department reporting 
requirements and may be in violation of the Health and Safety Code, Chapter 104. 
The written notification will also state that the commissioner of health 
<nl>may<ol> [will] request that the attorney general institute and conduct a 
suit in the name of the state to recover civil penalties if the hospital fails 
to submit the requested data to the department within 30 days of the <nl>date 
the entity received<ol> [postmark of] the notification letter. 
(B) If the department does not received the requested data from the non-
responding hospital within the specified time frame, the commissioner of health 
<nl>may<ol> [will] notify the attorney general in writing of the entity's 
noncompliance. The department will send a copy of the written notification to 
the hospital. 
<nl>(2)<ol> <nl> A hospital that does not timely submit requested data to the 
department according to the requirements and procedures established in these 
sections is subject to a civil penalty of not more than $500 for each day of 
noncompliance, under the provisions of Health and Safety Code, Chapter 104. <ol>
(b) Community benefits plans. 
(1) (No change.) 
(2) If a nonprofit hospital or hospital system does not submit a report of the 
community benefits plan to the department within the [120-day] reporting period 
established in sec.13.17 of this title (relating to Duties of Nonprofit 
Hospitals <nl>under Health and Safety Code, Chapter 311<ol>), the department may 
institute the following procedures.
(A) The department will notify the entity in writing by certified mail, return 
receipt requested, that the entity is in noncompliance with department reporting 
requirements and may be in violation of the Health and Safety Code, Chapter 311. 
The written notification will also state that the commissioner of health 
<nl>may<ol> [will] request that the attorney general institute and conduct a 
suit in the name of the state to recover civil penalties if the hospital or 
hospital system fails to submit the report to the department within ten days 
after receipt of the written notification letter. 
(B) If the department does not receive the report of the community benefits plan 
from the non-responding hospital or hospital system within the specified time 
frame, the commissioner of health <nl>may<ol> [will] notify the attorney general 
in writing of the entity's noncompliance. The department will send a copy of the 
written notification to the hospital or hospital system. 

sec.13.19. Confidential Data. 
(a) The following data received by the Texas Department of Health (department) 
from a [public or private] hospital is confidential under authority of the 
Health and Safety Code, Chapters 104 and 311: 
(1)-(2) (No change.) 
(b)-(c) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 21, 1998.
TRD-9800978
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 458-7236

CHAPTER 39.Primary Health Care Services Program
Medically Underserved Community-State Matching Incentive Program
25 TAC sec.sec.39.61-39.75
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Health or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Health (department) proposes the repeal of 
sec.sec.39.61-39.75, concerning the Medically Underserved Community-State 
Matching Incentive Program (MIP), through which the department allocates funds 
to qualified community groups in medically underserved areas to cover certain 
costs of establishing physicians' primary care practices. Specifically, the 
sections cover purpose and scope; define terms used in the rules; define 
eligibility criteria for contributing communities, participating physicians, and 
state designation as a medically underserved area; describe the procedures for 
applying for funds, prioritization of need among applicant communities and 
funding allocation; and provide specifications for related contracts, including 
requirements for community contribution of funds. 
The repeal is required by Senate Bill 913, 75th Legislature, 1997, which directs 
the Texas Board of Health (board) to transfer its obligations, property, and 
rights as administrator of the MIP under Health and Safety Code, Chapter 46, to 
the Center for Rural Health Initiatives (Center) not later than September 1, 
1998. The Center's executive board will adopt new rules to administer the MIP in 
compliance with Health and Safety Code, Chapter 106, as amended by Senate Bill 
913. 
Dora McDonald, Chief, Bureau of State Health Data and Policy Analysis, has 
determined that for the first five-year period the repeal is in effect, there 
will be no fiscal implications for state or local government as a result of the 
repeal. 
Mrs. McDonald also has determined that for each of the first five years the 
repeal is in effect, the public benefits anticipated are compliance with Senate 
Bill 913, 75th Legislature, 1997, and continuation of assistance to communities 
in medically underserved areas when the Center for Rural Health Initiatives 
begins to administer the MIP. There are no anticipated economic costs to small 
or large businesses or to persons who will be affected by the repeal. No effect 
on local employment is anticipated. 
Comments on the proposed repeal may be submitted to Dora McDonald, Chief, Bureau 
of State Health Data and Policy Analysis, Texas Department of Health, 1100 West 
49th Street, Austin, Texas 78756-3199, (512) 458-7261. Comments will be accepted 
for 30 days following the date of publication of the proposed repeal in the 
Texas Register.
The repeal is required by Senate Bill 913, 75th Legislature, 1997, and proposed 
under Health and Safety Code sec.12.001(b), which provides the Texas Board of 
Health (board) with authority to adopt rules for the performance of every duty 
imposed by law upon the board, the department, and the commissioner of health. 
The repeal of sec.sec.39.61-39.75 will affect Health and Safety Code, Chapter 
106.
sec.39.61.Introduction.
sec.39.62.Definitions.
sec.39.63. Eligibility Criteria for a Contributing Community.
sec.39.64.Physician Eligibility Criteria.
sec.39.65.Eligibility Criteria for State Designation as a Medically Underserved 
Area or Community.
sec.39.66.Procedures To Apply for Funds. 
sec.39.67.Application Requirements. 
sec.39.68.Evaluation of Application.
sec.39.69.Contract Award.
sec.39.70.Methodology for Prioritizing Neediest Communities.
sec.39.71.Contribution Procedures.
sec.39.72.Contract. 
sec.39.73.Funding Allocation Procedure.
sec.39.74.Breach of Contract. 
sec.39.75.Reporting and Monitoring.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 21, 1998.
TRD-9800977
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 458-7236

CHAPTER 241.Shellfish Sanitation
Molluscan Shellfish
25 TAC sec.sec.241.50-241.100
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Health or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Health (department) proposes the repeal of existing 
sec.sec.241.50 - 241.100, and new sec.sec.241.50-241.67, concerning Texas 
molluscan shellfish. Specifically, these sections cover definitions; grounds and 
arrangements; sanitary controls; water supplies; storage areas; processing of 
molluscan shellfish; maintenance and cleaning; records and supervision 
guidelines which are provided by the new federal Shellfish Sanitation Model 
Ordinance; and they also include requirements established by the U.S. Food and 
Drug Administration's Fish and Fishery Products Hazard Analysis and Critical 
Control Point (HACCP) regulations (Code of Federal Regulations, Title 21, Part 
123). This action is necessary because of new federal requirements and 
recommendations. These rules are essential for the proper regulation of the 
molluscan shellfish industry.
Richard E. Thompson, Director, Seafood Safety Division, has determined that for 
each year of the first five-year-period the sections are in effect there will be 
no fiscal implications for state government as a result of implementing the 
sections. The current level of inspection will be reduced slightly to allow for 
the increased time and in-depth coverage of the HACCP inspections. All involved 
department staff have already participated in training. The effect on state 
government would be an increase in general revenue if administrative penalties 
are assessed. There will be no fiscal implications to local governments. Mr. 
Thompson also has determined that for each year of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
the sections will be better assurance that molluscan shellfish processed in or 
imported into Texas will be free of disease or other health hazards 
transmissible by these products. There is no anticipated economic cost to 
individuals or small businesses because the industry involved was already 
regulated very stringently under the National Shellfish Sanitation Program. 
These requirements reflect primarily changes in form rather than new 
requirements. All currently licensed shellfish dealers have already participated 
in training. There is no impact on local employment. 
Comments on the proposal may be submitted to Richard E. Thompson, R.S., 
Director, Seafood Safety Division, Texas Department of Health, 1100 West 49th 
Street, Austin, Texas 78756, (512) 719-0215. Comments will be accepted for 30 
days following publication of this proposal in the Texas Register. Public 
hearings to receive comments on the proposed rules will be held on Monday, 
February 23, 1998, at 7:00 p.m. in the Galveston County Agriculture Extension 
Service Building, Dickinson, Texas, and on Tuesday, February 24, 1998, at 7:00 
p.m. in the Calhoun County Agriculture Building at the fairgrounds on County 
Road 101, Port Lavaca, Texas.
The repeal is proposed under Health and Safety Code, sec.sec.436.112 and 12.001, 
which provides the Board of Health (board) with the authority to adopt rules for 
the performance of every duty imposed by law on the board, the department, and 
the commissioner of health. 
The repeal will affect Health and Safety Code, Chapter 436.
sec.241.50.Definitions. 
sec.241.51.Growing Area Classification.
sec.241.52.Transplanting and Gathering for Depuration.
sec.241.53.Certification and Enforcement Procedures.
sec.241.54.Sources of Shellfish.
sec.241.55.Harvesting and Handling Shellstock. 
sec.241.56.Shellstock Shipping. 
sec.241.57.Plant Location, Grounds, and Arrangements.
sec.241.58.Dry Storage and Protection of Shellstock.
sec.241.59.Floors, Walls, and Ceilings. 
sec.241.60.Insect and Vermin Control Measures. 
sec.241.61.Lighting. 
sec.241.62.Heating, Cooling, and Ventilation.
sec.241.63.Water Supply. 
sec.241.64.Plumbing, Sewage, and Related Facilities.
sec.241.65.Poisonous or Toxic Materials.
sec.241.66.Construction of Shucking Benches, Stools, Runs, and Tables. 
sec.241.67.Construction of Utensils and Equipment.
sec.241.68.General Maintenance and Cleanliness. 
sec.241.69.Cleaning and Sanitizing Equipment and Utensils. 
sec.241.70.Shucking of Shellfish.
sec.241.71.Shell and Waste Disposal.
sec.241.72.Single Service Containers.
sec.241.73.Packing of Shucked Shellfish.
sec.241.74.Labeling Shucked Shellfish.
sec.241.75. Refrigeration and Shipping of Shucked Shellfish.
sec.241.76.Ice.
sec.241.77.Records.
sec.241.78.Employee Health.
sec.241.79.Supervision.
sec.241.80.Personal Cleanliness.
sec.241.81.Education and Training.
sec.241.82.Repacking Shucking Shellfish. 
sec.241.83.Wet Storage.
sec.241.84.Heat Shock.
sec.241.85.Depuration Certificate Requirements. 
sec.241.86.Depuration Gathering Permit. 
sec.241.87.Depuration Tank Design and Construction.
sec.241.88.Depuration Plant Sanitation. 
sec.241.89.Depuration Plumbing, Water Supply, and Related Facilities. 
sec.241.90.Depuration Construction Requirements.
sec.241.91.Depuration Laboratory Procedures. 
sec.241.92.Depuration Plant Operation. 
sec.241.93.Depuration Shellfish Sampling Procedures.
sec.241.94.Depuration Process Water Control - Sampling.
sec.241.95.Depuration Treatment Water - Standards.
sec.241.96.Depuration Shellfish Meat Standards. 
sec.241.97.Depuration Ultraviolet (UV) Unit. 
sec.241.98.Depuration Shellstock Storage. 
sec.241.99.Tagging and Release of Depurated Shellfish.
sec.241.100.Depuration Records.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 21, 1998.
TRD-9801019
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 458-7236

25 TAC sec.sec.241.50-241.67
The new sections are proposed under Health and Safety Code, sec.sec.436.112 and 
12.001, which provides the Board of Health (board) with the authority to adopt 
rules for the performance of every duty imposed by law on the board, the 
department, and the commissioner of health. 
The new sections will affect Health and Safety Code, Chapter 436.

sec.241.50.Definitions.
The following words and terms, when used in this chapter of this title (relating 
to Molluscan Shellfish), shall have the following meaning unless the context 
clearly indicates otherwise.
Air gap - The unobstructed vertical distance through the free atmosphere between 
the lowest opening from any pipe or faucet supplying water to a tank, plumbing 
fixture or other device and the flood level rim of that receptacle. 
Approved area - A classification used to identify a harvest area where harvest 
for direct marketing is allowed. 
Approved source - A source of molluscan shellfish acceptable to the director 
(commissioner of health). 
Aquaculture - The cultivation of seed in natural or artificial growing or 
harvest areas, or the cultivation of molluscan shell stock other than seed in 
harvest areas. 
Assure - To make certain. 
Authorized agent - An employee of the department who is designated by the 
director (commissioner of health) to enforce provisions of this chapter of this 
title (relating to Molluscan Shellfish). 
Backflow - The flow of water or other liquids, mixtures or substances into the 
distribution pipes of a potable water supply from any source or sources other 
than the intended source. 
Back siphonage - The flowing back of used, contaminated or polluted water from a 
plumbing fixture, vessel or other source into potable water supply pipes because 
of negative pressure in the water supply pipes.
Blower - A receptacle for washing shucked molluscan shellfish which uses forced 
air as a means of agitation. 
Certificate (molluscan shellfish certificate of compliance) - A numbered 
document issued by the Seafood Safety Division which authorizes a dealer to 
process molluscan shellfish for sale. 
Certification or certify - The issuance of a numbered certificate to a person 
for a particular activity or group of activities that indicates:
(A) permission from the department to conduct the activity; and 
(B) initial compliance with the requirements of these rules in this chapter of 
this title (relating to Molluscan Shellfish).
Certification number - The unique identification number issued by the department 
to each dealer for each location. Each certification number shall consist of a 
one to five digit Arabic number preceded by the two letter State abbreviation 
and followed by a two letter abbreviation for the type of activity or activities 
the dealer is qualified to perform in accordance with the following terms: 
(A) Shellstock shipper (SS); 
(B) Shucker/packer (SP); 
(C) Repacker (RP); 
(D) Depuration processor (DP). 
Certified location - A plant or place of business which has been inspected by 
the Seafood Safety Division and for which a molluscan shellfish certificate of 
compliance has been issued. 
Coliform group - All of the aerobic and facultative anaerobic, gram negative, 
nonspore forming, rod shaped bacilli which ferment lactose broth with gas 
formation within 48 hours at 95 degrees Fahrenheit (35 degrees + 0.5 degrees 
Centigrade). 
Commingle or commingling - The act of combining different lots of molluscan 
shell stock or shucked molluscan shellfish. 
Commissioner - The commissioner of health for the State of Texas.
Compliance schedule - A written schedule that provides a correction time period 
to eliminate key and other deficiencies. 
Conditionally approved area - A classification used to identify a harvest area 
which meets the criteria for the approved classification except under certain 
conditions described in a management plan established by the SSD. 
Conditionally restricted area - A classification used to identify a harvest area 
which meets the criteria for the restricted classification except under certain 
conditions described in a management plan established by the SSD. 
Container - The physical material in contact with or immediately surrounding 
molluscan shellfish that confines it into a single unit. 
Corrosion resistant materials - Materials that maintain their original surface 
characteristics under normal exposure to the foods being contacted, normal use 
of cleaning compounds and bactericidal solutions, and other conditions of use. 
Critical Control Point (CCP) - A point, step or procedure in a food process at 
which control can be applied, and a food safety hazard can as a result be 
prevented, eliminated or reduced to acceptable levels.
Critical deficiency - A condition or practice which: 
(A) results in the production of a product that is unwholesome; or 
(B) presents a threat to the health or safety of the consumer.
Critical limit - The maximum or minimum value to which a physical, biological, 
or chemical parameter must be controlled at a critical control point to prevent, 
eliminate or reduce to an acceptable level the occurrence of the identified food 
safety hazard. 
Cross connection - An unprotected actual or potential connection between a 
potable water system and any source or system containing unapproved water or a 
substance that is not or cannot be approved as safe and potable. Examples 
include, bypass arrangements, jumper connection, removable sections, swivel or 
change over devices, or other devices through which backflow could occur.
Cull - To remove dead or unsafe molluscan shell stock from a lot of molluscan 
shell stock. 
Dealer - A person to whom certification is issued for the activities of 
molluscan shell stock shipper, shucker-packer, repacker, or depuration 
processor. 
Department - The Texas Department of Health, 1100 West 49th Street, Austin, 
Texas, 78756, or its successor state agency, having the responsibility for the 
enforcement of laws concerning the safety of the food supply including molluscan 
shellfish growing area classification and certification of molluscan shellfish 
dealers. 
Depletion - The removal, under the direct control of the Texas Parks and 
Wildlife Department, of all existing commercial quantities of market-size 
molluscan shellfish from a harvest area classified as prohibited. 
Depuration or depurate - The process of reducing the level of bacteria and 
viruses that may be present in molluscan shellfish by using a controlled aquatic 
environment as the treatment process. 
Depuration plant - A place where depuration of molluscan shellfish occurs.
Depuration Processor (DP) - A person who harvests or receives molluscan shell 
stock from harvest areas in the approved or conditionally approved, restricted, 
or conditionally restricted classification and submits such molluscan shell 
stock to an approved depuration process. 
Direct marketing - The sale for human consumption of molluscan shellfish which: 
(A) does not require depuration or relaying prior to sale; or 
(B) has been subjected to depuration or relaying activities. Director - The 
executive head (commissioner of health) of the Texas Department of Health. 
Dry storage - The storage of molluscan shell stock out of water. 
Durable material - Material with the ability to exist for several years without 
significant deterioration and able to withstand normal daily use associated with 
molluscan shellfish operations. 
Easily cleanable - A surface which is: 
(A) readily accessible; and 
(B) is made of such materials, has a finish, and is so fabricated that residues 
may be effectively removed by normal cleaning methods.
Facility - A structure. 
FDA - The United States Food and Drug Administration or its successor agency, 
the federal agency in which regulation of foods, including the Cooperative 
Shellfish Program, is vested. 
Food contact surface - An equipment surface or utensil which normally comes into 
direct or indirect contact with shucked molluscan shellfish.
Food safety hazard - Any biological, chemical, or physical property that may 
cause a food to be unsafe for human consumption. 
Gatherer - Person who takes molluscan shellfish by any means from a growing area 
designated by the commissioner for delivery to a depuration plant. 
GLO - The Texas General Land Office, 1700 North Congress, Austin, Texas, 78701, 
or its successor agency, the state agency having the responsibility for the 
enforcement of laws concerning all state lands, including leasing of wetland 
bottom for private oyster leases. 
Growing area - Any site which supports or could support the propagation of 
molluscan shell stock by natural or artificial means. 
HACCP - Hazard Analysis Critical Control Point, a systematic, science-based 
approach used in food production as a means to assure food safety. The concept 
is built upon the seven principles identified by the National Advisory Committee 
on Microbiological Criteria for Foods(1992). 
HACCP Plan - A written document that delineates the formal procedures that a 
dealer follows to implement the HACCP requirements as adopted by the Interstate 
Shellfish Sanitation Conference set forth in Code of Federal Regulations, Title 
21, sec.123.6, as amended. 
Harvest - The act of removing molluscan shell stock from growing or harvest 
areas and its placement on or in a manmade conveyance or other means of 
transport. 
Harvest area - An area that contains commercial quantities of molluscan shell 
stock and may include aquaculture sites and facilities.
Harvester - A person who takes molluscan shell stock by any means from a harvest 
area. 
Heat shock - The process of subjecting molluscan shell stock to any form of heat 
treatment prior to shucking, including steam, hot water or dry heat, to 
facilitate removal of the meat from the shell without substantially altering the 
physical or organoleptic characteristics of the molluscan shellfish.
Includes or including - Includes or including by way of illustration and not by 
way of limitation. 
ISSC - The Interstate Shellfish Sanitation Conference. The ISSC consists of 
agencies from molluscan shellfish producing and receiving states, FDA, the 
molluscan shellfish industry, and the National Marine Fisheries Service of the 
U.S. Department of Commerce. 
Key deficiency - A condition or practice which may result in adulterated, 
decomposed, misbranded or unwholesome product. 
Label - Any written, printed or graphic matter affixed to or appearing upon any 
package containing molluscan shellfish. 
License - The document issued by the Texas Parks and Wildlife Department, under 
the Texas Parks and Wildlife Code, Chapter 47 or Chapter 76, which authorizes a 
person to harvest or transport molluscan shell stock for commercial sale. 
Lot of molluscan shell stock - A single type of bulk molluscan shell stock or 
containers of molluscan shell stock of no more than one day's harvest from a 
single defined harvest area gathered by one or more harvesters.
Lot of molluscan shell stock for depuration - Molluscan shell stock harvested 
from a particular area during a single day's harvest and delivered to one 
depuration plant. 
Lot of shucked molluscan shellfish - A collection of containers of no more than 
one day's shucked molluscan shellfish product produced under conditions as 
nearly uniform as possible, and designated by a common container code or 
marking. 
Marina - Any water area with a structure (docks, basin, floating docks, etc.) 
which is: 
(A) used for docking or otherwise mooring vessels; and 
(B) constructed to provide temporary or permanent docking space for more than 
ten boats. 
Marine Biotoxin - Any poisonous compound produced by marine microorganisms and 
accumulated by molluscan shell stock. Examples include Alexandrium spp. (Proto 
gonyaulax species), and Gymnodinium breve Market shellfish - Molluscan shellfish 
which are, may be, or have been harvested and/or prepared for sale for human 
consumption as a fresh or frozen product. 
May - Discretionary and is not mandatory or required. 
Molluscan shellfish - All species of:
(A) oysters, clams or mussels, whether: 
(i) shucked or in the shell;
(ii) fresh or frozen; and
(iii) whole or in part. 
(B) scallops in any form, except when the final product form is the adductor 
muscle only.
Monoculture - The culture of a single molluscan shellfish species. 
MPN - Most probable number.
Open area - A molluscan shellfish growing area where the harvesting for sale, 
harvesting for transplant, or gathering for depuration of molluscan shellfish is 
allowed. An open area status may be placed on any one of the classified area 
designations except for a prohibited area. 
Open water aquaculture - The cultivation of molluscan shellfish in natural 
molluscan shellfish harvest areas. 
Other deficiency - A condition or practice that is not defined as critical or 
key, but is of a public health significance and, if left uncorrected, could 
result in a more serious violation. 
Pack (packing) - All activities involved in placing molluscan shellfish in 
containers. 
Person - Any individual, receiver, trustee, guardian, personal representative, 
fiduciary, or representative of any kind, government or governmental subdivision 
or agency, partnership, association, corporation or other legal entity. 
Poisonous or deleterious substance - A toxic substance occurring naturally or 
added to the environment for which a regulatory tolerance limit or action level 
has been established in molluscan shellfish to protect public health. 
Polyculture - The cultivation of:
(A) two or more species of molluscan shellfish; or 
(B) molluscan shellfish with other species in a common environment. 
Potable water - A water supply which is suitable for human consumption. 
Principal display panel - The part of a label that is most likely to be 
displayed, presented, shown or examined under customary conditions of retail 
sale.
Process batch - A quantity of molluscan shell stock used to fill each separate 
tank or a series of tanks supplied by a single process water system for a 
specified depuration cycle in a depuration activity.
Process water - The water used in the scheduled depuration process.
Prohibited area - A classification used to identify a harvest area where the 
harvest of molluscan shell stock for any purpose, except depletion or gathering 
of seed for aquaculture, is not permitted. 
Repacker (RP) - Any person, other than the original certified shucker-packer, 
who repackages shucked molluscan shellfish into other containers.
Repacking molluscan shell stock - The practice of removing molluscan shell stock 
from containers and placing it into other containers.
Restricted area - A classification used to identify a harvest area where 
harvesting shall be by special license and the molluscan shell stock, following 
harvest, is subjected to a suitable and effective treatment process through 
transplanting or gathering for depuration. 
Safe materials - Articles manufactured from or composed of materials that may 
not reasonably be expected to, directly or indirectly, become a component of or 
otherwise adversely affect the characteristics of any food. 
Sanitation control record - Records that document the monitoring of sanitation 
practices and conditions. 
Sanitize - To adequately treat food contact surfaces by a process that is 
effective in: 
(A) destroying vegetative cells of microorganisms of public health significance; 
(B) substantially reducing the numbers of other undesirable microorganisms; and
(C) not adversely affecting the product or its safety for the consumer.
Seed - Molluscan shell stock which is less than market size.
Sewage - Refuse liquids or waste matter, including hand sink drainage. 
Sewer - An artificial, usually subterranean, conduit to carry off sewage and/or 
surface water. 
Sewerage - The removal and disposal of sewage and surface water by sewers. 
Shell stock - Live molluscan shellfish in the shell. 
Shell stock packing - The process of placing molluscan shell stock into 
containers for introduction into commerce. 
Shellstock Shipper (SS) - A dealer who grows, harvests, buys, or repacks and 
sells molluscan shell stock. They are not authorized to shuck molluscan 
shellfish nor to repack shucked molluscan shellfish. A shell stock shipper may 
also ship shucked molluscan shellfish. 
Shucked shellfish - Molluscan shellfish, whole or in part, from which one or 
both shells have been removed. 
Shucker/Packer (SP) - A person who shucks and packs molluscan shellfish. A 
shucker-packer may act as a shellstock shipper or may repack molluscan shellfish 
originating from other certified dealers. 
SSD - The Seafood Safety Division of the Texas Department of Health to which 
responsibility to classify molluscan shellfish growing areas and to regulate 
harvesting, processing, and/or shipping of molluscan shellfish is delegated. 
Take - Catch, hook, net, snare, trap, kill, or capture by any means, including 
the attempt to take. 
TDA - The Texas Department of Agriculture, 1700 North Congress, Austin, Texas, 
78701, or its successor state agency having responsibility for enforcement of 
laws concerning licensing of aquaculture. 
TNRCC - The Texas Natural Resource Conservation Commission, 12100 Park 35 
Circle, Austin, Texas, 78758, or its successor state agency having the 
responsibility for the enforcement of laws concerning water supplies and 
discharges of water or wastewater in Texas. 
TPWD - The Texas Parks and Wildlife Department, 4200 Smith School Road, Austin, 
Texas, 78744, or its successor state agency having the responsibility for the 
enforcement of laws concerning harvesting and depletion of molluscan shellfish 
resources. 
Transaction record - The form or forms used to document each purchase or sale of 
molluscan shellfish at the wholesale level, and includes molluscan shellfish 
harvest and sales records, ledgers, purchase records, invoices and bills of 
lading. 
Transplant (transplanting) - To transfer molluscan shell stock from a harvest 
area classified as restricted or conditionally restricted or from a 
conditionally approved area in the closed status to a harvest area classified as 
approved or conditionally approved for the purpose of reducing pathogens as 
measured by the coliform indicator group or poisonous or deleterious substances 
that may be present in the molluscan shell stock by using the ambient 
environment as the treatment process. 
Water closet - A toilet bowl and its accessories surrounded by walls or 
partitions. 
Wet storage - The temporary storage, by a dealer, of molluscan shell stock from 
harvest areas in the approved classification or in the open status of the 
conditionally approved classification in containers or floats in natural bodies 
of water or in tanks containing natural or synthetic seawater.

sec.241.51. Growing Area Classification.
The authority conferred on the commissioner by the Health and Safety Code, 
sec.436.101 is delegated to the bureau chief of the Bureau of Food and Drug 
Safety or his/her designee under the provisions of the Health and Safety Code, 
sec.436.003(a). The bureau chief shall: 
(1) designate coastal water (as defined in the rules of the Texas Parks and 
Wildlife Department, 31 Texas Administrative Code, Chapter 51) for the purposes 
of taking molluscan shellfish as: 
(A) an approved area; 
(B) a conditionally approved area; 
(C) a restricted area; 
(D) a conditionally restricted area; or 
(E) a prohibited area. 
(2) designate classified growing areas as open areas or closed areas. 

sec.241.52.Shell Stock Transplanting and Gathering for Depuration. 
(a) Any person who wants to transplant molluscan shell stock from a harvest area 
classified as conditionally approved, restricted, or conditionally restricted 
shall make application to the TPWD for a permit to transplant molluscan shell 
stock. 
(b) No person may transplant molluscan shell stock without a valid transplant 
permit from the TPWD. 
(c) Each person who transplants molluscan shell stock shall provide the 
following information to the department: 
(1) the source of the molluscan shell stock; 
(2) the quantity of molluscan shell stock; 
(3) the destination private oyster lease of the molluscan shell stock; and 
(4) the date the transplant permit expired or was canceled.
(d) No person shall harvest transplanted molluscan shell stock until the 
molluscan shell stock has been in waters meeting the approved area criteria for 
a minimum consecutive period of 14 days. 
(e) Any person, firm, or corporation engaging wholly or part-time in the 
business of gathering molluscan shellfish from areas designated by the 
department for delivery to a controlled depuration plant shall be required to 
hold a current permit issued specifically for this purpose by the TPWD, with a 
copy in the files of the department. 
(f) Permits for gathering for depuration shall be granted only subject to the 
following conditions. 
(1) All gathering and transporting of molluscan shellfish for depuration must be 
accomplished between sunrise and sunset as set by the National Weather Service 
for that locale. 
(2) All boats and vehicles used to gather or transport molluscan shellfish for 
depuration shall be conspicuously marked in a manner established by the TPWD. 
All boats or vehicles so marked shall be thoroughly cleaned and sanitized and 
the marking removed prior to use for harvesting or transporting treated 
molluscan shellfish or other molluscan shellfish approved for harvest or sale. 
(3) Molluscan shellfish gathered for depuration shall not be containerized in 
any manner resembling normal sales of molluscan shell stock from approved 
harvest areas. Containers used for normal sales of molluscan shell stock from 
approved areas shall not be stored on any boat or vehicle used to gather or 
transport molluscan shellfish for depuration. Containers of untreated molluscan 
shell stock shall be tagged or labeled as NOT FOR HUMAN CONSUMPTION. 
(4) A copy of the TPWD permit shall be kept on board the vessel at all times 
during gathering and transporting of molluscan shell stock for depuration. 
(5) All gathering and transporting of molluscan shellfish for depuration shall 
be conducted under the immediate surveillance of a commissioned officer of the 
TPWD, or other commissioned officer as provided by law. The responsibility for 
obtaining this surveillance rests with the depuration plant owner or operator. A 
commissioned officer shall be present for every ten gatherers or gathering boats 
or for any portion of 10 gatherers or boats working for any single depuration 
plant. An officer shall not concurrently serve as surveillance officer for more 
than one depuration plant. Separate surveillance officers shall be present for 
gatherers from the same plant working concurrently in more than one geographic 
area. The surveillance officer shall have all molluscan shell stock under his or 
her control at all times during transport from the gathering area to the 
depuration plant. The surveillance officer shall prepare a report stating the 
gathering area(s), species, and quantity of molluscan shellfish gathered each 
day by each gatherer under his or her surveillance. One copy of the report shall 
accompany the molluscan shell stock to the depuration plant and be maintained in 
the plant files for not less than one year. One copy of the report shall be 
forwarded to the Texas Department of Health, Seafood Safety Division, 1100 West 
49th Street, Austin, Texas 78756. 
(6) All molluscan shellfish gathered under authority of a depuration permit 
shall be delivered only to the depuration plant specified in the permit, on the 
day gathered, and shall be depurated or disposed of as waste. 
(7) Molluscan shellfish gathered for depuration shall be protected at all times 
during gathering and transporting to prevent contamination and undue stress. 
(g) Vessels and all other equipment coming in contact with molluscan shell stock 
during handling or transport for transplant or depuration shall be thoroughly 
cleaned before the vessels or equipment are used to transport or handle 
molluscan shellfish for direct marketing. 

sec.241.53.Molluscan Shellfish Aquaculture.
(a) The following activities are exempted from the requirements in this section: 
(1) hatcheries; 
(2) nursery products which do not exceed 10% of the market weight; and 
(3) nursery products which are 6 months or more growing time from market size. 
(b) Aquaculture encompasses both open water and land based monoculture and 
polyculture. 
(c) Any person who performs open water aquaculture or operates an aquaculture 
facility to raise molluscan shellfish for human consumption shall obtain: 
(1) a permit(s) or authorization from the department, GLO, TPWD, TDA, and/or 
TNRCC for the activity or for construction and functioning of his facility; 
(2) a harvester's license; and 
(3) certification as a dealer, where necessary. 
(d) Molluscan shellfish aquaculture shall be practiced only in strict compliance 
with the provisions of the authorization issued by the department for the 
aquaculture activity. Authorization shall be based on the aquaculturist's 
written operational plan. 
(e) Prior to beginning his activity, an aquaculturist shall obtain the 
permission of the department for use of his site and any construction.
(f) Water quality at any site used for open water or land based aquaculture 
shall meet the criteria for the approved, conditionally approved, restricted or 
conditionally restricted classification. 
(g) Molluscan shellfish cultured in any open water or land based system meeting 
the criteria for the approved classification of a harvest area throughout the 
culture period may be immediately marketed. 
(h) Any molluscan shellfish raised in aquaculture shall be subjected to relaying 
or depuration prior to direct marketing if the culture area or facility is 
located in or using water which is in: 
(1) the closed status of the conditionally approved classification;
(2) the restricted classification; or 
(3) the open status of the conditionally restricted classification.
(i) Only drugs sanctioned by the FDA may be used for molluscan shellfish 
treatment. 
(j) Harvesting, processing, storage, and shipping requirements for molluscan 
shellfish raised in aquaculture shall be the same as the requirements for wild 
molluscan shellfish specified in this chapter of this title (relating to 
Molluscan Shellfish). 
(k) Complete and accurate records shall be maintained for at least two years by 
the aquaculturist and shall include the: 
(1) source of molluscan shellfish, including seed if the seed is from harvest 
areas which are not in the approved classification; 
(2) dates of transplanting and harvest; and 
(3) water source, its treatment method, if necessary, and its quality in land 
based systems. 
(l) Seed may come from any growing area, or from any harvest area in any 
classification, provided that: 
(1) the source of the seed is approved by the department;
(2) seed from growing areas or harvest areas in the restricted or prohibited 
classification has acceptable levels of poisonous or deleterious substances; and 
(3) seed from growing areas or harvest areas in the prohibited classification is 
cultured for a minimum of six months. 

sec.241.54.Land Based Aquaculture.
(a) Operational plan. Each land based aquaculture facility shall have a written 
operational plan. The plan shall be approved by the department prior to its 
implementation and shall include: 
(1) a description of the design and activities of the culture facility; 
(2) the specific site and boundaries in which molluscan shellfish culture 
activities will be conducted; 
(3) the types and locations of any structures, including rafts, pens, cages, 
nets, tanks, ponds, or floats which will be placed in the waters; 
(4) the species of molluscan shellfish to be cultured and harvested; 
(5) if appropriate, the source and species of other organisms to be cultured in 
any polyculture systems; 
(6) procedures to assure that no poisonous or deleterious substances are 
introduced into the activities; 
(7) a program of sanitation, maintenance, and supervision to prevent 
contamination of the final molluscan shellfish products; 
(8) a description of the water source, including the details of any water 
treatment process or method, if necessary; 
(9) a program to maintain water quality, which includes collection of microbial 
water samples and their method of analysis and routine temperature and salinity 
monitoring. The bacterial indicator monitored shall be the same as used for 
monitoring harvest areas; 
(10) collection of information on the microbial and chemical quality of 
molluscan shellfish harvested from the aquaculture site; 
(11) collection of data concerning the quality of food production (algae or 
other) used in the artificial harvest system; 
(12) maintenance of the required records; and 
(13) how molluscan shell stock will be harvested, processed if applicable, and 
sold. 
(b) Water systems. 
(1) If the aquaculture system is of continuous flow through design, water from a 
harvest area classified as approved, or in the open status of the conditionally 
approved classification at all times molluscan shellfish are held, may be used 
without treatment. 
(2) Water used in land based aquaculture incorporating a closed or recirculating 
system shall: 
(A) not contaminate molluscan shellfish with residues that would render the 
product adulterated; 
(B) come from a source meeting the restricted classification criteria at a 
minimum; 
(C) be maintained, at a minimum, at the bacteriological quality of the 
restricted classification; and 
(D) be measured at least five times per year. 
(3) If the water in the closed or recirculating system meets the criteria for 
the conditionally approved classification, the operational plan, prior to 
molluscan shell stock harvest, shall require, at a minimum: 
(A) collection of three water samples from the tank at least three days apart 
over a 14 day period; and 
(B) a fecal coliform density of less than 14 MPN per 100 ml in each water sample 
collected from the holding tank. 
(c) Molluscan shell stock quality. 
(1) Molluscan shell stock cultured in any system meeting the criteria for the 
approved classification throughout the culture period may be used in direct 
marketing. 
(2) If the water in a closed or recirculating system is classified as 
conditionally approved and in the open status, and if the water quality meets a 
fecal coliform level of less than 14 MPN per 100 ml in each sample collected in 
the 14 days prior to harvest, the molluscan shell stock may be used in direct 
marketing. 
(3) Molluscan shell stock cultured in a closed or recirculating system which 
does not meet the requirements of sec.241.5(3)(A) and (B) shall be relayed or 
depurated prior to direct marketing.

sec.241.55. Polyculture Systems.
(a) A polyculture system shall: 
(1) meet all requirements in sec.241.54 of this title (relating to Land Based 
Aquaculture; 
(2) provide information concerning all sources of and species of all organisms 
to be cultivated, cultured, and harvested. 
(b) A polyculture system shall include in its operational plan requirements to: 
(1) monitor for human pathogens, animal drugs, and/or other poisonous or 
deleterious substances that might be associated with polyculture activities; and 
(2) subject all harvested molluscan shell stock to relaying or depuration if 
human pathogens, animal drugs, and/or other poisonous ordeleterious substances 
exist at levels of public health significance. 

sec.241.56. Molluscan Shell Stock Harvesting and Handling.
(a) Harvesters. Any harvester who engages in molluscan shell stock packing as 
defined in this chapter of this title (relating to Molluscan Shellfish) shall: 
(1) be a dealer; or 
(2) pack molluscan shell stock for a dealer. 
(b) Vessels. 
(1) The dealer shall not accept molluscan shell stock unless all vessels used to 
harvest and transport molluscan shell stock are properly constructed, operated 
and maintained to prevent contamination, deterioration and decomposition of the 
molluscan shell stock. 
(A) Decks and storage bins shall be constructed and located to prevent bilge 
water or polluted overboard water from coming into contact with the molluscan 
shell stock. 
(B) Bilge pump discharges shall be located so that the discharge shall not come 
into contact with the molluscan shell stock. 
(C) Bags or other containers used for storing molluscan shell stock shall be 
clean and fabricated from safe materials. 
(D) Boat decks and storage bins used in the harvest or transport of molluscan 
shell stock for direct marketing shall be: 
(i) kept clean with potable water or water from a harvest area in the approved 
classification or in the open status of the conditionally approved 
classification; and 
(ii) constructed so that water does not stand on the deck or in the storage bin. 
(E) Coverings shall be provided on harvest boats to protect molluscan shell 
stock from exposure to adverse conditions. 
(2) Cats, dogs, and other animals shall not be allowed on vessels. 
(c) Disposal of human sewage from vessels. 
(1) Human sewage shall not be discharged overboard from a vessel used in the 
harvesting of molluscan shell stock or from vessels which buy molluscan shell 
stock, but only into an appropriate sewage disposal system.
(2) An approved marine sanitation device (MSD), portable toilet or other sewage 
disposal receptacle shall be provided on the vessel to contain human sewage. 
(3) Portable toilets shall: 
(A) be used only for the purpose intended; 
(B) be secured while on board and located to prevent contamination of molluscan 
shell stock by spillage or leakage; 
(C) be emptied only into an appropriate sewage disposal system;
(D) be cleaned and sanitized before being returned to the boat; and 
(E) be cleaned only in equipment which is not used for washing or processing 
food. 
(4) Use of other receptacles for sewage disposal may be approved by department 
if the receptacles are: 
(A) constructed of impervious and cleanable materials; and
(B) meet the requirements in subsection (c)(3) of this section.
(d) Molluscan shell stock washing. 
(1) Molluscan shell stock shall be washed reasonably free of bottom sediments as 
soon after harvesting as practicable. 
(2) The harvester shall be primarily responsible for washing the molluscan shell 
stock. 
(3) If molluscan shell stock washing is not feasible at the time of harvest, the 
dealer shall assume this responsibility. 
(4) Water used for molluscan shell stock washing shall be obtained from: 
(A) a potable water source; or 
(B) a harvest area in the: 
(i) approved classification; or 
(ii) in the open status of the conditionally approved classification.
(5) If the harvester or dealer elects to use tanks or a water system to wash 
molluscan shell stock, the molluscan shell stock washing activity shall be 
constructed, operated, and maintained in compliance with an approved HACCP plan 
in accordance with sec.241.60 of this title (relating to General HACCP 
Requirements) and sec.241.61 of this title (relating to General Sanitation 
Requirements). 
(e) Molluscan shell stock identification. 
(1) Each harvester shall affix a tag to each bag or container of molluscan shell 
stock which shall be in place while the molluscan shell stock is being 
transported to a dealer. 
(2) If the molluscan shell stock is harvested at more than one location, each 
container shall be tagged at its harvest area. 
(3) When the harvester is also the dealer, the harvester has the option to tag 
the molluscan shellfish with a harvester's tag or a dealer's tag meeting the 
requirements outlined in sec.241.56(e) of this title (relating to Molluscan 
Shell Stock Identification). 
(4) The harvester's tags shall: 
(A) be durable, waterproof and approved by the department prior to use; and 
(B) be at least 2-5/8 by 5-1/4 inches (6.7 by 13.3 cm) in size. 
(5) The harvester's tag shall contain the following indelible, legible 
information in the order specified: 
(A) the commercial oyster boat captain's license number (issued by TPWD), the 
captain's name, and any one of the following: 
(i) the oyster boat license number; 
(ii) the boat state registration number; or 
(iii) the documented boat name; 
(B) the date of harvest; 
(C) the most precise identification of the harvest location as is practicable 
including the initials of the state of harvest, and any department designation 
of the harvest area by indexing, administrative or geographic designation; 
(D) when the molluscan shell stock has been in wet storage in a dealer's 
operation, the statement: "THIS PRODUCT IS A PRODUCT OF (NAME OF STATE) AND WAS 
WET STORED AT (FACILITY CERTIFICATION NUMBER) FROM (DATE) TO (DATE)"; 
(E) the type and quantity of molluscan shell stock; and 
(F) the following statement in bold capitalized type on each tag "THIS TAG IS 
REQUIRED TO BE ATTACHED UNTIL CONTAINER IS EMPTY OR IS RETAGGED AND THEREAFTER 
KEPT ON FILE FOR 90 DAYS." 
(6) Molluscan shell stock harvested during the period April 1 through October 31 
that will not be refrigerated within the Time-To-Refrigeration guidelines 
required in sec.241.58 of this title (relating to Molluscan Shell Stock 
Temperature Control) shall not be harvested before 6:00 a.m. and shall be placed 
under refrigeration as designated in sec.241.58 of this title by 8:00 p.m. each 
day and shall be identified, stored, and processed separately from molluscan 
shell stock that is refrigerated within these Time-To-Refrigeration guidelines. 
(7) Molluscan shell stock harvested and held exempt from the Time-To-
Refrigeration guidelines in paragraph (6) of this subsection shall:
(A) be tagged with a harvester tag meeting all other requirements that shall 
also be over stamped on both sides with the words "FOR SHUCKING BY A CERTIFIED 
DEALER" in ink that shall be neon green in color in letters at least one-half 
inch in height. This special harvester tag shall be placed on each container of 
molluscan shell stock at the conclusion of harvesting of this exempt molluscan 
shell stock and before harvesting of any other molluscan shell stock. This 
special harvester tag shall remain attached to each container until the 
molluscan shell stock is shucked; 
(B) not be commingled with any other molluscan shellfish and shall be stored 
separately on harvest boats and at any certified location; and 
(C) be shucked and placed in containers bearing the consumer information 
language adopted by the ISSC, or an equivalent approved in writing by the SSD 
prior to use, unless the invoice and bill of lading for shipment of this exempt 
molluscan shell stock to another dealer both contain the following statement: 
"FOR SHUCKING BY A CERTIFIED DEALER". All dealer tags attached to such molluscan 
shell stock shall be over stamped identical to the harvester tag. 
(8) If the molluscan shell stock is removed from the original bag or container, 
the tag on the new bag or container shall meet the requirements in subsection 
(e) of this section. 
(f) Harvester records. 
(1) Each harvester who harvests molluscan shell stock during the period April 1 
- October 31 shall maintain records for each date molluscan shell stock is 
harvested that show the time the first molluscan shell stock is harvested, the 
time harvesting ends, and the time molluscan shell stock is unloaded from the 
boat. 
(2) If molluscan shell stock is harvested and held exempt from the Time-To-
Refrigeration guidelines in subsection (e) of this section, the harvester 
records shall also include the time that harvesting of this exempt molluscan 
shell stock ends and the time that harvesting of other molluscan shell stock 
begins. 
(3) These records shall be provided to the dealer with the molluscan shell stock 
and shall be maintained as part of the dealer's records. 
(g) Any molluscan shellfish in possession of a person holding a valid license 
issued by TPWD under Texas Parks and Wildlife Code, Chapter 47 or Chapter 76, 
shall be considered to be harvested for human consumption and offered for sale 
for food in Texas. 
(h) Harvesters shall: 
(1) be responsible for control of their molluscan shell stock until acceptance 
by a dealer; 
(2) sell their molluscan shell stock only to a currently certified shellfish 
dealer; 
(3) be required to deliver their molluscan shell stock to a dealer within the 
day the molluscan shell stock is harvested. For this purpose, a day shall be 
considered to be a 24 hour period from 12:00 a.m. to 12:00 a.m. the next day. 
Delivery of the molluscan shell stock means packing the molluscan shell stock 
into an approved container, transfer of the molluscan shell stock from the boat 
to a certified location, and acceptance of the molluscan shell stock by the 
dealer; and 
(4) be required to transport molluscan shell stock on ice or at air temperatures 
of 45 degrees Fahrenheit or less if the time from unloading the boat until the 
product is accepted by a dealer and placed under refrigeration at a certified 
location will exceed two hours. 
(i) If the harvester transports molluscan shell stock other than by boat to a 
certified location, the harvest boat captain must accompany the molluscan shell 
stock until acceptance by the dealer. 
(j) It is illegal for harvesters to sell molluscan shell stock directly to the 
public. 

sec.241.57.Certification Requirements.
(a) No person shall engage in any activity requiring a certificate in 
sec.sec.241.50-241.67 of this title (relating to Molluscan Shellfish) without 
having applied for and obtained an annual numbered certificate of compliance 
pertaining to the particular activity from the department. No certificate will 
be issued without a HACCP plan in accordance with sec.241.60 of this title 
(relating to General HACCP Requirements) which is acceptable to the SSD. 
(b) Dealer certification. 
(1) Shucker/packer. Any person who shucks molluscan shellfish shall be certified 
as a shucker/packer. 
(2) Repacker. 
(A) Any person who repacks shucked molluscan shellfish shall be certified as a 
shucker/packer or repacker. 
(B) Any person who repacks molluscan shell stock shall be certified as a 
shellstock shipper, shucker/packer, or repacker. 
(C) A repacker shall not shuck molluscan shellfish. 
(3) Shellstock shipper. Any person who ships and receives molluscan shell stock 
in interstate commerce shall be certified as a shellstock shipper, repacker, or 
shucker/packer. 
(c) Each dealer shall have a Texas business address at which inspections of 
facilities, activities, equipment, or records can be made.
(d) Each dealer shall accept molluscan shellfish only if they are taken from 
areas approved by the department, or obtained from sources outside the State of 
Texas which are approved by the department. If obtained from sources outside of 
the State of Texas, the molluscan shellfish must be from areas approved by the 
appropriate state or other government authorities having jurisdiction and must 
be obtained from dealers currently certified by the appropriate state or other 
government authority. Molluscan shellfish obtained from sources other than those 
outlined in this section shall not be sold, offered for sale, or held for sale. 
(e) Each dealer shall pay the oyster sales fee as assessed by the Texas Health 
and Safety Code, sec.436.103. The fee is established at $1.00 per barrel of 
oyster shell stock. One barrel shall be equal to three containers (sacks, 
bushels, boxes, etc.) of oyster shell stock. Each container of oyster shell 
stock shall not weigh more than 100 pounds. Any container weighing more than 100 
pounds shall be counted as two containers for purposes of computing the oyster 
sales fee owed. 
(f) Prior to beginning construction of a new molluscan shellfish processing 
plant, or major remodeling of an existing molluscan shellfish processing plant 
(which includes, but is not limited to: any process new to that particular 
plant; any change of product flow; or any enlarging of the plant structure) 
complete, legible plans showing the floor plan of the building, with dimensions 
drawn to scale, location of equipment, doors, floor drains, etc., and written, 
complete operational procedures for all phases of the activity, including flow 
of the product, shall be submitted to the SSD for review and approval. 
Additional plans of the entire premises may be required showing all structures, 
as well as, all water wells and septic systems with related distances and a 
statement of specifications as to type, sizes, design, date installed, etc. 
Plans shall be submitted no less than 30 days prior to initiating a new process 
or beginning construction. No operations shall be conducted while any inside 
plant construction or any other construction which has the potential to 
contaminate the product is occurring. A legibly written or typed application for 
certification on forms provided by the department must be filed with the SSD 
each year.
(g) The application for a shucker/packer or repacker certificate must be 
accompanied by a written statement of the procedure the applicant will use to 
determine the SELL BY date for molluscan shellfish packed and shipped from the 
location listed in the application. 
(h) A certificate and unique number shall be issued by the department only after 
an inspection of the plant by an authorized agent hasrevealed that the plant and 
practices are in compliance with these sections. A certificate and unique number 
shall be issued to a dealer for each location at which molluscan shellfish 
operations are to be conducted and a certificate is required. 
(i) The inspection of a previously certified plant which has exhibited 
operational problems or violations of operational requirements of these sections 
or had a certificate of compliance revoked shall not be conducted until written, 
complete operational procedures for all phases of the activity, including flow 
of the product, are submitted to the SSD for review and approval. An application 
may be rejected and a certificate of compliance denied based on a history of 
failure to comply with the requirements of these sections.
(j) Molluscan shellfish operations by the dealer shall not begin until the 
department has issued the certificate for that location. Each certificate shall 
expire automatically at 11:59 p.m. on August 31st following the date of issue. 
Certificates shall not be transferable. 
(k) After a certificate is issued, unannounced inspections may be conducted at 
any time the SSD has reason to believe the business may be in operation or that 
molluscan shellfish may be stored on the premises and at such frequency as may 
be necessary to assure that adequate operational and sanitary conditions are 
maintained. All molluscan shellfish at a certified location shall be the 
responsibility of the dealer at that location, for the purposes of these 
sections. A copy of the completed inspection form listing written descriptions 
of the violations observed along with any necessary explanation shall be 
provided by an authorized agent of department to the most responsible individual 
present at the firm at the conclusion of the inspection. Any violations of the 
same requirement found on a consecutive inspection may result in certificate 
suspension in accordance with subsection (l) of this section. Molluscan 
shellfish inspections and the SSD forms shall comply with the requirements 
established in the current National Shellfish Sanitation Program. 
(1) When an inspection detects a critical deficiency the violation shall be 
corrected during that inspection or the plant must cease production affected by 
the violation. If production affected by the violation does not voluntarily 
cease, all molluscan shellfish handled or processed while the violation exists 
or existed shall be detained pursuant to Health and Safety Code, sec.436.028. 
(2) When an inspection detects four or more key deficiencies, the dealer shall 
establish a correction schedule acceptable to the SSD. Follow-up inspection 
shall determine if the violations have been corrected or are being corrected in 
accordance with the scheduled correction dates noted on the previous inspection 
report. 
(3) When an inspection detects other deficiencies or three or less key 
deficiencies, the deficiencies shall be corrected prior to the next routine 
inspection. 
(l) The SSD may initiate procedures to suspend or revoke a certificate of 
compliance as follows. 
(1) The procedures shall be in accordance with the Texas Health and Safety Code, 
sec.436.114 and the provisions of the Government Code, Chapter 2001, 
Administrative Procedure Act, and department formal hearing procedures in 
Chapter 1 of this title (relating to the Texas Board of Health).
(2) The grounds for suspension or revocation or assessment of administrative 
penalties may be any one or more of the following: 
(A) inspection results indicate unsatisfactory conditions in the plant or the 
existence of a public health hazard; 
(B) the certificate holder or representative refuses to allow an inspection or 
otherwise interferes with the authorized department agent in the performance of 
his or her duties; or 
(C) the certificate holder does not have a HACCP plan, has a HACCP plan 
unacceptable to the SSD, or fails to comply with a HACCP plan which is 
acceptable to the SSD. 
(m) A dealer whose certificate has been suspended may not process any molluscan 
shellfish for a period determined by the commissioner.
(n) A dealer whose certificate has been suspended may not process any molluscan 
shellfish until the SSD is satisfied that all necessary corrections have been 
made. A suspension will not be rescinded until an inspection establishes that 
the firm has corrected all violations which resulted in the suspension and is in 
full compliance with all applicable criteria of these sections. 
(o) A certificate may be revoked for any of the reasons outlined in subsection 
(l) of this section or for either of the following: if the violations initiating 
a suspension fail to be corrected within the time frame established, or if a 
history of repeated suspensions exists. A dealer whose certificate has been 
revoked may not be issued a new certificate for 180 days or before the next 
certification period, whichever is longer, after the date of signing of the 
final order of revocation. When the department contemplates suspension or 
revocation, the certificate holder shall be afforded the opportunity for a 
hearing. Notice of the contemplated action shall be given to the certificate 
holder by personal service or certified mail, return receipt requested. If no 
request for a hearing is received by the director of the SSD, within 14 days of 
personal service or the date of receipt of the notice by the dealer, the 
allegations contained in the notice are admitted as true, and the department may 
proceed to take the action set out in the notice. 
(p) When the department determines that administrative penalties are 
appropriate, proposals for assessment of and hearings on administrative 
penalties shall be made in accordance with the Texas Health and Safety Code, 
sec.436.034; the Government Code, Chapter 2001, Administrative Procedure Act; 
and the department formal hearing procedures in Chapter 1 of this title. When 
the department contemplates administrative penalties, the certificate holder or 
harvester shall be afforded the opportunity for a hearing. Notice of the 
contemplated action shall be given to the certificate holder or harvester by 
personal service or certified mail, return receipt requested. If no request for 
a hearing is received by the director of the SSD, within 14 days of personal 
service or the date of receipt of the notice by the dealer, the allegations 
contained in the notice are admitted as true, and the department may proceed to 
take the action set out in the notice. 
(q) The seriousness of violations shall be categorized by one of the following 
severity levels. The examples following the severity levels are neither 
exhaustive nor controlling. They reflect only the seriousness of the violation 
and not the intent of the violator, the history of the violator, the amount 
necessary to deter future violations, or efforts to correct the violation. 
(1) Severity Level I - Violations that are of minor public health significance. 
The following are examples of severity level I violations (other deficiency): 
(A) failure to keep premises clean and have adequate drainage;
(B) failure to clean and maintain floors, walls, or ceilings;
(C) failure to provide adequate and properly shielded lighting;
(D) failure to post hand washing signs at hand washing stations;
(E) failure to provide blower air intake with approved filter;
(F) failure to prohibit use of "dip" buckets to rinse hands or knifes; 
(G) failure to use returnable containers only within the plant; and 
(H) failure to restrict shuckers from the packing room and all unauthorized 
persons from processing areas when operating. 
(2) Severity Level II - Violations that are of more than minor significance, or 
if left uncorrected, could result in more serious violations. The following are 
examples of severity level II violations (other deficiency): 
(A) failure to provide or use storage for employee clothing or personal 
articles; 
(B) failure to have clean, maintained, adequately drained floor; 
(C) failure to provide adequate heating/cooling/ventilation;
(D) failure to provide adequate quantity of water to facility;
(E) failure to provide hand washing stations with soap, sanitary towels, and/or 
waste receptacles with proper lids; 
(F) failure to properly construct, locate, maintain, and/or keep clean all non-
food contact surfaces; 
(G) failure to provide detergents, approved sanitizers, brushes, and/or a 
sanitizer test kit to properly clean and sanitize the facility; 
(H) failure to properly store and/or keep clean single service containers; 
(I) failure to maintain frozen molluscan shellfish at 0 degrees Fahrenheit or 
less; 
(J) failure to require employees to wear clean outer garments, impermeable 
gloves/finger cots; to store these items properly; and/or to wear proper hair 
restraints; 
(K) failure to promptly remove empty molluscan shells or other accumulation; and 
(L) failure to meet plumbing code and/or install water disposal correctly or 
have adequate drainage where operations discharge water. 
(3) Severity Level III - Violations that are significant and which, if not 
corrected, could threaten public health. The following are examples of severity 
level III violations (key deficiency): 
(A) failure to exclude insects, rodents, vermin, and any other animals; 
(B) failure to provide hot and cold water at each sink and lavatory; 
(C) failure to protect plumbing from backflow, backsiphonage, and/or cross 
contamination; 
(D) failure to have toilets clean, repaired, and/or have self-closing doors; 
(E) failure to properly use, store, separate, and/or label poisonous/toxic 
materials; 
(F) failure to properly construct, locate, clean, and/or maintain food contact 
surfaces; 
(G) failure to provide a temperature measuring device in each refrigeration 
unit; 
(H) failure to wash molluscan shell stock reasonably free of bottom sediments 
and detritus as soon after harvesting as feasible; 
(I) failure of employees to wash/sanitize hands and/or exhibit good hygienic 
practices; 
(J) failure to restrict any personnel with infections that may be transmitted 
through the molluscan shellfish from participating in molluscan shellfish 
operations; and 
(K) failure to maintain complete and accurate records. 
(4) Severity Level IV - Violations that have a significant adverse impact on 
public health. The following are examples of severity level IV violations (key 
deficiency):
(A) failure to separate operations by partition, space, or time; 
(B) failure to provide adequate refrigeration units; 
(C) failure to clean and sanitize food contact surfaces effectively and within 
required time frame; 
(D) failure to label molluscan shell stock or properly complete label; 
(E) failure to protect molluscan shell stock from contamination;
(F) failure to pack into containers with a valid certificate number for that 
location; comply with label requirements; and/or to use proper date; 
(G) failure to promptly shuck, pack, and protect molluscan shellfish; and 
(H) failure to have responsible, effective, designated person as supervisor. 
(5) Severity Level V - Violations that are most significant and create an 
imminent hazard to public health. The following are examples of severity level V 
violations (critical deficiency): 
(A) failure to cease operations when location/plant is flooded;
(B) failure to protect the water supply from contamination;
(C) failure to install and/or maintain adequate sewage disposal system; 
(D) failure to process molluscan shellfish from only an approved source; 
(E) failure to maintain molluscan shell stock at the proper temperature; 
(F) failure to obtain approval for wet storage operation;
(G) failure to keep molluscan shellfish from becoming contaminated;
(H) failure to cool packed molluscan shellfish to 45 degrees Fahrenheit within 
two hours of delivery to the packing room; 
(I) failure to maintain packed molluscan shellfish at 45 degrees Fahrenheit or 
less during storage, repacking, and to cover in ice; and 
(J) failure to provide sanitary ice and/or properly protect it. 
(r) The department may impose differing levels of penalties for different 
severity level violations. 
(1) Administrative penalties shall be imposed for Severity Level III, IV and V 
violations. Administrative penalties may be assessed for Severity Level I and II 
violations when they are combined with those of higher severity level(s) or for 
repeated violations which could have been prevented by corrective action and for 
which the dealer or harvester did not take effective corrective action. 
(2) Tables IA and IB show the base administrative penalties and the percentage 
of base amounts to be proposed based on severity level of violation. 
Figure 1: 25 TAC sec.241.57(r)(2) 
Figure 2: 25 TAC sec.241.57(r)(2) 
(3) Adjustments to the values in Tables IA and IB in paragraph (2) of this 
subsection may be made for the presence or absence of the following factors: 
(A) prompt identification and reporting; 
(B) corrective action to prevent recurrence; 
(C) compliance history; 
(D) prior notice of similar event; and 
(E) multiple occurrences. 
(4) The penalty may be in an amount not to exceed $25,000 a day for each 
violation for a person who violates the Health and Safety Code Chapter 436, or a 
rule in this chapter of this title (relating to Molluscan Shellfish), or an 
order of the department. Each day a violation continues may be considered a 
separate violation for purposes of penalty assessment.
(s) The department may offer a certificate holder or harvester the opportunity 
to attend a settlement conference to discuss with the SSD, methods and schedules 
for correcting the violation(s) or to show compliance with applicable provisions 
of the Health and Safety Code Chapter 436, the rules in this chapter of this 
title (relating to Molluscan Shellfish), certificate conditions, and any orders 
of the department issued thereunder, or discuss all such topics. The Office of 
General Counsel may conduct settlement negotiations.
(t) Notices of any settlement conference shall be sent by personal service or 
certified mail, return receipt requested. A settlement conference is not a 
prerequisite for the action to be taken under subsections (l), (m), (n), (o), or 
(p) of this section. 
(u) By acceptance of a certificate, the holder agrees to save, hold harmless, 
and indemnify the State of Texas, the department, and its employees against any 
and all liability, claims or losses for property damage or personal injury which 
result in whole or in part from the certificate holder's activities. The State 
of Texas shall not be held liable for financial losses incurred by the molluscan 
shellfish transplanters, gatherers, harvesters, plant supervisors, or plant 
owners due to failure of molluscan shellfish activity, condemnation of molluscan 
shellfish, loss of molluscan shellfish, or other reasons. 

sec.241.58. Molluscan Shell Stock Temperature Control.
(a) Molluscan shell stock intended for consumption as raw product shall be 
placed under ambient refrigeration at 45 degrees Fahrenheit (7.2 degrees 
Centigrade) or less within the hours specified below: 
(1) 20 hours for the months of November, December, January, February, and March; 
(2) 14 hours for the month of April; and 
(3) for the months of May through October, as established by the department 
based on the current Time-To-Refrigeration guidelines adopted by the ISSC. 
(b) The Time-To-Refrigeration guidelines shall be based upon the first molluscan 
shell stock harvested each day. 
(c) The Time-To-Refrigeration guidelines established for each month shall be in 
effect from 12:01 a.m. of the first day of the month until 11:59 p.m. of the 
last day of the month.
(d) The department may approve other measures proposed by the industry to 
provide controls equivalent to the Time-To-Refrigeration guidelines matrix. 

sec.241.59.Trucks or Other Vehicles Used to Transport Molluscan Shell Stock to 
the Original Dealer.
(a) The harvester or dealer who transports molluscan shell stock from the 
harvester to the first dealer to handle the product, shall assure that all 
trucks used to transport molluscan shell stock are properly constructed, 
operated, and maintained to prevent contamination, deterioration, and 
decomposition. 
(b) Storage bins on trucks or other vehicles used in the transport of molluscan 
shell stock for direct marketing shall be: 
(1) kept clean with potable water or water from an approved area or 
conditionally approved area in the open status; and 
(2) constructed so that water does not stand on the deck or in the storage bin. 
(c) Molluscan shell stock shall be transported in air temperatures inside the 
truck or other vehicle of 45 degrees Fahrenheit (7.2 degrees Centigrade) or 
less. 
(d) Mechanical refrigeration units shall be: 
(1) equipped with automatic controls; and 
(2) capable of maintaining the ambient air temperature in the storage area at 
temperatures of 45 degrees Fahrenheit (7.2 degrees Centigrade) or less. 
(e) Any ice used to cool molluscan shell stock during transport shall be 
produced and handled in compliance with the sanitation standard operating 
procedures in accordance with sec.241.61 of this title (relating to General 
Sanitation Requirements). 
(f) Cats, dogs, and other animals shall not be allowed in any part of the truck 
or other vehicle where molluscan shell stock is stored.

sec.241.60. General HACCP Requirements.
(a) Every dealer shall conduct a hazard analysis to determine the food safety 
hazards that are reasonably likely to occur for each kind of molluscan shellfish 
product processed by that dealer and to identify the preventive measures that 
the dealer can apply to control those hazards. Such food safety hazards can be 
introduced both within and outside the processing plant environment, including 
food safety hazards that can occur before, during, and after harvest. A food 
safety hazard that is reasonably likely to occur is one for which a prudent 
dealer would establish controls because experience, illness data, scientific 
reports, or other information provide a basis to conclude that there is a 
reasonable possibility that it will occur in the particular type of molluscan 
shellfish product being processed in the absence of those controls. 
(b) Every dealer shall have, implement, and comply with a written HACCP plan 
which is acceptable to the SSD. A copy of the plan shall be provided to the SSD 
upon request. A HACCP plan shall be specific to:
(1) each location where molluscan shellfish products are processed by that 
dealer; and 
(2) each kind of molluscan shellfish product processed by the dealer. The plan 
may group kinds of molluscan shellfish products together, or group kinds of 
production methods together, if the food safety hazard, critical control points, 
critical limits, and procedures required to be identified and performed in this 
section are identical for all molluscan shellfish products so grouped or for all 
production methods so grouped. 
(c) The HACCP plan shall, at a minimum: 
(1) list the food safety hazards that are reasonably likely to occur, as 
identified in accordance with subsection (a) of this section and that must be 
controlled for each molluscan shellfish product. Consideration should be given 
to whether any food safety hazards are reasonably likely to occur as a result of 
the following: 
(A) natural toxins; 
(B) microbiological contamination; 
(C) chemical contamination; 
(D) pesticides; 
(E) drug residues; 
(F) unapproved use of direct or indirect food or color additives; and 
(G) physical hazards. 
(2) list the critical control points for each of the identified food safety 
hazards, including as appropriate: 
(A) critical control points designed to control food safety hazards introduced 
outside the processing plant environment, including food safety hazards that 
occur before, during, and after harvest. If the dealer can demonstrate to the 
department through a hazard analysis that the food safety hazard is not 
reasonably likely to occur or is otherwise controlled, the critical control 
point is not required; and 
(B) critical control points designed to control food safety hazards that could 
be introduced in the processing plant environment. If the dealer can demonstrate 
to the department through a hazard analysis that the food safety hazard is not 
reasonably likely to occur, the critical control point is not required; 
(3) list the critical limits that must be met at each of the critical control 
points; 
(4) list the procedures, and frequency thereof, that will be used to monitor 
each of the critical control points to ensure compliance with the critical 
limits; 
(5) include any corrective action plans that have been developed in accordance 
with this section to be followed in response to deviations from critical limits 
at critical control points; 
(6) list the verification procedures, and frequency thereof, that the dealer 
will use in accordance with this section. The records shall contain the actual 
values and observations obtained during monitoring; and
(7) provide for a record keeping system that documents the monitoring of the 
critical control points. The records shall contain the actual values and 
observations obtained during monitoring. 
(d) The HACCP plan shall be signed and dated by the most responsible individual 
on site at the processing facility or by a higher level official of the dealer: 
(1) upon initial acceptance; 
(2) upon any modification; and 
(3) upon verification of the plan in accordance with subsection (g)(1)(A) of 
this section. 
(e) Sanitation controls may be included in the HACCP plan. However, to the 
extent that they are monitored in accordance with sec.241.61 of this title 
(relating to General Sanitation Requirements), they need not be included in the 
HACCP plan, and vice versa. 
(f) Corrective Actions. 
(1) Whenever a deviation from a critical limit occurs, a dealer shall take 
corrective action either by: 
(A) following a corrective action plan that is appropriate for the particular 
deviation; or 
(B) following the procedures in subsection (f) of this section.
(2) Dealers may develop written corrective action plans, which become part of 
their HACCP plans in accordance with subsection (c)(5) of this section, by which 
they predetermine the corrective actions that they will take whenever there is a 
deviation from a critical limit. A corrective action plan that is appropriate 
for a particular deviation is one that describes the steps to be taken and 
assigns responsibility for taking those steps, to ensure that: 
(A) no product enters commerce that is either injurious to health or is 
otherwise adulterated as a result of the deviation; and 
(B) the cause of the deviation is corrected. 
(3) When a deviation from a critical limit occurs and the dealer does not have a 
corrective action plan that is appropriate for that deviation, the dealer shall: 
(A) segregate and hold the affected product, at least until the requirements of 
subsections (f)(3)(B) and (C) of this section are met;
(B) perform or obtain a review to determine the acceptability of the affected 
product for distribution. The review shall be performed by an individual or 
individuals who have adequate training or experience to perform such a review. 
Adequate training may or may not include training in accordance with this 
section; 
(C) take corrective action, when necessary, with respect to the affected product 
to ensure that no product enters commerce that is either injurious to health or 
is otherwise adulterated as a result of the deviation;
(D) take corrective action, when necessary, to correct the cause of the 
deviation; and 
(E) perform or obtain timely reassessment by an individual or individuals who 
have been trained in accordance with this section to determine whether the HACCP 
plan needs to be modified to reduce the risk of recurrence of the deviation, and 
modify the HACCP plan as necessary. 
(4) All corrective actions taken in accordance with this section shall be fully 
documented in records that are subject to verification in accordance with 
subsection (g) of this section and the record keeping requirements of subsection 
(h) of this section. 
(g) Verification. 
(1) Every dealer shall verify that the HACCP plan is adequate to control food 
safety hazards that are reasonably likely to occur, and that the plan is being 
effectively implemented. Verification shall include, at a minimum: 
(A) a reassessment of the adequacy of the HACCP plan whenever any changes occur 
that could affect the hazard analysis or alter the HACCP plan in any way or at 
least annually. The reassessment shall be performed by an individual or 
individuals who have been trained in accordance with subsection (i) of this 
section. The HACCP plan shall be modified immediately whenever a reassessment 
reveals that the plan is no longer adequate to fully meet the requirements of 
subsection (c) of this section. These changes may include:
(i) raw materials or source of raw materials; 
(ii) product formulation; 
(iii) processing methods or systems; 
(iv) finished product distribution systems; or 
(v) the intended use or consumers of the finished product.
(B) ongoing verification activities including: 
(i) a review of any consumer complaints that have been received by the dealer to 
determine whether they relate to the performance of critical control points or 
reveal the existence of unidentified critical control points;
(ii) the calibration of process-monitoring instruments; and
(iii) at the option of the dealer, the performing of periodic end-product or in-
process testing. 
(C) a review, including signing and dating, by an individual who has been 
trained in accordance with subsection (i) of this section, of the records that 
document: 
(i) the monitoring of critical control points. The purpose of this review shall 
be, at a minimum, to ensure that the records are complete and to verify that 
they document values that are within the critical limits. This review shall 
occur within one week of the day that the records are made;
(ii) the taking of corrective actions. The purpose of this review shall be, at a 
minimum, to ensure that the records are complete and to verify that appropriate 
corrective actions were taken in accordance with subsection (f) of this section. 
This review shall occur within one week of the day that the records are made; 
and 
(iii) the calibrating of any process monitoring instruments used at critical 
control points and the performing of any periodic end-product or in-process 
testing that is part of the dealer's verification activities. The purpose of 
these reviews shall be, at a minimum, to ensure that the records are complete, 
and that these activities occurred in accordance with the processor's written 
procedures. These reviews shall occur within a reasonable time after the records 
are made. 
(2) Dealers shall immediately follow the procedures in subsection (f) of this 
section, whenever any verification procedure, including the review of a consumer 
complaint, reveals the need to take a corrective action. 
(3) The calibration of process-monitoring instruments, and the performing of any 
periodic end-product and in-process testing, in accordance with (g)(1)(B)(ii) 
and (iii) of this section shall be documented in records that are subject to the 
record keeping requirements of subsection (h) of this section. 
(h) Records. 
(1) All records required shall include: 
(A) the name and location of the dealer; 
(B) the date and time of the activity that the record reflects;
(C) the signature or initials of the person performing the operation; and 
(D) where appropriate, the identity of the product and the production code, if 
any. Processing and other information shall be entered on records at the time 
that it is observed. 
(2) All records required shall be retained at the processing facility for at 
least one year after the date they were prepared in the case of refrigerated 
products and for at least two years after the date they were prepared in the 
case of frozen products. 
(3) Records that relate to the general adequacy of equipment or processes being 
used by a processor, including the results of scientific studies and 
evaluations, shall be retained at the processing facility for at least two years 
after their applicability to the product being produced at the facility. 
(4) If the processing facility is closed for a prolonged period between seasonal 
operations, or if record storage capacity is limited on a processing vessel or 
at a remote processing site, the records may be transferred to some other 
reasonably accessible location at the end of the seasonal operations, but shall 
be immediately produced for official review upon request. 
(5) All records required by subsection (h) of this section and HACCP plans 
required by subsections (b) and (c) of this section shall be available for 
official review and copying at reasonable times. 
(6) Tags on containers of molluscan shell stock are not subject to the 
requirements of this section unless they are used to fulfill the requirements of 
record keeping. 
(7) The maintenance of records on computers is acceptable, provided that 
appropriate controls are implemented to ensure the integrity of the electronic 
data and electronic signatures. 
(i) Training. 
(1) At a minimum, the following functions shall be performed by an individual 
who has successfully completed training in the application of HACCP principles 
to molluscan shellfish processing at least equivalent to that received under 
standardized curriculum recognized as adequate by the FDA or who is otherwise 
qualified through job experience to perform these functions: 
(A) developing a HACCP plan, which could include adapting a model or generic-
type HACCP plan that is appropriate for a specific processor, in order to meet 
the requirements of subsection (c) of this section; 
(B) reassessing and modifying the HACCP plan in accordance with the corrective 
action procedures specified in subsection (f)(3)(E) of this section, and the 
HACCP plan in accordance with the verification activities specified in 
subsection (g)(1)(B) of this section; and 
(C) performing the record review required by subsection (g)(1)(C) of this 
section. 
(2) Job experience will qualify an individual to perform these functions if it 
has provided knowledge at least equivalent to that provided through the 
standardized curriculum as determined by the SSD.
(3) The trained individual need not be an employee of the dealer. 

sec.241.61.General Sanitation Requirements.
(a) Each dealer shall have written sanitation standard operating procedures. A 
copy of the procedures shall be provided to the SSD upon request. Each dealer 
shall monitor conditions and practices that are both appropriate to the plant 
and the food being processed with sufficient frequency to ensure, at a minimum, 
conformance with the requirements specified in sec.229.183(a)(2) of this title 
(relating to Minimum Standards for Licensure) concerning current good 
manufacturing practice in manufacturing, processing, packing, or holding human 
food. Copies are indexed and filed in the offices of the SSD, and are available 
for inspection during normal working hours. The requirements specified in 
sec.229.183(a)(2) of this title relate to the following sanitation items:
(1) safety of water for processing and ice production; 
(2) condition and cleanliness of food contact surfaces;
(3) prevention of cross contamination; 
(4) maintenance of hand washing, hand sanitizing and toilet facilities; 
(5) protection from adulterants; 
(6) proper labeling, storage, use of toxic compounds;
(7) control of employees with adverse health conditions; and 
(8) exclusion of pests. 
(b) Each dealer shall maintain sanitation control records that, at a minimum, 
document the monitoring and corrections prescribed by subsection (a) of this 
section. These records are subject to the requirements of sec.241.60(h) of this 
title (relating to General HACCP Requirements).
(c) Sanitation controls may be included in the HACCP plan, required by 
sec.241.60(b) of this title. However, to the extent that they are monitored in 
accordance with subsection (a) of this section, they need not be included in the 
HACCP plan, and vice versa. 

sec.241.62. Dealer Molluscan Shell Stock Identification. 
(a) The dealer shall keep the harvester's tag affixed to each container of 
molluscan shell stock until the bag or container is: 
(1) shipped; or 
(2) emptied to wash, grade or pack the molluscan shell stock. 
(b) Unless the dealer is also the harvester and has already placed a dealer tag 
on the container, the dealer shall affix his tag to each container of molluscan 
shell stock prior to shipment. 
(c) The dealers' tags shall: 
(1) be durable, waterproof and approved by the department prior to use; and 
(2) be at least 2-5/8 by 5-1/4 inches (6.7 by 13.3 cm) in size. 
(d) The dealer's tag shall contain the following indelible, legible information 
in the order specified below: 
(1) the dealer's name and address; 
(2) the dealer's certification number as assigned by the department and the 
original shellstock shipper's certification number;
(3) the date of harvest; 
(4) the most precise identification of the harvest location as is practicable 
including the initials of the state of harvest, and any department designation 
of the harvest area by indexing, administrative or geographic designation; 
(5) when the molluscan shell stock has been in wet storage in a dealer's 
operation, the tag shall state: "THIS PRODUCT IS A PRODUCT OF (NAME OF STATE) 
AND WAS WET STORED AT (FACILITY CERTIFICATION NUMBER) FROM (DATE) TO (DATE)"; 
(6) the type and quantity of molluscan shell stock; and
(7) the following statements in bold capitalized type on each tag: 
(A) "THIS TAG IS REQUIRED TO BE ATTACHED UNTIL CONTAINER IS EMPTY AND THEREAFTER 
KEPT ON FILE FOR 90 DAYS"; and 
(B) the consumer information statement adopted by the ISSC or its equivalent as 
approved by the SSD. 
(e) When both the dealer and harvester tags appear on the container, the 
dealer's tag is not required to duplicate the information on the harvester's 
tag. 
(f) If the molluscan shell stock is removed from the original container, the tag 
on the new container shall meet the requirements of this section. 
(g) When the molluscan shell stock is removed from the original container, the 
dealer shall: 
(1) keep the harvester tag for 90 days unless records maintained as part of the 
HACCP plan provide the necessary information to track product to the original 
harvest location; 
(2) track the harvest area and date of harvest for the molluscan shell stock; 
and 
(3) maintain the lot identity of all molluscan shell stock during any 
intermediate stage of processing. 

sec.241.63. Shucked Molluscan Shellfish Labeling.
(a) If the dealer uses reusable containers to hold or transport shucked 
molluscan shellfish between activities for the purpose of further processing or 
packing, the reusable containers are exempt from the labeling requirements in 
this section. When reusable containers are used, the lot shall be accompanied by 
a record containing: 
(1) the shuckers-packer's name and certification number; 
(2) the shucking date; and 
(3) the quantity of molluscan shellfish per container and the total number of 
containers. 
(b) If the dealer uses master shipping cartons, the master cartons are exempt 
from these labeling requirements when the individual containers within the 
carton are properly labeled. 
(c) The dealer shall assure that each individual package containing fresh or 
frozen shucked molluscan shellfish meat is labeled in a legible and indelible 
form in accordance with applicable federal and state regulations concerning: 
(1) information on the principal display panel; and 
(2) the standard of identity. 
(d) The dealer shall assure that each package containing less than 64 fluid 
ounces of fresh or frozen molluscan shellfish shall have: 
(1) the shucker-packer's or repacker's certification number on the label; and 
(2) a "SELL BY DATE" which provides a reasonable subsequent shelf-life or the 
words "BEST IF USED BY" followed by a date when the product would be expected to 
reach the end of its shelf-life. The date shall consist of the abbreviation for 
the month and number of the day of the month. For frozen molluscan shellfish, 
the year will be added to the date. 
(e) The dealer shall provide a "DATE SHUCKED" on all containers of shucked 
molluscan shellfish with a capacity of 64 fluid ounces (1873 ml) or more. The 
"DATE SHUCKED" shall: 
(1) for fresh molluscan shellfish, consist of the number of the day of the year 
(Julian date) or the month and the number of the day of the month; 
(2) for frozen molluscan shellfish, include the year; and 
(3) appear on the lid and either the sidewall or bottom of durable containers; 
or 
(4) appear on the lid or sidewall of disposable containers.
(f) The dealer shall label all frozen molluscan shellfish as frozen in type of 
equal prominence immediately adjacent to the name of the molluscan shellfish. 
(g) If the dealer thaws and repacks frozen molluscan shellfish, the dealer shall 
label the molluscan shellfish container as previously frozen.
(h) The dealer shall provide all label information in a legible and indelible 
form. 
(i) Shucked Molluscan Shellfish. If the dealer elects to repack molluscan 
shellfish, the dealer shall pack and label all molluscan shellfish in accordance 
with this section except that the original date of shucking shall be used as the 
"DATE SHUCKED" or in establishing the "SELL BY DATE".

sec.241.64.Labeling of Molluscan Shellfish Post-Harvest Processed to Reduce 
Vibrio vulnificus.
(a) A dealer may elect to use a process to reduce Vibrio vulnificuslevels in 
molluscan shellfish.
(1) The dealer shall:
(A) have a HACCP plan acceptable to the department for the process which 
includes:
(i) an end point criteria for the process as non-detectable (&lt;3 MPN/gram) 
using the FDA approved EIA procedure of Tamplin, et al, as detailed in Chapter 9 
of the FDA Bacteriological Analytical Manual, 7th edition, 1992; and 
(ii) a sampling program to demonstrate that the end point criteria is met. 
(B) package and label all molluscan shellfish in accordance with the 
requirements in this chapter of this title (relating to Molluscan Shellfish) 
including labeling all molluscan shellfish which has been subjected to the 
process but which is not frozen in accordance with the molluscan shell stock 
labeling requirements in sec.241.62 of this title (relating to Dealer Molluscan 
Shell Stock Identification); and 
(C) keep records in accordance with the requirements in this chapter of this 
title (relating to Molluscan Shellfish). 
(b) A dealer who meets the requirements of this section may label product which 
has been subjected to the reduction process as "Processed to reduce Vibrio 
vulnificus to non-detectable levels". 

sec.241.65.Shipping Documents and Records.
(a) Each molluscan shellfish shipment shall be accompanied by a shipping 
document which contains: 
(1) the name, address, and certification number of the shipping dealer; 
(2) the name and address of the major consignee; and
(3) the kind and quantity of the molluscan shellfish product. 
(b) The receiving dealer shall: 
(1) maintain in his files a copy of the completed shipping document; and 
(2) make the shipping document available to the department upon request. 
(c) If the shipment is subdivided to different dealers, each receiving dealer 
shall maintain records sufficient to trace his portion back to the original 
shipment. 
(d) Each dealer shall have a business address at which transaction records are 
maintained. 
(e) Each dealer shall maintain complete, accurate and legible records of 
department required information in a form authorized by the department.
(f) Transaction records shall be sufficient to: 
(1) document that the molluscan shellfish are from a source authorized under 
this chapter of this title (relating to Molluscan Shellfish);
(2) permit a container of molluscan shellfish to be traced back to the specific 
incoming lot of shucked molluscan shellfish from which it was taken; and 
(3) permit a lot of shucked molluscan shellfish or a lot of molluscan shell 
stock to be traced back to the harvest area, date of harvest, and if possible, 
the harvester or group of harvesters. 
(g) Purchases and sales shall be recorded: 
(1) in a permanently bound ledger book; or 
(2) using other recording methods acceptable to and authorized by the 
department. 
(h) The transaction records shall be retained: 
(1) in the case of fresh molluscan shellfish, for a minimum of one year; and 
(2) in the case of frozen molluscan shellfish, for at least two years or the 
shelf-life of the product, whichever is longer. 
(i) If computer records are maintained, the department shall approve the format 
and its use. 

sec.241.66. Tagging of Depurated Molluscan Shellfish. 
All containers of treated molluscan shellfish, before being released from the 
molluscan shellfish treatment plant, shall be suitably tagged or labeled with a 
uniform tag or label bearing the following information: 
(1) the depuration processor's name and address, including at least the city and 
state; 
(2) the depuration processor's valid, complete certificate number issued by the 
Seafood Safety Division (SSD); 
(3) the type of molluscan shell stock; 
(4) the date on which the molluscan shellfish were released from the depuration 
plant; 
(5) the term "Depurated" in letters as large as the largest other letters 
printed on the tag or label; and 
(6) the lot code of the treatment process batch. 

sec.241.67. Depuration Records.
(a) Records containing the following information shall be available at the 
depuration plant at all times for molluscan shellfish presently undergoing the 
treatment process: 
(1) name and/or location of gathering area(s); 
(2) copy of permit(s); 
(3) date received; 
(4) quantity of molluscan shellfish received; 
(5) quantity of molluscan shellfish destroyed; 
(6) quantity of molluscan shellfish in tank(s); and 
(7) date and time of initiation of treatment. 
(b) Records containing the following information shall be available at the 
depuration plant at all times for each lot of molluscan shellfish for which the 
treatment process has been completed for a period of one year from the date of 
treatment: 
(1) name and/or location of gathering area(s); 
(2) copy of permit(s); 
(3) date received in plant; 
(4) quantity of molluscan shellfish received; 
(5) quantity of molluscan shellfish destroyed; 
(6) date and time of initiation of treatment; 
(7) date and time of termination of treatment; 
(8) number of hours treated; 
(9) quantity of molluscan shellfish treated; 
(10) quantity of molluscan shellfish destroyed after treatment; 
(11) all laboratory results as specified; 
(12) date released from plant; and 
(13) quantity of molluscan shellfish released. 
(c) The plant supervisor or assistant plant supervisor shall send to the Texas 
Department of Health, Seafood Safety Division, 1100 W. 49th Street, Austin, 
Texas 78756, on a weekly basis, a copy of the daily records required in this 
section and the laboratory analysis results of all molluscan shellfish and water 
samples completed during each weekly period. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 21, 1998.
TRD-9801018
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 458-7236

TITLE 28. INSURANCE
PART I. Texas Department of Insurance
CHAPTER 5.Property and Casualty Insurance
SUBCHAPTER F.Inland Marine Insurance
Definition and Classification of Inland Marine Insurance
28 TAC sec.5.5002
The Texas Department of Insurance proposes an amendment to sec.5.5002(5)(Q), 
relating to inland marine insurance. The amendment is necessary to provide that 
credit property insurance coverage resulting from an open or closed end consumer 
credit transaction that is a retail installment transaction under the Texas 
Finance Code is a class of inland marine insurance for which rules, rates, and 
forms must be filed with the department for approval. The amendment provides 
that credit property insurance coverage resulting from consumer credit 
transactions must comply with all applicable provisions of the subparagraph. The 
amendment sets out the meaning of an open or closed end consumer credit 
transaction that is a retail installment transaction. The amendment provides 
that coverage under credit property insurance policies resulting from an open or 
closed end consumer transaction shall be limited to "durable personal property," 
and provides a definition for that term. The amendment prohibits premium 
calculations based on amounts paid for services, meals, entertainment, 
nondurable property, finance/service charges, loan interest, delivery charges, 
or other insurance premiums, for coverages resulting from consumer credit 
transactions. The amendment provides for adequate disclosure in consumer credit 
property insurance transactions. It requires that five items of information be 
provided to the prospective insured at the time of invitation to contract, and 
requires additional disclosure in the policy about when the vendor's interest in 
an item of insured property ends, as well as the mechanics of that 
determination. The amendment requires claim forms and instructions be provided 
at the time of insurer acceptance of the coverage. The amendment provides that 
credit property insurance coverage resulting from commercial credit 
transactions, as set out in clause (ii) of the amendment, continues to be non-
regulated. 
Lyndon Anderson, associate commissioner for property and casualty at the Texas 
Department of Insurance, has determined that for the first five-year period the 
proposed amendment is in effect there will be no fiscal impact to the state or 
local units of government as a result of enforcing or administering the section. 
Mr. Anderson also has determined there will be no other implications for the 
local economy and no impact on local employment as a result of administering the 
proposed amendment. 
Mr. Anderson also has determined that for each year of the first five years the 
proposed amendment is in effect the public benefit anticipated as a result of 
enforcing or administering the proposed amendment will be credit property 
insurance availability at rates which are fair, reasonable, not excessive, and 
more competitive than those resulting under the current regulation. An 
additional benefit is the assurance that under the amended section consumers 
will be purchasing credit insurance only on property considered to be insurable, 
and therefore appropriate subject matter for insurance coverage. 
Mr. Anderson also has determined that for the first year the proposed amendment 
is in effect, individual insurer compliance cost under the amended rule will 
vary, but should not exceed $5,000 per filing, based on department experience. 
This cost could be materially lower for any insurer which has developed and made 
rate and form filings for other property and casualty insurance coverages. The 
ultimate amount of first-year compliance cost will be determined by the overall 
efficiency of an insurer in developing and making its rate and form filings, and 
the number of filings made. The compliance cost in the second through fifth 
years should not vary materially from the first-year cost.
Mr. Anderson further has determined that the proposed amendment will not have an 
adverse effect on insurers qualifying as small businesses under the Government 
Code, sec.2006.001, because those insurers authorized to write inland marine 
coverages in this state which would qualify as small businesses do not write the 
class of coverage subject to the filing and approval provisions of the proposed 
amendment. A computerized search of the 1996 Annual Statements for the 868 
property and casualty insurers authorized to write inland marine coverages 
revealed that 383 actually reported written premium for inland marine coverages. 
Seven of the 383 insurers reporting inland marine written premium write less 
than $1 million annual premium. Department inquiry of each of these seven 
insurers revealed that none of the reported inland marine premium on their 
annual statement reporting forms is attributable to credit property insurance, 
and each indicated it does not issue credit property insurance in this state. 
Comments on the proposal may be submitted to the Chief Clerk, Texas Department 
of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, 
Mail Code 113-2A, within 30 days following the date of this publication. An 
additional copy of comments should be submitted to Lyndon Anderson, Associate 
Commissioner, Property Division, P.O. Box 149104, MC #103-1A, Austin, Texas 
78714-9104. A request for a public hearing on the proposed amendment should be 
submitted separately to the Office of the Chief Clerk. 
The amendment is proposed pursuant to the Insurance Code, Article 5.53. Article 
5.53 authorizes the commissioner to adopt a definition and classes of inland 
marine insurance. 
The proposed amendment affects regulation pursuant to the following statutes: 
Insurance Code, Article 5.53 

sec.5.5002.Texas Definition of Inland Marine Insurance.
Inland marine insurance is defined and classified as follows.
(1)-(4) (No change.) 
(5) Other inland marine risks. 
(A)-(P) (No change.) 
(Q) <nl>Inland marine insurance classes of coverage, commonly referred to as 
consumer credit property insurance and commercial credit property insurance, set 
out in clauses (i) and (ii) of this subparagraph, respectively, as follows:<ol> 
<nl>(i)<ol> <nl>Coverage resulting from an open or closed end consumer credit 
transaction that is a retail installment transaction (filed). For purposes of 
this subparagraph, "retail installment transaction" has the meaning assigned in 
the Texas Finance Code, sec.345.001. The credit property insurance addressed in 
this clause must comply with provisions in subclauses (I) through (IV) of this 
clause.<ol> 
<nl>(I)<ol> <nl>Policies offering coverage addressed in this clause must include 
coverage while in transit and may be extended to include the interest of a 
vendee, mortgagor, or lessee, but in no event shall the policy cover beyond 
termination of the vendor's, mortgagee's, or lessor's interest.<ol> 
<nl>(II)<ol> <nl>Policies extending the coverage addressed in this clause shall 
be limited to coverage only for durable personal property. <ol> 
<nl>(-a-)<ol> <nl>For purposes of this clause, "durable personal property" shall 
mean consumer durable goods, also known as consumer "hard" goods, designed to be 
used repeatedly and over an extended time period, not generally consumed in use, 
and specifically excluding wearing apparel, draperies, piece goods, and similar 
items.<ol> 
<nl>(-b-)<ol> <nl>Premium calculations for coverage addressed in this clause may 
not be based on amounts paid for services, meals, entertainment, any nondurable 
property items, finance or service fees, loan interest, delivery charges, or 
other insurance premiums (egs., credit life, credit disability or involuntary 
unemployment insurance coverage).<ol> 
<nl>(-c-)<ol> <nl>Policies or certificates shall include, for purposes 
disclosing the point at which the vendor's interest in an item of covered 
property ends, a statement that:<ol> 
<nl>(-1-)<ol> <nl>net payments are applied to oldest unpaid purchases first; 
and<ol> 
<nl>(-2-)<ol> <nl>if more than one item was purchased the same day, payment will 
be applied to pay off the lowest priced item first. <ol> 
<nl>(III)<ol> <nl>An offer to extend coverage addressed in this clause shall 
include, at the time of the invitation to contract, a prominent written 
disclosure in no smaller than 12-point boldface type indicating that the 
coverage being offered:<ol> 
<nl>(-a-)<ol> <nl>might duplicate existing coverage if the consumer has a 
residential property policy;<ol> 
<nl>(-b-)<ol> <nl>ceases for any item of covered property at the time the debt 
on that covered property item is paid in full; <ol> 
<nl>(-c-)<ol> <nl>is primary coverage for the property being insured, and the 
first source to be used in the event of loss;<ol>
<nl>(-d-)<ol> <nl>may be canceled by the consumer at any time; and<ol> 
<nl>(-e-)<ol> <nl>costs $(enter amount) per $100 of outstanding principal amount 
of insured property.<ol> 
<nl>(IV)<ol> <nl>Policies or certificates extending coverage addressed in this 
clause shall be provided to the insured person at the time coverage is accepted, 
along with claim forms accompanied by written instructions on filing claims 
under the coverage. Such policies or certificates provided to insureds shall 
include the disclosure set out in subclause (III) of this clause, subject to the 
same type face and size requirements.<ol> 
<nl>(ii)<ol> <nl>Coverage resulting from commercial credit transactions 
involving installment<ol> [Installment] sales, leased property, and deferred 
payment <nl>contracts<ol> [policies] (non-regulated). <nl>For purposes of this 
subparagraph, a commercial credit transaction is one which does not fall within 
the meaning of an open or closed end consumer credit transaction that is a 
retail installment transaction under clause (i) of this subparagraph. The credit 
property insurance coverage addressed in this clause covers<ol> [Covering] the 
interest of <nl>a<ol> vendor[,] <nl>or<ol> mortgagee[, and lessor] in property 
sold <nl>in a commercial transaction<ol> under <nl>an<ol> installment sales 
contract, <nl>or a<ol> partial or deferred payment contract<nl> ;<ol>[,] <nl>and 
the interest of a lessor in property<ol> [or] leased. <nl>Credit property 
insurance<ol> [Such] policies <nl>subject to this clause<ol> must include 
coverage while in transit and may be extended to include the interest of the 
vendee, mortgagor, or lessee, but in no event shall the policy cover beyond 
termination of the vendor's, mortgagee's, or lessor's interest. 
(R)-(OO) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801145
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 463-6327

SUBCHAPTER K.Commercial Multi-Peril Policies
28 TAC sec.5.9101
The Texas Department of Insurance proposes an amendment to sec.5.9101, which 
concerns the writing of commercial multi-peril package policies and the filing 
of policy forms, endorsements, and rates for commercial multi-peril insurance. 
The amendment is necessary to conform this section to amendments to the 
Insurance Code, Article 5.13-2 enacted by Senate Bill 1499, 75th Texas 
Legislature, 1997. The writing of multi-peril policies was authorized through 
the enactment of Article 5.81. Under 5.81, the Texas Department of Insurance is 
authorized to prescribe policy forms and rates for multi-peril policies of 
insurance and the commissioner has the authority to choose the procedure under 
any of the subchapters of Chapter 5 of the Insurance Code for the purpose of 
determining the regulatory scheme for commercial multi-peril rates and forms. In 
1992, the State Board of Insurance selected, through the adoption of sec.5.9101, 
the regulatory scheme in Article 5.13-2, applicable to general liability lines 
and commercial property lines of insurance, to govern the regulation of forms 
and rates for commercial multi-peril policies. Senate Bill 1499 amended 
subsection (e), section 8, of Article 5.13-2 to delete the requirements that 
forms submitted by individual insurers for approval must provide coverage 
equivalent to that provided in the policy forms used for these lines of coverage 
and that an endorsement may not reduce coverage provided under the approved 
policy form. Since there is no longer an equivalent coverage requirement for 
multi-peril form filings and no longer a prohibition against filing multi-peril 
endorsements that reduce coverage, sec.5.9101 must be amended to reflect these 
statutory changes. 
David Durden, deputy commissioner for property and casualty lines has determined 
that for the first five-year period the proposed amendment is in effect, there 
will be no fiscal implications for state or local government as a result of 
enforcing or administering the section and there will be no effect on local 
employment or the local economy. 
Mr. Durden has also determined that for each year of the first five years the 
proposed amendment is in effect, the public benefit anticipated as a result of 
administering the section will be that sec.5.9101 will be in accord with Article 
5.13-2 and it is anticipated that it will increase competition in the commercial 
insurance marketplace as insurers provide a wider variety of products designed 
to meet the specific needs of insurance consumers. This proposed amendment will 
also simplify the form filing procedure for the insurers who make individual 
policy form and endorsement filings. It is anticipated that the proposed 
amendment will give insurers greater flexibility to adapt their products or 
respond in a timely fashion to changes in the insurance marketplace. There is no 
anticipated adverse economic effect on large or small insurers who are required 
to comply with the proposed amendment. It is anticipated that there would be a 
benefit to both large and small insurers because with the elimination of the 
equivalent coverage requirement from policy forms and endorsement filings, 
insurers will be able to file the same forms in Texas that they file nationwide, 
thereby, reducing the insurers' cost of doing business in Texas. Although 
insurers may have some costs associated with making new filings, those 
additional costs may be offset by the fact that the insurers will not have to 
produce a Texas specific policy form or endorsement which is different from the 
other programs that the insurers write in other states.
Comments on the proposal to be considered by the Department must be submitted 
within 30 days after publication of the proposed section in the Texas Register 
to Caroline Scott, General Counsel and Chief Clerk, Texas Department of 
Insurance, P. O. Box 149104, Mail Code 113-2A, Austin, Texas 78714-9104. An 
additional copy of the comment should be submitted to David Durden, Deputy 
Commissioner for Property and Casualty Lines, Texas Department of Insurance, P. 
O. Box 149104, Mail Code 104-5A, Austin, Texas 78714-9104. 
The amendment is proposed under the Insurance Code, Articles 5.13-2, 5.81, 5.98, 
and 1.03A; and the Government Code sec.sec.2001.004-2001.038. Article 5.13-2 
regulates the policy forms submitted by insurers for approval in general 
liability, commercial property, commercial casualty, and medical professional 
liability insurance. Article 5.81 authorizes the commissioner to approve forms 
for multi-peril policies of insurance and to adopt rules as in the best judgment 
of the commissioner are necessary and desirable to carry out the purposes and 
objectives of this article. Article 5.98 authorizes the commissioner to adopt 
reasonable rules and rates that are appropriate to accomplish the purposes of 
Chapter 5. Article 1.03A authorizes the commissioner to adopt rules and 
regulations, which must be for general and uniform regulation, for the conduct 
and execution of the duties and functions of the department only as authorized 
by a statute. The Government Code, sec.sec.2001.004-2001.038 (Administrative 
Procedure Act) authorize and require each state agency to adopt rules of 
practice stating the nature and requirements of available formal and informal 
procedures and prescribe the procedures for adoption of rules by a state 
administrative agency. 
The following articles of the Insurance Code are affected by this section: 
Insurance Code, Articles 5.13-2 and 5.81 

sec.5.9101.Multi-peril Policies.
(a)-(e) (No change.) 
(f) Forms. 
(1)-(4) (No change.) 
(5) If the Texas Department of Insurance promulgates standard commercial multi-
peril insurance forms, endorsements, and other related forms, an insurer, at its 
discretion, may use these forms instead of the insurer's own forms for writing 
commercial multi-peril insurance. [Forms submitted by insurers for approval 
under this subsection must provide coverage equivalent to that provided in the 
policy and endorsement forms used for these lines of coverages on the effective 
date of this section. An endorsement may not reduce coverage provided under the 
approved policy form.] 
(g) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801128
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 463-6327

SUBCHAPTER M.Filing Requirements
28 TAC sec.5.9302
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Department 
of Insurance or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Texas Department of Insurance proposes the repeal of sec.5.9302, concerning 
the standards for equivalent coverage, as provided for in the Insurance Code, 
Article 5.13-2 sec.8(e), for policy forms filed by individual insurers for 
commercial property insurance, general liability insurance, commercial casualty 
insurance, and medical professional liability insurance, and as provided in 28 
TAC sec.5.9101(f)(5) (relating to Multi-Peril Policies) for policy forms filed 
by individual insurers for commercial multi-peril insurance. Section 5.9302 was 
first adopted in 1992 in accordance with the provisions of Article 5.13-2. 
Article 5.13-2 was enacted in 1991 by the Legislature for the purpose of 
establishing a new system of regulation for the rates and forms for general 
liability and commercial property insurance. Section 5.9302 was adopted as part 
of the implementation of the new system of regulation mandated in Article 5.13-
2. In 1993, Article 5.13-2 was amended to add commercial casualty insurance and 
medical professional liability insurance under the new system of regulation and 
to exempt insurers writing large risks from being required to file policy forms. 
Section 5.9302 was amended to reflect these statutory changes. Prior to the 
enactment of 5.13-2, insurers writing the lines of insurance which came under 
the regulation of 5.13-2 were required to use promulgated or standard and 
uniform policy forms. After the enactment of 5.13-2, insurers were no longer 
required to use promulgated and standard and uniform policy forms but could 
submit their own policy forms for approval. However, the individual insurer 
policy form filings were required to provide coverage equivalent to that 
provided in the policy forms used for these lines of coverage. Furthermore, 
filings of endorsements could not reduce coverage under the approved policy 
form. This equivalent coverage requirement has been evaluated by the department 
based on a comparison of the policy forms filed by the individual insurers to 
similar policy forms that were approved by the State Board of Insurance prior to 
and in effect on October 1, 1991.
The repeal of sec.5.9302 is necessary because Senate Bill 1499, 75th Texas 
Legislature, 1997, amended Article 5.13-2 to delete the equivalent coverage 
requirement for individual insurer policy form filings and to delete the 
prohibition against filing endorsements that reduce coverage. Since there is no 
longer an equivalent coverage requirement for individual insurer policy form 
filings and no longer a prohibition against filing endorsements that reduce 
coverage, sec.5.9302 must be repealed to remove a section which no longer has a 
statutory basis. 
David Durden, deputy commissioner for property and casualty lines has determined 
that for the first five-year period the repeal will be in effect, there will be 
no fiscal implications for state or local government as a result of enforcing or 
administering the repeal and there will be no effect on local employment or the 
local economy. 
Mr. Durden has also determined that for each year of the first five years the 
proposed repeal is in effect, the public benefit anticipated as a result of 
administering the repeal will be that a section of the Texas Administrative Code 
that no longer has a function will be removed. It is anticipated that the 
proposed repeal will increase competition in the commercial insurance 
marketplace as insurers provide a wider variety of products designed to meet the 
specific needs of insurance consumers. This proposed repeal will also streamline 
the policy filin7g procedures for insurers who make individual policy form 
filings. It is further anticipated that the proposed repeal will give insurers 
greater flexibility to adapt their products or respond in a timely fashion to 
changes in the insurance marketplace. There is no anticipated adverse economic 
effect on large or small insurers who are required to comply with the proposed 
repeal. It is anticipated that there would be a benefit to both large and small 
insurers because with the elimination of the equivalent coverage requirement 
from policy forms and endorsement filings, insurers will be able to file the 
same forms in Texas that they file nationwide, thereby, reducing the insurers' 
cost of doing business in Texas. Although insurers may have some costs 
associated with making new filings, those additional costs may be offset by the 
fact that the insurers will not have to produce a Texas specific policy form or 
endorsement which is different from the other programs that the insurers write 
in other states. 
Comments on the proposal to be considered by the Department must be submitted 
within 30 days after publication of the proposed section in the Texas Register 
to Caroline Scott, General Counsel and Chief Clerk, Texas Department of 
Insurance, P. O. Box 149104, Mail Code 113-2A, Austin, Texas 78714-9104. An 
additional copy of the comment should be submitted to David Durden, Deputy 
Commissioner for Property and Casualty Lines, Texas Department of Insurance, P. 
O. Box 149104, Mail Code 104-5A, Austin, Texas 78714-9104. 
The repeal is proposed under the Insurance Code, Articles 5.13-2, 5.81, 5.98, 
and 1.03A; and the Government Code, sec.2001.004-2001.038. Article 5.13-2 
regulates the policy forms submitted by insurers for approval in general 
liability, commercial property, commercial casualty, and medical professional 
liability insurance. Article 5.81 authorizes the commissioner to approve forms 
for multi-peril policies of insurance and to adopt rules as in the best judgment 
of the commissioner are necessary and desirable to carry out the purposes and 
objectives of this article. Article 5.98 authorizes the commissioner to adopt 
reasonable rules and rates that are appropriate to accomplish the purposes of 
Chapter 5. Article 1.03A authorizes the commissioner to adopt rules and 
regulations, which must be for general and uniform regulation, for the conduct 
and execution of the duties and functions of the department only as authorized 
by statute. The Government Code, sec.2001.004-2001.038 (Administrative 
Procedures Act) authorize and require each state agency to adopt rules of 
practice stating the nature and requirements of available formal and informal 
procedures and prescribe the procedures for adoption of rules by a state 
administrative agency. 
The following articles of the Insurance Code are affected by this repeal: 
Insurance Code, Articles 5.13-2 and 5.81 
sec.5.9302.Equivalent Coverage Requirements.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801129
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 463-6327

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART I. General Land Office
CHAPTER 13.Land Resources
Land Sales-Preferential Right to Purchase Certain Former Superconducting Super 
Collider Tracts
31 TAC sec.sec.13.60-13.67
The General Land Office (GLO) proposes new sec.sec.13.60-13.67, concerning 
procedures for notification and for exercise of the preference right to purchase 
certain tracts of land conveyed to the state for use by the superconducting 
super collider research facility in Ellis County, Texas, as set forth in Teas 
Natural Resource Code Annotated, sec.31.309. 
Spencer Reid, General Counsel, has determined that for the first five-year 
period the rules are in effect, there will be no anticipated fiscal implications 
as a result of the administration of these rules. 
Mr. Reid also has determined that, for the first five-year period the rules are 
in effect, the public benefit anticipated as a result of administration and 
compliance with these rules is to streamline the process for compliance with 
Texas Natural Resource Code, sec.31.309. There will be no effect on small 
businesses. There are no anticipated economic costs to persons who are required 
to comply with the sections as proposed.
Interested parties may submit comments to Carol Milner, General Land Office, 
1700 North Congress, Room 626, Austin, Texas 78701-1495. Comments must be 
submitted by 5:00 p.m. on Friday, February 26, 1998. 
The new subchapter is proposed under Texas Natural Resource Code, sec.31.309, 
which authorizes the commissioner to promulgate rules necessary to implement 
sec.31.309. 
The Texas Natural Resource Code Annotated, sec.31.309 is affected by this 
proposed rulemaking.

sec.13.60.Purpose and Scope 
The purpose of this subchapter is to provide procedures for notification and for 
exercise of the preference right to purchase certain property conveyed to the 
state for use by the superconducting super collider research facility in Ellis 
County, Texas, as set forth in Texas Natural Resource Code Annotated, 
sec.31.309.

sec.13.61. Definitions.
The following words and terms, when used in this subchapter, mean the following 
unless the context clearly indicates otherwise: 
Conveyed - The transfer of title whether by deed or condemnation for use by the 
superconducting super collider facility in Ellis County, Texas.
GLO - General Land Office 
Heirs - One entitled to inherit the estate of a decedent under a lawful will, or 
under the laws of descent and distribution then in effect in the State of Texas.
Person - An individual, a duly organized corporation, business trust, estate, 
trust, partnership, limited liability company, association or other business 
entity, or a government or governmental subdivision or agency.
Preference right - A statutory priority right to purchase property in accordance 
with this subchapter. 
Property - A tract of land acquired by the state by deed or condemnation for use 
by the superconducting super collider research facility in Ellis County, or 
portion thereof, which has not been offered for sale, or sold prior to January 
1, 1998. 
Successors - A subsequent holder of title to all of the assets of another entity 
by acquisition or merger or as otherwise permitted by law.
TNRLC-The Texas National Research Laboratory Commission, a state agency which 
ceased to exist by act of the legislature, and whose authority to manage, 
control, market and dispose of real property and interests in real property was 
transferred to the GLO under the Government Code, sec.465.018(d).

sec.13.62.Preference Right.
(a) There is no preference right as to any property sold, under contract for 
sale, or offered for sale prior to January 1, 1998. For purposes of this 
section, the phrase "offered for sale" shall include, any of the following 
activities: 
(1) the publication of a list of properties to be sold by sealed bid sale held 
by the GLO under the provisions of the Texas Natural Resource Code Annotated, 
sec.31.158; or 
(2) any actions taken to solicit offers for the sale of property, including 
without limitations, the placement of "For Sale" signs, advertisement for sale 
in newspapers, magazines, brochures, flyers, or the internet. 
(b) As to property not offered for sale prior to January 1, 1998, a preference 
right shall accrue to a person, or the person's heirs or successor, who conveyed 
land to the state for use by the superconducting super collider research 
facility in Ellis County, Texas. 
(c) Before the GLO initiates formal action to sell a particular tract of 
property to any other party, notice shall be given to a person with a preference 
right, in accordance with the provisions of sec.13.63 of this subchapter 
(relating to Notice of Preference Right). 

sec.13.63.Notice of Preference Right.
The notice of preference right shall contain: 
(1) the date of the notice; 
(2) a legal description of the property subject to the preference right; 
(3) an application to purchase the tract in a form prescribed by the GLO; 
(4) a statement informing the addressee that in order to exercise the preference 
right, the addressee must deliver a signed application to the GLO at the address 
set forth in the application on or before the 30 days after the date of the 
notice, and pay to the GLO a fee in the amount of $300.00, which shall be 
applied to the cost of an appraisal of the property described in the 
application. The required fee shall not be refundable and shall not apply to the 
purchase price of the property from the GLO; and 
(5) a statement that within 15 days after receipt of written notice from the GLO 
of appraised value, the addressee shall, enter into a contract to purchase the 
property described in the application at the appraised value, on the terms and 
conditions contained in a form of purchase contract prescribed by the GLO, or 
the preference right is conclusively deemed to have been waived. 

sec.13.64.Method of Service of Notice.
(a) The notice required by sec.13.63 of this subchapter (relating to Notice of 
Preference Right) shall be given by: 
(1) certified mail, return receipt requested, to the last known address of the 
person who conveyed the tract or any portion of the tract to the state, as 
reflected in the files and records of the GLO; and 
(2) publication of a "Notice of Preference Right to Purchase Certain Former 
Superconducting Super Collider Property" in at least three issues of a daily 
newspaper published in Waxahachie, Texas, and in at least three issues of a 
daily newspaper in the Dallas/Ft. Worth Metroplex. The last date of publication 
shall be 30 days prior to the deadline, for application established in sec.13.63 
of this subchapter. The notice shall be addressed to all prior owners (their 
heirs and successors) who conveyed the property subject to the preference right. 
(b) Notice given by certified mail shall be deemed delivered upon deposit in a 
US Postal Service depository, postage prepaid, regardless of whether the notice 
is returned to the GLO as unclaimed, undeliverable or for any other reason noted 
by the US Postal Service. 
(c) Notice given by publication shall be deemed received the last date of 
publication. 

sec.13.65.Proof of Notice.
The GLO shall maintain copies of all notices provided pursuant to this 
subchapter. The records of the GLO shall be conclusive proof of the fulfillment 
of notice requirements of this subchapter. 

sec.13.66.Exercise of Preference Right.
A person or a person's heirs or successors entitled to a preferential right to 
purchase shall strictly comply with the deadlines and other conditions of sale 
set forth in this subchapter or any contract of sale, or the preference right 
shall be deemed waived without further action of the GLO.

sec.13.67.Permitted Exceptions .
The property sold under this subchapter shall be conveyed subject to any 
easement, covenants, restrictions, rights of ways and any other matter of record 
in the official records of the GLO or Ellis County, Texas, and any other matters 
contained in the contract of sale.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801149
Garry Mauro
Commissioner
General Land Office
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 305-9129

TITLE 34. PUBLIC FINANCE
PART V. Texas County and District Retirement System
CHAPTER 107.Miscellaneous Rules
34 TAC sec.107.4
The Texas County and District Retirement System proposes new sec.107.4, 
concerning the establishment of rules for determining the amortization period 
for the funding of prior service credit. The proposed rule proceeds from the 
specific authority granted to the board of trustees to establish rules for 
determining the amortization period as set forth in the Government Code, Chapter 
844, Subchapter H, sec.844.703(f). The rule is being proposed to assist in 
providing a funding mechanism that is appropriate for the current benefit plan 
design and budgetary considerations of subdivisions participating in the Texas 
County and District Retirement System. 
Terry Horton, Director of the Texas County and District Retirement System, has 
determined that for the first five-year period the rule is in effect there will 
be no fiscal implications for state or local government as a result of enforcing 
or administering the rule. 
Mr. Horton also has determined that for each year of the first five years the 
rule is in effect the anticipated public benefit will be a more orderly and 
consistent funding of pension benefits which in turn produces a more predictable 
and consistent pension liability. There will be no effect on small businesses. 
There are no anticipated economic costs to persons who are required to comply 
with the rule as proposed. 
Comments on the proposal may be submitted to Terry Horton, Director, Texas 
County and District Retirement System, P.O. Box 2034, Austin, Texas 78768-2034.
This new section is proposed under the Government Code, Chapter 845, Subchapter 
B, sec.845.102 which provides the board of trustees with the authority to adopt 
rules necessary or desirable for the effective administration of the System. 
The Government Code, Chapter 844, Subchapter H, sec.844.703 is affected by this 
proposed new rule. 

sec.107.4.Amortization Period.
In accordance with Government Code, Chapter 844, Subchapter H, sec.844.703(f), 
for purposes of determining the amortization period for annually determined 
contribution rate (ADCR) plans, the following rules are effective for plan years 
beginning after December 31, 1998 based on actuarial valuations on and after 
December 31, 1997.
(1) The prior service contribution rate prescribed by sec.844.703(b) shall be 
based on an open amortization period of 30 years.
(2) If a subdivision has an overfunded obligation instead of an unfunded 
obligation in its plan, the negative prior service contribution rate prescribed 
by sec.844.703(b) shall be based on an open amortization period of 30 years. 
(3) If the governing body of a subdivision has adopted an ADCR plan and has also 
elected to contribute at a higher integer contribution rate as allowed by 
sec.844.703(d), the amortization period for the actuarially determined 
contribution rate shall be determined from one of the two rules stated above. 
The amortization period for the higher integer contribution rate shall be 
calculated in each annual actuarial valuation as the number of years required to 
amortize the unfunded obligation in that actuarial valuation, assuming that the 
employer contribution rate available to amortize the unfunded obligation shall 
be equal each year in the future, beginning one year after the actuarial 
valuation date, to the excess of the higher integer contribution rate over the 
normal cost contribution rate determined in that actuarial valuation.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801121
Terry Horton
Director
Texas County and District Retirement System
Proposed date of adoption: March 12, 1988
For further information, please call: (512) 328-8889

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART III. Texas Youth Commission
CHAPTER 81.Interaction with the Public
37 TAC sec.81.36
The Texas Youth Commission (TYC) proposes new sec.81.36, concerning notification 
to public and private schools. The new section will establish a procedure for 
TYC staff to notify public and private school personnel of the arrest, detention 
or referral of a TYC paroled youth and any subsequent disposition of that arrest 
or detention. 
Terry Graham, Assistant Deputy Executive Director for Finance, has determined 
that for the first five-year period the section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be more efficient communication between the Texas Youth Commission 
and the local school districts in compliance with laws amended during the 75th 
legislative session. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the section 
as proposed. No private real property rights are affected by adoption of this 
rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The new section is proposed under the Human Resources Code, sec.61.036, which 
provides the Texas Youth Commission with the authority to cooperate with all 
existing agencies and encourage the establishment of programs, both local and 
statewide, the object of which is services to delinquent and predelinquent youth 
of this state. 
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.81.36. Notification to Public and Private Schools.
(a) Purpose. The purpose of this rule is to provide a procedure for Texas Youth 
Commission (TYC) staff to notify public and/or private school officials when 
certain action is taken against a TYC paroled youth. 
(b) The assigned TYC parole officer of a youth who transfers from a school or is 
subsequently removed from a school and later returned to a school or to a 
different school district shall notify the new school officials of: 
(1) an arrest/detention/referral to juvenile court, the date of the action, and 
the offense/allegation; or 
(2) an adjudication/conviction, date of the action, and the offense for which 
the action was taken. 
(c) The oral and written notice must include sufficient detail so that the 
official can determine whether there is reasonable belief that the youth has 
engaged in conduct defined as a felony. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801136
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

CHAPTER 87.Treatment
SUBCHAPTER A.Program Planning
37 TAC sec.87.3
The Texas Youth Commission (TYC) proposes an amendment to sec.87.3, concerning 
the resocialization program. The amendment will add specific assessment 
information which clarifies requirements in the TYC treatment programs. For 
example, a phases checklist requirement and a monthly timeline for measuring an 
individual youth's progress are added. 
Terry Graham, Assistant Deputy Executive Director for Finance, has determined 
that for the first five-year period the section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be TYC's ability to better evaluate a youth's progress. There will 
be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. No private real 
property rights are affected by adoption of this rule.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The amendment is proposed under the Human Resources Code, sec.61.076, which 
provides the Texas Youth Commission with the authority to require the modes of 
life and conduct that seem best adapted to fit the child for return to full 
liberty without danger to the public. 
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.87.3. Resocialization Program. 
(a) Purpose. The purpose of this rule is to identify the agency's philosophy and 
approach to rehabilitation of juvenile delinquents in order to reduce future 
<nl> delinquent <ol> [offensive] behavior and increase accountability of the 
youth and programs. 
(b) Explanation of Terms Used. 
(1) Resocialization Program - the basic program implemented in all <nl> Texas 
Youth Commission (TYC) <ol> [TYC] facilities.
(2) Phases <nl> of <ol> Resocialization - five <nl> competency based <ol> 
[progressive] phases in the resocialization program used to determine a youth's 
progress in the program. 
(3) Phases Checklist - standardized list of measurements used at every program 
for individual determination of phase completion. 
(c) (No change.)
(d) All aspects of the TYC resocialization program will be competency based with 
clearly defined <nl> performance <ol> [behavior] expectations. Individual 
progress will be measured [regularly] <nl> monthly and based upon all identified 
treatment needs and strengths.<ol> 
(e) Phases of resocialization are [generally] progressive. Youth will be 
assessed by <nl> a treatment team <ol> [the primary service worker] at each <nl> 
residential <ol> placement for the appropriate phase. <nl> Parole youth will be 
assessed by the assigned parole officer. Higher phases are associated with 
increased expectations of responsibility and decreased need for direct staff 
supervision. <ol> 
(f)-(k) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801137
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

SUBCHAPTER B.Special Needs Offender Programs
37 TAC sec.87.51
The Texas Youth Commission (TYC) proposes an amendment to sec.87.51, concerning 
special needs offenders. The amendment will make more efficient use of 
specialized treatment resources by changing the ineligibility status of youth 
who have been identified as having a need for specialized treatment and have not 
completed phase three of the TYC resocialization program. Priority placement 
will be given to youth who have completed phase three. Terry Graham, Assistant 
Deputy Executive Director for Finance, has determined that for the first five-
year period the section is in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be a more efficient use of state resources and greater protection 
for the public. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the section 
as proposed. No private real property rights are affected by adoption of this 
rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The amendment is proposed under the Human Resources Code, sec.61.076, which 
provides the Texas Youth Commission with the authority to correct the socially 
harmful tendencies of a child committed to it by requiring the child to 
participate in moral, academic, vocational, physical and correctional training 
activities. 
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.87.51.Special Needs Offenders.
(a)-(e) No change.)
(f) Youth will be placed in a Capital Offender, Sex Offender, and Chemical 
Dependency specialized treatment program as resources are available. [after 
completion of phase three of resocialization which demonstrates motivation and 
behavioral compliance as necessary for specialized treatment.] <nl> Priority 
will be given to youth who have completed Phase III.<ol> 
(g) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801138
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

CHAPTER 91.Program Services
SUBCHAPTER C.Youth Employment and Work
37 TAC sec.91.61
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Youth 
Commission or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Texas Youth Commission (TYC) proposes the repeal of sec.91.61, concerning 
youth employment and work. This section is being repealed to allow for the 
publication of a new section. The new section is also aimed at providing TYC 
youth with opportunities for compensated and uncompensated work experience. 
Terry Graham, Assistant Executive Deputy Director of Finance, has determined 
that for the first five-year period the repeal as proposed is in effect there 
will be no fiscal implications for state or local government as a result of 
enforcing or administering the repeal. 
Mr. Graham also has determined that for each year of the first five years the 
repeal is in effect the public benefit anticipated as a result of enforcing the 
repeal will be increased structure within TYC programs and greater public 
protection. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the repeal as proposed.
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The repeal is proposed under the Human Resources Code, sec.61.034, which 
provides the Texas Youth Commission with the authority to make rules appropriate 
to the accomplishment of its functions. 
The proposed repeal implements the Human Resource Code, sec.61.034. 
sec.91.61.Youth Employment and Work.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801140
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

37 TAC sec.91.61
The Texas Youth Commission (TYC) proposes new sec.91.61, concerning youth 
employment and work. The new section will provide TYC youth with opportunities 
for compensated and uncompensated work to allow youth in residential facilities 
to experience the responsibilities and rewards of constructive work. 
Terry Graham, Assistant Deputy Executive Director for Finance, has determined 
that for the first five-year period the section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be increased structure within TYC programs and greater public 
protection. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed. No private real property rights are affected by adoption of this rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The new section is proposed under the Human Resources Code, sec.61.076, which 
provides the Texas Youth Commission with the authority to require the child to 
participate in academic and vocational activities.
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.91.61.Youth Employment and Work.
(a) Purpose. The purpose of this rule is to provide opportunities for 
compensated and uncompensated work in order to allow youth in residential 
facilities to experience the responsibilities and rewards of constructive work. 
(b) Youth shall not be permitted to perform any work prohibited by state or 
federal regulations or statutes pertaining to child labor. 
(c) Repetitive, purposeless, degrading make-work is prohibited.
(d) Training and work programs will utilize the advice and assistance of labor, 
business and industrial organizations. 
(e) Youth in TYC facilities may be required to do the following kinds of work 
without compensation: 
(1) assignments which are part of an agency educational curriculum (vocational 
training); 
(2) tasks performed as community service; and/or 
(3) routine housekeeping chores which are shared by all youth in the facility, 
including facility maintenance. 
(f) Youth in TYC facilities may volunteer to perform work without compensation 
as restitution for damage done by youth. 
(g) Youth may be paid for performing tasks incidental to facility operations if 
such employment is part of the youth's treatment plan. 
(h) Youth will be paid for participation in the private sector youth industries 
program. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801139
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

37 TAC sec.91.65
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Youth 
Commission or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Texas Youth Commission (TYC) proposes the repeal of sec.91.65, concerning 
payment for youth employment by TYC. This section is being repealed and 
information is consolidated with proposed amendments to GAP sec.91.61 of this 
chapter concerning youth employment and work. The amendments will provide TYC 
youth with opportunities for compensated and uncompensated work experience. 
Terry Graham, Assistant Executive Deputy Director of Finance, has determined 
that for the first five-year period the repeal as proposed is in effect there 
will be no fiscal implications for state or local government as a result of 
enforcing or administering the repeal. 
Mr. Graham also has determined that for each year of the first five years the 
repeal is in effect the public benefit anticipated as a result of enforcing the 
repeal will be a new section and greater protection for the public. There will 
be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the repeal as proposed. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The repeal is proposed under the Human Resources Code, sec.61.034, which 
provides the Texas Youth Commission with the authority to make rules appropriate 
to the accomplishment of its functions. 
The proposed repeal implements the Human Resource Code, sec.61.034. 
sec.91.65. Payment for Youth Employment by TYC. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801141
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: March 8, 1998
For further information, please call: (512) 424-6244

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART I. Texas Department of Human Services
CHAPTER 45.Community Living Assistance and Support Services
The Texas Department of Human Services (DHS) proposes new chapter 45, Community 
Living Assistance and Support Services, concerning suspension and termination of 
services, program and claim payment requirements, and fiscal monitoring, for its 
Community Living Assistance and Support Services (CLASS) program. The purpose of 
the new chapter is to establish rules for the CLASS program. These rules clarify 
when services to a participant must be suspended and when services must be 
terminated. The process for suspension or termination of services is defined. 
Also defined are the documentation requirements for provider payment, specifying 
what constitutes administrative and financial errors and establishing provider 
sanctions for errors identified. A sanction of 100% of the paid unit rate is 
applied to financial errors identified on the documentation reviewed, 
eliminating payment for services not authorized or not delivered according to 
program rules. A sanction of 12% of the unit rate is applied to the paid units 
with administrative errors on the documentation reviewed, reducing payment for 
administrative services not performed. Administrative and financial errors are 
not extended beyond the documentation reviewed. Compliance with these rules 
improves fiscal accountability. 
Eric M. Bost, commissioner, has determined that for the first five-year period 
the sections are in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering the sections. Mr. 
Bost also has determined that for each year of the first five years the sections 
are in effect the public benefit anticipated as a result of enforcing the 
sections will be to initiate a sanction of 12% for administrative errors, which 
is the percentage of the reimbursement paid by the department that is attributed 
to administration by the provider, and initiate a sanction of 100% for financial 
errors eliminating payment for services that are not authorized and reducing the 
cost of services that are not delivered according to program rules and policies 
as established in current rules. There will be no effect on small businesses. 
There is no anticipated economic cost to persons who are required to comply with 
the proposed sections. 
Questions about the content of this proposal may be directed to Don Mann at 
(512) 438-3642 in DHS's Long-Term Care section. Written comments on the proposal 
may be submitted to Supervisor, Rules and Handbooks Unit-010, Texas Department 
of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 
days of publication in the Texas Register

SUBCHAPTER B.Suspension and Termination of Services
40 TAC sec.sec.45.201, 45.203, 45.205, 45.207, 45.209, 45.211, 45.213, 45.215
The new sections are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which authorizes the department to administer public and medical 
assistance programs and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The new sections implement the Human Resources Code, sec.sec.22.001-22.030 and 
sec.sec.32.001-32.042. 

sec.45.201.Termination of Services to Current Participants.
(a) The case management agency (CMA) with concurrence by the Texas Department of 
Human Services (DHS) must terminate Community Living Assistance and Support 
Services (CLASS) services if one or more circumstances specified in paragraphs 
(1)-(17) of this subsection occur. The CMA and direct services agency (DSA) must 
provide written documentation to DHS to support the reason for denial of 
services. 
(1) The participant leaves the state for more than 90 days or moves to a county 
in which the CLASS program does not exist. 
(2) The participant dies. 
(3) The participant has resided in an institutional setting for longer than 120 
days. An institution includes an acute care hospital, state hospital, 
rehabilitation hospital, state school, nursing home or intermediate care 
facility for persons with mental retardation/related condition (ICF-MR/RC). DHS 
will retain authority to extend this time in extraordinary circumstances.
(4) The participant requests in writing that services end. 
(5) The participant is not financially eligible for Medicaid benefits. 
(6) The participant does not meet the level of care criteria for ICF-MR/RC. 
(7) The estimated cost of the CLASS services necessary to adequately meet the 
needs of the participant exceeds the CLASS cost ceiling.
(8) Two DSA providers have refused to serve the participant on the basis of a 
reasonable expectation that the participant's medical, nursing, and social needs 
cannot be met adequately in the participant's residence.
(9) The participant/responsible party or court-appointed guardian refuses to 
sign the individual service plan (ISP). A referral will be made to the county 
judge to determine whether the court-appointed guardian is acting in the best 
interests of the CLASS participant. 
(10) The participant refuses to comply with his ISP/individual program plan, 
including situations in which he refuses services and threatens his own health 
and safety. 
(11) The participant or someone in the participant's home deliberately threatens 
the health or safety of the service provider.
(12) The participant is incarcerated for more than 30 days. 
(13) The participant has no need for habilitation services as determined by the 
interdisciplinary team. 
(14) The participant or someone in the participant's home has subjected the 
person providing services to sexual harassment. 
(15) The participant or someone in the participant's home has a substantiated 
pattern of discrimination against the service provider(s) on the basis of race, 
color, national origin, age, sex, disability, political beliefs, or religion 
that has not improved with appropriate intervention.
(16) The participant or someone in the participant's home has a substantiated 
use of illegal drugs or has illegal drugs readily available within sight of the 
service provider. 
(17) The participant fails to pay his qualified income trust copayment. 
(b) Following approval by DHS, the case manager provides written notice to the 
participant and provides the DSA of the effective date of termination and 
provides the participant with written notice of the right to appeal. 
(c) If the participant appeals the denial within 12 days of written 
notification, the case manager continues CLASS services until notification of 
the decision by the DHS hearing officer. The case manager may not reduce 
services until the outcome of the appeal is known. Services do not continue 
during the appeal process in situations where the participant has been 
determined to be a threat to the health and safety of himself or others.

sec.45.203.Automatic Suspension of Community Living Assistance and Support 
Services (CLASS).
The case management agency and direct services agency must automatically suspend 
CLASS services to a participant when: 
(1) the participant is admitted to an institution. An institution includes acute 
care hospital, state hospital, rehabilitation hospital, state school, 
intermediate care facility for persons with mental retardation, or a nursing 
home; 
(2) the participant temporarily leaves the service area for vacations or other 
personal business unless special arrangements have been authorized by the direct 
services agency or the Texas Department of Human Services (DHS); 
(3) the participant dies; 
(4) the participant requests in writing that services end; 
(5) the participant's physician refuses to sign orders or rescinds existing 
orders for the service; 
(6) DHS denies the participant's eligibility; 
(7) the participant or someone in the participant's home deliberately threatens 
the health or safety of the service provider; 
(8) DHS terminates the contract with the provider; or
(9) the participant is incarcerated.

sec.45.205.Suspension of Community Living Assistance and Support Services for 
Cause.
The direct services agency and case management agency may suspend services with 
approval by the Texas Department of Human Services and documentation to support 
that one or more of the following has occurred: 
(1) The participant or someone in the participant's home sexually harasses the 
service provider(s). 
(2) The participant or someone in the participant's home has a pattern of 
discrimination against the service provider(s) on the basis of race, color, 
national origin, age, sex, disability, political beliefs, or religion that has 
not improved with appropriate intervention.
(3) The participant or someone in the participant's home openly uses illegal 
drugs or has illegal drugs readily available within sight of the service 
provider. 

sec.45.207.Notification of Suspension.
(a) The direct services agency (DSA) must verbally notify the case manager or 
staff in the case manager's office about the reason the DSA agency suspended 
services within 24 hours after service suspension. Written notification on the 
case information form must be sent to the case manager within two days of 
service suspension. 
(b) The case manager performs any necessary face-to-face contacts necessary to 
evaluate and document the reasons for suspension described in sec.45.203(a)(3)-
(5) and (7) of this title (relating to Automatic Suspension of Community Living 
Assistance and Support Services) and sec.45.205(a)(1)-(3) of this title 
(relating to Suspension of Community Living Assistance and Support Services for 
Cause). The case manager sends to the Texas Department of Human Services (DHS) 
Community Living Assistance and Support Services (CLASS) program staff all 
written documentation provided by the DSA and case manager to substantiate the 
suspension within five days from the suspension. 
(c) The case manager, DSA, and DHS CLASS program staff review all written and 
verbal documentation provided by the DSA and other individuals connected with 
the suspension within five days from the date the suspension occurred. 
(d) If the documentation does not support the suspension of services as 
determined by DHS CLASS program staff, the DSA will be notified to reinstate 
services to the participant. 
(e) If the documentation does support the suspension of services as determined 
by DHS CLASS program staff, the case manager will notify the participant that 
CLASS services will be terminated as set out in sec.45.201 of this title 
(relating to Termination of Services to Current Participants) and inform them of 
the right to appeal. 

sec.45.209.Sanction.
The Texas Department of Human Services may sanction up to and including contract 
termination any provider agency that has: 
(1) suspended services to a participant for a reason other than what is allowed 
in sec.45.203 of this title (relating to Automatic Suspension of Community 
Living Assistance and Support Services) or sec.45.205 of this title (relating to 
Suspension of Community Living Assistance and Support Services for Cause); or 
(2) uses the information cited in sec.45.203 of this title (relating to 
Automatic Suspension of Community Living Assistance and Support Services) or 
sec.45.205 of this title (relating to Suspension of Community Living Assistance 
and Support Services for Cause) to suspend a participant when the provider 
agency knew or should have known that the cited information did not apply to the 
participant. 

sec.45.211.Waiting List.
The applicant is placed on the Community Living Assistance and Support Services 
(CLASS) waiting list on a first-come, first-served basis. The applicant must: 
(1) contact the Texas Department of Human Services CLASS administrative 
assistant or program staff and provide enough information to complete the CLASS 
application/summary of applicant's needs for services form; and 
(2) be responsible for the update of any information such as address and 
telephone number; and 
(3) reside in the county where they are placing their name on the waiting list 
if CLASS services are available in that county; or
(4) place their name on the waiting list in the nearest county in which CLASS 
services are available if CLASS services are not available in the county in 
which they currently reside. 

sec.45.213.Use of Non-Waiver Services.
Community Living Assistance and Support Services (CLASS) applicants and 
participants must utilize all services available through other funding sources. 
As a Medicaid program, the CLASS program is payor of last resort.

sec.45.215.Authorization of Services.
Units of service must be prior authorized on the individual service plan to be 
eligible for reimbursement through the Community Living Assistance and Support 
Services program except in cases of documented medical emergencies.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801125
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER C.Program and Claim Payment Requirements
40 TAC sec.sec.45.301, 45.303, 45.305, 45.307, 45.309, 45.311, 45.313, 45.315, 
45.317, 45.319, 45.321, 45.323, 45.325, 45.327, 45.329, 45.331, 45.333, 45.335, 
45.337, 45.339, 45.341, 45.343
The new sections are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which authorizes the department to administer public and medical 
assistance programs and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The new sections implement the Human Resources Code, sec.sec.22.001-22.030 and 
sec.sec.32.001-32.042. 

sec.45.301.Service Array for Community Living Assistance and Support Services 
(CLASS) Providers.
CLASS providers must provide the array of CLASS Services identified in 
paragraphs (1-11) of this section in accordance with the CLASS individual 
service plan form, through its own employees, subcontractors, or personal 
service agreements with qualified individuals. Services include:
(1) habilitation; 
(2) nursing; 
(3) physical therapy; 
(4) occupational therapy; 
(5) speech pathology; 
(6) psychological services; 
(7) adaptive aids/vehicle modifications; 
(8) minor home modifications; 
(9) respite care (in-home); 
(10) respite (out-of-home); and 
(11) case management.

sec.45.303.Cost Effective Purchases of Adaptive Aids.
(a) For any single adaptive aid expenditure costing less than $500, the direct 
services agency (DSA) must: 
(1) determine and document the needs and preferences of the participant for the 
adaptive aid; 
(2) document the necessity for the adaptive aid; 
(3) consider renting the adaptive aid on a short-term basis if the participant's 
needs or desires cannot be accurately determined at the time of the assessment; 
(4) obtain comparative price quotes or use a price list to document prices of 
the adaptive aid from a minimum of three suppliers or annually select a supplier 
based on the lowest prices from the quotes/price list for the main types of 
adaptive aids that the agency has been purchasing;
(5) document the justification of the selection, including cost, delivery time 
of item, record of quality services, access to loaners during repairs, repair 
history, and warranties. For those suppliers selected, document in the vendor 
records the names of the suppliers from whom all quotes/price lists were 
obtained, the amount of the quotes/price lists, the items for which the 
quotes/price lists were requested, and the dates the quotes/price lists were 
obtained; and 
(6) have a nurse, therapist, or other appropriate professional conduct a home 
visit within 14 Texas Department of Human Services (DHS) work days from the date 
of delivery to verify the adaptive aid meets the needs of the participant, that 
orientation was provided to the participant in the use of the adaptive aid, and 
document completion of purchase and satisfaction of the participant. 
(b) For any single adaptive aid expenditure costing $500 or more, in addition to 
complying with the requirements listed in subsection (a)(1)-(6) of this section, 
the DSA must: 
(1) obtain written specifications for the adaptive aid from a licensed 
occupational therapist, physical therapist, speech pathologist, or other 
appropriate professional specializing in assessments for assistive technology or 
adaptive aids; 
(2) obtain a minimum of three written bids if not using price lists or price 
quotes as identified under subsection (a)(5)-(6) of this section, and document 
the justification of the selection including cost, delivery time of item, record 
of quality services, access to loaners during repairs, repair history, and 
warranties; and 
(3) document justification when not accepting the lowest bid, such as, delivery 
time of item, record of quality services, access to loaners during repairs, 
repair history, and warranties.

sec.45.305.Time Frames for Adaptive Aids Costing Less Than $500.
(a) The direct services agency (DSA) must ensure purchase and delivery of any 
adaptive aid/vehicle modification within 14 Texas Department of Human Services 
(DHS) work days from the date purchase of the adaptive aid/vehicle modification 
is authorized, using either the effective date of the individual service plan 
form, or the date the form is received, whichever is later. 
(b) If the DSA cannot ensure delivery of an adaptive aid/vehicle modification 
within 14 DHS work days from the date of receipt of DHS's authorization, before 
the 14th day the agency must submit to the case manager the case information 
form containing an explanation why the adaptive aid/vehicle modification cannot 
be delivered within the required time frame and a new proposed date for 
delivery.

sec.45.307.Time Frames for Adaptive Aids Costing $500 or More.
(a) The direct services agency (DSA) must ensure purchase and delivery of any 
adaptive aid/vehicle modification within 30 Texas Department of Human Services 
(DHS) work days from the date purchase of the adaptive aid/vehicle modification 
is authorized, using either the effective date of the individual service plan 
form, or the date the form is received, whichever is later. 
(b) If the DSA cannot ensure delivery of an adaptive aid/vehicle modification 
within 30 work days from the date of receipt of DHS's authorization, before the 
30th day the agency must submit to the case manager the case information form 
containing an explanation why the adaptive aid/vehicle modification cannot be 
delivered within the required time frame and including a new proposed date for 
the delivery. 

sec.45.309.Cost Effective Purchases of Medical Supplies.
The direct services agency must: 
(1) prior to the selection of medical supplies, obtain comparative price quotes 
or use a price list to document prices of the medical supplies from a minimum of 
three suppliers; 
(2) at least annually select supplies based on the lowest prices from the 
quotes/price list for the main types of supplies that the agency has been 
purchasing, and document the justification of the selection including cost, 
delivery time of item and record of quality services; and
(3) document the basis for selection and for those selected, document in the 
vendor records the names of the suppliers from whom all quotes/price lists were 
obtained, the amount of the quotes/price lists, the items for which the 
quotes/price lists were requested, and the dates the quotes/price lists were 
obtained. 

sec.45.311.Time Frames for Medical Supplies.
(a) The direct services agency (DSA) is responsible for assuring the purchase 
and delivery of any authorized medical supplies within five Texas Department of 
Human Services (DHS) work days from the waiver service initiation date. 
(b) On existing cases, the DSA must deliver medical supplies within five DHS 
work days from the date purchase of the supplies is authorized, counting from 
the effective date of the individual service plan form, or the date the form is 
received, whichever is later. 
(c) If the DSA cannot ensure delivery of a medical supply within five DHS work 
days from the date of receipt of DHS's authorization, the DSA must submit the 
case information form to the case manager before the fifth day, containing an 
explanation why the medical supply cannot be delivered within the required time 
frame and a new proposed date for the delivery. 

sec.45.313.Time Frames for Emergency Purchases of Medical Supplies.
If the direct services agency (DSA) or case manager identifies a need for the 
emergency purchase and delivery of a medical supply, the DSA must deliver the 
item within two Texas Department of Human Services work days from the date that 
the need for the medical supply is identified. 

sec.45.315.Medical Supplies on Hand.
At least twice a year, the direct services agency must verify the quantity of 
the medical supplies that the participant has on hand, and if necessary, adjust 
the service plan, or modify the delivery schedule for the medical supplies. The 
results of this verification must be documented in the case conference notes. 

sec.45.317.Freight Charges for Medical Supplies and Adaptive Aids.
The direct services agency must assure that if medical supplies or adaptive aids 
are delivered to the participant by means of any commercial carrier, such as 
United Parcel Services or the United States Postal Service, the most cost-
effective carrier is used. Overnight delivery should not be used unless it is an 
emergency purchase that cannot be purchased locally and delivered by the next 
day after determining the need.

sec.45.319.Cost Effective Purchases of Minor Home Modifications.
The direct services agency (DSA) must:
(1) determine and document the needs and preferences of the participant for the 
minor home modification; 
(2) document the necessity for the minor home modification;
(3) obtain written specifications for any project expenditure costing $1000 or 
more which will be used to procure bids and validate the completed job; 
(4) request a minimum of three written bids based on the specifications for any 
single expenditure costing $1000 or more; 
(5) select a bidder to provide the modification and document the justification 
when not selecting the lowest bid for the selection, including cost, completion 
time of modification, record of quality service, timely response to repair 
requests, and warranties; and 
(6) inspect the minor home modification for completion, compliance with the 
written specifications, if applicable, and quality of workmanship within seven 
Texas Department of Human Services (DHS) work days from the date the work is 
completed.
(A) The DSA must ensure that a qualified person inspects completed work to 
ensure all work was done to written specifications, if applicable, and the Texas 
Accessibility Standards. 
(B) The inspector cannot be the attendant. 
(C) Once the inspection is concluded and the modification is completed, the DSA 
must send the case information form to the case manager within seven DHS work 
days from the date the modification is completed. 

sec.45.321.Time Frames for Minor Home Modifications Costing $1000 or More.
(a) The Community Living Assistance and Support Services direct services agency 
(DSA) is responsible for assuring the completion of all minor home modifications 
within 60 Texas Department of Human Services (DHS) work days from the date the 
minor home modification is authorized, counting from either the effective date 
of the individual service plan form, or the date the form is received, whichever 
is later. 
(b) If the modification cannot be completed within 60 DHS work days from the 
date the minor home modification is authorized, the DSA must submit the case 
information form to the case manager prior to the 60th day, explaining why the 
modification cannot be completed on time and including a new projected date of 
completion for the modification. 

sec.45.323.Time Frames for Minor Home Modifications Costing Less Than $1000.
(a) The Community Living Assistance and Support Services direct services agency 
(DSA) is responsible for assuring the completion of all minor home modifications 
within 30 Texas Department of Human Services (DHS) work days from the date the 
minor home modification is authorized, counting from either the effective date 
of the individual service plan form, or the date the form is received, whichever 
is later. 
(b) If the modification cannot be completed within 30 DHS work days from the 
date the minor home modification is authorized, the DSAmust submit the case 
information form to the case manager prior to the 60th day, explaining why the 
modification cannot be completed on time and including a new projected date of 
completion for the modification. 

sec.45.325.Landlord Approval for Minor Home Modifications.
Prior to beginning the home modifications, the direct services agency must 
obtain written approval from the owner of the building for the proposed 
modifications if the rental agreement does not provide such approval. 
Additionally, the direct services agency must obtain any applicable building 
permits prior to starting the home modifications.

sec.45.327.Accountability for Minor Home Modifications.
If a minor home modification requires repair or replacement within one year of 
completion, the Community Living Assistance and Support Services direct service 
agency must repair or replace the minor home modification without billing the 
Texas Department of Human Services or the participant, unless
(1) the finished modification met appropriate specifications and bid 
requirements agreed upon before the job was started; or 
(2) the repair or replacement is required due to circumstances beyond the 
control of the participant or participant's family members, or due to abuse by 
the participant or family members. 

sec.45.329.Completion of Minor Home Modifications.
The Community Living Assistance and Support Services direct services provider 
must maintain in the client record a copy of the fully executed receipt for the 
minor home modification attesting to the quality of the workmanship and whether 
or not the participant is satisfied. 

sec.45.331.Billable Units.
The following activities may be billed through the Community Living Assistance 
and Support Services (CLASS) program by the CLASS providers. 
(1) Nursing services: 
(A) direct participant contact; 
(B) participation on the interdisciplinary team (IDT): 
(i) when the participant has an identified need for the service; and 
(ii) for actual time spent in the capacity of the respective discipline. Time 
spent as the official representative of the direct services agency (DSA) must be 
billed as habilitation; 
(C) time spent in delegating, training, and supervising attendants and 
substitutes in the delivery of nursing tasks that have been delegated;
(D) time spent in providing nursing tasks that had been delegated to an 
attendant in order to prevent a service break, if no attendant can be found; 
(E) time spent in training family members, neighbors, and other informal support 
providers to provide needed nursing or personal care tasks; and 
(F) time spent in performing the annual reassessment, which includes actual 
participant contact and documentation of assessment forms and care plan. 
(2) Specialized therapy (occupational therapy, physical therapy, speech 
pathology): 
(A) direct participant contact; 
(B) participation on the IDT: 
(i) when the participant has an identified need for the service; and 
(ii) for actual time spent in the capacity of the respective discipline. Time 
spent as the official representative of the DSA must be billed as habilitation; 
and 
(C) time for doing evaluations for specialized equipment.
(3) Habilitation services, which include: 
(A) assisting with the performance of personal care tasks;
(B) performing delegated health-related tasks; 
(C) training the participant to perform the activities of daily living as 
identified in the habilitation plan; 
(D) providing reinforcement of therapy goals; 
(E) participating in IDT meetings; 
(F) accompanying the participant to habilitative activities as listed in the 
participant's individual program plan; and 
(G) performing chores services for the participant. 
(4) Adaptive aids/vehicular modifications and minor home modifications - 
delivery of a prior approved, medically necessary item or minor home 
modification. 
(A) Billable items for medical supplies include the invoice cost, including 
freight charges and sales tax, of the medical supply and the requisition fee. 
(B) Billable items for minor home modifications include the invoice cost of 
labor, materials, sales tax, and the requisition fee. 
(C) Billable items for adaptive aids include the invoice cost of the item, 
including freight charges and sales tax, and the requisition fee. 
(5) In-home respite - relief for the unpaid primary caregiver. 
(6) Out-of-home respite - relief for the unpaid primary caregiver. 

sec.45.333.Non-Billable Time and Activities.
The following activities are not considered billable activities under the 
Community Living Assistance and Support Services (CLASS) program for CLASS 
providers: 
(1) supervision of habilitation attendants performing personal assistance tasks, 
unless the attendant is delivering nursing tasks delegated by a registered 
nurse; 
(2) phone calls, letters, or meetings with the Texas Department of Human 
Services (DHS) or community resources; 
(3) administrative meetings or staff meetings; 
(4) in-service training, continuing education, or conferences;
(5) employee conferences or evaluations; 
(6) filing claims for services; 
(7) traveling to and from the participant's home; 
(8) processing paperwork, completing records or reports, except for the annual 
reassessment; 
(9) home modifications or adaptive aids/vehicular modifications that are not 
listed in the CLASS Provider Manual as covered items nor approved by authorized 
DHS staff. Billable items on the invoice include the actual cost of obtaining 
specifications, labor, materials, delivery and inspection costs; 
(10) collateral contact when that contact is between:
(A) provider employees; and 
(B) individuals providing services to participants under:
(i) personal service agreements with the CLASS provider; or
(ii) subcontracts with other CLASS agencies; 
(11) billing for services that are considered to be duplicate services or 
mutually exclusive, as identified in sec.45.335 of this title (relating to 
Mutually Exclusive Services); 
(12) "down-time" such as illness, holidays, vacation time, etc; 
(13) collateral contact (telephone or face-to-face) to assist or discuss a 
specific participant (for example, helping access community services); and 
(14) leaving a phone message on a recorder, or leaving a message with anyone 
other than the participant or parent/legal guardian.

sec.45.335.Mutually Exclusive Services.
The following waiver services are considered to be mutually exclusive and are 
not allowed under the waiver. 
(1) A participant receiving in-home respite or out-of-home respite may not 
receive habilitation for the same period of time. 
(2) A participant residing in an institutional setting may not receive any 
Community Living Assistance and Support Services (CLASS) services. 
(3) CLASS cannot provide a service that is available to the participant through 
a non- waiver source. 

sec.45.337.Service Claim Limits.
(a) A maximum of four hours may be billed under nursing services by the 
registered nurse to decide whether or not to delegate a nursing task to a direct 
services agency (DSA) attendant. 
(b) In order to avoid service breaks, the Community Living Assistance and 
Support Services DSA may bill for authorized habilitation units performed by a 
licensed nurse for a maximum period of 10 days during the participant's 
individual service plan (ISP) effective period: 
(1) The hours performed by the nurse may be billed at the nursing rate only if 
there are no attendants available to perform the needed delegated nursing tasks 
and only licensed nurses can be recruited. 
(2) The documentation must include all efforts the provider agency made to find 
an attendant to deliver delegated nursing tasks to prevent a break in service. 
(c) Components of minor home modifications cannot be billed without an invoice 
or in more than three billings. 

sec.45.339.Claims and Service Delivery Records.
(a) The Community Living Assistance and Support Services (CLASS) provider is 
liable for monetary exceptions if the monthly claims do not correspond with the 
provider's service authorization and service delivery records. 
(b) The provider must maintain the following records: 
(1) approval of application of CLASS form; 
(2) CLASS individual service plan form pages 1 and 2;
(3) CLASS documentation of services delivered form for any billing submitted for 
reimbursement or a facsimile previously approved by the waiver manager; 
(4) bids for home modifications costing $500 or more;
(5) bids for any single expenditure for adaptive aids/vehicle modifications 
costing $500 or more and comparative price quotes or a price list; 
(6) annual comparative price quotes/lists for the purchase of medical supplies; 
(7) annual comparative price quotes/lists for the purchase of adaptive aids; 
(8) receipts from the contractor for minor home modifications provided, 
documenting the date of completion and the cost of the modification;
(9) any applicable building permits; 
(10) documentation of completion of purchase; 
(11) specifications for minor home modifications; 
(12) receipts for the completed minor home modification from the CLASS direct 
services agency (DSA). The minor home modification must be completed before 
billing the Texas Department of Human Services for the modification and: 
(A) the DSA must attest that the workmanship is acceptable;
(B) the DSA must attest that the modification is completed according to the 
specifications of the bid, if applicable; 
(C) the CLASS documentation of services delivered form must be signed by the DSA 
representative;
(D) a final inspection sheet must be signed by the participant or the 
responsible party, the DSA representative and an inspector, stating that the 
home modifications were completed in accordance to the specification sheet; and 
(E) document whether or not the participant is satisfied with the home 
modification; 
(13) documentation of the annual selection of a supplier; 
(14) copies of case information forms sent to the case manager upon completion 
of the minor home modification; 
(15) receipts for the purchase of adaptive aids/vehicle modifications showing 
the cost of the item, the date the item was delivered to the participant, and 
signed confirmation delivery by the participant or responsible party; 
(16) written approval from the homeowner for modifications to be made; 
(17) documented justification for not accepting the lowest bids or quotes for 
adaptive aids, medical supplies, vehicle modifications or minor home 
modifications, where applicable; and 
(18) documentation of the basis of the annual selection of a supplier if using 
price lists/price quotes. 

sec.45.341.Monetary Exceptions.
(a) Providers of Community Living Assistance and Support Services (CLASS) must 
document on the CLASS documentation of services delivered form or an approved 
facsimile for services reimbursed on an hourly basis as authorized on the 
individual service plan, including: 
(1) box 2 must show the month and year service was delivered;
(2) box 10 must show what type of service was delivered;
(3) section D must record the units of service delivered;
(4) section D must indicate the dates of service delivery;
(5) section E must show the name and dated signature of the individual providing 
waiver services or the signature of the designated representative; and 
(6) the individual providing the service or designated representative must sign 
and date the CLASS documentation of services delivered form with the month, day, 
and year. 
(b) If documentation does not support the monthly claims, the CLASS provider may 
be liable for monetary exceptions. 
(c) The CLASS provider must designate a timekeeper to verify that the service 
units recorded on the CLASS documentation of services delivered form were worked 
and that the tasks assigned were completed. The timekeeper may be a registered 
nurse supervisor. 
(d) The employee must enter the daily total time and monthly total hours. The 
CLASS documentation of services delivered form, or an approved facsimile, may be 
signed by the direct services agency (DSA) employee who has designated signature 
authority if an employee is unable to complete and sign the CLASS documentation 
of services delivered form. The CLASS provider must document in writing the 
reasons the employee is unable to complete and sign the CLASS documentation of 
services delivered form, or the approved facsimile, and must document in writing 
who is authorized to make these entries. The documentation may be a written 
statement that includes the following: 
(1) the employee's name; 
(2) a brief summary of what portion of the CLASS documentation of services 
delivered form, or the approved facsimile, the employee is unable to complete; 
(3) the name and relationship of the person who has been designated to complete 
the form for the employee; and 
(4) the authorized employee's signature and date. 
(e) The timekeeper may add the monthly total of time with no exception taken, so 
long as the provider completes the daily total time. 

sec.45.343.Unallowable Services.
The Community Living Assistance and Support Services program does not provide 
the following items to participants: 
(1) purchase or long-term lease of vehicles, or vehicle repair and/or 
maintenance; 
(2) past due expenses; 
(3) income taxes; 
(4) automobile, life, or accident insurance; 
(5) death benefits, burial policies, or funeral expenses;
(6) costs for allowable services that have not been prior authorized; 
(7) food, shelter, utilities, general home repairs, electrical upgrades from 110 
volt to 220 volt outlets, major home renovations, remodeling, home furnishings, 
and yard work; 
(8) items or services covered by other third-party resources such as private 
insurance, Medicare, or other Medicaid benefits; 
(9) school tuition or fees, or equipment/items/services that are provided 
through the public school system; or 
(10) swimming pools or swimming pool repairs, maintenance, or supplies. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801126
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER D.Fiscal Monitoring
40 TAC sec.45.401, sec.45.403
The new sections are proposed under the Human Resources Code, Title 2, Chapters 
22 and 32, which authorizes the department to administer public and medical 
assistance programs and under Texas Government Code sec.531.021, which provides 
the Health and Human Services Commission with the authority to administer 
federal medical assistance funds. 
The new sections implement the Human Resources Code, sec.sec.22.001-22.030 and 
sec.sec.32.001-32.042. 

sec.45.401.Administrative Errors.
(a) A recoupment of 12% of the paid unit rate is the administrative error 
exception for services billed on an hourly basis. It represents the 
administrative portion of the rate and is applied to the unit(s) of service on 
the documentation reviewed in the Community Living Assistance and Support 
Services (CLASS) program. This exception is not extrapolated. 
(b) Administrative errors include, but are not limited to, the items in 
paragraphs (1)-(3) of this subsection: 
(1) Administrative errors on the Texas Department of Human Services's (DHS) 
documentation of services delivered form, or the prior approved facsimile, 
include the following: 
(A) The provider agency leaves the month and year of service blank in item 2, 
section A. DHS applies the error to the total number of units documented on the 
time sheet. 
(B) The timekeeper fails to enter a date of signature to certify the total 
number of hours the attendant, nurse, therapist, or other professional worked. 
DHS applies the error to the total number of units documented on the time sheet. 
(C) The timekeeper corrects the date of signature but fails to initial the 
correction. DHS applies the error to the number of units reimbursed after the 
earliest signature date. 
(D) The timekeeper enters an illegible date of signature or makes an illegible 
correction to the date. DHS applies the error to the total number of units 
documented on the time sheet. 
(E) The timekeeper enters a date of signature that is before the date of the 
last day services are delivered. DHS applies the error to the total number of 
units reimbursed after the signature date. 
(F) The timekeeper fails to sign CLASS documentation of services delivered form. 
DHS applies the error to the total number of units documented on the time sheet. 
(G) The timekeeper uses a signature stamp, but fails to initial the stamped 
signature. DHS applies the error to the total number of units documented on the 
time sheet. 
(H) The attendant, nurse, therapist, other professional, and/or timekeeper uses 
liquid paper/correction fluid to correct an entry in the record of time, 
signature, or date portion of the documentation of services delivered form. DHS 
applies the error to the total number of units documented on the time sheet. If 
the liquid paper/correction fluid is used only on a daily entry in the record of 
time, DHS applies the error only to the total number of units reimbursed for 
that day. 
(I) The attendant, nurse, therapist, other professional, and/or timekeeper makes 
an illegible entry in or an illegible correction to any portion of the record of 
time column. DHS applies the error to the total number of units reimbursed for 
the days in which entries are illegible. 
(J) The attendant fails to initial an increase in the daily time or the monthly 
total of hours for the pay period. DHS applies the error to the number of units 
reimbursed in excess of the original entry. 
(K) The attendant, nurse, therapist, other professional, or other agency 
representative fails to sign the documentation of services delivered form or 
approved facsimile. DHS applies the error to the total number of units 
documented on the time sheet. 
(L) The provider agency uses a form that has not been approved by DHS. DHS 
applies the error to the total number of units reimbursed while using something 
other than CLASS documentation of services delivered form or an approved 
facsimile. 
(M) DHS reimburses the provider agency for nursing, therapies, psychological, 
habilitation, out-of-home respite, in-home respite, adaptive aids/vehicle 
modifications or home modifications but a valid authorization individual service 
plan (ISP) form, pages 1-2 and all pertinent amendments signed by the case 
manager, is missing for the period reimbursed to the agency. DHS applies the 
error to the total number of units of nursing, therapies, habilitation, etc. 
claimed and not covered by an valid ISP. 
(N) DHS reimburses the provider agency for nursing services, but CLASS 
documentation of services delivered form lists "supervisory visit" in the 
comments section, without specifying that it is a nursing visit to supervise the 
delivery of delegated tasks, and there is no other documentation available that 
the nurse provided nursing services during the visit. 
(O) The direct services agency (DSA) begins home modification procurement 
without using the bid specifications and materials list as approved by the 
Interdisciplinary Team. 
(2) The following items are administrative errors resulting in recoupment of the 
entire requisition fee. The recoupment amount represents the administrative cost 
of the requisition fee. 
(A) There is no documentation of services delivered form, but there is a receipt 
for the purchase of adaptive aids/vehicle modifications or the completion of the 
minor home modification. 
(B) Bids were required for the purchase of an adaptive aid/vehicle modification 
or the completion of a minor home modification and bids were not obtained. 
(C) DHS reimburses the provider for the purchase of medical supplies, but there 
is no documentation available that price list/price quotes were obtained from 
three suppliers for the items for which the provider has been reimbursed, or the 
price lists/price quotes were obtained more than 12 months before the purchase. 
(D) DHS reimburses the provider for the purchase of adaptive aids, but there is 
no documentation available that price list/price quotes were obtained from three 
suppliers for the items for which the provider has been reimbursed, or there is 
no documentation available that the supplier selected on an annual basis to 
deliver the adaptive aids had the lowest prices for the main type of adaptive 
aids the agency has purchased. 
(3) Administrative errors for the case management agency (CMA) include, but are 
not limited to, the following: 
(A) The case management agency does not provide a completed ISP and an updated 
individual program plan within seven days from an interdisciplinary team meeting 
which results in the DSA providing services that at a later date are rejected 
because the CMA failed to submit the ISP for DHS authorization.
(B) The DSA has the case information form on record which indicates that the DSA 
had requested corrected service updates be made to the participant's ISP prior 
to providing the service and the CMA provided authorization for that service on 
the case information form but failed to submit a corrected ISP for DHS 
authorization. 

sec.45.403.Financial Errors.
(a) A reduction of 100% of the paid unit rate is the financial error exception. 
This exception is applied to the unit(s) of service on the documentation 
reviewed in the Community Living Assistance and Support Services (CLASS) 
program. This exception is not extrapolated. 
(b) Financial errors include, but are not limited to, the following: 
(1) The Texas Department of Human Services (DHS) reimburses the provider agency 
for services, but the CLASS documentation of services delivered form, or 
approved facsimile, is missing for the period for which services are reimbursed. 
DHS applies the error to the total number of units/dollars reimbursed for the 
pay period. 
(2) The attendant, nurse, therapist, or other professional leaves the entire 
record of time section blank. DHS applies the error to the total number of units 
reimbursed for the pay period. 
(3) DHS reimburses the provider agency for hours that exceed the authorization 
given by DHS. 
(A) For habilitation services, the maximum that may be reimbursed for a month is 
the monthly amount authorized on the CLASS Individual Service Plan/Individual 
Program Plan (ISP/IPP) plus any hours not used due to participant stay while in 
a hospital or in a rehabilitation hospital. 
(B) For nursing services, the maximum that may be reimbursed is the number of 
hours listed in the ISP form, item 16. 
(C) DHS applies the error to the total number of units reimbursed in excess of 
the units authorized by DHS, unless purchased following emergency procedures. 
(4) DHS reimburses the provider agency for any waiver service that is not 
identified on the participant's ISP form, unless purchased following emergency 
procedures. DHS applies the error to the entire amount reimbursed for such 
services. 
(5) DHS reimburses the provider agency for hours that exceed the total number of 
hours recorded on the documentation of services delivered form or approved 
facsimile. DHS applies the error to the total number of units reimbursed in 
excess of the units recorded on the timesheet. If the sum of the daily total of 
hours does not equal what is written in the monthly total blank, the lesser of 
the two totals is used to calculate the total number of hours subject to the 
error. 
(6) The provider makes a claim for nursing, physical therapy, occupational 
therapy, or speech pathology services, but a valid physician's order is missing. 
DHS applies the error to the total number of units claimed and not covered by a 
valid order. 
(7) DHS reimburses the provider agency for a claim for service, other than the 
initial administrative fee, delivered prior to the eligibility effective date on 
the ISP form. DHS applies the error to the total number of units reimbursed for 
such services. 
(8) DHS reimburses the provider agency for any hours that consisted of non-
billable time and activities as identified in sec.45.333 of this title (relating 
to Non-Billable Time and Activities). DHS applies the error to the total number 
of units reimbursed for such services. 
(9) DHS reimburses the provider agency for more than fours hours of nursing used 
to decide whether to delegate to the direct services agency attendant. DHS 
applies the error to the total number of units reimbursed for such services. 
(10) DHS reimburses the provider agency for more than 10 days during the 
participant's ISP year for nursing services being performed by a nurse to 
prevent service breaks caused by the attendant not being available to provide 
delegated nursing tasks. DHS applies the error to the total number of units 
reimbursed in excess of the 10 day maximum for such services. 
(11) DHS reimburses the provider agency for an amount in excess of the amount 
documented on the receipt for adaptive aids/vehicle modifications or minor home 
modifications. DHS applies the error to the total number of dollars reimbursed 
in excess of the amount on the receipt, plus the appropriate dollar amount of 
the requisition fee, if applicable. 
(12) There is no documentation for the completion of purchase and there is no 
receipt for the purchase of adaptive aids/vehicle modifications or for the 
completion of minor home modifications for which the provider has been 
reimbursed. DHS applies the error to the total number of dollars reimbursed for 
adaptive aids/vehicle modifications or minor home modifications in question, 
including the requisition fee. 
(13) DHS reimburses the provider agency for any waiver service that is not 
authorized on the participant's ISP form, unless the service was provided as a 
result of an emergency and is supported by backup documentation supplied within 
seven days from the date the emergency was determined. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801127
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

CHAPTER 48.Community Care for Aged and Disabled
1915(c) Medicaid Home and Community-based Waiver Services for Aged and Disabled 
Adults Who Meet Criteria for Alternative to Nursing Facility Care
40 TAC sec.sec.48.6003, 48.6041, 48.6042, 48.6044, 48.6046, 48.6048, 48.6050, 
48.6052, 48.6054, 48.6056, 48.6058, 48.6060, 48.6062, 48.6064, 48.6066, 48.6068, 
48.6070, 48.6072, 48.6074, 48.6076, 48.6078, 48.6080, 48.6082, 48.6084, 48.6086, 
48.6088, 48.6090
The Texas Department of Human Services (DHS) proposes an amendment to 
sec.48.6003, concerning client eligibility criteria; and new sec.48.6041, 
concerning termination of services to current participants; sec.48.6042, 
concerning automatic suspension of Community Based Alternatives (CBA) services; 
sec.48.6044, concerning suspension of CBA services for cause; sec.48.6046, 
concerning sanctions related to service suspension; sec.48.6048, concerning 
notification of suspension; sec.48.6050, concerning service array for Home and 
Community Support Services; sec.48.6052, concerning cost-effective purchases of 
adaptive aids; sec.48.6054, concerning time frames for adaptive aids costing 
less than $500; sec.48.6056, concerning time frames for adaptive aids costing 
$500 or more; sec.48.6058, concerning cost-effective purchases of medical 
supplies; sec.48.6060, concerning time frames for medical supplies; sec.48.6062, 
concerning time frames for emergency purchases of medical supplies; sec.48.6064, 
concerning medical supplies on hand; sec.48.6066, concerning freight charges for 
medical supplies and adaptive aids; sec.48.6068, concerning cost-effective 
purchases of minor home modifications; sec.48.6070, concerning time frames for 
minor home modifications costing $1000 or more; sec.48.6072, concerning time 
frames for minor home modifications costing less than $1000; sec.48.6074, 
concerning landlord approval for minor home modifications; sec.48.6076, 
concerning accountability for minor home modifications; sec.48.6078, concerning 
billable units; sec.48.6080, concerning non- billable time and activities; 
sec.48.6082, concerning mutually exclusive services; sec.48.6084, concerning 
service claim limits; sec.48.6086, concerning claims and service delivery 
records; sec.48.6088, concerning monetary exceptions; and sec.48.6090, 
concerning fiscal monitoring; in its Community Care for Aged and Disabled 
chapter. The purpose of the amendment and new sections is to clarify when 
services to a participant must be suspended and when services must be 
terminated. The process for suspension or termination of services is defined. 
Also defined are the documentation requirements for provider payment, specifying 
what constitutes administrative and financial errors and establishing provider 
sanctions for errors identified. A sanction of 100% of the paid unit rate is 
applied to financial errors identified on the documentation reviewed, 
eliminating payment for services not authorized or not delivered according to 
program rules. A sanction of 12% of the unit rate is applied to the paid units 
with administrative errors on the documentation reviewed reducing payment for 
administrative services not performed. Administrative and financial errors are 
not extended beyond the documentation reviewed. Compliance with these rules 
improves fiscal accountability.
Eric M. Bost, commissioner, has determined that for the first five- year period 
the sections are in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering the sections. Mr. 
Bost also has determined that for each year of the first five years the sections 
are in effect the public benefit anticipated as a result of enforcing the 
sections will be to initiate a sanction of 12% for administrative errors, which 
is the percentage of the reimbursement paid by the department that is attributed 
to administration by the provider, and initiate a sanction of 100% for financial 
errors, eliminating payment for services that are not authorized and reducing 
the cost of services that are not delivered according to program rules and 
policies as established in current rules. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the proposed sections. 
Questions about the content of this proposal may be directed to Gerardo Cantu at 
(512) 438-3693 in DHS's Community Care Section. Written comments on the proposal 
may be submitted to Supervisor, Rules and Handbooks Unit-010, Texas Department 
of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 
days of publication in the Texas Register The amendment and new sections are 
proposed 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 amendment and new sections implement the Human Resources Code, 
sec.sec.22.001-22.030 and sec.sec.32.001-32.042. 

sec.48.6003.Client Eligibility Criteria.
(a) To be determined eligible by the Texas Department of Human Services (DHS) 
for the 1915(c) Medicaid waiver program provided as an alternative to care in a 
nursing facility, an applicant must: 
(1)-(2) (No change.) 
[(3) meet the requirements for Preadmission Screening and Annual Resident Review 
(PASARR) and be determined appropriate for nursing facility care;] 
<nl>(3)<ol> [(4)] choose home and community-based waiver services as an 
alternative to nursing facility placement based on an informed choice with 
approval conditional on feasible alternatives available under the waiver in 
accordance with 42 Code of Federal Regulations, sec.441.302(d)(1);
<nl>(4)<ol> [(5)] have an individual plan of care for waiver services as 
specified in sec.48.6006 of this title (relating to Individual Plan of Care for 
Waiver Services) whose cost does not exceed 95% of the individual's actual Texas 
Index for Level of Effort payment rate;
<nl>(5)<ol> [(6)] meet the financial eligibility criteria for waiver services as 
specified in sec.48.6007 of this title (relating to Financial Eligibility 
Criteria); and 
<nl>(6)<ol> [(7)] have ongoing needs for waiver services whose projected costs, 
as indicated on the Individual Plan of Care, do not exceed the maximum service 
ceilings set for those services as listed in this paragraph: 
(A) Adaptive Aids and Medical Supplies service category cannot exceed $10,000 
per individual per Individual Plan of Care year without approval by the waiver 
manager; 
(B) minor home modifications service category cannot exceed $7500 per individual 
without approval by the waiver manager; 
(C) respite care cannot exceed 30 days per individual per Individual Plan of 
Care year without approval by the waiver manager; 
<nl>(7)<ol> [(8)] receive waiver services within 30 days after waiver 
eligibility is established and 
<nl>(8)<ol> [(9)] reside either in his own home or in a licensed personal care 
facility or adult foster care home contracted with the Texas Department of Human 
Services to provide Community Based Alternatives (CBA) services. CBA services 
will not be delivered to residents of hospitals, nursing facilities, ICF-MR 
facilities, or unlicensed personal care facilities. 
<nl>(9)<ol> [(10)] meet two or more of the criteria for nursing home risk, as 
specified in the Resident Assessment Instrument-Home Care Assessment for Nursing 
Home Risk as revised in April 1996 and summarized as follows: 
(A) needs assistance with one or more of the activities of dressing, personal 
hygiene, eating, toilet use, or bathing; 
(B) has a functional decline in the past 90 days; 
(C) has a history of a fall two or more times in past 180 days; 
(D) has a neurological diagnosis of Alzheimer's, head trauma, multiple 
sclerosis, Parkinsonism, or dementia; 
(E) has a history of nursing facility placement within the last five years; 
(F) has multiple episodes of urine incontinence daily; and
(G) goes out of one's residence one or fewer days a week.
(b)-(e) (No change.) 

sec.48.6041.Termination of Services to Current Participants.
(a) The case manager must terminate Community Based Alternatives (CBA) services 
if one or more of the following circumstances occur. 
(1) The participant leaves the state for more than 90 days.
(2) The participant dies. 
(3) The participant has resided in an institutional setting for longer than 120 
days. An institution includes an acute care hospital, state hospital, 
rehabilitation hospital, state school, nursing home or intermediate care 
facility for persons with mental retardation or related conditions (ICF-MR/RC). 
DHS will retain authority to extend this time in extraordinary circumstances.
(4) The participant requests that services end and the request is documented in 
writing. 
(5) The participant is not financially eligible for Medicaid benefits. 
(6) The participant does not meet the medical necessity (MN) criteria for 
nursing facility care. 
(7) The estimated cost of the CBA services necessary to adequately meet the 
needs of the participant exceeds his CBA cost ceiling.
(8) Two providers of the same category have refused to serve the participant on 
the basis of a reasonable expectation that the participant's medical, nursing, 
and social needs cannot be met adequately in the participant's residence. 
(9) The participant\responsible party or court-appointed guardian refuses to 
sign the Individual Service Plan (ISP). A referral will be made to the County 
Judge to determine whether the court-appointed guardian is acting in the best 
interests of the CBA participant. 
(10) The participant refuses to comply with his ISP, including situations in 
which he refuses services and threatens his own health and safety. 
(11) The participant refuses to release relevant medical information necessary 
for the ISP. 
(12) The participant or someone in the participant's home deliberately threatens 
the health or safety of the service provider or the Texas Department of Human 
Services (DHS) staff. 
(13) The participant is incarcerated for more than 30 days. 
(14) The participant or someone in the participant's home has subjected the 
person providing services to sexual harassment. 
(15) The participant or someone in the participant's home has a substantiated 
pattern of discrimination against the service provider(s) on the basis of race, 
color, national origin, age, sex, disability, political beliefs, or religion 
that has not improved with appropriate intervention.
(16) The participant or someone in the participant's home has a substantiated 
use of illegal drugs or has illegal drugs readily available within sight of the 
service provider. 
(17) The participant fails to pay his room and board expenses or co- payment in 
the adult foster care (AFC) or assisted living/residential care (AL/RC) setting. 
(18) Participant fails to pay his qualified income trust co-payment. 
(b) The case manager provides written notice to the participant of the effective 
date of termination and provides the participant with the written notice of the 
right to appeal. 
(c) If the participant appeals the denial within 12 days of notification, the 
case manager continues CBA services until notification of the decision by the 
DHS hearing officer. The case manager may not reduce services until the outcome 
of the appeal is known. Services do not continue during the appeal process when 
the reason for denial is that the participant threatens the health and safety of 
himself or others. 

sec.48.6042.Automatic Suspension of Community Based Alternatives (CBA) Services.
The Home and Community Support Services (HCSS) agency must automatically suspend 
CBA services to a participant when: 
(1) the participant is admitted to an institution. An institution includes acute 
care hospital, state hospital, rehabilitation hospital, state school, or a 
nursing home; 
(2) the participant temporarily leaves the contracted service area for vacations 
or other personal business unless special arrangements have been authorized by 
the HCSS agency; 
(3) the participant dies; 
(4) the participant requests in writing that services end and the request is 
documented in writing; 
(5) the participant's physician refuses to sign orders or rescinds existing 
orders for the service; 
(6) the Texas Department of Human Services (DHS) denies the participant's 
eligibility; 
(7) the participant or someone in the participant's home deliberately threatens 
the health or safety of the service provider; 
(8) DHS terminates the contract with the provider; or
(9) the participant is incarcerated.

sec.48.6044.Suspension of Community Based Alternatives Services for Cause.
The Home and Community Support Services (HCSS) agency may suspend services if 
one or more of the following occur: 
(1) the participant or someone in the participant's home sexually harasses the 
service provider(s); 
(2) the participant or someone in the participant's home has a pattern of 
discrimination against the service provider(s) on the basis of race, color, 
national origin, age, sex, disability, political beliefs, or religion that has 
not improved with appropriate intervention; or 
(3) the participant or someone in the participant's home openly uses illegal 
drugs or has illegal drugs readily available within sight of the service 
provider. 

sec.48.6046.Sanctions Related to Service Suspension.
The Texas Department of Human Services (DHS) may sanction up to and including 
contract termination any provider agency that:
(1) suspends services to a participant for a reason other than what is allowed 
in sec.48.6042 of this title (relating to Automatic Suspension of Community 
Based Alternatives Services) and sec.48.6044 of this title (relating to 
Suspension of Community Based Alternatives for Cause); or 
(2) uses the information cited in sec.48.6042 of this title (relating to 
Automatic Suspension of Community Based Alternatives Services) and sec.48.6044 
of this title (relating to Suspension of Community Based Alternatives for Cause) 
to suspend a participant when the provider agency knew or should have known that 
the cited information did not apply to the participant. 

sec.48.6048.Notification of Suspension.
No later than the first Texas Department of Human Services work day after 
services are suspended, the Home and Community Support Services (HCSS) agency 
must verbally notify the case manager or staff in the case manager's office 
about the reason the HCSS agency suspended services. Written notification on the 
case information form must be sent to the case manager within seven calendar 
days of service suspension. 

sec.48.6050.Service Array for Home and Community Support Services (HCSS).
HCSS agencies must provide the array of home and community support services 
identified in paragraphs (1)-(9) of this section in accordance with the 
individual service plan through their own employees, subcontractors, or personal 
service agreements with qualified individuals. Services include:
(1) personal assistance services; 
(2) nursing services; 
(3) physical therapy; 
(4) occupational therapy; 
(5) speech pathology services; 
(6) adaptive aids; 
(7) medical supplies; 
(8) minor home modifications; and 
(9) respite care (in-home). 

sec.48.6052.Cost-Effective Purchases of Adaptive Aids.
(a) For any single adaptive aid expenditure costing less than $500, the Home and 
Community Support Services (HCSS) agency must: 
(1) determine and document the needs and preferences of the participant for the 
adaptive aid; 
(2) document the necessity for the adaptive aid; 
(3) consider renting the adaptive aid on a short-term basis if the participant's 
needs or desires cannot be accurately determined at the time of the assessment; 
(4) obtain comparative price quotes or use a price list to document prices of 
the adaptive aid from a minimum of three suppliers or annually select a supplier 
based on the lowest prices from the quotes/price list for the main types of 
adaptive aids that the agency has been purchasing;
(5) document the justification of the selection including cost, delivery time of 
item, record of quality services, access to loaners during repairs, repair 
history, and warranties. For those suppliers selected, document in the vendor 
records the names of the suppliers from whom all quotes/price lists were 
obtained, the amount of the quotes/price lists, the items for which the 
quotes/price lists were requested, and the dates the quotes/price lists were 
obtained; and 
(6) have a nurse, therapist, or other appropriate professional conduct a home 
visit within 14 Texas Department of Human Services work days of delivery to 
verify that the adaptive aid meets the needs of the participant, that 
orientation was provided to the participant in the use of the adaptive aid, and 
to document completion of purchase and satisfaction of the participant on the 
documentation of completion of purchase form. 
(b) For any single adaptive aid expenditure costing $500 or more, in addition to 
complying with the requirements listed in subsection (a)(1)-(6) of this section, 
the HCSS agency must: 
(1) obtain written specifications for the adaptive aid from a licensed 
occupational therapist, physical therapist, speech pathologist, or other 
appropriate professional specializing in assessments for assistive technology or 
adaptive aids; 
(2) obtain a minimum of three written bids if not using price lists or price 
quotes as identified under subsection (a)(5)-(6) of this section, and document 
the justification of the selection including cost, delivery time of item, record 
of quality services, access to loaners during repairs, repair history, and 
warranties; and 
(3) document the justification when not accepting the lowest bid, including 
delivery time of item, record of quality services, access to loaners during 
repairs, repair history, and warranties. 

sec.48.6054.Time Frames for Adaptive Aids Costing Less Than $500.
(a) The Home and Community Support Services agency must purchase and ensure 
delivery of any adaptive aid within 14 Texas Department of Human Services (DHS) 
work days of being authorized to purchase the adaptive aid, counting from either 
the effective date of the individual service plan form or the date the form is 
received, whichever is later. 
(b) If the agency cannot ensure delivery of an adaptive aid within 14 DHS work 
days of receipt of DHS's authorization, before the 14th day, the agency must 
submit to the case manager the case information form, containing an explanation 
why the adaptive aid cannot be delivered within the required time frame and a 
new proposed date for the delivery.

sec.48.6056.Time Frames for Adaptive Aids Costing $500 or More.
(a) The Home and Community Support Services agency must purchase and ensure 
delivery of any adaptive aid within 30 Texas Department of Human Services (DHS) 
work days of being authorized to purchase the adaptive aid, counting from either 
the effective date of the individual service plan form or the date the form is 
received, whichever is later. 
(b) If the agency cannot ensure delivery of an adaptive aid within 30 DHS work 
days of receipt of DHS's authorization, before the 30th day, the agency must 
submit to the case manager the case information form, containing an explanation 
why the adaptive aid cannot be delivered within the required time frame and 
including a new proposed date for the delivery.

sec.48.6058.Cost-Effective Purchases of Medical Supplies.
The Home and Community Support Services agency must:
(1) prior to the selection of medical supplies, obtain comparative price quotes 
or use a price list to document prices of the medical supplies from a minimum of 
three suppliers; or 
(2) at least annually select supplies based on the lowest prices from the 
quotes/price list for the main types of supplies that the agency has been 
purchasing, and document the justification of the selection, including cost, 
delivery time of item, and record of quality services; and
(3) document the basis for selection and for those selected, document in the 
vendor records the names of the suppliers from whom all quotes/price lists were 
obtained, the amount of the quotes/price lists, the items for which the 
quotes/price lists were requested, and the dates the quotes/price lists were 
obtained. 

sec.48.6060.Time Frames for Medical Supplies.
(a) The Home and Community Support Services (HCSS) agency is responsible for 
assuring the purchase and delivery of any authorized medical supply within five 
Texas Department of Human Services (DHS) work days of the waiver service 
initiation date. 
(b) On existing cases, the HCSS agency must deliver medical supplies within five 
DHS work days of being authorized to purchase the supplies, counting from the 
effective date of the individual service plan form or the date the form is 
received, whichever is later. 
(c) If the HCSS agency cannot ensure delivery of a medical supply due to unusual 
or special supply needs or availability within five DHS work days of receipt of 
DHS's authorization, the HCSS agency must submit the case information form to 
the case manager before the fifth day, containing an explanation why the medical 
supply cannot be delivered within the required time frame and a new proposed 
date for the delivery. 

sec.48.6062.Time Frames for Emergency Purchases of Medical Supplies.
If the case manager or the Home and Community Support Services (HCSS) agency 
identifies a need for the emergency purchase and delivery of a medical supply, 
the HCSS agency must deliver the item within two Texas Department of Human 
Services work days of identifying the need for the medical supply.

sec.48.6064.Medical Supplies on Hand.
At least twice a year, the Home and Community Support Services agency must 
verify the quantity of the medical supplies that the participant has on hand, 
and, if necessary, adjust the service plan or modify the delivery schedule for 
the medical supplies. The results of this verification must be documented in the 
case conference notes. 

sec.48.6066.Freight Charges for Medical Supplies and Adaptive Aids.
The Home and Community Support Services agency must assure that, if medical 
supplies or adaptive aids are delivered to the participant by means of any 
commercial carrier, such as United Parcel Services or United States Postal 
Service, the most cost effective carrier is used. Overnight delivery should not 
be used unless it is an emergency purchase that cannot be purchased locally and 
delivered by the next day after determining the need. 

sec.48.6068.Cost-Effective Purchases of Minor Home Modifications.
The Home and Community Support Services (HCSS) agency must:
(1) determine and document the needs and preferences of the participant for the 
minor home modification; 
(2) document the necessity for the minor home modification;
(3) obtain written specifications for any project expenditure costing $1000 or 
more which will be used to procure bids and inspect the completed job; 
(4) obtain a minimum of three written bids based on the written specifications 
for any project expenditure costing $1000 or more;
(5) select a bidder to provide the modification and document the justification 
when not selecting lowest bid for the selection, including cost, completion time 
of modification, record of quality service, timely response to repair requests, 
and warranties; and 
(6) inspect the minor home modification for completion, compliance with the 
written specifications, if applicable, and quality of workmanship within seven 
Texas Department of Human Services (DHS) work days of the work being completed. 
The inspection requirements are as follows:
(A) The HCSS provider must ensure that a qualified person inspects completed 
work to ensure all work was done according to written specifications, if 
applicable, and the Texas Accessibility Standards. 
(B) The inspector cannot be the attendant. 
(C) Once the inspection is concluded and the modification is completed, the HCSS 
provider must send a copy of the Community Based Alternatives documentation of 
completion of purchase form to the case manager within seven DHS work days after 
the completion of the modification. 

sec.48.6070.Time Frames for Minor Home Modifications Costing $1000 or More.
(a) The Home and Community Support Services agency is responsible for assuring 
the completion of all minor home modifications within 60 Texas Department of 
Human Services (DHS) work days of being authorized to do the minor home 
modification, counting from either the effective date of the individual service 
plan form or the date the form is received, whichever is later. 
(b) If the modification cannot be completed within 60 DHS work days of being 
authorized to do the minor home modification, the agency must submit the case 
information form to the case manager prior to the 60th day, explaining why the 
modification cannot be completed on time and including a new projected date of 
completion for the modification. 

sec.48.6072.Time Frames for Minor Home Modifications Costing Less Than $1000.
(a) The Home and Community Support Services agency is responsible for assuring 
the completion of all minor home modifications within 30 Texas Department of 
Human Services (DHS) work days of being authorized to do the minor home 
modification, counting from either the effective date of the individual service 
plan form or the date the form is received, whichever is later. 
(b) If the modification cannot be completed within 30 DHS work days of being 
authorized to do the minor home modification, the agency must mail the case 
information form to the case manager prior to the 30th date, explaining why the 
modification cannot be completed on time and including a new projected date of 
completion for the modification. 

sec.48.6074.Landlord Approval for Minor Home Modifications.
Prior to beginning the home modifications, the Home and Community Support 
Services (HCSS) agency must obtain written approval from the owner of the 
building for the proposed modifications if the rental agreement does not provide 
such approval. Additionally, the HCSS agency must obtain any applicable building 
permits prior to starting the home modifications.

sec.48.6076.Accountability for Minor Home Modifications.
If a minor home modifications require repair or replacement within one year of 
completion, the Home and Community Support Services agency must repair or 
replace the minor home modification without billing the Texas Department of 
Human Services or the participant, except when 
(1) the finished modification met appropriate specifications and bid 
requirements agreed upon before the job was started; or 
(2) the repair or replacement is required due to circumstances beyond the 
control of the participant or participant's family members, or due to abuse 
caused by the participant or family members. 

sec.48.6078.Billable Units.
The following activities may be billed as Community Based Alternatives (CBA) 
services by Home and Community Support Services agencies: 
(1) Nursing services: 
(A) direct participant contact; 
(B) participation on the interdisciplinary team (IDT); 
(C) time spent in delegating, training, and supervising personal care 
attendants, Adult Foster Care providers, and provider substitutes in the 
delivery of nursing tasks that have been delegated; 
(D) time spent in providing nursing tasks that had been delegated to an 
attendant in order to prevent a service break, if no attendant can be found; 
(E) time spent in training family members, neighbors, and other informal support 
providers to provide needed nursing or personal care tasks; and 
(F) time spent in performing the annual reassessment or Texas Index for Level of 
Effort resets which includes actual participant contact and documentation of 
assessment forms and care plan. 
(2) Specialized therapy services (occupational therapy, physical therapy, and 
speech pathology): 
(A) direct participant contact; and 
(B) participation on the IDT. 
(3) Personal assistance services: 
(A) direct participant contact to provide personal care and nursing tasks that 
have been delegated; and 
(B) participation on the IDT. 
(4) Billable items for medical supplies include the invoice cost, including 
freight charges and sales tax, of the medical supply and the requisition fee. 
(5) Billable items for minor home modifications include the invoice cost of 
labor, materials, sales tax, and the requisition fee.
(6) Billable items for adaptive aids include the invoice cost of the item, 
including freight charges and sales tax, and the requisition fee. 
(7) In-Home Respite Care - relief of the unpaid primary caregiver. 

sec.48.6080.Non-Billable Time and Activities.
The following activities are not considered billable activities under the 
Community Based Alternatives (CBA) program for Home and Community Support 
Services agencies: 
(1) supervision of personal care attendants performing personal assistance 
tasks, unless the attendant is delivering nursing tasks delegated by a 
registered nurse; 
(2) phone calls, letters, or meetings with Texas Department of Human Services 
(DHS) or community resources; 
(3) administrative meetings or staff meetings; 
(4) in-service training, continuing education, or conferences;
(5) employee conferences or evaluations; 
(6) filing claims for services; 
(7) traveling to and from the participant's home; 
(8) processing paperwork or completing records or reports, except for the annual 
reassessment; 
(9) home modifications, medical supplies, or adaptive aids that are not listed 
in the CBA Provider Manual as covered items nor approved by authorized DHS 
staff; 
(10) collateral contact when that contact is between agency employees and 
individuals providing services to participants under personal service agreements 
or subcontracts with the CBA agency; 
(11) billing for services that are considered to be mutually exclusive, as 
identified in sec.48.6082 of this title (relating to Mutually Exclusive 
Services); 

sec.48.6082.Mutually Exclusive Services.
The following waiver services are considered to be mutually exclusive and are 
not allowed under the waiver:
(1) A participant receiving In-Home Respite Care may not receive personal 
assistance services for the same period of time. 
(2) A participant residing in a personal care facility, Type B, may not receive 
minor home modifications. 
(3) A participant residing in a personal care facility or an Adult Foster Care 
home may not receive personal assistance services.
(4) A participant cannot receive any Home and Community Support Services 
reimbursed through the Community Based Alternatives program from two provider 
agencies on the same date.

sec.48.6084.Service Claim Limits.
(a) A maximum of four hours may be billed under nursing services by the 
registered nurse to decide whether or not to delegate a nursing task to an adult 
foster care provider. 
(b) In order to avoid service breaks, the Home and Community Support Services 
agency may bill for authorized personal assistance services hours performed by a 
licensed nurse, for a maximum period of 10 days during the participant's 
individual service plan effective period. 
(1) The hours performed by the nurse may be billed at the nursing rate, only if 
there are no attendants available to perform the needed delegated nursing tasks 
and only licensed nurses can be recruited. 
(2) The documentation must include all efforts the provider agency made in order 
to find an attendant to deliver delegated nursing tasks in order to prevent a 
break in service. 
(c) Components of minor home modifications cannot be billed without an invoice 
or in more than three billings.

sec.48.6086.Claims and Service Delivery Records.
The Community Based Alternatives (CBA) Home and Community Support Services 
(HCSS) agency provider is liable for monetary exceptions if the monthly claims 
do not correspond with the provider's service authorization and service delivery 
records. The provider must maintain the following records: 
(1) notification of Community Based Alternatives services form; 
(2) individual service plan, pages 1-3 and attachments B-E form; 
(3) notification of ineligibility form; 
(4) client needs assessment questionnaire and task/hour guide and addendum for 
personal assistance services form; 
(5) CBA HCSS purchased services delivery report form;
(6) CBA documentation of services delivered form, or a facsimile previously 
approved by the waiver manager; 
(7) bids for minor home modifications costing $1000 or more; 
(8) bids for any single expenditure for adaptive aids costing $500 or more, 
comparative price quotes or a price list; 
(9) annual comparative price quotes/lists for the purchase of medical supplies; 
(10) annual comparative price quotes/lists for the purchase of adaptive aids; 
(11) receipts from the contractor for minor home modifications completed, 
documenting the date of completion and the cost of the modification;
(12) CBA documentation of completion of purchase form;
(13) any applicable building permits; 
(14) CBA specifications for minor home modifications form; 
(15) documented justification for not accepting the lowest bids or quotes for 
adaptive aids, medical supplies, or minor home modifications, where applicable; 
(16) if using price lists/price quotes, documentation of the basis of the annual 
selection of a supplier; and 
(17) written approval from the homeowner for modifications to be made. 

sec.48.6088.Monetary Exceptions.
(a) Providers of Home and Community Support Services (HCSS) services must 
document on the documentation of service delivery form, or an approved 
facsimile, that services reimbursed on an hourly basis are provided as 
authorized on the notification of Community Based Alternatives services form and 
identified on the individual service plan, including: 
(1) type of service delivered; 
(2) units of service delivered; 
(3) dates of service delivery; and 
(4) name of the individual providing waiver services.
(b) If documentation does not support the monthly claims, the HCSS agency may be 
liable for monetary exceptions. 
(c) The HCSS agency must designate a timekeeper to verify that the hours 
recorded on the time sheet were worked and that the tasks assigned were 
completed. The timekeeper may be a registered nurse supervisor. 
(d) The employee must enter the daily total time and monthly total hours. An 
employee who is unable to complete and sign the time sheet may designate another 
person to complete and sign the time sheet. The HCSS agency must document in 
writing the reasons the employee is unable to complete and sign the time sheet 
and must document in writing who is authorized to make these entries. The 
documentation may be a written statement that includes the following: 
(1) the employee's name; 
(2) a brief summary of what portion of the time sheet the employee is unable to 
complete; 
(3) the name and relationship of the person who has been designated to complete 
the form for the employee; and 
(4) the timekeeper's signature and date. The timekeeper may add the monthly 
total of time with no exception taken, as long as the employee completes the 
daily total time. 

sec.48.6090.Fiscal Monitoring.
(a) Administrative errors. A recoupment of 12% of the paid unit rate is the 
administrative error exception for services billed on an hourly basis. It 
represents the administrative portion of the rate. Administrative errors are 
applied to the documentation reviewed and are not extrapolated. Administrative 
errors include, but are not limited to, the items in paragraphs (1)-(2) of this 
subsection:
(1) administrative errors on the documentation of services delivered form or the 
prior approved facsimile: 
(A) The provider agency leaves the month and year of service blank in item 2, 
section A. The Texas Department of Human Services (DHS) applies the error to the 
total number of units documented on the time sheet. 
(B) The timekeeper fails to enter a date of signature to certify the total 
number of hours the attendant, nurse, or therapist worked. DHS applies the error 
to the total number of units documented on the time sheet. 
(C) The timekeeper corrects the date of signature, but fails to initial the 
correction. DHS applies the error to the number of units reimbursed after the 
earliest signature date. 
(D) The timekeeper enters an illegible date of signature or makes an illegible 
correction to the date. DHS applies the error to the total number of units 
documented on the time sheet. 
(E) The timekeeper enters a date of signature that is before the date of the 
last day services are delivered. DHS applies the error to the total number of 
units reimbursed after the signature date. 
(F) The timekeeper fails to sign the time sheet. DHS applies the error to the 
total number of units documented on the time sheet. 
(G) The timekeeper uses a signature stamp, but fails to initial the stamped 
signature. DHS applies the error to the total number of units documented on the 
time sheet. 
(H) The attendant, nurse, therapist, and/or timekeeper uses liquid 
paper/correction fluid to correct an entry in the record of time, signature, or 
date portion of the time sheet. DHS applies the error to the total number of 
units documented on the time sheet. If the liquid paper/correction fluid is used 
only on a daily entry in the record of time, DHS applies the error only to the 
total number of units reimbursed for that day. 
(I) The attendant, nurse, therapist, and/or timekeeper makes an illegible entry 
in or an illegible correction to any portion of the record of time column. DHS 
applies the error to the total number of units reimbursed for the days in which 
entries are illegible. 
(J) The attendant fails to initial an increase in the daily time or the monthly 
total of hours for the pay period. DHS applies the error to the number of units 
reimbursed in excess of the original entry. 
(K) The attendant, nurse, therapist, or other agency representative fails to 
sign the documentation of services delivered form or approved facsimile. DHS 
applies the error to the total number of units documented on the time sheet. 
(L) The provider agency uses a form that has not been approved by DHS. DHS 
applies the error to the total number of units reimbursed while using something 
other than documentation of services delivered form or an approved facsimile. 
(M) DHS reimburses the provider agency for nursing, therapies, personal 
assistance services, or in-home respite, but a valid individual service plan, 
pages 1-3 and all pertinent attachments, and client needs assessment 
questionnaire and task/hour guide and addendum for personal assistance services 
form, signed by the case manager, is missing for the period reimbursed by the 
agency. DHS applies the error to the total number of units of nursing, 
therapies, personal assistance services, or in-home respite, claimed and not 
covered by a valid individual service plan. 
(N) DHS reimburses the provider agency for nursing services, but the 
documentation of services form lists "supervisory visit" in the comments section 
without specifying that it is a nursing visit to supervise the delivery of 
delegated tasks, and there is no other documentation available that the nurse 
provided nursing services during the visit. 
(2) The following items are administrative errors resulting in recoupment of the 
entire requisition fee. The recoupment amount represents the administrative cost 
of the requisition fee: 
(A) There is no Community Based Alternatives documentation of completion of 
purchase form, but there is a receipt for the purchase of adaptive aids, medical 
supplies, or for the completion of the minor home modification.
(B) Bids were required for the purchase of an adaptive aid or the completion of 
a minor home modification and bids were not obtained.
(C) DHS reimburses the provider for the purchase of medical supplies, but there 
is no documentation available that price list/price quotes were obtained from 
three suppliers for the items for which the provider has been reimbursed or the 
price list/price quotes were obtained more than 12 months before the purchase. 
(D) DHS reimburses the provider for the purchase of adaptive aids, but there is 
no documentation available that price list/price quotes were obtained from three 
suppliers for the items for which the provider has been reimbursed or there is 
no documentation available that the supplier selected on an annual basis to 
deliver the adaptive aids had the lowest prices for the main type of adaptive 
aids the agency has purchased. 
(b) Financial errors. A reduction of 100% of the paid unit rate is the financial 
error exception. This exception is applied to the units of service on the 
documentation reviewed. This exception is not extrapolated. Financial errors 
include, but are not limited to, the following: 
(1) DHS reimburses the provider agency for services, but the documentation of 
services delivered form, or approved facsimile, is missing for the period for 
which services are reimbursed. DHS applies the error to the total number of 
units documented on the time sheet. 
(2) The attendant, nurse, or therapist leaves the entire record of time section 
blank. DHS applies the error to the total number of units documented on the time 
sheet. 
(3) DHS reimburses the provider agency for hours that exceed the authorization 
given by DHS. DHS applies the error to the total number of units reimbursed in 
excess of the units authorized by DHS, unless purchased following emergency 
procedures. 
(A) For personal assistance services, the maximum that may be reimbursed for a 
month is the weekly total of hours listed under "adjusted weekly hours" on the 
addendum to the personal assistance services form, multiplied by 4.50 plus prior 
authorized hours not used due to participant stay while in a hospital or in a 
rehabilitation hospital. 
(B) For nursing services, the maximum that may be reimbursed is the number of 
hours listed under "direct nursing hours" on the individual service plan/nursing 
service plan. 
(4) DHS reimburses the provider agency for any waiver service that is not 
identified on the participant's individual service plan, attachments B-E, and 
client needs assessment questionnaire and task/hour guide and addendum for 
personal assistance services form, unless the service was provided as a result 
of an emergency and is supported by backup documentation supplied within seven 
DHS work days from the date the emergency was determined. DHS applies the error 
to the entire amount reimbursed for such services. 
(5) DHS reimburses the provider agency for hours that exceed the total number of 
hours recorded on the documentation of services delivered form or approved 
facsimile. DHS applies the error to the total number of units reimbursed in 
excess of the units recorded on the time sheet. If the sum of the daily total of 
hours does not equal what is written in the monthly total blank, the lesser of 
the two totals is used to calculate the total number of hours subject to the 
error. 
(6) The provider makes a claim for nursing, physical therapy, occupational 
therapy, or speech pathology services, but a valid physician's order is missing. 
DHS applies the error to the total number of units claimed and not covered by a 
valid order. 
(7) DHS reimburses the provider agency for a claim for service, other than a 
pre-enrollment home health assessment, delivered prior to the eligibility 
effective date on the notification of Community Based Alternatives services 
form. DHS applies the error to the total number of units reimbursed for such 
services that were delivered before the effective date on the form.
(8) DHS reimburses the provider agency for any hours that consisted of non-
billable time and activities as identified in the rule sec.48.6080 of this title 
(relating to Non-Billable Time and Activities). DHS applies the error to the 
total number of units reimbursed for such services.
(9) DHS reimburses the provider agency for more than four hours of nursing used 
to decide whether to delegate to an Adult Foster Care provider. DHS applies the 
error to the total number of units reimbursed for such services. 
(10) DHS reimburses the provider agency for more than 10 days during the 
participant's individual service plan year for nursing services being performed 
by a nurse to prevent service breaks caused by the attendant not being available 
to provide delegated nursing tasks. DHS applies the error to the total number of 
units reimbursed in excess of the ten-day maximum for such services. 
(11) DHS reimburses the provider agency for an amount in excess of the amount 
documented on the receipt for adaptive aids, medical supplies, or minor home 
modifications. DHS applies the error to the total number of dollars reimbursed 
in excess of the amount on the receipt, plus the appropriate dollar amount of 
the requisition fee, if applicable. 
(12) There is no receipt for the purchase of adaptive aids or medical supplies, 
or for the completion of minor home modifications for which the provider has 
been reimbursed. DHS applies the error to the total dollar amount reimbursed for 
the medical supplies, adaptive aids, or minor home modifications in question, 
including the requisition fee. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 26, 1998.
TRD-9801120
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

CHAPTER 79.Legal Services
The Texas Department of Human Services (DHS) proposes the repeal of 
sec.sec.79.1001-79.1007 and sec.sec.79.1601-79.1614, concerning informal 
hearings, request for hearing, setting for hearing, conduct of hearing, 
decision, rehearing, administrative appeal, definitions, right to a hearing, 
special requirements, notice of adverse action, request for a hearing, effective 
dates of adverse actions, administrative law judge, hearing guidelines, 
withdrawal of hearing request and informal disposition, conduct of hearings - 
general requirements, prehearing procedure, evidence and depositions, 
deliberation, and decisions; and proposes new sec.sec.79.1601-79.1613, 
concerning definitions, computation of time, notice of adverse action, request 
for a hearing, notice of hearing, venue, representation of parties, prehearing 
procedure, discovery and depositions, informal disposition of appeal, conduct of 
hearings, final decisions and orders, and motions for rehearing, in its Legal 
Services chapter. DHS is also repealing Subchapter K, Informal Hearings. The 
purpose of the repeals and new sections is to organize and simplify the formal 
hearing rules that are used when appearing before and participating in a hearing 
before an administrative law judge. In addition, the new sections promulgate 
hearing rules are required by 1997 legislation, including Senate Bills 30, 84, 
and 637. 
Eric M. Bost, commissioner, has determined that for the first five-year period 
the proposed sections will be in effect there will be fiscal implications as a 
result of enforcing or administering the sections. The effect on state 
government for the first five-year period the sections will be in effect is an 
estimated additional cost of $58,630 for fiscal year 1998; $117,812 for fiscal 
year 1999; $117,812 for fiscal year 2000; $117,812 for fiscal year 2001; and 
$117,812 for fiscal year 2002. There will also be an increase in revenue of 
$99,975 for fiscal year 1998; $399,900 for fiscal year 1999; $399,900 for fiscal 
year 2000; $399,900 for fiscal year 2001; and $399,900 for fiscal year 2002. 
There will be no fiscal implications for local government. 
Mr. Bost also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be that a party to a hearing will be able to consult one set 
of hearing rules to determine how to proceed before an administrative judge in 
contested cases involving adverse actions by DHS. Also, Senate Bill 30 
implementation costs will be offset by increased recoveries of benefit 
overissuances. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
proposed sections.
Questions about the content of the proposal may be directed to Carrie McLarty at 
(512) 438-4872 in DHS's Hearings Department. Written comments on the proposal 
may be submitted to Supervisor, Rules and Handbooks Unit-117, Texas Department 
of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, within 30 
days of publication in the Texas Register.

SUBCHAPTER K.Informal Hearings
40 TAC sec.sec.79.1001-79.1007
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Human Services or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the Human Resources Code, Title 2, Chapter 22, 
which provides the department with the authority to administer public assistance 
programs. 
The repeals implement the Human Resources Code, sec.sec.22.001- 22.030.
sec.79.1001.Informal Hearings.
sec.79.1002.Request for Hearing.
sec.79.1003.Setting for Hearing.
sec.79.1004.Conduct of Hearing.
sec.79.1005.Decision.
sec.79.1006.Rehearing.
sec.79.1007.Administrative Appeal.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801066
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER Q.Formal Hearings
40 TAC sec.sec.79.1601-79.1614
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Human Services or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the Human Resources Code, Title 2, Chapter 22, 
which provides the department with the authority to administer public assistance 
programs. 
The repeals implement the Human Resources Code, sec.sec.22.001- 22.030.
sec.79.1601.Definitions.
sec.79.1602.Right to a Hearing.
sec.79.1603.Special Requirements.
sec.79.1604.Notice of Adverse Action.
sec.79.1605.Request for a Hearing.
sec.79.1606.Effective Dates of Adverse Actions.
sec.79.1607.Administrative Law Judge.
sec.79.1608.Hearing Guidelines.
sec.79.1609.Withdrawal of Hearing Request and Informal Disposition.
sec.79.1610.Conduct of Hearings - General Requirements.
sec.79.1611.Prehearing Procedure.
sec.79.1612.Evidence and Depositions.
sec.79.1613.Deliberation.
sec.79.1614.Decisions.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801067
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

40 TAC sec.sec.79.1601-79.1613
The new sections are proposed under the Human Resources Code, Title 2, Chapter 
22, which provides the department with the authority to administer public 
assistance programs. 
The new sections implement the Human Resources Code, sec.sec.22.001-22.030.

sec.79.1601.Definitions.
The following words and terms, when used in this section, shall have the 
following meanings, unless the context clearly indicates otherwise.
(1) Administrative law judge - The Texas Department of Human Services' (DHS) 
attorney appointed to preside over the hearing by the director of the Hearings 
Department. 
(2) Administrator - A nursing facility administrator licensed by DHS. 
(3) Adverse action - Any action in which DHS: 
(A) terminates or suspends a contract between a person and DHS before the 
contract's stated expiration date; 
(B) denies payment, in whole or part, for any claim arising under a contract; 
(C) terminates or suspends payments, in whole or part, to a contractor; 
(D) demands payment or repayment for contract or rule violations;
(E) directs one of its contractors to terminate or suspend a subcontract or 
payments to any subcontractor or provider of medical services;
(F) chooses not to renew a nursing facility contract; 
(G) reduces a contractor's block grant funds by 25% or more of the amount DHS 
reimburses if DHS plans to allocate the withheld funds to another contractor for 
similar services in the same geographic area, if the contractor alleges that the 
reduction was in violation of DHS rules, was discriminatory, or was without 
reasonable basis in law or fact; it does not apply to funding or contracts 
subject to DHS's competitive procurement rules; 
(H) denies, suspends, or revokes the license of a person:
(i) providing home health services; 
(ii) operating an adult day-care facility or an adult day health care facility; 
(iii) operating a personal care facility; 
(iv) operating a convalescent or nursing facility; 
(v) operating a maternity home; 
(vi) operating an intermediate care facility for the mentally retarded; or 
(vii) operating a nurse aide training and competency evaluation program; 
(I) terminates the certification of a facility providing intermediate or long-
term care for the mentally retarded; 
(J) imposes civil, administrative, or monetary penalties against a convalescent 
or nursing facility; 
(K) imposes administrative penalties against a person, as defined in paragraph 
(15)(B) of this section; 
(L) revokes, suspends, or refuses to renew an administrator's license; assesses 
an administrative penalty against an administrator; issues a written reprimand 
to an administrator; requires an administrator to participate in continuing 
education; or places an administrator on probation; 
(M) suspends a license or revokes a stay of an order suspending a license issued 
to any person by the Texas Department of Public Safety or the Texas Parks and 
Wildlife Department; 
(N) places a finding of abuse, neglect, or misappropriation of a resident's 
property by a nurse aide on the nurse aide registry; 
(O) denies, revokes, suspends, refuses to renew, or rescinds program approval of 
a medication aide permit; 
(P) excludes a person, as that term is defined in paragraph (15)(B) of this 
section, from eligibility for a license to operate an institution; or 
(Q) imposes any adverse sanction, penalty, or other action to which a person has 
a statutory right to a formal hearing in accordance with the provisions of this 
subchapter. 
(4) Commissioner - The commissioner of the Texas Department of Human Services. 
(5) Contract - Any written document or series of documents that obligates DHS to 
provide consideration to a person in exchange for goods or services from that 
person or that obligates DHS to provide goods or services in exchange for 
consideration. 
(6) Contractor - Any person with whom DHS has a written contract. 
(7) Controlling person - A person who has the ability, acting alone or in 
concert with others, to directly or indirectly influence, direct, or cause the 
direction of the management, expenditure of money, or policies of an institution 
or other person, including: 
(A) a management company, landlord, or other business entity that operates or 
contracts with others for the operation of an institution;
(B) any person who is a controlling person of a management company or other 
business entity that operates an institution or that contracts with another 
person for the operation of an institution; and 
(C) any other individual who, because of a personal, familial, or other 
relationship with the owner, manager, landlord, tenant, or provider of an 
institution, is in a position of actual control or authority with respect to the 
institution, without regard to whether the individual is formally named as an 
owner, manager, director, officer, provider, consultant, contractor, or employee 
of the facility, unless the individual does not exercise any formal or actual 
influence or control over the operation of an institution. 
(8) Department - The Texas Department of Human Services.
(9) Hearings Department - The Hearings Department of the Texas Department of 
Human Services. 
(10) Institution - An establishment that furnishes, in one or more facilities, 
food and shelter to four or more persons who are unrelated to the proprietor of 
the establishment, and provides minor treatment under the direction and 
supervision of a physician licensed by the Texas State Board of Medical 
Examiners, or other services that meet some need beyond the basic provision of 
food, shelter, and laundry. 
(11) License - When used in conjunction with a hearing to suspend a license to 
operate a motor vehicle or a license to engage in recreational activity, this 
term shall mean a license, certificate, registration, permit, or other 
authorization that: 
(A) is issued by a licensing authority; 
(B) is subject before expiration to suspension, revocation, forfeiture, or 
termination by an issuing licensing authority; and 
(C) a person must obtain to: 
(i) operate a motor vehicle; or 
(ii) engage in a recreational activity, including hunting and fishing, for which 
a license or permit is required. 
(12) Licensee - When used in conjunction with a hearing to suspend a license to 
operate a motor vehicle or a license to engage in recreational activity, this 
term shall mean the person whose license DHS seeks to suspend. 
(13) Licensing authority - When used in conjunction with a hearing to suspend a 
license to operate a motor vehicle or a license to engage in recreational 
activity, this term shall mean the Texas Department of Public Safety or the 
Texas Parks and Wildlife Department. 
(14) Order suspending a license - When used in conjunction with a hearing to 
suspend a license to operate a motor vehicle or a license to engage in 
recreational activity, this term shall mean an order issued by DHS directing a 
licensing authority to suspend a license. 
(15) Person - The following terms apply to the definition of a person: 
(A) Except as defined in subparagraph (B) of this paragraph, a person is an 
individual, partnership, corporation, association, governmental subdivision or 
agency, or a public or private organization of any character.
(B) When used in conjunction with a hearing to deny, suspend, or revoke a 
license as provided by sec.242.061 of the Texas Health and Safety Code, an 
administrative penalty hearing as provided by sec.242.066 of the Texas Health 
and Safety Code, or an exclusion hearing as provided by sec.242.0615 of the 
Texas Health and Safety Code, a person is the applicant; the partner, officer, 
director, or managing employee of the applicant; the licensee; the partner, 
officer, director, or managing employee of the licensee; the owner or the one 
who controls the owner of the physical plant of a facility in which an 
institution operates or is to operate; or a controlling person. 
(16) Petitioner - The designation used by a person against whom an adverse 
action has been proposed or taken and who participates in a hearing conducted 
pursuant to this subchapter. 
(17) Respondent - The designation used by DHS when DHS is a party to a hearing 
conducted pursuant to this subchapter.

sec.79.1602.Computation of Time.
In computing any period of time prescribed under this subchapter or by order of 
the administrative law judge, the period begins on the day after the act or 
event in question and concludes on the last day of the period; however, if the 
last day is a Saturday, Sunday, or legal holiday, the last day runs until the 
next day that is not a Saturday, Sunday, or legal holiday.

sec.79.1603.Notice of Adverse Action.
(a) Commissioner to send notice. The commissioner or the commissioner's designee 
shall send each person against whom the Texas Department of Human Services (DHS) 
takes adverse action notice of the adverse action. 
(b) Services. The notice shall be sent by certified mail, return receipt 
requested, unless DHS determines that a more immediate form of notice is 
required. 
(c) Contents of notice. The notice shall include details of the basis of the 
adverse action sufficient to enable the person to file a timely appeal of and 
request a hearing on the imposition of the adverse action by DHS. The notice 
shall inform the person that the person has the right to a hearing to contest 
the adverse action by sending a written request for a hearing to the Hearings 
Department and shall specify the date by which such written request must be 
received by the Hearings Department. 
(d) Notice not required. DHS is not required to give a person notice of adverse 
action with each billing transaction for areas of DHS that have a large volume 
of bills or which routinely post debit and credit entries. DHS must give the 
contractor an individual notice of appeal rights any time the contractor informs 
DHS that the contractor is dissatisfied with a claim transaction that is an 
adverse action. 
(e) Special requirements for contractors. A notice of adverse action involving a 
contract cancellation must specify whether the contract will remain in force 
pending completion of the appeal. 
(f) Special requirements for nurse aides. A notice of adverse action to a nurse 
aide accused of resident abuse, resident neglect, or misappropriation of a 
resident's property must include: 
(1) the nature of the allegations; 
(2) the date and time of the alleged occurrence; 
(3) notification of the right to a hearing; 
(4) notification of DHS's intent to report the findings to the nurse aide 
registry following a hearing; 
(5) the fact that the nurse aide's failure to request a hearing within 30 days 
from the date of the notice will result in reporting the findings to the nurse 
aide registry; 
(6) the consequences of waiving the right to a hearing;
(7) the consequences of a finding through the hearing process that the alleged 
conduct occurred; and 
(8) the fact that the nurse aide has the right to be represented by an attorney 
of the nurse aide's choice at the nurse aide's expense. 
(g) Special requirements for administrative penalties assessed against nursing 
facility administrators. 
(1) Notice given by DHS. When DHS determines that an administrative penalty 
should be assessed against a nursing facility administrator, DHS shall give 
written notice of such determination to the administrator. 
(2) Contents of notice. The notice must include a brief summary of the alleged 
violation and a statement of the amount of the recommended penalty. The notice 
must inform the administrator of the date by which the administrator should 
submit its written request for a hearing to the Hearings Department and must 
inform the administrator that the administrator has a right to a hearing on the 
occurrence of the violation, the amount of the penalty, or both the occurrence 
of the violation and the amount of the penalty. 
(h) Special requirements for motor vehicle or recreational licenses. 
(1) Initiation of adverse action. DHS may initiate a proceeding to suspend a 
license by filing a petition with the Hearings Department. 
(2) Contents of petition. DHS's petition must state that license suspension is 
authorized under sec.23.003 of the Texas Human Resources Code and must allege 
the licensee's name; the licensee's social security number, if known; the type 
of license held by the licensee; the licensing authority involved; and the 
amount that DHS claims is owed by the licensee. 
(3) Notice of filing of petition. At the time of the filing of the petition to 
suspend a license, DHS shall give the licensee notice of the licensee's right to 
a hearing before the Hearings Department, notice of the deadline for requesting 
a hearing before the Hearings Department, and a form requesting a hearing for 
completion by the licensee for filing with the Hearings Department. 
(4) Contents of notice. The notice required under this section must inform the 
licensee that the licensee's license will be suspended on the 60th day after the 
date of service of the notice unless the licensee pays the amount owed to DHS; 
the licensee presents evidence of a payment history satisfactory to DHS in 
compliance with a reasonable repayment schedule; or the licensee appears at a 
hearing before the Hearings Department and shows that the petition for 
suspension of a license should be denied or that an order suspending the license 
should be stayed. 
(5) Service. DHS shall serve the notice required under this section in 
accordance with the rules for service in civil cases under the Texas Rules of 
Civil Procedure. 
(i) Special requirements for administrative penalties assessed pursuant to 
sec.242.066 of the Texas Health and Safety Code. A notice of adverse action to a 
person shall include a brief summary of the charges; the amount of the 
recommended penalty; whether the violation is subject to correction, and, if so, 
the date by which the institution must file a plan of correction and the date by 
which the plan of correction must be filed to avoid assessment of the penalty; 
and a statement that the person has a right to a hearing on the occurrence of 
the violation, the amount of the penalty, or both. 

sec.79.1604.Request for a Hearing.
(a) Time for filing. Unless otherwise provided by statute or this section, a 
person must file a written request for a hearing with the Hearings Department so 
that the Hearings Department receives the written request within 15 days from 
the date the person receives the Texas Department of Human Services' (DHS's) 
notice of adverse action. 
(b) Form of request. The request must be in writing, in the form of a petition 
or letter, and must state the basis of the appeal of the adverse action. 
(c) Referral to administrative law judge. Upon receipt of a request for a 
hearing, the director of the Hearings Department will assign the appeal to an 
administrative law judge for disposition according to this subchapter. 
(d) Special requirements for nurse aide appeals. A nurse aide must file a 
written request for a hearing with the Hearings Department so that the Hearings 
Department receives the written request within 30 days from the date the nurse 
aide receives DHS's notice of adverse action. 
(e) Special requirements for medication aide appeals. A medication aide or an 
applicant for a medication aide permit must file a written request for a hearing 
with the Hearings Department so that the Hearings Department receives the 
written request within 30 days from the date the medication aide or applicant 
receives DHS's notice of adverse action. 
(f) Special requirements for nursing facility administrator administrative 
penalty appeals. Within 20 days from the date the administrator receives DHS's 
notice of assessment of an administrative penalty, the administrator may file 
with the Hearings Department a written acceptance of the determination and the 
penalty recommended by DHS or a written request for a hearing on the occurrence 
of the violation, the amount of the penalty, or both the occurrence of the 
violation and the amount of the penalty. 
(g) Special requirements for motor vehicle and recreational license appeals. If 
a licensee wishes to request a hearing on DHS's petition to suspend a license, 
the licensee must file a written request for a hearing with the Hearings 
Department not later than the 20th day after the date of service of the notice. 
(h) Special requirements for administrative penalty appeals pursuant to 
sec.242.066 of the Texas Health and Safety Code. 
(1) Not later than the 20th day after the date on which DHS's notice of adverse 
action is sent, the person may give written consent to the recommended penalty, 
submit a plan of correction if the violation is subject to correction, or make a 
written request for a hearing. 
(2) If a plan of correction has been submitted and rejected, then, not later 
than the 20th day after the date on which DHS's notice that the plan of 
correction is rejected is sent, the person may give written consent to the 
recommended penalty or make a written request for a hearing. 
(i) Election of arbitration as alternative to hearing. 
(1) A person or DHS may elect binding arbitration as an alternative to a hearing 
for any of the following adverse actions, unless the United States Health Care 
Financing Administration requires that the appeal be resolved by the federal 
government: 
(A) failure to renew a license pursuant to the Texas Health and Safety Code, 
sec.242.033; 
(B) suspension or revocation of a license pursuant to the Texas Health and 
Safety Code, sec.242.061; 
(C) assessment of a civil penalty pursuant to the Texas Health and Safety Code, 
sec.242.065; 
(D) assessment of a monetary penalty pursuant to the Texas Health and Safety 
Code, sec.242.066; or 
(E) assessment of a penalty pursuant to the Texas Human Resources Code, 
sec.32.021(k). 
(2) The rules and procedures for electing arbitration as an alternative to a 
hearing are codified at 1 Texas Administrative Code Chapter 163 (relating to 
Arbitration Procedures for Certain Enforcement Actions of the Department of 
Human Resources).

sec.79.1605.Notice of Hearing.
(a) Setting the hearing date. Within 30 days of the date of the request for 
hearing, the administrative law judge selects a hearing date in response to the 
request for hearing. 
(b) Scheduled hearing date. The administrative law judge must give the parties 
written notification of the hearing date at least 20 days before the date of the 
hearing. 
(c) Contents of notice. The written notice of hearing must include a statement 
of the time, date, and location of the hearing and a statement of the legal 
authority and jurisdiction under which the hearing will be conducted.
(d) Service of notice. The notice of hearing may be served upon the parties in 
the manner deemed by the Hearings Department as being the most reliable method 
to ensure receipt of service by the parties. The method of service need not be 
identical for each party. 
(e) Expedited hearings. Upon written motion for either party for good cause 
shown, the administrative law judge may expedite the hearing. The administrative 
law judge must give the parties notice of the date of the expedited hearing at 
least ten days prior to the hearing date. 
(f) Special requirements for nursing facility administrator administrative 
penalty appeals. If the administrator requests a hearing regarding assessment of 
an administrative penalty or fails to respond to the Texas Department of Human 
Services (DHS's) notice of assessment of an administrative penalty and 
recommended penalty, the Hearings Department shall set a hearing on the 
determination of violation and recommended penalty, and give the notice provided 
by this section. 
(g) Special requirements for Summer Food Service Program appeals. In any appeal 
involving the federal Summer Food Service Program, a hearing must be scheduled 
and held within 14 days of the date the request for hearing is received by DHS.

sec.79.1606.Venue.
(a) General venue. Unless otherwise noted by statute or this section, the 
hearing shall be conducted in Austin, Texas. 
(b) Contractor block grant fund reductions. In any hearing on reduction of a 
contractor's block grant funds, the Texas Department of Human Services (DHS) 
must hold one session of the hearing in the contractor's locality if requested 
in writing by a locally elected official or an organization with at least 25 
members. 
(c) Special requirements for nurse aide appeals. In any appeal involving a nurse 
aide, the hearing shall be conducted in the DHS office nearest to the place of 
residence of the nurse aide. 
(d) Special requirements for medication aide appeals. In any appeal involving a 
medication aide or an applicant for a medication aide permit, the hearing shall 
be conducted in the DHS office nearest to the place of residence of the 
medication aide or applicant.
(e) Special requirements for motor vehicle and recreational license appeals. 
Hearings involving motor vehicle and recreational licenses shall be conducted by 
telephone unless the administrative law judge finds that there is good cause to 
conduct the hearing in person. 
(f) Application for change of venue. Either party may file a written application 
with the administrative law judge requesting that the hearing be conducted at 
some location other than that specified in this section. The administrative law 
judge shall order a change in the location of the hearing if the administrative 
law judge finds that such is necessary for a full and fair resolution of the 
appeal. 
(g) Telephone hearings. 
(1) Filing. The administrative law judge, upon written motion of either party 
filed at least 14 days prior to the hearing date, may order all or part of the 
hearing to be conducted by telephone. 
(2) Showing required. The party requesting the telephone hearing must state the 
reasons for the request in the motion. If the administrative law judges finds 
that good cause exists to permit all or part of the hearing to be conducted by 
telephone, the motion will be granted. 
(3) Procedural rights and duties. All rights available to the parties at an in-
person hearing apply to telephone hearings, subject only to the limitations of 
the physical arrangement. DHS shall notify the parties of the scheduled 
telephone hearing and the parties shall contact their respective witnesses to 
ensure the availability of the witnesses for the hearing.
(4) Documentary evidence. To be offered in a telephone hearing, tangible or 
documentary evidence must be marked and filed with the administrative law judge 
with a copy provided to the opposing party or the party's representative at 
least five working days prior to the scheduled hearing.
(5) Default. For a party to be considered as having failed to appear at a 
telephone hearing, one or more of the following conditions must exist for more 
than ten minutes after the scheduled time for hearing:
(A) failure to answer the telephone; 
(B) failure to free the telephone line for a hearing; or 
(C) failure to be ready to proceed with the hearing as scheduled.

sec.79.1607.Representation of Parties.
(a) Respondent. The Texas Department of Human Services (DHS) is represented in a 
hearing by an attorney appointed by the general counsel.
(b) Petitioner. The petitioner may be represented by any of the following 
persons: 
(1) the petitioner; 
(2) a licensed attorney, upon filing of a notice of representation with the 
administrative law judge; 
(3) a non-attorney person designated in writing by the petitioner to the 
administrative law judge; or 
(4) if the petitioner is a corporation, by an officer, board member, or any 
other person designated by the corporation's board of directors by written 
resolution of the board filed with the administrative law judge. 
(c) Attorney not required. A petitioner is not required to have an attorney in 
order to appear and participate at a hearing. DHS will not provide an attorney 
to represent a petitioner. 
(d) Change in representation. If a party wishes to change its representative, 
the party should file a written notice of substitution of representative with 
the administrative law judge. An attorney wishing to withdraw from representing 
a party should do so in accordance with the Texas Rules of Civil Procedure. 

sec.79.1608.Prehearing Procedure.
(a) Prehearing motions. 
(1) Filing. All motions must be filed with the Hearings Department.
(2) Form of motion. All motions filed prior to the hearing must be in writing 
and must specify the desired relief and the reasons for the requested relief and 
must be filed in a timely manner so as to allow for the filing of a response by 
the non-moving party and issuance of a ruling by the administrative law judge. 
(3) Response. A party shall be allowed to file a written response to any 
prehearing motion with the Hearings Department. 
(4) Certificate of service. All motions and responses to motions must contain a 
certificate stating that a copy of the motion or response has been served on the 
opposing party or the party's representative. The certificate must state the 
date and manner of service and should bear the signature of the person making 
the certification. 
(b) Rules of Civil Procedure. In all prehearing matters not specifically 
addressed by this section, the Texas Rules of Civil Procedure will apply, unless 
the administrative law judge finds that there is good cause for waiving those 
rules. 
(c) Prehearing conference. On the motion of either party or on the 
administrative law judge's own motion, the administrative law judge may direct 
the parties to appear for a prehearing conference for the purpose of simplifying 
the issues in the case, narrowing the scope of the hearing, or for any other 
purpose the administrative law judge finds is necessary. The administrative law 
judge may order that certain information be exchanged by the parties by a date 
prior to the hearing date, including, but not limited to, the following: 
(1) a list of witnesses each party may call to testify; 
(2) a written statement of the disputed issues for consideration at the hearing; 
(3) copies of any written testimony to be offered at the hearing; and 
(4) copies of documentary evidence to be offered at the hearing. 
(d) Respondent's statement of the case. At least ten days before the hearing 
date, or at least three days before the hearing date in an expedited case, the 
Texas Department of Human Services (DHS) must ensure that the petitioner and the 
administrative law judge receive a statement of the case that includes a concise 
statement of the matters asserted by DHS in support of its adverse action and a 
reference to the particular sections of all statutes, rules, and regulations 
upon which DHS relies. 
(e) Petitioner's statement of the case. Upon a timely written motion from the 
respondent, the administrative law judge may order the petitioner to file a 
statement of the case that includes a concise statement of the matters asserted 
by the petitioner in support of its position and a reference to the particular 
sections of all statutes, rules, and regulations upon which the petitioner 
relies. Such statement shall be filed at least ten days before the hearing date, 
or at least three days before the hearing date in an expedited case. 
(f) Postponement or continuance of hearing. 
(1) Motion in writing and time for filing. If either party desires to postpone 
or continue the hearing, such party must file a sworn written motion for 
continuance at least seven days prior to the date set for the hearing. 
(2) Contents of motion. The motion must specify the reasons for the continuance 
and must make reference to all prior motions for continuance filed in the same 
proceeding. 
(3) Failure to comply. Failure to comply with the requirements of this 
subsection, except for good cause shown by the party seeking the continuance, 
shall be grounds for the administrative law judge to deny the motion. 
(4) Order. The administrative law judge shall issue an order denying or granting 
a motion for continuance properly filed under this subsection. The decision to 
grant or deny the motion for continuance shall be solely at the discretion of 
the administrative law judge. 

sec.79.1609.Discovery and Depositions.
(a) Discovery. Unless otherwise specified in this section, discovery shall be 
conducted pursuant to the Texas Rules of Civil Procedure.
(b) Copy of previous statement. Any person, including a non-party, is entitled 
to and may obtain a copy of a statement in a party's possession, custody, or 
control that the person has previously made about the contested case or its 
subject matter. A statement is considered to be previously made if it is: 
(1) a written statement signed or otherwise adopted or approved by the person 
making it; or 
(2) a stenographic, mechanical, electrical, or other recording, or a 
transcription of the recording, which is a substantially verbatim recital of an 
oral statement by the person making it and which was contemporaneously recorded. 
(c) Depositions. 
(1) Commission to take deposition. 
(A) Issuance of commission. Upon written motion and the deposit of an amount 
that will reasonably ensure payment of the amounts estimated to accrue under 
this section, the administrative law judge may issue a commission, addressed to 
the officers authorized by statute to take depositions, requiring that the 
deposition of a witness be taken. 
(B) Subpoena. The commission shall authorize the issuance of any subpoena 
necessary to require that the witness appear and produce, at the time the 
deposition is taken, books, records, papers, or other objects that may be 
necessary and proper for the purpose of the proceeding. 
(C) Requirements of officer taking deposition. The commission shall require an 
officer to whom it is addressed to: 
(i) examine the witness before the officer on the date and at the place named in 
the commission; and 
(ii) take answers under oath to questions asked the witness by a party to the 
proceeding, the state agency, or an attorney for a party or the agency. 
(D) Witness to remain in attendance. The commission shall require the witness to 
remain in attendance from day to day until the deposition is begun and 
completed. 
(2) Place of deposition. A deposition in a contested case shall, in the absence 
of agreement by the parties, be taken in the county where the witness resides, 
is employed, or regularly transacts business in person. 
(3) Objections to deposition testimony. Objections to deposition testimony are 
reserved for the action of the administrative law judge. The administrative law 
judge may consider objections other than those made at the taking of the 
deposition. 
(4) Submission of deposition to witness. 
(A) Deposition submitted to witness. The deposition shall be submitted to the 
witness for examination after the testimony is fully transcribed and shall be 
read to or by the witness. The witness and the parties may waive the examination 
by written agreement. If the witness is a party and is represented by counsel, 
the deposition officer shall notify the attorney that the deposition is ready 
for examination and reading at the office of the deposition officer and that if 
the witness does not appear and examine, read, and sign the deposition before 
the 21st day after the date on which the notice is mailed, the deposition shall 
be returned as provided by this section for unsigned depositions. 
(B) Changes to deposition. The officer taking a deposition shall enter on the 
deposition a change in form or substance that the witness desires to make and a 
statement of the reasons given by the witness for making the change. After the 
change and statement of reasons for the change have been entered, the witness 
shall sign the deposition. 
(C) Signature of witness. A witness must sign a deposition at least three days 
before the date of the hearing or the deposition shall be returned by the 
officer as an unsigned deposition. 
(D) Failure of witness to sign. If a deposition is not signed by the witness, 
the officer shall sign it and state on the record the fact of the witness's 
waiver, illness, absence, or refusal to sign and the reason given, if any, for 
failure to sign. The deposition shall then be used as though signed by the 
witness. 
(5) Return of deposition to Hearings Department. A deposition may be returned to 
the Hearings Department by mail or by hand-delivery. If returned by mail, the 
Hearings Department employee receiving the deposition shall endorse on the 
deposition that it was received by mail and sign the deposition. If returned by 
hand-delivery, the person delivering the deposition shall sign an affidavit 
before the Hearings Department stating that the person delivering the deposition 
received the deposition from the officer who took the deposition, that the 
deposition has not been out of the deliverer's possession since receipt from the 
officer, and that the deposition has not been altered.
(6) Opening of deposition by Hearings Department employee. At the request of a 
party, a deposition may be opened by a Hearings Department employee. The 
Hearings Department employee who opens the deposition shall endorse on the 
deposition the date and at whose request it was opened, and then sign the 
deposition. The deposition shall remain on file with the Hearings Department for 
inspection by the parties. 
(7) Use of deposition. A party is entitled to use a deposition without regard to 
whether a cross-interrogatory has been propounded. 
(8) Expenses. 
(A) Non-party witness. A non-party witness is entitled to receive: 
(i) ten cents for each mile from and to the place of the deposition if the place 
is more than 25 miles from the witness's residence and if a personal motor 
vehicle is used for travel; 
(ii) reimbursement of transportation expenses to and from the place of the 
deposition if the place is more than 25 miles from the witness's residence and 
the witness does not use a personal motor vehicle for travel;
(iii) meal and lodging expenses if the witness's residence is more than 25 miles 
from the place of the deposition; and 
(iv) $10 for each day or part of a day that the person is necessarily present. 
(B) Payment of expenses. Amounts required to be paid by this section shall be 
paid by the party at whose request the witness appears. If the Texas Department 
of Human Services (DHS) is required to pay the witness, expenses shall not 
exceed the maximum rates provided by law for state employees.
(9) Failure to comply with a commission. If a person fails to comply with a 
commission, DHS, acting through the attorney general, or the party requesting 
the commission may bring suit to enforce the commission in the county in which 
the hearing is conducted. 
(d) Abuse of discovery; sanctions. 
(1) Motions for sanctions or order compelling discovery. A party may make 
written motion to the administrative law judge for an order compelling discovery 
or for sanctions. A party may request sanctions without having first obtained an 
order compelling discovery. 
(2) Failure to comply with order or with discovery request. If a party or a 
person designated to testify on behalf of a party fails to comply with a proper 
discovery request or to obey an order compelling discovery, an administrative 
law judge may, after opportunity for hearing, make orders in response to the 
failure, including any of the following orders: 
(A) preventing the non-responding party from conducting further discovery; 
(B) charging the non-responding party, the party representative, or both with 
the expenses of discovery or taxable costs: 
(C) deeming any facts pertaining to the order, or any other facts, to be 
established, as claimed by the moving party; 
(D) disallowing the non-responding party from supporting or opposing designated 
claims or defenses, or prohibiting the party from introducing designated matters 
in evidence; 
(E) striking pleadings or parts of pleadings; 
(F) staying further action until the order is obeyed; 
(G) dismissing the proceeding with or without prejudice; or
(H) rendering a default judgment against the non-responding party. 
(3) Abuse of the discovery process. The administrative law judge may impose any 
of the sanctions specified in this subsection on a party who abuses the 
discovery process in seeking or resisting discovery or who files a request, 
response, or answer that is frivolous, oppressive, or made for the purpose of 
delay. 
(4) Failure to supplement discovery. A party who fails or refuses to supplement 
a response to a discovery request may not present evidence that the party was 
under a duty to provide in an initial or supplemental response to a discovery 
request, and may not offer the testimony of an expert witness or of any other 
person having knowledge of the discoverable matter, unless the administrative 
law judge finds good cause to permit the evidence despite the noncompliance. The 
burden of establishing good cause is upon the party offering the evidence, and 
good cause must be shown in the record. 
(5) Record of basis for sanction. The administrative law judge shall state the 
specific basis for any sanction in the record or in a written order. 

sec.79.1610.Informal Disposition of Appeal.
At any time before the conclusion of the hearing, informal disposition of a case 
may be made, in writing, by stipulation, agreed settlement, consent order, 
default, or withdrawal of the request for a hearing by the petitioner.

sec.79.1611.Conduct of Hearings.
(a) Authority of administrative law judge. The administrative law judge is in 
charge of the hearing. The administrative law judge has the authority to: 
(1) administer oaths; 
(2) examine witnesses; 
(3) issue subpoenas; 
(4) consolidate causes of action; 
(5) rule on admissibility of evidence; 
(6) establish reasonable time limits for conducting hearings;
(7) request information; 
(8) issue intermediate orders; 
(9) limit the witnesses to be called by the parties; and 
(10) issue orders necessary to enforce rulings, including, but not limited to: 
(A) exclusion of evidence; 
(B) exclusion of witnesses; 
(C) summary orders or default judgment on any issue; and 
(D) postponement or dismissal of the hearing, with or without prejudice to a 
party. 
(b) Decorum. Each party, witness, attorney, representative, or other person 
involved in the hearing shall show proper dignity, courtesy, and respect for the 
hearing process and for the hearing participants. The administrative law judge 
may take any action necessary to maintain proper decorum and conduct including, 
but not limited to: 
(1) recessing the hearing; 
(2) continuing the hearing to reconvene at another time or place; and 
(3) excluding any person from the hearing for a period and under conditions that 
the administrative law judge considers fair and just. 
(c) Record. A record must be made of the hearing that includes:
(1) all pleadings, motions, and intermediate rulings and orders;
(2) evidence received or considered; 
(3) a statement of matters officially noticed; 
(4) questions and offers of proof, objections, and rulings;
(5) proposed findings of fact and conclusions of law and exceptions; 
(6) the decision; and 
(7) all staff memoranda or data submitted to or considered by the administrative 
law judge. 
(d) Stenographic record. A stenographic record of each hearing on the merits 
must be made. If requested by the administrative law judge, the proceedings must 
be transcribed and transcript given to the administrative law judge. The costs 
associated with recording and preparing the transcript may be assessed to one or 
more parties. If a party wants a transcript of the hearing, that party must pay 
all costs associated with providing the transcript. If a party fails to appear 
at a hearing the administrative law judge may assess court reporter costs 
against the party or parties failing to appear. 
(e) Rules of procedure. In all procedural matters not specifically provided for 
in this subchapter, the Texas Rules of Civil Procedure will be followed unless 
the administrative law judge determines that there is good cause for waiving the 
Texas Rules of Civil Procedure. 
(f) Evidence. The Texas Rules of Civil Evidence will be followed except that, 
when necessary to ascertain facts not reasonably susceptible of proof under the 
Texas Rules of Civil Evidence, evidence otherwise inadmissible may be admitted, 
unless precluded by statute, if it is the type of evidence commonly relied upon 
by reasonably prudent persons in the conduct of their affairs. 
(g) Presentation of cases. Subject to any rulings and orders of the 
administrative law judge, all parties shall have the opportunity to present 
evidence and argument on all issues involved, and to respond to evidence and 
arguments presented. Each party will have the opportunity to call witnesses, 
cross-examine witnesses, and present rebuttal testimony. The administrative law 
judge may call a witness or direct a party to call a witness whose testimony the 
administrative law judge believes is necessary to make a final decision.
(h) Subpoenas. On the written request of any party, on a showing of good cause, 
and on deposit of sums that will reasonably ensure payment of the amounts 
estimated to accrue under this section, the administrative law judge may issue a 
subpoena addressed to the sheriff or any constable to require the attendance of 
witnesses and the production of books, records, papers, or other objects as may 
be necessary and proper for the purposes of the proceedings. The party 
requesting the subpoena is responsible for preparation and service of the 
subpoena. If a party is not represented by an attorney, the administrative law 
judge may prepare the subpoena. If a person fails to comply with a subpoena, the 
requesting party may bring suit to enforce the subpoena in a district court in 
the county in which the hearing is conducted.
(i) Failure of parties to appear. If a party or the party's representative is 
notified of the hearing and fails to appear, all matters stated in evidence 
introduced at the hearing may be considered as uncontroverted.

sec.79.1612.Final Decisions and Orders.
(a) Form of final decision. A final decision shall be in writing and shall 
include separately stated findings of fact and conclusions of law.
(b) Orders. The administrative law judge shall enter all orders necessary to 
implement the final decision. The administrative law judge may also make 
recommendations that the administrative law judge considers appropriate to the 
case. 
(c) Time for issuing decisions. Unless otherwise provided by statute or by this 
section, a decision shall be issued on or before the expiration of 60 days from 
the date the hearing is closed. 
(d) Manner of issuing decisions. Decisions shall be mailed by certified mail, 
return receipt requested, to the parties or their representatives. If a decision 
is returned unclaimed, the decision shall be re-mailed by regular mail service. 
Decisions may be hand- delivered or sent by intra-agency mail to the Texas 
Department of Human Services (DHS). A decision is deemed issued on the date it 
is mailed, hand-delivered, or placed in intra-agency mail. A decision that has 
been re-mailed after being returned unclaimed is deemed issued on the date it is 
first mailed, if mailed to the last known address of the addressee. 
(e) Special requirements for nurse aide appeals. 
(1) Time for issuing decision. In any action involving an appeal by a nurse 
aide, the final decision must be issued on or before the expiration of 120 days 
from the date the nurse aide's request for hearing is received by DHS. 
(2) Determinations of neglect. The administrative law judge must not find that a 
nurse aide has neglected a resident if the nurse aide demonstrates that the 
neglect was caused by factors beyond the control of the nurse aide. 
(f) Special requirement for medication aide appeals. In any action involving an 
appeal by a medication aide or an applicant for a medication aide permit, the 
final decision must be issued on or before the expiration of 120 days from the 
date the medication aide's or applicant's request for hearing is received by 
DHS. 
(g) Special requirements for Child and Adult Care Food Program appeals. In any 
appeal involving the federal Child and Adult Care Food Program, the final 
decision must be issued on or before the expiration of 120 days from the day DHS 
received a request for hearing. 
(h) Special requirements for Summer Food Service Program appeals. In any appeal 
involving the federal Summer Food Service Program, the final decision must be 
issued on or before the expiration of five days from the date the hearing is 
closed. 
(i) Special requirements for nursing facility administrator administrative 
penalty appeals. When a final decision is issued in any appeal involving an 
administrative penalty, a notice shall be provided to the administrator of the 
administrator's right to judicial review of the final decision. 
(j) Special requirements for motor vehicle and recreational license appeals. 
(1) Order suspending a license. 
(A) The administrative law judge shall issue an order suspending the licensee's 
license if the administrative law judge finds that, after notice of the adverse 
action from DHS, the licensee: 
(i) failed to reimburse DHS for an amount in excess of $250 granted in error to 
the licensee under the Food Stamp program or the program of financial assistance 
under Chapter 31 of the Texas Human Resources Code;
(ii) has been provided an opportunity to make payments toward the amount owed 
under a repayment schedule; and 
(iii) failed to comply with a repayment schedule previously entered into by DHS 
and the licensee. 
(B) The administrative law judge may order the licensee to refrain from engaging 
in the licensed activity as a part of any final order suspending a license. 
(C) If the administrative law judge does not make the findings set out in 
subparagraph (A) of this paragraph, the administrative law judge shall dismiss 
DHS's petition to suspend a license, without prejudice, and shall not issue an 
order suspending the licensee's license. 
(D) The Hearings Department shall forward a final order suspending a license to 
the appropriate licensing authority, except as provided in subparagraph (F) of 
this paragraph. 
(E) The administrative law judge may stay an order suspending a license 
conditioned on the licensee's compliance with a reasonable repayment schedule 
that is incorporated in the final order suspending a license. 
(F) A final order suspending a license that incorporates a stay of such 
suspension shall not be served on the licensing authority unless the stay is 
revoked. 
(2) Allegations of petition deemed admitted. The administrative law judge shall 
deem the allegations of the petition for suspension of license to be admitted 
and shall render an order suspending a license if the licensee fails to respond 
to the notice of adverse action issued by the DHS, request a hearing, or appear 
at a hearing. 
(3) Revocation of the stay of an order suspending a license.
(A) DHS may file a motion with the Hearings Department seeking to revoke the 
stay of an order suspending a license if the licensee does not comply with the 
terms of a reasonable repayment plan made part of the order suspending a 
license. 
(B) The motion seeking to revoke the stay of an order suspending a license must 
allege the manner in which the licensee failed to comply with the payment plan. 
(C) Upon receipt of a motion to revoke the stay of an order suspending a 
license, the Hearings Department shall issue notice by certified mail, return 
receipt requested, to the licensee. The notice shall include:
(i) a statement that the motion was filed, including the date and time of the 
filing; and 
(ii) the date, time, and location of the hearing on the motion.
(D) The licensee shall be given no less than ten day's notice prior to the 
hearing on the motion to revoke the stay of the order suspending the license. 
(E) If, after the hearing, the administrative law judge finds that the licensee 
has not complied with the terms of the repayment plan contained in the order 
suspending the license, the administrative law judge shall revoke the stay of 
the order and render a final order suspending the license. 
(4) Vacating or staying order suspending a license.
(A) The administrative law judge may, upon written motion filed with the 
Hearings Department, vacate or stay an order suspending a license.
(B) A motion to vacate an order suspending a license must allege that the 
licensee has paid all amounts owed to DHS. 
(C) A motion to stay an order suspending license must allege that the licensee 
has established a satisfactory payment record with DHS.
(D) Upon receipt of a motion to vacate or stay an order suspending a license, 
the Hearings Department shall transmit a copy of the motion to the non-movant. 
(E) Upon receipt of a motion to vacate or stay an order suspending a license, 
the non-movant will have ten days in which to file a written response in support 
of or in opposition to the motion. 
(F) Upon receipt of a written response in opposition to a motion to vacate or 
stay an order suspending a license, the Hearings Department shall set the motion 
for a hearing not less than ten days from the date of the notice of the hearing. 
The Hearings Department shall notify the parties of the date, time and location 
of the hearing. 
(G) If the administrative law judge finds that all amounts owed to DHS have been 
paid, the administrative law judge shall enter an order vacating the order 
suspending the license. 
(H) If the administrative law judge finds that the licensee has established a 
satisfactory payment record, the administrative law judge shall enter an order 
staying the order suspending the license. 
(I) The Hearings Department shall promptly deliver all orders vacating or 
staying an order suspending a license to the appropriate licensing authority. 
(J) An order issued under this section does not preclude DHS from seeking any 
other relief provided by law, including that provided by this subchapter. 
(k) Special requirements for administrative penalty appeals pursuant to 
sec.242.066 of the Texas Health and Safety Code. 
(1) Contents of decision. The administrative law judge shall find that: 
(A) a violation has occurred and assess a penalty; or 
(B) a violation has not occurred. 
(2) Notice of decision. The commissioner shall provide written notice of the 
decision to the person. If the decision is adverse to the person, the 
commissioner shall further notify the person as to the amount of the penalty, 
the interest rate, the date upon which interest begins to accrue, whether the 
penalty should be paid in full or whether the penalty will be ameliorated, and 
the person's right to judicial review of the decision.

sec.79.1613.Motions for Rehearing.
(a) Filing. Either party may file a written motion for rehearing. Any motion for 
rehearing must be filed with and received by the Hearings Department on or 
before the 20th day after the date on which the final decision was mailed.
(b) Reply. A written reply to a motion for rehearing must be filed with and 
received by the Hearings Department on or before the 30th day after the date on 
which the final decision was mailed. 
(c) Order on motion. The administrative law judge shall rule on a motion for 
rehearing not later than the 45th day after the date on which the final decision 
was mailed or the motion for rehearing is overruled by operation of law. 
(d) Extension of deadlines. The administrative law judge may, by written order 
extend the time of filing a motion or reply or for ruling on the motion for a 
period not to exceed the 90th day after the day on which the final decision was 
mailed. 
(e) Shortening the time for filing. The parties may, in writing or on the 
record, agree to a date other than that provided by this section for filing a 
motion for rehearing if the specified date is not before the date the order is 
signed or later than the 20th day after the date the order is issued. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801068
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 438-3765

PART XX. Texas Workforce Commission
CHAPTER 800.General Administration
SUBCHAPTER G.Petition for Adoption of Rules
40 TAC sec.sec.800.251-800.255
The Texas Workforce Commission (Commission) proposes new sec.sec. 800.251-
800.255, concerning the Petition for Adoption of Rules. New Subchapter G., 
Petition for Adoption of Rules, is proposed as the location of new 
sec.sec.800.251-800.255. 
New Subchapter G in Chapter 800 provides the form and procedure for processing a 
petition for the adoption of rules. 
New sec. 800.251 sets forth the short title and purpose for this subchapter.
New sec. 800.252 sets forth the definitions that apply to this subchapter.
New sec. 800.253 sets forth the procedure for submission and the petition 
requirements that apply to this subchapter. 
New sec. 800.254 sets forth the procedure for reviewing the petitions submitted 
pursuant to this subchapter. 
New sec. 800.255 sets forth a description of Commission action that may result 
from the submission made pursuant to this subchapter. 
Randy Townsend, Director of Finance, has determined that for the first five-year 
period the rules are in effect, there will be minimal fiscal implications as a 
result of enforcing or administering the rules. There will be minimal additional 
costs to the state as a result of enforcing the rules. There will be no 
reduction in costs to the state. There will be no costs to local governments. J. 
Ferris Duhon, Acting Deputy Director of Legal Services, has determined that for 
each year of the first five years the rules are in effect, the public benefit 
anticipated as a result of enforcing the rules will be the enhanced ability of 
the public to recommend rules to the Commission. There is no anticipated effect 
on small businesses and there are no anticipated costs to persons who are 
required to comply with the rules as proposed. 
All official comments submitted to J. Ferris Duhon will be considered before the 
final rules are adopted. Comments on the proposed rules may be submitted to J. 
Ferris Duhon, Acting Deputy Director of Legal Services, Texas Workforce 
Commission Building, 101 East 15th Street, Room 264, Austin, Texas 78778 (512) 
463-2293. Comments may also be submitted via fax to J. Ferris Duhon at (512) 
463-1426, or e-mailed to: ferris.duhon@twc.state.tx.us. Comments must be 
received by the Commission by 5:00 p.m. on March 10, 1998 for consideration. 
The new rules are proposed under Texas Labor Code, sec.301.061 which provides 
the Commission with the authority to adopt, amend or rescind such rules as it 
deems necessary for the effective administration of the Act and Texas Government 
Code, sec.2001.021 which provides for the Commission to promulgate by rule the 
form for a petition for adoption of rules and the procedure for its submission, 
consideration, and disposition of the petition. The proposed rules affect the 
Texas Labor Code, Title 4. 

sec.800.251.Title and Purpose.
(a) Title. These rules may be cited as the Petition for the Adoption of Rules. 
(b) Purpose. The purpose of these rules is to implement the provisions of Texas 
Government Code sec.2001.21 regarding agency procedure for addressing petitions 
for the adoption of rules.

sec.800.252.Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meaning, unless the context clearly indicates otherwise.
Commission --The Texas Workforce Commission. 

sec.800.253.Submission and Petition Requirements.
Any interested person may petition the Texas Workforce Commission (Commission) 
requesting the adoption of a rule. Petitioners should submit petitions in 
writing to the General Counsel of the Commission. The petition may be in any 
legible form but must contain at least the following information.
(1) Petitioner's Name and Address. The petitioners' name, complete mailing 
address, and signature should appear in the request. 
(2) Explanation and Justification. A petitioner should include an explanation 
and justification of the proposed rule. The explanation should include a concise 
statement of the relevant background information necessary to understand the 
need for the rule, the existing problem that the proposed rule is to correct, 
and the foreseeable effects of the requested rule. 
(3) Text. A petitioner should include the text of the proposed rule reflecting 
added or deleted words. A reference to any existing rule including the title, 
chapter and section number, if applicable, should appear on the request. 
(4) Authority. A statement of the statutory or other authority for taking the 
requested action should also appear on the request.

sec.800.254.Review of Petition. 
Upon receipt of a substantially complete petition, the general counsel will 
forward a copy of the petition to the appropriate division director for a 
response. 
(1) Division Response. Within 20 days after receiving the petition from the 
general counsel, the division director shall respond in writing to the General 
Counsel recommending either denying the request or initiating the rulemaking 
process. The division director's response shall contain the reasons for the 
recommendation. 
(2) General Counsel Recommendation. Within 20 days after receiving the division 
director's response, the general counsel shall submit to the commissioners the 
petition, the division director's response and a written recommendation by the 
general counsel specifying the reasons for the recommendation. 

sec.800.255.Commission Decision and Action.
(a) The Commissioners shall issue the final decision regarding the petition 
within 60 days after receipt of the petition from the petitioner to either: 
(1) deny the petition in writing, stating the reasons for the denial; or 
(2) initiate rulemaking proceedings in accordance with Texas Government Code, 
Chapter 2001, Administrative Procedure, Subchapter B, Rulemaking, as it may be 
amended. 
(b) The Commission may modify any proposed rule to ensure that it conforms to 
the format of commission rules, adequately addresses the perceived problem, and 
conforms to the filing requirements of the Texas Register. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State, on January 23, 1998.
TRD-9801076
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: March 9, 1998
For further information, please call: (512) 463-8812