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

TITLE 1. ADMINISTRATION
PART XV. Texas Health and Human Services Commission
CHAPTER 355. Medicaid Reimbursement Rates
SUBCHAPTER D. Reimbursement Methodology for the Medicaid Intermediate Care 
Facilities for the Mentally Retarded
1 TAC sec.sec.355.454, 355.456-355.458
The Texas Health and Human Services Commission (THHSC) adopts
sec.sec.355.454 and 355.456-.458, governing Reimbursement Methodology
for the Medicaid Intermediate Care Facilities for the Mentally Retarded 
(ICF/MR).
The sections will replace existing 1 TAC sec.355.454, 25 TAC sec.406.154 and 25 
TAC sec.sec.406.156-.158 of Chapter 406, Subchapter D, governing reimbursement 
methodology, the contemporaneous repeal of which is adopted in this issue of the 
Texas Register. Sections 355.454 and 355.456-355.458 are adopted with changes to 
the proposed text as published in the December 19, 1997, issue of the Texas 
Register (22 TexReg 12363). 
The adopted sections accommodate the reimbursement methodology developed for the 
ICF/MR program. Rules governing the reimbursement methodology for the ICF/MR 
program are transferred to THHSC from the Texas Department of Mental Health and 
Mental Retardation (TDMHMR) in response to Texas Government Code, 
sec.531.021(b), effective September 1, 1998. The methodology was developed with 
model-based rates. The models included assumptions about direct care costs, 
including the number of direct care staff available for the provision of 
services, and wages and benefits that provide incentives for reducing turnover 
and improving the quality of staff. The adopted new sections establish a fiscal 
accountability process to track the amount of money spent on direct care. These 
rules will allow TDMHMR, the operating agency for the ICF/MR program, to recover 
some of the direct care portion of the rate when a provider spends less than 90% 
of that portion of the rate on direct care.  
Section 355.457(b)(4) was added to provide clarification of the recoupment 
process when a licensed facility changes ownership. The reference to "1997" in 
sec.355.456(d) has been deleted. Section 355.456(d)(2) was modified to delete 
the sentence, "There is no cost settlement." Section 355.457(b)(3) was changed 
to indicate that the direct service portions of the current rate model are 
inflated on an annual basis as specified in sec.355.456(d)(2) of this title 
(relating to Rate Setting Methodology). Section 355.457(e)(1) was modified to 
indicate that provisions of the rule concerning fiscal accountability recoupment 
or repayment apply to that portion of the provider's fiscal year that occurs 
after the effective date of the rule. Section 355.457(e)(5) and (6) were 
modified to indicate that the settlement amount will be 50% of the difference 
rather than 75%. Section 355.457(e)(7) was changed to indicate that a provider's 
repayment status may change as a result of reductions as well as additions 
("adjustments") to claims paid to the provider for services provided in the cost 
reporting period. Section 355.458 was modified to indicate, for the rate year 
beginning January 1, 2001, and at least every three years thereafter, TDMHMR 
will assess the viability of the non-state operated modeled rates. Section 
355.454(b)(1), was changed to replaced the word "survey" with the word "report" 
in order to consistently reference the submission of cost reports. Section 
355.457(e)(2) was modified to delete the term "billed." Several modifications of 
the proposed language were made to improve grammar, update references, and 
correct renumbering of sections. 
Oral and written testimony was offered by one commenter at a public hearing held 
on January 8, 1997. Written comments were offered by the following 
organizations: the Private Providers Association of Texas, Austin; Educare, 
Austin; and Concept Six, Austin. While all commenters offered recommendations 
regarding modification(s) to the language of the rule, no commenter was 
specifically for or against the proposal. 
Regarding sec.355.457(e)(8), one commenter requested clarification of the 
recoupment process when a licensed facility changes ownership. The commission 
responds that it has added a new item, sec.355.457(b)(4), which states, "A 
vendor hold will be placed on a prior owner at the change of ownership that 
results in the execution of a new provider agreement. The prior owner will 
submit a fiscal accountability report for the current reporting period. Upon 
receipt of an acceptable fiscal accountability report and resolution of any 
outstanding balances, the vendor hold will be released." 
Regarding sec.355.453 of this title (relating to Cost Reporting Procedures), one 
commenter requested that, even though the applicable rule had not been proposed 
for revision, the due date for ICF/MR fiscal accountability cost reports be 
changed from 45 days to 90 days. Although the comment is beyond the scope of the 
current proposal, the commission responds that it agrees with the comment and 
will initiate the process to amend the relevant rule. Regarding 
sec.355.457(e)(8), one commenter requested rule language regarding the timing 
and process of filing amended fiscal accountability cost reports. The commission 
responds that the instructions to the cost reports allow for an accrual method 
of capturing costs which will minimize the need for amended cost reports. 
Regarding the rule in general, one commenter requested additional clarifying 
language stating that a combined cost report will be filed for providers 
operating multiple facilities/vendor numbers. The commission responds that the 
instructions for the cost reports developed by TDMHMR adequately address the 
requirements for submitting a combined cost report. Accordingly, no change to 
the proposed rule is required. 
Regarding sec.355.456(d) and sec.355.457(c), one commenter requested the 
deletion of references to 1997. The commission responds that the reference to 
1997 in sec.355.456(d) has been deleted. However, since the date January 1, 
1997, accurately reflects the effective date of the current reimbursement 
determination process for non-state operated facilities, it will not be deleted 
elsewhere in the rule. 
Regarding sec.355.456(d)(2), one commenter referenced the deletion of the 
sentence, "There is no cost settlement," since the proposed new sections on 
fiscal accountability initiate settlement requirements for direct services. The 
commission agrees and has deleted the sentence. 
Regarding sec.355.457(b)(3), one commenter requested modifications in the text 
of the rule which clearly indicate that when indirect costs are calculated as a 
percentage of direct costs, the entire rate is changed in accordance with 
inflation rates in effect at the time. The commission responds that it has 
revised language in sec.355.457(b)(3) to indicate that the direct service 
portions of the current rate model are inflated on an annual basis as specified 
in sec.355.456(d)(2) of this title (relating to Rate Setting Methodology). This 
will increase the indirect part of the rate proportionately.
Regarding sec.355.457(e), one commenter requested clarification to indicate when 
the new accountability provisions will take effect. The commenter indicated an 
understanding that the earliest date possible is April 1, 1998. The commission 
has revised language in sec.355.457(e)(1) to indicate that provisions of the 
rule concerning fiscal accountability recoupment or repayment apply to that 
portion of the provider's fiscal year that occurs after the effective date of 
the rule. 
Regarding sec.355.457(e)(5) and (6), two commenters observed that the settlement 
amount (when costs fell between 85% and 90% of direct service revenues) had been 
set at 50% of the difference rather than the 75% shown in the rule. The 
commission responds that it agrees and has revised sec.355.457(e)(5) and (6) to 
indicate that the settlement amount will be 50% of the difference. Regarding 
sec.355.457(e)(7), one commenter stated that additional claims paid to the 
provider may also result in additional expenses incurred by the provider which 
may not have been reported. The commenter indicated that providers should be 
provided the opportunity to amend reports before settlement numbers are 
finalized. The commission responds that it does not envision circumstances under 
which additional payments could result in additional expenses that were not 
previously reported. Language was modified in sec.355.457(e)(7) to indicate that 
a provider's repayment status may change as a result of reductions as well as 
additions ("adjustments") to claims paid to the provider for services provided 
in the cost reporting period. 
Regarding sec.355.458, one commenter requested modifications to the rule text 
which ensures that rates will be rebased beginning January 1, 2001. The 
commission has revised language in sec.355.458 to indicate, for the rate year 
beginning, January 1, 2001, and at least every three years thereafter, TDMHMR 
will assess the viability of the non-state operated modeled rates.
The new sections are adopted under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021, which provide 
the Texas Health and Human Services Commission (THHSC) with the authority to 
administer federal medical assistance funds and administer the state's medical 
assistance program and adopt rules governing the determination of medical 
assistance rates. 
The sections affect Texas Human Resources Code, Chapter 32, and Texas Government 
Code, Chapter 531, sec.531.021. 

sec.355.454. Frequency of Reporting Costs. 
(a) All state-operated provider agencies must annually submit full cost reports 
as directed by TDMHMR in accordance with Subchapter F of this chapter (relating 
to General Reimbursement Methodology for all Medical Assistance Programs) and 
sec.355.452 of this title (relating to Cost Reporting Procedures). 
(b) Non-state operated facilities must submit cost report information as 
directed by TDMHMR in accordance with Subchapter F of this Chapter. 
(1) Except for facilities selected to file a full cost report for the same 
reporting period, all non-state operated facilities will annually submit direct 
service cost reports according to sec.355.452 of this title and sec.355.457 of 
this title (relating to Fiscal Accountability).  
(2) Beginning with the provider agencies' 1999 fiscal year, and every three 
years thereafter, a sample of non-state operated facilities will be required to 
submit full cost reports according to sec.355.452 of this title and sec.355.458 
of this title (relating to Rebasing the Non-State Operated Facility Modeled 
Rates). 

sec.355.456. Rate Setting Methodology. 
(a) Types of facilities. There are two types of facilities for purposes of rate 
setting: state-operated and non-state operated. Non-state operated facilities 
are further divided by classes that are determined by the size of the facility. 
(b) Classes of non-state operated facilities. There is a separate set of 
reimbursement rates for each class of non-state operated facilities, which are 
as follows. 
(1) Large facility - A facility with a Medicaid certified capacity of 14 or more 
as of the first day of the full month immediately preceding a rate's effective 
date or, if certified for the first time after a rate's effective date, as of 
the date of initial certification. 
(2) Medium facility - A facility with a Medicaid certified capacity of nine 
through 13 as of the first day of the full month immediately preceding a rate's 
effective date or, if certified for the first time after a rate's effective 
date, as of the date of initial certification. 
(3) Small facility - A facility with a Medicaid certified capacity of eight or 
fewer as of the first day of the full month immediately preceding a rate's 
effective date or, if certified for the first time after a rate's effective 
date, as of the date of initial certification. 
(c) State-operated facilities. There are no classes of state-operated 
facilities. State-operated facilities are reimbursed on a facility-based per 
diem rate that is determined by each facility's allowable costs, inflated 
forward to the rate period. The reimbursement rates include residential, day, 
and comprehensive medical services. 
(d) Reimbursement rate determination for non-state operated facilities. The 
department will present the reimbursement rates for non-state operated 
facilities to the Texas MHMR Board for approval and then to the Texas Health and 
Human Services Commission for final adoption in accordance with Subchapter F of 
this chapter (relating to General Reimbursement Methodology for all Medical 
Assistance Programs) and this subchapter.  
(1) The initial modeled rates for calendar year 1997 are set according to 
paragraph (7) of this subsection. 
(2) Annual rates for the time period between the years that modeled rates are 
rebased are set by inflating the previous year's direct cost rates by the IPD-
PCE as defined in Subchapter F of this chapter. These rates are uniform by class 
of facility and client level-of-need, and determined prospectively and annually. 
(3) In the year 2000, the models from which the rates are based are analyzed to 
determine if rebasing is necessary for the rates paid in the year 2001. The 
models will be analyzed every three years thereafter to determine if rebasing is 
necessary. 
(4) Reimbursement rates combine residential and day program services, i.e., 
payment for the full 24-hours of daily service. 
(5) Reimbursement rates are differentiated based on client level-of-need as 
outlined in 25 TAC Chapter 406, Subchapter E. The levels of need are 
intermittent, limited, extensive, pervasive, and pervasive plus.
(6) Modeled rates are rebased according to sec.355.458 of this title (relating 
to Rebasing the Non-State Operated Facility Modeled Rates). 
(7) The modeled rates are based on cost components deemed appropriate for 
economically and efficiently operated services. The determination of these 
components is based on a combination of data including, but not limited to, 
historical costs and operational information collected from a representative 
sample of ICF/MR providers. In the year 2000 and every three years thereafter, 
an advisory panel consisting of service providers, advocates, and department 
personnel, and an independent consultant retained by TDMHMR analyzes available 
information regarding historical cost and operational data and level-of-need 
assessment to determine if revisions to the models are necessary. TDMHMR will 
use the analysis to make recommendations regarding rates to the Texas MHMR 
Board.  
(e) Rate determination for state-operated facilities. The department will 
present the reimbursement rates for state-operated facilities to the Texas MHMR 
Board for approval and then to the Texas Health and Human Services Commission 
for final adoption in accordance with Subchapter F of this chapter and this 
subchapter. Rates are facility specific, determined prospectively, and cost 
related. A per diem rate for each facility, which is based on the total 
projected allowable costs for selected cost centers, is divided by the total 
days of service the facility delivered either in the rate period or in the cost 
reporting period. 
(1) Reimbursement rates for state-operated ICFs/MR are based on the most current 
costs reported on their cost reports. 
(2) Costs for each facility are divided into three groups: salaries and 
benefits, comprehensive medical, and other. These costs are inflated by the 
factors identified in sec.355.704 of this title (relating to Determination of 
Inflation Indices). Each facility will have its own per diem rate. 
(3) Reimbursement rates for newly certified state-operated ICFs/MR are based on 
a pro forma model. The pro forma rate is the average of all available similarly 
sized state-operated facilities' per diem rates for that particular rate year. 
Newly certified facilities will be required to submit three-month cost reports 
to reflect costs incurred during the first 90 days of certified operation. These 
costs will be used to determine the facility's specific per diem rate within 180 
days of certification. 
(f) Experimental class. TDMHMR may define experimental classes of service to be 
used in research and demonstration projects on new reimbursement methods. 
Demonstration or pilot projects based on experimental classes may be implemented 
on a statewide basis or may be limited to a specific region of the state or to a 
selected group of providers. Reimbursement for an experimental class is not 
implemented, however, unless the Texas MHMR Board, THHSC, and the Health Care 
Financing Administration (HCFA) approve the experimental methodology.

sec.355.457. Fiscal Accountability. 
(a) General principles. Fiscal accountability is a process used to gauge the 
ongoing financial performance under the non-state operated facility 
reimbursement rates.  
(b) Annual reporting. Fiscal accountability will consist of the annual reporting 
of direct service costs from all non-state operated providers. The data will be 
collected on a cost report designed by TDMHMR or its designee in accordance with 
sec.355.453 of this title (relating to Cost Reporting Procedures). 
(1) Direct service costs are defined to include costs associated with personnel 
who provide direct hands-on support for consumers and include personnel such as 
direct care workers, first-level supervisors of direct care staff, QMRPs, 
registered nurses, and licensed vocational nurses. Direct service costs include: 
costs related to wage rates, benefits, payroll taxes, contracts for direct 
services, and direct service supervision information. Accrued leave (sick or 
annual) can only be counted as a direct service cost if the employee has a right 
to the cash value of that leave upon termination. 
(2) For staff whose duties include work other than the provision of direct 
services, the proportion of work that is spent on direct services may be 
included in the direct service costs. The proportion of their salary and 
benefits that are compensation for direct services work can be included in the 
direct service cost report. The salary and benefits for this direct service work 
must be the lesser of the actual wages and benefits paid or the wages and 
benefits for a comparable direct services staff assumed in the model. The 
facility must have a procedure that specifies how direct service work time is 
allocated. 
(3) The direct service portions of the current rate model are inflated on an 
annual basis as specified in sec.355.456(d)(2) of this title (relating to Rate 
Setting Methodology). 
(4) A vendor hold will be placed on a prior owner at a change of ownership which 
results in the execution of a new provider agreement. The prior owner will 
submit a fiscal accountability report for the current reporting period. Upon 
receipt of an acceptable fiscal accountability report and resolution of any 
outstanding balances, the vendor hold will be released.
(c) In 1997, providers are required to submit direct service costs on a report 
for a uniform three-month period of the year, as selected by the department. The 
report will reflect the provider's actual direct costs for the three-month 
period. The direct service costs will be compared to the "direct service cost" 
component of the modeled rates. In instances in which a provider's actual direct 
service costs, as captured by the quarterly cost reports, are less than 85% of 
the direct service revenues in the model, TDMHMR will require additional 
reporting of costs and other information from the provider. 
(d) TDMHMR will review the results obtained from the direct services cost 
reports submitted for 1997 with representatives of provider associations and 
advocacy groups. In instances in which a provider's actual direct service costs 
are less than 85% of the direct service revenues in the model, TDMHMR may 
require the provider to: 
(1) report more detailed financial information; 
(2) submit to a quality assurance survey and review;
(3) submit to a utilization review of all services provided; and/or 
(4) submit to a detailed audit of all relevant financial records. 
(e) The department will require providers to report all direct costs incurred in 
their annual fiscal year. The department will compare the reported direct 
service costs to the direct service cost component of the modeled rates. 
(1) Provisions of this section concerning fiscal accountability recoupment or 
repayment apply to that portion of the provider's fiscal year that occurs after 
the effective date of such provisions. 
(2) The total direct service revenue of the modeled rates is the direct service 
portion of the rate multiplied by the number of allowable units [billed and] 
paid for services provided during the reporting period. 
(3) Providers whose direct service costs are 90% or more of the direct service 
revenues will not be subject to repayment under this section. 
(4) Providers whose direct service costs are less than 80% of the direct service 
revenues will be required to pay to TDMHMR the difference between the actual 
expenses incurred and 95% of the direct service revenues.
(5) Providers whose direct service costs are between 80% and 85% of the direct 
service revenues will be required to pay to TDMHMR 100% of difference between 
the actual expenses incurred and 85% of the direct service revenues plus 50% of 
the difference between 85% and 90% of the direct service revenues.  
(6) Providers whose direct service costs are between 85% and 90% of the direct 
service revenues will be required to pay to TDMHMR 50% of the difference between 
the actual expenses incurred and 90% of the direct service revenues. 
(7) Providers will be notified of their repayment status within 90 days of 
submitting their cost reports. A provider's repayment status may change as a 
result of the desk reviews or outside audits of cost reports, or by adjustments 
to claims paid to the provider for services provided in the cost reporting 
period. Providers will submit the repayment amount within 60 days of 
notification. 
(8) Repayment will be collected from the following: 
(A) the provider or legal entity submitting the report; 
(B) any other legal entity responsible for the debts or liabilities of the 
submitting entity; or 
(C) the legal entity on behalf of which a report is submitted.
(9) These entities will be jointly and severally liable for any repayment due to 
TDMHMR. Failure to repay the amount due when notified may result in a vendor 
hold on all of the facilities included in the cost report. 
(10) Providers who wish to appeal the requirement to make payment to TDMHMR in 
accordance with this section may do so in accordance with 25 TAC Chapter 409, 
Subchapter B. 

sec.355.458. Rebasing the Non-State Operated Facility Modeled Rates. 
For the rate year beginning, January 1, 2001, and at least every three years 
thereafter TDMHMR will assess the viability of the non-state-operated modeled 
rates using the following process: 
(1) TDMHMR will seek to obtain a consultant to conduct an independent, detailed 
analysis of cost and operational information for a sample of ICF/MR service 
providers throughout the state in accordance with Texas Government Code, Chapter 
2254. 
(2) Site visits will be made to each of the sample providers to collect cost 
data and discuss operations.  
(3) An advisory panel consisting of service providers, advocates, and department 
personnel will analyze available information regarding historical cost and 
operational data and level-of-need assessment. TDMHMR will use the analysis to 
make recommendations to the Texas MHMR Board for adjusting the rates or rebasing 
model-based rates. 
(4) TDMHMR will recommend adjustments to rate factors if required, based on the 
results of the analysis of the sample of cost and operational information. 
(5) Revised rates, as well as the rationale supporting the rates, will be 
presented to the Texas MHMR Board for approval and implementation. Final 
approval of the rates will be provided by THHSC. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803745
Marina Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Effective date: April 5, 1998
Proposal publication date: December 19, 1997
For further information, please call: (512) 424-6576

SUBCHAPTER F. Reimbursement Methodology for Medicaid Home and Community-based 
Services Provided by the Texas Department of Mental Health and Mental 
Retardation
1 TAC sec.355.722, sec.355.723
The Texas Health and Human Services Commission (THHSC) adopts sec.355.722 and 
sec.355.723, governing Reimbursement Methodology for Medicaid Home and 
Community-based Services (HCS) Provided by the Texas Department of Mental Health 
and Mental Retardation (TDMHMR). The sections would replace existing 1 TAC 
sec.355.722 and sec.355.723 of Chapter 355, Subchapter D, governing HCS, which 
were transferred from TDMHMR to THHSC in accordance with Government Code Section 
531.021(b) and are contemporaneously repealed in this issue of the Texas 
Register. Section 355.722 and sec.355.723 are adopted with changes to the 
proposed text as published in the December 19, 1997, issue of the Texas Register 
(22 TexReg 12366). 
The adopted sections set forth the reimbursement methodology developed for the 
HCS program. Rules governing the reimbursement methodology for the HCS program 
are being transferred to THHSC from the Texas Department of Mental Health and 
Mental Retardation in response to Texas Government Code, sec.531.021(b), 
effective September 1, 1998. The methodology was developed with model-based 
rates. The models included assumptions about direct care costs, including the 
number of direct care staff available for the provision of services, and wages 
and benefits that provide incentives for reducing turnover and improving the 
quality of staff. The proposed new sections establish a fiscal accountability 
process to track the amount of money spent on direct care. These rules will 
allow TDMHMR, the operating agency for the HCS program, to recover some of the 
direct care portion of the rate when a provider spends less than 90% of that 
portion of the rate on direct care. 
Section 355.722(i) was revised on adoption to reflect a due date for direct 
service cost reports of 90 calendar days after the end of the reporting period 
or 90 days after the date that TDMHMR mails the form to the provider, whichever 
is later. Section 355.722(s)(9) was modified to delete confusing language. 
Section 355.722(b)(3) was revised to indicate that the direct service portions 
of the current rate model are inflated on an annual basis as specified in 
sec.355.723(g)(1), and that this will increase the indirect part of the rate 
proportionately. Section 355.722(s)(6) was revised to indicate that provisions 
of this section concerning fiscal accountability recoupment or repayment apply 
to that portion of the provider's fiscal year that occurs after the effective 
date of such provisions. Section 355.722(10) and (11) were revised to indicate 
the settlement of 50% of the difference between 80% and 90% of the direct 
service revenues. Section 355.723(g)(2) was revised to indicate that the modeled 
rates will be analyzed to determine if rebasing is necessary for the rates 
effective September 1, 2001. Section 355.722(c) was revised to indicate TDMHMR 
will select a sample of non-state operated providers which will be required to 
submit a full and accurate account of all costs related to the provision of 
services for provider's fiscal year in order to collect data for the analysis 
referenced in sec.355.723(g)(2). Section 355.722(s)(7) was modified to avoid 
potential misinterpretations regarding the terms "billed" and "paid." Section 
355.722(s)(11) (proposed as sec.355.722(s)(12))was modified to indicate that a 
provider's repayment status may change as a result of reductions and additions 
("adjustments") to claims paid to the provider for services provided in the cost 
reporting period. Several modifications of the proposed language were made to 
improve grammar, update references, and correct renumbering. Oral and written 
testimony was offered by one commenter at a public hearing held on January 8, 
1997. Written comments were offered by the following organizations: the Private 
Providers Association of Texas, Austin; Educare, Austin; and Concept Six, 
Austin. While all commenters offered recommendations regarding modification(s) 
to the language of the rule, no commenter was specifically for or against the 
proposal. 
Regarding sec.355.722(i), two commenters requested the due date for direct 
service cost reports be changed from 45 days to 90 days. The commission responds 
that it agrees and has revised the language to reflect a due date for direct 
service cost reports of 90 calendar days after the end of the reporting period 
or 90 days after the date that TDMHMR mails the form to the provider, whichever 
is later. 
Regarding sec.355.722(s)(9), three commenters stated that certain language in 
this item is not logical. The commenters indicated that the item should be 
corrected by eliminating "plus 50% of the difference between 85% and 90% of the 
direct service revenues." The commission responds that it agrees and has deleted 
the referenced language. 
Regarding the proposal in general, one commenter requested clarification as to 
whether a combined cost report may be filed for providers with multiple vendor 
numbers when reporting and settling direct revenues and costs. The commission 
responds that the instructions for the cost reports developed by TDMHMR 
adequately address the requirements for submitting a combined cost report. 
Accordingly, no change to the proposed rule is required. 
Regarding sec.355.722, one commenter suggested the title be changed to rate 
setting methodology. The commission responds that it disagrees. The proposed 
subchapter specifically governs HCS reimbursement methodology and the referenced 
section deals primarily with cost reporting. The title will remain as written. 
Regarding sec.355.722(b)(3), one commenter requested rule text modifications to 
indicate that the total rate is inflated, not just the direct portion of the 
rate. The commission responds that it agrees and has revised the language to 
indicate that the direct service portions of the current rate model are inflated 
on an annual basis as specified in sec.355.723(g)(1), and that this will 
increase the indirect part of the rate proportionately. 
Regarding sec.355.722(s)(5), one commenter stated that rule text revision is 
needed to clarify the intended time frames. The commission responds that it has 
revised sec.355.722(s)(6) to indicate that provisions of this section concerning 
fiscal accountability recoupment or repayment apply to that portion of the 
provider's fiscal year that occurs after the effective date of such provisions. 
Regarding sec.355.722(10) and (11), one commenter stated that the referenced 
language should indicate the settlement of 50% of the difference between 80% and 
90% of the direct service revenues. Based on public testimony received during 
the February 11, 1998, meeting of the Texas Mental Health and Mental Retardation 
Board, the language of sec.355.722 (8),(10), and (11) has been revised to allow 
the recoupment of 100% of the difference between 80% and 85% of the direct 
service revenues and no settlement above 85%. 
Regarding sec.355.723(g)(2), two commenters requested clarification of the time 
frames for rebasing. The commission responds that it agrees and has revised the 
language to indicate that the modeled rates will be analyzed to determine if 
rebasing is necessary for the rates effective September 1, 2001. The commission 
has also revised the language of sec.355.722(c) to indicate TDMHMR will select a 
sample of non-state operated providers which will be required to submit a full 
and accurate account of all costs related to the provision of services for 
provider's fiscal year in order to collect data for the analysis referenced in 
sec.355.723(g)(2) of this title. 
The new sections are adopted under the Human Resources Code, Chapter 32, 
sec.32.021, and Government Code, Chapter 531, sec.531.021, which provide the 
Texas Health and Human Services Commission (THHSC) with the authority to 
administer federal medical assistance funds and administer the state's medical 
assistance program and adopt rules governing the determination of medical 
assistance rates. 
The sections affect Human Resources Code, Chapter 32, and Government Code, 
Chapter 531, sec.531.021. 

sec.355.722. Reporting Costs. 
(a) On an annual basis, all state-operated providers must submit cost reports as 
directed by TDMHMR or its designee in accordance with Subchapter F of this 
chapter (relating to General Reimbursement Methodology for all Medical 
Assistance Programs). 
(b) Non-state operated providers must report direct service costs as specified 
in this subsection and in accordance with Subchapter F of this chapter. 
(1) Direct service costs are defined to include costs associated with personnel 
who provide direct hands-on support for consumers and include personnel such as 
direct care workers, first-level supervisors of direct care workers, registered 
nurses, licensed vocational nurses, and other personnel who provide activities 
of daily living training and clinical program services. Reporting of direct 
service costs include: costs related to wage rates, benefits, payroll taxes, 
contracts for direct services, and direct service supervision information. 
Accrued leave (sick or vacation) can only be considered as a direct service cost 
if the employee has a right to a cash value of that leave upon termination. 
(2) For staff whose duties include work other than the provision of direct 
services, the proportion of work that is spent on direct services may be 
included in the direct service costs. The proportion of their salary and 
benefits that are compensation for direct services work can be included in the 
direct service cost report only to the extent that the salary and benefits for 
this direct service work must be the lesser of the actual wages and benefits or 
the wages and benefits for a comparable direct care workers assumed in the 
model. The facility must have a procedure that specifies how direct service work 
time is allocated. 
(3) The direct service portions of the current rate model are inflated on an 
annual basis as specified in sec.355.723(g)(1) of this title (relating to Annual 
Rates). This will increase the indirect part of the rate proportionately. 
(4) On an annual basis, non-state operated providers will submit direct service 
cost data. 
(5) Providers must report the following costs: 
(A) Staff wages related to the delivery of direct services including residential 
assistance, day habilitation services, and the direct supervision of the 
delivery of these services. 
(B) These costs may be either the provider's actual expense or contracted 
expenditures. 
(c) TDMHMR will select a sample of non-state operated providers which will be 
required to submit a full and accurate account of all costs related to the 
provision of services for a provider's fiscal year in order to collect data for 
the analysis referenced in sec.355.723(g)(2) of this title (relating to Modeled 
Rates Analysis Process). 
(d) TDMHMR will conduct desk audits of all full cost reports and/or direct 
service cost reports, and will conduct on-site reviews of a sample of providers 
submitting cost reports. 
(e) Record keeping requirements. Each provider must retain records according to 
the TDMHMR's requirements. Providers must ensure that records are accurate and 
sufficiently detailed to support the legal, financial, and statistical 
information provided to TDMHMR. 
(f) Noncompliance with record keeping requirements. Failure to maintain records 
that support the information submitted to TDMHMR constitutes a violation of the 
HCS provider contract. 
(g) Allowable and unallowable costs. Providers must complete cost reports in 
accordance with Subchapter F of this chapter. 
(h) Certification. Providers must certify the accuracy of cost reports submitted 
to TDMHMR. Providers may be liable for civil and/or criminal penalties if the 
cost report is not completed according to TDMHMR requirements.
(i) Due date. Providers must submit direct service cost reports no later than 90 
calendar days after the end of the reporting period or 90 days after the date 
that TDMHMR mails the form to the provider, whichever is later. Providers must 
submit full cost reports no later than 90 days after the reporting period or 90 
days after the date that TDMHMR mails the form to the provider, whichever is 
later. 
(j) Extension of due date. TDMHMR may grant extensions of due dates for good 
cause. Good cause is defined as one that the provider could not reasonably be 
expected to control. A provider must submit a request for extension in writing 
to TDMHMR before the cost report due date. TDMHMR will respond to a request for 
extension within 10 working days of its receipt.
(k) Cost data. TDMHMR may at times require additional financial and statistical 
information to ensure the fiscal integrity of the HCS Program. Each provider 
must submit additional information to TDMHMR upon request, unless the 
information is not at the provider's disposal. 
(l) Failure to submit requested data. Failure to submit acceptable cost data by 
the due date constitutes a violation of the HCS provider contract.
(m) Review of cost data. TDMHMR or its designee reviews each provider's cost 
data to ensure that the financial and statistical information submitted conforms 
to all applicable rules and instructions. Forms that are not completed according 
to TDMHMR's instructions or rules may be returned to the provider for proper 
completion. 
(n) On-site audits. TDMHMR or its designee performs a sufficient number of on-
site financial audits to ensure the fiscal integrity of the HCS Programs. The 
number of on-site audits performed may vary. 
(o) On-site audit standards. TDMHMR or its designee performs on-site financial 
audits in a manner consistent with the generally accepted auditing standards 
(GAAS) approved by the American Institute of Certified Public Accountants and 
included in Standards for Audit of Governmental Organizations, Programs, 
Activities and Functions, issued by the United States Comptroller General. 
(p) Access to records. Each provider must allow access to TDMHMR or its designee 
to any and all records necessary to verify cost data submitted to TDMHMR or its 
designee. This requirement includes records pertaining to related-party 
transactions and other business activities engaged in by the provider that are 
directly or indirectly related to the provision of contracted services. Failure 
to allow inspection of pertinent records within 10 working days following 
written notice from TDMHMR constitutes a violation of the HCS provider contract. 
If the administrative office or other entity pertaining to a multi-contract 
operation refuses access to records, then the penalties are extended to all of 
the provider's entities having Medicaid contracts with TDMHMR. Additional rules 
regarding access to records that are out-of-state may be found in sec.355.702 of 
this title (relating to Methods for Cost Determination). 
(q) Reviews of exclusions or adjustments. A provider who disagrees with TDMHMR's 
exclusion or adjustment of items in cost reports may request an informal review 
and, when appropriate, an administrative hearing as specified in sec.355.7 of 
this title (relating to Reviews and Administrative Hearings). 
(r) Notification of exclusions and adjustments. TDMHMR will notify a provider of 
exclusions and any adjustments, including caps applied, to reported costs in 
accordance with sec.355.705 of this title (relating to Notification). 
(s) Fiscal Accountability. 
(1) General principles. Fiscal accountability is a process used to gauge the 
ongoing financial performance under the non-state operated reimbursement rates. 
(2) Annual reporting. Fiscal accountability will consist of the annual reporting 
of direct service costs including wages, and benefits, from all non-state 
operated providers. The data will be collected on a cost report designed by 
TDMHMR or its designee. 
(3) In the initial rate period, providers are required to submit direct services 
costs on a report for a uniform three month period of the year, as selected by 
the department. The report will reflect the provider's actual direct costs for 
the three month period. The direct service costs will be compared to the "direct 
service cost" component of the modeled rates. Instances where a provider's 
actual direct service costs, as captured by the quarterly cost surveys, are less 
than 85% of the direct service revenues in the model, will require additional 
reporting of costs and other information from the provider. 
(4) TDMHMR will review the results obtained from the direct services cost 
reports submitted for 1997 with representatives of provider associations and 
advocacy groups to further refine the fiscal accountability process. TDMHMR may 
require the provider to: 
(A) report more detailed financial information; 
(B) submit to a quality assurance survey and review; 
(C) submit to a utilization review of all services provided, and/or 
(D) submit to a detailed audit of all relevant financial records.
(5) The department will require providers to report all direct costs incurred on 
an annual fiscal year basis. The department will compare the reported direct 
service costs to the total direct service revenue.
(6) Provisions of this section concerning fiscal accountability recoupment or 
repayment apply to that portion of the provider's fiscal year that occurs after 
the effective date of such provisions. 
(7) Direct Service Revenues are calculated by multiplying the number of units 
eligible for payment that have been paid, for services delivered during the 
reporting period times the appropriate direct service portion of the rate for 
the service billed. 
(8) Providers whose direct service costs are 85% or more of the direct service 
revenues will not be subject to repayment under this section. 
(9) Providers whose direct service costs are less than 80% of the direct service 
revenues will be required to pay to TDMHMR the difference between the actual 
expenses incurred and 95% of the direct service revenues.
(10) Providers whose direct service costs are between 80% and 85% of the direct 
service revenues will be required to pay to TDMHMR 100% of the difference 
between the actual expenses incurred and 85% of the direct service revenues. 
(11) Where applicable, providers will be notified of the requirement to repay 
revenues within 90 days of submitting their cost reports. A provider's repayment 
status may change as a result of the desk reviews or outside audits of cost 
reports, or adjustments to claims paid to the provider for services provided in 
the cost reporting period. Providers will submit the repayment amount within 60 
days of notification. 
(12) Recoupment will be collected from the following:
(A) the provider or legal entity submitting the report; 
(B) any other legal entity responsible for the debts or liabilities of the 
submitting entity; or 
(C) the legal entity on behalf of which a report is submitted.
(13) Providers required by TDMHMR to repay revenues will be jointly and 
severally liable for any repayment. TDMHMR may apply a vendor hold on Medicaid 
payments to all providers included in a report for not making the repayment 
amount to TDMHMR within 60 days of receiving notice.
(14) Providers who wish to appeal the requirement to make payment to TDMHMR 
should do so in accordance 25 TAC sec.409.106. 

sec.355.723. Reimbursement Methodology for Home and Community-Based Services 
(HCS). 
(a) The department will present reimbursement rates to the Texas MHMR Board for 
approval and then to the Texas Health and Human Services Commission for final 
adoption according to Subchapter F of this chapter (relating to General 
Reimbursement Methodology for all Medicaid Assistance Programs).
(b) Reimbursement rates apply to all non-state operated providers uniformly by 
type of service component provided and the individual's level-of-need. 
Reimbursements for state-operated providers are adjusted based on allowed costs 
reported at the end of the state fiscal year, in accordance with Subchapter F of 
this chapter. The state-operated cost adjustment will not exceed allowable 
federal maximums. 
(c) The department will present reimbursement rates annually to the Texas MHMR 
Board for approval and then to the Texas Health and Human Services Commission 
for final adoption. The rates are prospective in nature.
(d) Modeled rates are based on relevant cost information including a sample of 
historical cost information and operational experience of service providers in 
Texas. The modeled rates are reasonable and adequate to meet the costs that must 
be incurred by efficiently and economically operated providers to provide 
services in conformity with applicable state and federal laws, regulations, and 
quality and safety standards. 
(e) Rates for service components may also take into account the individual's 
level of need as defined in 25 TAC sec.409.103. Rates vary by level of need for 
residential support, HCS foster care, and day habilitation.
(f) The modeled rates effective January 1, 1997, are based on cost components 
deemed appropriate for a provider. The determination of these components is 
based on historical cost and operational information collected from a 
representative sample of providers. An advisory panel consisting of service 
providers, advocates, an independent firm and department personnel, will analyze 
available information regarding historical cost and operational data and level-
of-need assessment. The analysis will result in recommendations to the board for 
rates which are reasonable and adequate. 
(g) The rates are derived for each type of service and, when appropriate, each 
level-of-need and include the following cost factors: direct service staffing 
costs (wages for direct care, direct care supervisors, benefits, modeled 
staffing ratios); non-personnel operating costs; facility costs (for respite 
care only); room and board costs for overnight, out-of-home respite care; 
administrative costs; and professional consultation and program support costs. 
(1) Annual rates for the time period between the years that modeled rates are 
rebased are set by inflating the direct cost portion of the previous year's 
rates by the IPD-PCE as defined in Subchapter F of this chapter. TDMHMR will 
collect the direct costs on a survey during a three month period of the current 
rate year. The data will reflect the provider's actual costs for the fiscal 
quarter ending during the three-month period. The direct service costs will be 
compared to the direct service cost component of the modeled rates. 
(2) The modeled rates will be analyzed to determine if rebasing is necessary for 
the rates effective September 1, 2001, using the following process: 
(A) TDMHMR will seek to retain an independent firm in accordance with Texas 
Government Code, Chapter 2254, to perform a detailed analysis of cost and 
operational information for a sample of providers throughout the state. 
(B) Site visits will be made to each of the sample providers to collect cost 
data and discuss operations. 
(C) An advisory panel will be formed consisting of service providers, advocates, 
and department personnel who will analyze available information regarding 
historical cost and operational data and level-of-need assessment. TDMHMR will 
use the analysis to make recommendations to the board for rates which are deemed 
appropriate. 
(D) The advisory panel, TDMHMR, and the independent firm will recommend 
adjustments to rate factors if required, based on the results of the analysis of 
the sample of cost and operational information. 
(E) Revised rates, as well as the rationale supporting the rates, will be 
presented to the TDMHMR Board for interim approval and for referral to THHSC for 
final adoption. 
(3) Refinement/adjustment of the cost factors and model assumptions will be 
considered, as appropriate, by the TDMHMR Board based on the overall industry 
results and recommendations of department staff. Final adoption of rates is made 
by the Health and Human Services Commission.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803746
Marina Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Effective date: April 5, 1998
Proposal publication date: December 19, 1997
For further information, please call: (512) 424-6576

1 TAC sec.355.773, sec.355.775
The Texas Health and Human Services Commission adopts sec.355.773 and 
sec.355.775, concerning Reimbursement for the Mental Retardation Local Authority 
(MRLA) Program Operated by the Texas Department of Mental Health and Mental 
Retardation (TDMHMR). Section 355.771 was proposed erroneously under this 
subchapter and is withdrawn. Sections 355.773 and 355.775 are adopted with 
changes to the proposed text as published in the December 19, 1997, issue of the 
Texas Register (22 TexReg 12369). 
The adopted sections are in response to Senate Concurrent Resolution 55 of the 
74th Texas Legislature which, in part, directs the state Medicaid office to 
apply for a federal waiver to allow a pilot program to test enhanced local 
authority functions regarding services provided to individuals with mental 
retardation and other developmental disabilities. The proposed sections 
represent the reimbursement methodology portion of the MRLA pilot study, 
conducted by TDMHMR, which establishes a local authority structure for the 
provision of mental retardation services (Medicaid and non-Medicaid). Designated 
local authorities will ensure the provision of targeted case management for 
pilot waiver consumers, be the single point of access for services, recommend 
certification for pilot waiver providers, authorize pilot waiver services, and 
conduct pilot waiver utilization reviews. 
The commission erroneously proposed sec.355.771 under this subchapter and has 
withdrawn it. The commission has revised sec.355.775(e) to indicate that 
residential support, MRLA foster/companion care, and day habilitation are 
reimbursed on a daily basis. Section 355.775(f) has been revised to specify that 
respite care may be reimbursed on an hourly basis as well as a daily basis. The 
commission has revised sec.355.775(c) to fully reflect the process for approving 
and adopting reimbursement rates. Several modifications of the proposed language 
were made to improve grammar, update references, and correct renumbering. 
A public hearing regarding the proposal was held on January 7, 1997, at which no 
oral or written testimony was presented. Written comments were received from 
Educare, Austin. The commenter offered recommendations regarding modification(s) 
to the language of the rule, but did not specifically support or oppose the 
proposal.  
The commenter stated that several sections of these proposed rules indicate that 
payment to providers is dependent upon the Mental Retardation Authorities' 
(MRAs) performance of certain steps and documentation which are outside the 
providers' control. The commenter recommended that the rule indicate the MRAs 
will incur the financial results of any mistakes or omissions on its part, 
rather than the provider. The commission responds that sec.355.771 of this title 
(relating to Payment Category and Assignment and Provider Claims Payment) will 
be withdrawn from this subchapter but will be retained by Texas Department of 
Mental Health and Mental Retardation (TDMHMR) as sec.409.507 of Chapter 409, 
Subchapter L. TDMHMR has revised sec.409.507 (g) (3) on adoption to indicate 
that payments to providers will not be withheld in the event the MRA fails to 
renew an Individual Plan of Care (IPC) before the end date of the IPC. In 
addition, TDMHMR believes that sec.409.509 of this title (regarding Gaps in 
Level of Care ), adequately addresses the continuation of payment to providers 
in the event the MRA fails to renew an individual's level-of-care.
The commenter noted that several sections of the proposed rules should be 
updated to conform to the latest HCS Program rules as the sections appear to be 
drawn from previously existing rules for the HCS Program which are now dated and 
no longer applicable. The commenter did not specify which sections appeared to 
be out-of-date and no longer applicable. The commission responds that all rules 
listed in sec.355.773 and sec.355.775 are applicable to the MRLA Program. The 
fiscal accountability rules at sec.355.773(p) were drawn from previously 
existing HCS program rules and the commission believes that these provisions 
allow providers flexibility to adjust their costs during the early stages of 
this pilot project. 
Regarding sec.355.775 (f), the commenter recommended that the rule clearly 
indicate the cap on Respite availability. The commission responds that the rules 
to be retained by TDMHMR clearly specify the availability and limits for respite 
in sec.409.501 (b)(9) and that it is unnecessary to repeat the limitations in 
this subchapter.  
Regarding sec.355.775(g), the commenter noted that TDMHMR and the TDMHMR 
Reimbursement Advisory Panel have recognized that the provider's cost of 
"managing" services will not stop because case management responsibilities have 
been transferred to the MRA. The commenter stated that this section of the rules 
does not ensure that the indirect component of the HCS program rate for case 
management will be adjusted to cover the costs that providers will still incur. 
The commission responds that, based upon available data, it believes there are 
adequate funds to meet a provider's costs under this methodology. TDMHMR will 
continue to monitor these concerns as the pilot project progresses.
The sections are adopted under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021, which provide 
the Texas Health and Human Services Commission (THHSC) with the authority to 
administer federal medical assistance funds and the state's medical assistance 
program and to adopt rules governing the determination of medical assistance 
rates. 
The section affects Texas Human Resources Code, Chapter 32, and Texas Government 
Code, Chapter 531, sec.531.021.  

sec.355.773. Reporting Costs. 
(a) Submission of cost reports. All providers must submit cost reports as 
directed by the Texas Department of Mental Health and Mental Retardation 
(TDMHMR) in accordance with sec.sec.355.701-355.709 of this title (relating to 
General Reimbursement Methodology for all Medicaid Assistance Programs). 
(b) Recordkeeping requirements. Each provider must retain records according to 
TDMHMR's requirements. Providers must ensure that records are accurate and 
sufficiently detailed to provide the legal, financial, and statistical 
information requested by TDMHMR. 
(c) Noncompliance with Recordkeeping requirements. Failure to maintain records 
that support the information submitted to TDMHMR could result in the provider 
being placed on vendor hold. 
(d) Cost certification. Providers must certify the accuracy of cost reports 
submitted to TDMHMR. Providers may be liable for civil and/or criminal penalties 
if the cost report is not completed according to TDMHMR requirements. 
(e) Due date. Providers must submit cost reports no later than 90 days after the 
reporting period or 90 days after the date that TDMHMR mails the form to the 
provider, whichever is later.  
(f) Extension of due date. TDMHMR may grant extensions of due dates for good 
cause. Good cause is defined as a causal factor that the provider could not 
reasonably be expected to control. A provider must submit a request for an 
extension in writing to TDMHMR before the cost survey or cost report due date. 
TDMHMR will respond to a request for extension within 10 working days of its 
receipt. 
(g) Cost data. TDMHMR may at times require additional financial and statistical 
information to ensure the fiscal integrity of the MRLA program. Each provider 
must submit additional information to TDMHMR upon request, unless the 
information is not at the provider's disposal. 
(h) Failure to submit requested data. Failure to submit acceptable cost data by 
the due date may result in the provider being placed on vendor hold by TDMHMR. 
(i) Review of cost data. TDMHMR or its designee reviews each provider's cost 
data to ensure that the financial and statistical information submitted conforms 
to all applicable rules and instructions. Forms that are not completed according 
to TDMHMR's instructions or rules may be returned to the provider for proper 
completion. 
(j) On-site financial audits. TDMHMR or its designee performs a sufficient 
number of on-site financial audits to ensure the fiscal integrity of the MRLA 
program. The number of on-site audits performed may vary. 
(k) On-site financial audit standards. TDMHMR or its designee performs on-site 
financial audits in a manner consistent with the generally accepted auditing 
standards (GAAS) approved by the American Institute of Certified Public 
Accountants and included in Standards for Audit of Governmental Organizations, 
Programs, Activities and Functions, issued by the United States Comptroller 
General.  
(l) Access to records. Each provider must allow access by TDMHMR or its designee 
to any and all records necessary to verify cost data submitted to TDMHMR or its 
designee. This requirement includes records pertaining to related-party 
transactions and other business activities engaged in by the provider that are 
directly or indirectly related to the provision of contracted services. Failure 
to allow inspection of pertinent records within 10 working days following 
written notice from TDMHMR constitutes a violation of the MRLA provider 
contract. If the administrative office or other entity pertaining to a multi-
contract operation refuses access to records, then the penalties are extended to 
all of the provider's entities having Medicaid contracts with TDMHMR. Additional 
rules regarding access to records that are out-of-state may be found in 
sec.355.702 of this title (relating to Methods for Cost Determination). 
(m) Reviews of exclusions or adjustments. A provider who disagrees with TDMHMR's 
exclusion or adjustment of items in cost reports may request an informal review 
and, when appropriate, an administrative hearing as specified in sec.355.707 of 
this title (relating to Reviews and Administrative Hearings).
(n) Notification of exclusions and adjustments. TDMHMR will notify a provider of 
exclusions and any adjustments, including caps applied, to reported costs. 
(o) Fiscal Accountability. Fiscal accountability is a process used to gauge the 
ongoing financial performance under the reimbursement rates.
(1) Fiscal accountability will consist of the annual reporting of direct service 
costs including wages, benefits, staffing, and supervisory span-of-control 
information from all MRLA providers. The data will be collected on a cost survey 
designed by TDMHMR. 
(2) Providers are required to submit direct services costs on a survey during a 
uniform three-month period of the year, selected by TDMHMR. The survey will 
reflect the provider's actual direct costs for the three-month period. The 
direct service costs will be compared to the "direct service cost" component of 
the MRLA rates. Instances in which a provider's actual direct service costs, as 
captured by the quarterly cost surveys, are less than 85% of the direct service 
revenues in the model will require additional reporting of costs and other 
information from the provider. 
(3) TDMHMR will review the results obtained from the direct services cost 
surveys with representatives of provider associations and advocacy groups to 
further refine the fiscal accountability process. Direct services cost surveys 
will be collected in each fiscal year. In instances in which a provider's actual 
direct service costs are less than 85% of the direct service revenues in the 
model, TDMHMR may require the provider to:
(A) report more detailed financial information; 
(B) submit to a quality assurance survey and review; 
(C) submit to a utilization review of all services provided; and/or 
(D) submit to a detailed audit of all relevant financial records.

sec.355.775. Reimbursement Methodology for the MRLA program. 
(a) TDMHMR determines reimbursement rates according to sec.sec.355.701-355.709 
of this title (relating to General Reimbursement Methodology for all Medical 
Assistance Programs). 
(b) Reimbursement rates apply to all providers uniformly by the type of service 
component provided and the individual's level-of-need. Case management is not a 
reimbursable service under the MRLA program. 
(c) TDMHMR will present reimbursement rates at least annually to the Texas MHMR 
Board for approval and then to the THHSC for final adoption. The rates are 
prospective in nature. 
(d) Modeled rates are based on relevant cost information including a sample of 
historical cost information and operational experience of service providers in 
Texas. The rates will be the same as the HCS rates which are set in accordance 
with sec.355.723 of this title (relating to Reimbursement Methodology for Home 
and Community-based Services (HCS), with the exception of the case management 
service component. 
(e) Rates for service components may also take into account the individual's 
level of need as defined in 25 TAC sec.409.507 (relating to Payment Category 
Assignment and Provider Claims Payment). Rates for residential support, MRLA 
foster/companion care, and day habilitation vary by level of need and are paid 
on a daily basis. 
(f) Rates for respite care are paid on a daily or hourly basis. Respite care is 
not a reimbursable service for individuals who are receiving MRLA program 
foster/companion care or residential support. 
(g) The rate for the indirect costs of the MRLA program is paid as a flat 
monthly fee to the program provider. The rate is that portion of the HCS modeled 
rate set for case management but does not include the direct service cost and 
overhead for case management.  
(h) The rates are derived for each type of service and, when appropriate, each 
level-of-need, to include the following cost factors: direct service staffing 
costs (wages for direct care, direct care supervisors, benefits, modeled 
staffing ratios); non-personnel operating costs; facility costs (for respite 
care only); room and board costs for out-of-home respite care; administrative 
costs; and professional consultation and program support costs. With the 
exception of the rate for indirect and administrative costs noted in subsection 
(g) of this section, rates will be set at the same time as the HCS rates in 
accordance with sec.355.723 of this title (relating to Reimbursement Methodology 
for Home and Community-based Services (HCS).  
(i) The modeled rates will be analyzed to determine if rebasing is necessary in 
accordance with sec.355.723 of this title (relating to Reimbursement Methodology 
for Home and Community-based Services (HCS). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803744
Marina Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Effective date: April 5, 1998
Proposal publication date: December 19, 1997
For further information, please call: (512) 424-6576

TITLE 19. EDUCATION
PART VII. State Board for Educator Certification
CHAPTER 230.Professional Educator Preparation and Certification
SUBCHAPTER Z.General Provisions Relating to the Transition of Authority to the 
State Board for Educator Certification
19 TAC sec.230.901
The State Board for Educator Certification (SBEC) adopts the repeal of 
sec.230.901, concerning general provisions relating to the transition of 
authority to the State Board for Educator Certification, without changes to the 
proposed text as published in the November 28, 1997, issue of the Texas Register 
(22 TexReg 11632 ) and will not be republished. 
The repeal is necessary because the rule contains an expiration date of November 
1, 1997, and would be ineffective after that date. The SBEC did not extend 
Subchapter Z's expiration date for two reasons: 1) Even without Subchapter Z, 
Section 63(h) of Senate Bill 1, effective May 30, 1995, 74th Legislature, 
Chapter 260, 1995 Texas Session Law, allows the commissioner to enter final 
orders in disciplinary cases until the effective date of the SBEC's disciplinary 
proceedings rules; and 2) Section 63 (h) of Senate Bill 1 does not require the 
commissioner to conduct administrative hearings in disciplinary matters until 
the effective date of the SBEC's disciplinary proceedings rules but Subchapter Z 
would have, and the SBEC has chosen instead to use the State Office of 
Administrative Hearings to conduct such hearings. Subchapter Z was originally 
added to Chapter 230 to help achieve the transfer of authority for disciplinary 
actions against educators from the Commissioner of Education to the SBEC. 
Subchapter Z provided a transition period during which the commissioner would 
continue to conduct hearings and issue final orders related to disciplinary 
actions until the SBEC could assume responsibility for them. 
No comments were received regarding adoption of the repeal. 
The repeal is adopted under the authority of the Texas Education Code (TEC), 
sec.21.031, relating to the authority of the SBEC to adopt rules to regulate and 
oversee all aspects of the certification, continuing education, and standards of 
conduct of public school educators; TEC, sec.21.041(b)(7), relating to SBEC's 
rules regarding disciplinary proceedings, including sanctions, under Government 
Code, Chapter 2001; and sec.63 of the conforming amendments to Senate Bill 1, 
74th Texas Legislature, 1995, relating to the transition regarding the SBEC.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803764
Dr. Mark Littleton
Executive Director
State Board for Educator Certification
Effective date: April 5, 1998
Proposal publication date: November 28, 1998
For further information, please call: (512) 469-3012

TITLE 22. EXAMINING BOARDS
PART III. Texas Board of Chiropractic Examiners
CHAPTER 73.Licenses Renewals
22 TAC sec.73.2
The Texas Board of Chiropractic Examiners adopts an amendment to sec.73.2(c), 
relating to expired licenses, with changes to the proposed text as published in 
the January 2, 1998, issue of the Texas Register (23 TexReg 39). 
The current fee schedule for late renewal of a license in sec.73.2(c) is adopted 
to reflect the correct fees, which a licensee must pay under Texas Civil 
Statutes, Article 4512b, sec.8a. Article 4512b, sec.8a calculates late fees as 
part or all of the fee for the examination for new applicants, depending on how 
long a license has expired for nonrenewal. The late fees set out in sec.73.2(c) 
were not based on the current examination fee and thus, needed to be amended. 
The amendment, as adopted, sets out the correct fees for late renewal. The 
proposed version based the late fee on an examination fee of $445, which was the 
fee when the board administered a clinical and jurisprudence examination. That 
fee is not the current fee assessed by the board for its jurisprudence 
examination which is the only examination it currently gives. The jurisprudence 
examination fee is $125 for a new licensee, and that amount is used in the 
adopted rule to calculate late fees. The section is also amended to change the 
date of renewal for licensees. The board has implemented a stagger system of 
license expiration and renewal based on a licensee's birth date as permitted by 
Texas Civil Statutes, Article 4512b, sec.8c. Under the amendment, renewal is due 
on or before the first day of a licensee's birth month, instead of January 1 of 
each year. Lastly, the rule is amended by adding a new paragraph (5), which sets 
out the statutory late fee for persons whose licenses have expired for one year 
or longer, but who have been practicing in another state for two years. 
No comments were received regarding adoption of the amendment. 
The amendment is adopted under Texas Civil Statutes, Article 4512b, sec.4(c), 
sec.4a, which authorize the board to adopt rules necessary for performance of 
its duties, the regulation of the practice of chiropractic, and the enforcement 
of the Act, sec.8a, which sets out the statutory fees relating to late renewal 
of a license issued by the board, and sec.8c, which authorizes the board to 
establish a stagger system of license expiration and renewal. 
The following sections of Texas Civil Statutes, Article 4512b are affected by 
the adopted amendment: sec.sec.4(c), 4a, 8a, and 8c. 

sec.73.2.Renewal of License. 
(a)-(b) (No change.) 
(c) Expired License. 
(1) If a license is not renewed on or before the first day of the licensee's 
birth month of each year, it becomes expired. 
(2) If a person's license has expired for 90 days or less, the person may renew 
the license by paying to the board the required renewal fee, as provided in 
sec.75.7 of this title (relating to Fees), and a late fee of $62. 
(3) If a person's license has expired for longer than 90 days, but less than one 
year, the person may renew the license by paying to the board the required 
renewal fee, as provided in sec.75.7 of this title and a late fee of $125. 
(4) If a person's license has expired for one year or longer, the person may not 
renew the license but may obtain a new license by submitting to reexamination 
and complying with the current requirements and procedures for obtaining an 
initial license. 
(5) At the board's discretion, a person whose license has expired for one year 
or longer may renew without complying with paragraph (4) of this subsection if 
the person moved to another state and is currently licensed and has been in 
practice in the other state for two years preceding application for renewal. The 
person must also pay the board the required renewal fee, as provided in sec.75.7 
of this title and a late fee of $125. 
(6) The annual renewal application will be deemed to be the written notice of 
the impending license expiration forwarded to the person at the person's last 
known address according to the records of the board. 
(d) (No change.) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803773
Joyce Kershner
Direcor of Licensure
Texas Board of Chiropratic Examiners
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (512) 305-6700

CHAPTER 75.Rules of Practice
22 TAC sec.75.7
The Texas Board of Chiropractic Examiners adopts an amendment to sec.75.7, 
relating to fees, with changes to the proposed text as published in the January 
2, 1998, issue of the Texas Register (23 TexReg 40). 
As adopted, the current fee schedule in sec.75.7 was amended to remove the 
processing fee for an inactive license and the reference to the "retired license 
processing fee" since the Chiropractic Act provides only a fee for processing 
active license applications. The fee for Examination Appeal ($25) is also 
deleted since no appeal is provided for current examinations. The adopted 
version changes the fees for examination and re-examination to reflect the 
current fees for the jurisprudence examination which is the only examination 
currently administered by the board. The examination fees prior to this adopted 
amendment included fees for the clinical and jurisprudence examinations. The 
rule as adopted has also been revised and reformatted to reflect the $200 fee 
required to be collected pursuant to Texas Civil Statutes, Article 4512b, 
sec.11B, in addition to fees imposed by the board, for annual renewal, a 
provisional license, an examination and re-examination. A new subsection (b) has 
been added setting out the requirements of sec.11B. The components of the total 
amount due for each subject to sec.11B are set out separately. The statutory 
charge of $50 for verifying educational courses in connection with an 
application for examination has been added to the schedule. Lastly, the fees 
relating to new licenses and examination for both new licensees and provisional 
licensees have been separately set out in the fee schedule. Other non-
substantive changes have been made for clarification. Charges for certain 
documents, which are available through the board and were listed in the prior 
fee schedule as items I through L and Q through R in sec.75.7 are moved to a new 
subsection (c) and changed to reflect the correct charges for publicinformation 
which the board uses, as determined under General Services Commission (GSC) 
rules, 1 TAC sec.sec.111.61-111.70, on charges for open Records. The adoption of 
this rule as amended will provide licensees with more accurate notice of the 
current fees charged by the board. Members of the public who request copies of 
documents affected by the amendment may obtain those documents at a lower cost 
depending on the number of copies and personnel costs to provide. The overall 
public benefit of the change in fees on board documents will be to ensure that 
the public has access to copies of public documents at a reasonable and 
consistent price while the board is able to recoup its actual costs for such 
documents as provided in the Texas Open Records Act and the GSC's open records 
charges. 
No comments were received regarding adoption of the amendment. 
The amendment is adopted under Texas Civil Statutes, Article 4512b, sec.4(c), 
sec.4a, which authorize the board to adopt rules necessary for performance of 
its duties, the regulation of the practice of chiropractic, and the enforcement 
of the Act, sec.11, sec.11B, which authorize the board to set reasonable and 
necessary fees for the administration of the Chiropractic Act and require the 
board to assess an additional $200 fee on certain board fees, and the Government 
Code, Chapter 552, Subchapter F, relating to charges for providing copies of 
public information. 
The following sections of Texas Civil Statutes, Article 4512b are affected by 
the adopted amendment: sec.sec.4(c), 4a, 11, and 11B. 

sec.75.7.Fees and Charges for Public Information.
(a) Current fees required by the board are listed in the following fee schedule 
table: 
Figure: 22 TAC sec.75.7(a) 
(b) The board is required to increase its fees for annual renewal, a provisional 
license, an examination, and re-examination by $200 pursuant to Texas Civil 
Statutes, Article 4512b, sec.11B. That increase is reflected in subsection (a) 
of this section shown in the fee schedule table under the column entitled 
"sec.11B Fee." The total amount of each of these fees must be paid before the 
board will process an application subject to such fee. 
(c) Copies of public information, not excepted from disclosure by the Texas Open 
Records Act, Government Code, Chapter 552, including the information listed in 
paragraphs (1)-(6) of this subsection, may be obtained upon written request to 
the board, at the rates established by the General Services Commission for 
copies of public information, 1 TAC sec.sec.111.61-111.70 (relating to Copies of 
Public Information): 
(1) List of New Licensees; 
(2) Lists of Licensees; 
(3) Licensee Labels; 
(4) Demographic Profile; 
(5) Facilities List; 
(6) Facilities Labels; 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803774
Joyce Kershner
Director of Licensure
Texas Board of Chiropratic Examiners
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (512) 305-6700

PART I. Texas Natural Resource Conservation Commission
CHAPTER 37.Financial Assurance
SUBCHAPTER L.Financial Responsibility for Used Oil Recycling
30 TAC sec.sec.37.2001, 37.2011, 37.2021
The Texas Natural Resource Conservation Commission (commission) adopts new 
sec.sec.37.2001, 37.2011, and 37.2021, concerning Financial Assurance. Section 
37.2021 was adopted with changes to the proposed text as published in the 
October 17, 1997, issue of the Texas Register (22 TexReg 10238). Sections 
37.2001 and 37.2011 are adopted without change and will not be republished.  
EXPLANATION OF ADOPTED RULE: The adopted new sections are a new Subchapter L 
(relating to Financial Responsibility for Used Oil Recycling). The newly adopted 
sections address the statutory requirements of Texas Health and Safety Code 
Section 371.026(a)(1)(C). This statutory section requires the commission to 
adopt rules that require used oil handlers other than generators to "provide 
proof of liability insurance or other evidence of financial responsibility for 
any liability that may be incurred in handling used oil." The section further 
states that it does not apply to a used oil handler which is owned or otherwise 
effectively controlled by the owners or operators where the used oil is 
generated.  
Adopted new sec.37.2021 requires used oil transporters to show proof of 
insurance to the commission in the forms and levels prescribed by the Texas 
Department of Transportation or the U.S. Department of Transportation. In 
response to a comment, a change has been made to this section to add a second 
sentence stating: "The document issued by the Texas Department of Transportation 
or the U.S. Department of Transportation which shows the used oil transporter is 
currently satisfying department requirements for transporting used oil will be 
an acceptable form of demonstrating proof of insurance and should be submitted 
to the commission."  
TAKINGS IMPACT ASSESSMENT: The commission has prepared a takings impact 
assessment for these rules pursuant to Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the adopted 
new sections is to bring 30 TAC Chapter 324 on Used Oil into compliance with 
Health and Safety Code Chapter 371, Section 371.026(a)(1)(C), Registration and 
Reporting Requirements of Used Oil Handlers Other Than Generators. The rule new 
sections substantially advance the stated purpose by implementing in rule the 
state statutory requirement for financial responsibility. Promulgation and 
enforcement of these rules will not create a new burden on private real property 
which is the subject of the rule amendments because financial responsibility was 
already required by state statute but not federal rule, and the new state rule 
financial assurance requirements do not affect property values; they just 
provide funds for cleanup of contamination, if any, at site closure.
COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW: The executive director has 
reviewed the adopted rulemaking and found that the rule is neither identified in 
Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11, nor will it 
affect any action/authorization identified in Coastal Coordination Act 
Implementation Rules, 31 TAC sec.505.11. Therefore, the adopted rule is not 
subject to the Coastal Management Program.  
HEARINGS AND COMMENTERS: A public hearing was not held for this rulemaking. The 
comment period closed November 17, 1997. Safety-Kleen Corporation was the only 
commenter. Some of the comments were in support of the proposed changes and 
others recommended revisions.  
ANALYSIS OF COMMENTS: Concerning sec.37.2011(b) and (c), Safety-Kleen stated 
that they believe the methods and due dates for annually updating financial 
assurance and the inflation factor basis to use are not clearly defined, and 
they requested clarification. They also proposed that due dates and the 
inflation factor basis be based on requirements in 40 CFR sec.264.12.  
The commission disagrees with this comment. Section 37.2011(b) already refers to 
Chapter 37, Subchapters A, B, C, and D (relating to Financial Assurance), except 
that wherever the term "Closure" is cited it will need to be replaced with the 
term "Soil Remediation". Section 37.2011(c) then references sec.37.131 (relating 
to Annual Inflation Adjustments to Closure Cost Estimates) for annual inflation 
adjustments. This section fully addresses the issues raised by the commenter. 
Therefore, no rule change is required.  
Concerning sec.37.2021, Safety-Kleen commented that they feel the proposed rules 
are unclear on how the Transporters of Used Oil must show proof of insurance 
within 90 days after the effective date of this rule and they requested 
clarification of the procedures.  
The commission agrees with the comment. A clarifying second sentence has been 
added to sec.37.2021, stating: "The document issued by the Texas Department of 
Transportation or the U.S. Department of Transportation which shows the used oil 
transporter is currently satisfying department requirements for transporting 
used oil will be an acceptable form of demonstrating proof of insurance and 
should be submitted to the commission."  
STATUTORY AUTHORITY: The new sections are adopted under Texas Health and Safety 
Code, Chapter 371, sec.371.026, which provides the commission with the authority 
to establish rules on Registration and Reporting Requirements of Used Oil 
Handlers Other Than Generators. The new sections are also proposed under Texas 
Water Code, sec.sec.5.103, 5.105, and 26.011, which provide the commission the 
authority to adopt rules necessary to carry out its powers, duties, and policies 
and to protect water quality in the state. 

sec.37.2021.Financial Responsibility Requirements for Transporters of Used Oil.
A used oil transporter must show proof of insurance to the commission in the 
forms and levels as prescribed by the Texas Department of Transportation (Texas 
Civil Statutes, Articles 6675c, 6675c-1, 911m, and 6687-9a) or the U.S. 
Department of Transportation (49 U.S.C. sec.11506). The document issued by the 
Texas Department of Transportation or the U.S. Department of Transportation 
which shows the used oil transporter is currently satisfying department 
requirements for transporting used oil will be an acceptable form of 
demonstrating proof of insurance and should be submitted to the commission. If a 
used oil transporter is not required to be registered as a motor carrier with 
either of these agencies, then proof of insurance in the form of an original 
signed certificate of insurance and in levels sufficient to pay for bodily 
injury and property damage liability caused by the used oil must be submitted to 
the commission directly by an insurance agent. In all cases, the name of the 
used oil transporter must be identical to the party named on the applicable 
insurance form. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 17, 1998.
TRD-9803854
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation
Effective date: April 6, 1998
Proposal publication date: October 1, 1997
For further information, please call: (512) 239-6087

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART XX. Edwards Aquifer Authority
CHAPTER 709. Critical Period Management Rules
31 TAC sec.sec.709.1, 709.3, 709.5, 709.7, 709.9, 709.11, 709.13, 709.15, 
709.17, 709.19, 709.21, 709.23, 709.25, 709.27, 709.29, 709.31, 709.33, 709.35, 
709.37, 709.39, 709.41, 709.43, 709.45
The Edwards Aquifer Authority (EAA) adopts new sec.sec.709.1, 709.3, 709.5, 
709.7, 709.9, 709.11, 709.13, 709.15, 709.17, 709.19, 709.21, 709.23, 709.25, 
709.27, 709.29, 709.31, 709.33, 709.35, 709.37, 709.39, 709.41, 709.43, and 
709.45, concerning the critical period management rules. Sections 709.1, 709.11, 
709.15, 709.17, 709.19, 709.21, 709.23, 709.25, 709.31, 709.33, and 709.37, are 
adopted with changes to the proposed text as published in the January 2, 1998, 
issue of the Texas Register (23 TexReg 89). Sections 709.3, 709.5, 709.7, 709.9, 
709.13, 709.27, 709.29, 709.35, 709.39, 709.41, 709.43, and 709.45 are adopted 
without changes and will not be republished. 
Senate Bill 1477, sec.1.25 requires that the EAA implement a critical period 
management plan. 
Beginning in May, 1997, the Authority undertook a complete review of its rules 
and rulemaking process. The purpose of the review was to ensure that future 
rulemaking would be efficient and effectively accommodated. The review found 
that there was no preexisting framework or index for likely future rulemaking. 
In addition, the bulk of the rules were being lodged in one single chapter, 
while other rules were located in another chapter without an apparent numerical 
nexus. The placement of most of the rules in one chapter was over time likely to 
result in intermixing of multiple unrelated subject matters and creation of 
problems in the sequencing of chapters and subchapters. Accordingly, an index of 
probable future rulemaking was developed as a structural guide to follow. In 
light of the development of this index, it became necessary to reorganize the 
rules of the Authority to conform to the index. Adopting this new Chapter 709 
furthers this process relating to the Authority's Critical Period Management 
Rules and is done concurrent with the repeal of former Chapter 721, 31 TAC 
relating to the Interim Critical Period Management Rules. The prior Interim 
Critical Period Management Rules may be found at 22 TexReg 1698 (1997) (to be 
codified at 31 TAC, Chapter 721)(repealed). 
The Interim Critical Period Management rules were reviewed. The rules were 
evaluated for completeness as to the scope of issues to be addressed, editorial 
style and clarity with a special focus on terminology, substantive legal 
conformance to the Act, the need for augmentation and expansion of discussion 
relative to issues already addressed in the rules, and the elimination of 
unnecessary provisions. 
Authority Responses to Comments: Procedural Background. 
The Authority conducted public hearings on January 21, 1998, in San Antonio, 
January 22, 1998, in New Braunfels, and January 29, 1998, in Hondo. The 
Authority received oral comments at these hearings. It received written comments 
from January 2, 1998, through 5:00 p.m. on February 3, 1998. Authority staff 
compiled the oral and written comments and reviewed them for the purpose of 
developing recommendations to the Aquifer Management Planning Committee 
(AMPComm) of the Board of Directors (Board) of the Authority. On February 11, 
1998, the staff presented its recommendations to AMPComm. The AMPComm made its 
recommendations on February 11, 1998, to the Board. On February 17, 1998, the 
Board considered the recommendations of the Authority staff, recommendations of 
AMPComm, and other recommendations of the members of the Board at its regular 
Board meeting in San Antonio. These adopted rules reflect the action of the 
Board after review and consideration of the comments received by the Authority 
and staff recommendations. 
Authority Response to Comments not Identifying Specific Rules Within Proposed 
Chapter 709. 
Some commenters did not correlate their comments to specific rules within 
proposed Chapter 709. When the Authority was able to ascertain that a particular 
nonspecific comment was related to a particular rule, the Authority interpreted 
the comment as such and responds as if the comment had identified a particular 
rule. 
Written comments were filed by the following commenters: Office of the Staff 
Judge Advocate, Fort Sam Houston, Texas (Staff Judge Advocate), Rudy Ranch, J.R. 
Oliver, Vinson Pecans, New Braunfels Utilities (NBU), Inland Ocean, Inc., 
Guadalupe Blanco River Authority (GBRA), Sierra Club-Lone Star Chapter (Sierra 
Club), Environmental Defense Fund (EDF), City of San Marcos (San Marcos), United 
Service Automobile Association (USAA), and San Antonio Water System (SAWS). 
Written comments were filed by the following commenters in general opposition to 
the proposed rules but did not address a specific proposed rule such that no 
response is required or is able to be formulated: Rudy Ranch. 
The Authority conducted public hearings on January 21, 1998, in San Antonio, 
January 22, 1998, in New Braunfels, and January 29, 1998, in Hondo. Oral 
comments were received from the following commenters: SAWS and the Sierra Club.
Comments applicable to unspecified rules. 
GBRA comments that the CPM Rules should reduce pumping to the extent necessary 
to avoid adverse water quality impacts and violation of federal law at all 
times, even during major droughts. At a minimum, it comments that the plan 
should ensure minimum springflows will be maintained throughout a repeat of the 
drought of record. It argues that the proposed CPM rules do not accomplish these 
objectives because in its view the plan does not limit withdrawals from the 
aquifer to 225,000 acre-feet per annum, which is argued is the permissible 
amount of withdrawals that demonstrably maintain minimum Comal springflows of 60 
c.f.s. under certain aquifer conditions and withdrawal management regime. GBRA 
maintains that an acceptable CPM Rule would contain withdrawal schedules (or 
caps) as springflows drop coupled with early imposition of withdrawal 
limitations. The Sierra Club and EDF offer similar comments with the addition 
that the Authority makes no demonstration that program is tied in any way to the 
maintenance of springlfows. The Critical Period Rules are not the sole vehicle 
to provide the necessary springflows. Instead, this objective will be a product 
of the Authority's overall set of regional aquifer management strategies that 
will be integrated with the CPM Rules. The graph prepared by the Court Monitor, 
Joe Moore, Jr., and submitted by GBRA shows of at least four springflow peaks of 
450 c.f.s. at Comal Springs before 1950, with nine such peaks through 1973, 
assuming annual withdrawals of 225,000 acre-feet per year. However, the actual 
measured springflow at Comal Springs did not exceed 450 c.f.s until 1973. 
Further, the reported groundwater withdrawals did not equal 225,000 acre-feet 
until 1953. Under the withdrawal schedules proposed by GBRA, springflow would 
appear to discharge at much higher than historic levels. In so doing, this would 
create needless conflict between users of the aquifer and surface water user in 
the lower Guadalupe River Basin. Moreover, the reductions caused by the 
implementation of the proposed CPM rules can be determined by comparing the 
groundwater used on an annual basis when the proposed CPM rules are in effect to 
the permitted amount of a particular applicant. Also, monthly comparisons may 
also be made between years in which the CPM rules are in effect versus when they 
are not in effect. 
GBRA also comments that the current permit and interim authorization status 
rules negatively affect the possibility of success of the proposed CPM Rules by 
allowing withdrawals in excess of 450,000 acre-feet per annum. According  to the 
Authority Report Number 97-01, the average annual reported withdrawals for 
authorized uses during the last ten years (1987-1996) is 408,100 acre-feet per 
annum (irrigation - 116,900; municipal - 258,000; and industrial/commercial - 
33,200). If exempt domestic and livestock uses are included, the average is 
increased to 442,500 acre-feet per annum. The volumes are reported actual 
withdrawals. Based on these available data, the Authority is unable to accept 
this premise at this time. 
The Sierra Club comments that the CPM should, rather than require steps be taken 
to reduce landscape watering as the stages progress, instead encourage or 
require the conversion to less water intensive landscaping practices. Section 
709.17 establishes an aggressive series of water use reduction initiatives 
required to be implemented at the local level. The philosophy in these rules is 
delegate to the most local form of government the regulatory duties to engage in 
meaningful reductions for discretionary uses. The Authority retains the right to 
review and monitor the individual programs adopted and implemented by the 
various local units of governments. 
EDF comments that irrigation withdrawals are improperly excluded from the CPM 
rules and that reductions under the rules would be achieved by paying farmers 
not to irrigate. The Authority responds that this issue is not yet addressed in 
these proposed rules. The Authority intends to consider this issue when it 
proposes the definitions for the CPM rules during later rulemaking. The pendency 
of the Authority permit program rules and definitions prevented it from 
proposing definitions for the CPM rules currently at the time it published the 
proposed CPM rules. 
USAA notes that the terms "retail water utilities" and "retail public utilities" 
are seemingly used interchangeably throughout the rules, and that one of the 
terms should be selected and used consistently throughout the rules. The 
Authority agrees and has modified the rules to use the term "retail water 
utilities" throughout the rules. 
Comments related to sec.709.1. 
In commenting on sec.709.27, Vinson Pecans offered a comment about the Critical 
Period Management (CPM) rules applicable to exempt well. The Authority has 
modified sec.709.1 to more specifically identify the CPM rules are applicable to 
exempt wells. 
SAWS notes that sec.709.1 applies to customers of applicants for initial regular 
permits who are retail public utilities and that SAWS may have customers over 
which it has no authority to enforce critical period measures. SAWS advises that 
for those customers, the Authority may have to assume critical period 
enforcement authority. Without resolving this legal question, the Authority 
responds that the CPM rules are intended to provide enforcement authority to the 
EAA over the category of entities identified in sec.709.1. 
Comments related to sec.709.3. 
GBRA comments that sec.709.3 is contrary to the Act in that it prohibits the 
reductions in non-discretionary uses until it is much too late. Section 1.26(4) 
of the Act requires reduction of nondiscretionary uses only "to the extent 
further reductions are necessary". Rather than prohibiting reductions, sec.709.3 
identifies the times during a critical period in which, in the Authority's 
judgment, it is appropriate to further reduce nondiscretionary uses as may be 
necessary. In so providing that nondiscretionary uses are not subject to 
reduction during Stages I-IV, it is implementing it's other mission of 
effectively controlling the aquifer to protect not only terrestrial and aquatic 
life, but also "domestic and municipal water supplies, the operation of existing 
industries, and the economic development of the state" (Act, sec.1.01).
Comments related to sec.709.5. 
For sec.709.5, San Marcos opposes the use of a unique index well for the East 
Area to determine critical period applicability to the area. Instead, it 
recommends that one index well be used for the entire region encompassed by the 
Authority. The Authority declines to accept this recommendation the Act itself 
establishes at least two pools, the San Antonio and the Uvalde Pool (Act, 
sec.sec.1.14(f) and 1.19(b) and (c)). The Act also authorizes the Authority to 
establish additional pools (Id. sec.1.14(g)). The Authority will continue to 
monitor this issue and make recommendation as additional hydrogeologic 
circumstances may dictate. 
SAWS supports the J-17 index well levels triggering the critical period stages 
for the East Area. 
GBRA and the Sierra Club do not support the critical period stage trigger level 
for the J-17 index well levels commenting that these levels don't adequately 
protect springflow, and that the well levels should be higher at some 
unspecified level. In short, they assert that the Authority's stage triggers are 
"too little too late." The Authority disagrees with this comment because if the 
level of the aquifer is equal to or greater than 650 feet above mean sea level 
as measured at the J-17 well, then sec.1.14(f) of the Act authorizes withdrawals 
from the San Antonio pool on an interruptible basis. Stage V in the East Area is 
triggered by an aquifer level of 628 feet mean sea level in Well J-17. Available 
data show that at that elevation, the average springflow at Comal Springs is 78 
c.f.s.. In 1996, the lowest level for well J-17 was 627.5 feet mean sea level. 
The corresponding springflow at Comal Springs was 82 c.f.s. Thus, there is a 
reasonable basis to support the staging proposed by the Authority.
San Marcos does not support the critical period stage trigger level for the J-17 
index well levels, and that the well levels should be set at 655 mean sea level 
to enter Stage I. The Authority disagrees with this comment because if the level 
of the aquifer is equal to or greater than 650 feet above mean sea level as 
measured at the J-17 well, then sec.1.14(f) of the Act authorizes withdrawals 
from the San Antonio pool on an interruptible basis. San Marcos does support the 
632 mean sea level trigger for Stage IV in sec.709.5(4). 
The Sierra Club also argues that there should be fewer number of stages instead 
of five. In its judgment, confusion will be created in a rapidly declining 
aquifer context. The Authority declines to reduce the number of stages at this 
time because it is not necessary to subject users of the aquifer to limitations 
than are necessary at any particular time. The aquifer is dynamic and shows 
dramatic ability to change aquifer levels over time. Variation in groundwater 
levels in either direction can occur quite rapidly. A CPM program with multiple 
stages recognizes this aquifer characteristic and allows for progressively more 
rigorous limitations on withdrawals for appropriate incremental adjustment as 
the aquifer groundwater levels change. 
Comments related to sec.709.7. 
For sec.709.7, San Marcos opposes the use of a unique index well for the Medina 
Area to determine critical period applicability to the area. Instead, it 
recommends that one index well be used for the entire region encompassed by the 
Authority. The Authority declines to accept this recommendation. The Act itself 
establishes at least two pools, the San Antonio and the Uvalde Pool (Act, 
sec.sec.1.14(f) and 1.19(b) and (c)). The Act also authorizes the Authority to 
establish additional pools (Id. sec.1.14(g)). The Authority will continue to 
monitor this issue and make recommendations as additional hydrogeologic 
circumstances may dictate. 
SAWS supports the Medina index well levels triggering the critical period stages 
for the Medina Area. 
Comments related to sec.709.9. 
For sec.709.9, San Marcos opposes the use of a unique index well for the Uvalde 
Area to determine critical period applicability to the area. Instead, it 
recommends that one index well be used for the entire region encompassed by the 
Authority. The Authority declines to accept this recommendation. The Act itself 
establishes at least two pools, the San Antonio and the Uvalde Pool (Act, 
sec.sec..14(f) and 1.19(b) and (c)). The Act also authorizes the Authority to 
establish additional pools (Id. sec.1.14(g)). The Authority will continue to 
monitor this issue and make recommendations as additional hydrogeologic 
circumstances may dictate. 
SAWS supports the J-27 index well levels triggering the critical period stages 
for the Uvalde Area. 
The Sierra Club generally does not support the trigger levels for all stages and 
recommends they be higher, although no specific levels were recommended. 
Comments related to sec.709.11. 
SAWS supported the establishment of a residential water use credit. 
As to sec.709.11(d), Inland Ocean, Inc. comments that it is not fair or 
equitable to require retail water utilities with residential water use below 125 
gallons per day to participate in a withdrawal suspension program in order to 
retain the more favorable reduction multipliers. The Authority declines to make 
a change based on this comment because, among the purposes of the of the 
withdrawal suspension program, is to reduce overall demand on withdrawals from 
the aquifer. This goal is similar to that of CPM. The Authority position is that 
benefits that are derived under the CPM are appropriately linked to 
participation in a withdrawal suspension program, if any. 
San Marcos comments that sec.709.11(d)(1) does not address what the multiplier 
is for retail water utilities with residential water use above 125 gallons per 
person per day that do not participate in the withdrawal suspension program. The 
Authority responds that the rules do so provide and that the multiplier is 1.3. 
The Staff Judge Advocate, NBU, SAWS, and San Marcos recommend that in 
sec.709.11(d)(1) and (2) the acronym "WSP" be defined. The acronym "WSP" means 
"withdrawal suspension program". The Authority agrees and will propose a 
definition of "WSP" in its sec.703.1, Definition rules. NBU comments that the 
term "reduction multiplier" as used in sec.709.11(d) and (f) should be defined. 
The Authority agrees and will propose a definition to be included in its 
sec.703.1, Definition rules. 
San Marcos comments that the reduction multipliers in sec.709.11(d) "have been 
expanded to the point that these rules may prove to be ineffective in preserving 
springflow during severe drought". The Authority disagrees with this 
characterization. When compared to the Interim CPM rules, the only multiplier 
that has been changed is for Stage I, which was reduced from 1.8 to 1.7.
The Staff Judge Advocate and NBU also recommend that in sec.709.11(e) the term 
"transfer schedule" be defined. The Authority agrees and will propose a 
definition in its sec.703.1, Definition rules. 
NBU comments related to sec.709.11(e) are that the Authority should not place 
reductions on a transferee's amount of withdrawal. The Authority disagrees 
because the point of withdrawal by the transferee would be from the pool that 
would be in CPM. The transfer may be from a pool that is not yet in CPM. Even if 
the transfer is from a pool that is in CPM, a primary purpose of the CPM is to 
reduce demand on withdrawals during lower water levels in order to allow the 
hydrologic cycle to restore aquifer levels through recharge. If demand is not 
reduced through the acquisition of transferred groundwater rights from pools 
that are not yet in CPM or from holders of groundwater rights in a pool that is 
in CPM but not actually make withdrawals of the groundwater transferred, then 
over all demand on withdrawals from the aquifer would not be reduced. NBU also 
recommends that the term "transfer multiplier" as used in sec.709.11(e) be 
defined. The Authority agrees and will propose a definition in its sec.703.1, 
Definition rules. 
The Staff Judge Advocate and SAWS also recommend that note (1) of the table in 
sec.709.11(f) the terms "base withdrawal," "maximum allowable withdrawals" and 
"reduction multiplier" be defined. The Authority agrees and will propose 
definitions in its sec.703.1, Definition rules. 
SAWS comments that sec.709.11(f) should be modified to eliminate confusion over 
whether a user is required to withdraw at base withdrawals levels from November 
through February. The Authority agrees and has modified this subsection 
accordingly. 
SAWS comments that the table in sec.709.11(f) recognizes three areas each with 
either own index wells to determine when each area becomes subject to CPM 
stages. SAWS notes that this approach may be inadequate once the Authority is 
administering and managing the aquifer through permits instead of interim 
authorization. The Authority notes this comment and will consider this issue as 
it transitions its management of the aquifer from interim authorization to its 
permits program. 
San Marcos does not support the critical period stage trigger level for the J-17 
index well levels, and that the well levels should be set at 655 mean sea level 
to enter Stage I. The Authority disagrees with this comment because if the level 
of the aquifer is equal to or greater than 650 feet above mean sea level as 
measured at the J-17 well, then sec.1.14(f) of the Act authorizes withdrawals 
from the San Antonio pool on an interruptible basis. Comments related to 
sec.709.13. 
San Marcos comments that the reference to "one month period" in sec.709.13(a) is 
vague as to its intent from an enforcement perspective. The Authority responds 
that the reference to "one month period" refers to both the period of time for 
which a violation is determined and the time in which a penalty is imposed. 
Maximum withdrawal amounts are calculated on a monthly basis. Therefore, water 
use reports are submitted on a monthly basis. It is the review of these reports 
that determines if a penalty exists. Penalties are assessed for the monthly 
withdrawals. 
Comments related to sec.709.15. 
SAWS comments that this section should be deleted in favor of definitions of 
"base withdrawal" and "maximum allowable withdrawals" to be proposed in 
sec.703.1, Definition rules of the Authority. The Authority agrees and has 
modified this section accordingly. 
Comments related to sec.709.17. 
The Sierra Club recommends that more unspecified limits be placed on 
discretionary uses. The Sierra Club does not specify the additional limitations 
on discretionary uses that in its judgment are required. The Authority disagrees 
that additional limitations are required at this time because among the 
statutory missions of the Authority is the effective control of the aquifer to 
protect not only terrestrial and aquatic life, but also "domestic and municipal 
water supplies, the operation of existing industries, and the economic 
development of the state" (Act, sec.1.01). 
NBU advises that sec.709.17(b) should merely specify the amount of reductions 
required of users rather than identify the specific action to be taken to 
achieve those reductions. The Authority agrees and has modified this subsection 
accordingly. 
NBU, SAWS, and San Marcos comment that in sec.709.17(b) the February 1, 1998, 
date should be moved to 1999. The Authority agrees and has modified this 
subsection to provide for a January 1, 1999 filing date for pricing orders or 
ordinances. 
The Staff Judge Advocate comments that the Figure in sec.709.17(c) does not 
appear in the Authority's proposed rules. The Figure is located in the January 
2, 1998, issue of the Texas Register (23 TexReg 214-223). 
NBU also comments that sec.709.17(c) should not dictate the structure and 
content of all ordinances. The Authority agrees. The model ordinance is provided 
as a helpful tool for the development of an appropriate ordinance. The Authority 
is not as concerned about the "structure" of an ordinance, but it is concerned 
about the content of such ordinances. The Authority agrees that "one size fits 
all" is not likely to be appropriate. However, the intent of the model ordinance 
is not necessary to adopt a "one size fits all" mandate, but rather to provide a 
checklist of the issues the Authority would like to see addressed in an 
ordinance. Accordingly, the Authority has modified this subsection to require 
that ordinances "substantially" contain the elements of the model ordinance. 
NBU also recommends that the Authority should not approve ordinance, although it 
should review and provide comments. The Authority agrees and has modified this 
subsection accordingly to require certification by the General Manager and 
periodic review. 
USAA also recommends that Model Ordinance identified in sec.709.17(c) be 
modified to require that a map of a retail water utility's service area be 
required to be filed with the Authority. The Authority agrees and has modified 
the Model Ordinance accordingly. 
USAA recommends that sec.709.17 be modified to allow applicants who withdraw 
more than 100 acre-feet annually, may develop their own Critical Period 
Management Rules for review and approval by the Authority. The Authority agrees 
and has modified sec.709.17 by adding subsection (h) to authorize and provide 
the procedures for this process. 
NBU recommends non-substantive editorial and stylistic changes to sec.709.17(e) 
which are not adopted by the Authority. 
Comments related to sec.709.19. 
One commenter stated that that the restricted hours for landscape watering in 
sec.709.19(2) was not fair to homeowners without sprinkler systems because not 
enough daylight hours are available to water lawns. The Authority disagrees 
because the CPM Rules are more likely to be in effect during the summer months 
when there is sufficient daylight hours for landscape watering before or after 
the hours of restriction. It is also important to note that the time 
restrictions do not apply to landscape watering with non-potable water. 
Comments related to sec.709.21. 
One commenter stated that the restricted hours for landscape watering in 
sec.709.21(2) was not fair to homeowners without sprinkler systems because not 
enough daylight hours are available to water lawns. The Authority disagrees 
because the CPM Rules are more likely to be in effect during the summer months 
when there is sufficient daylight hours for landscape watering before or after 
the hours of restriction. It is also important to note that the time 
restrictions do not apply to landscape watering with non-potable water. 
USAA comments that the calendar days when landscape watering is permissible 
under sec.709.21(2) should be clarified . The Authority responds that no 
additional clarification is needed. This paragraph provides that customers 
served by a retail water utility are allowed to water landscape on days 
designated by the utility. Persons not served by a retail water utility may 
water on the default days of Saturday and Wednesday as indicated by 
sec.709.21(4). USAA also comments that the concept of "watering days" be 
clarified. The Authority agrees and will propose a definition of "watering days" 
in its sec.703.1, Definition rules. 
USAA also comments that sec.709.21 does not clearly identify persons who are 
subject to a retail water utilities designated watering day, i.e. customers 
within the utility's service area or customers serviced by the utility but not 
within the service area of the utility. USAA recommends that customers within a 
utility's service area be subject to the watering days established by its CPM 
Ordinance. Other customers not within the service area are subject to the 
default days in sec.709.21(4). The Authority agrees and has modified 
sec.709.21(3) and (4) accordingly. 
USAA also recommends that the Authority create a definition for the term 
"service area". The Authority declines to do so at this time, but will monitor 
this issue during implementation of the CPM program to determine if such a 
definition would be helpful. 
This definition is being proposed for the CPM rules definitions in sec.703.1.
Comments related to sec.709.23. 
One commenter stated that the restricted hours for landscape watering in 
sec.709.23(2) was not fair to homeowners without sprinkler systems because not 
enough daylight hours are available to water lawns. The Authority disagrees 
because the CPM Rules are more likely to be in effect during the summer months 
when there is sufficient daylight hours for landscape watering before or after 
the hours of restriction. It is also important to note that the time 
restrictions do not apply to landscape watering with non-potable water. 
USAA comments that the calendar days when landscape watering is permissible 
under sec.709.23(2) should be clarified . The Authority responds that no 
additional clarification is needed. This subsection provides that customers 
served by a retail water utility are allowed to water landscape on one day 
designated by the utility. Persons not served by a retail water utility may 
water on the default day of Saturday as indicated by sec.709.23(4). 
USAA also comments that the concept of "watering days" be clarified. The 
Authority agrees and will propose a definition of "watering days" in its 
sec.703.1, Definition rules. 
USAA also comments that sec.709.23 does not clearly identify persons who are 
subject to a retail water utilities designated watering day, i.e. customers 
within the utility's service area or customers serviced by the utility but not 
within the service area of the utility. USAA recommends that customers within a 
utility's service area be subject to the watering days established by its CPM 
Ordinance. Other customers not within the service area are subject to the 
default days in sec.709.23(4). The Authority agrees and has modified 
sec.709.23(3) and (4) accordingly. 
Comments related to sec.709.25. 
One commenter stated that the restricted hours for landscape watering in 
sec.709.25(2) was not fair to homeowners without sprinkler systems because not 
enough daylight hours are available to water lawns. The Authority disagrees 
because the CPM Rules are more likely to be in effect during the summer months 
when there is sufficient daylight hours for landscape watering before or after 
the hours of restriction. It is also important to note that the time 
restrictions do not apply to landscape watering with non-potable water. 
USAA comments that the calendar days when landscape watering is permissible 
under sec.709.25(2) should be clarified . The Authority responds that no 
additional clarification is needed. This paragraph provides that customers 
served by a retail water utility are allowed to water landscape on one day 
designated by the utility. Persons not served by a retail water utility may 
water on the default day of Saturday as indicated by sec.709.25(4). 
USAA also comments that the concept of "watering days" be clarified. The 
Authority agrees and will propose a definition of "watering days" in its 
sec.703.1, Definition rules. 
USAA also comments that sec.709.25 does not clearly identify persons who are 
subject to a retail water utilities designated watering day, i.e. customers 
within the utility's service area or customers serviced by the utility but not 
within the service area of the utility. USAA recommends that customers within a 
utility's service area be subject to the watering days established by its CPM 
Ordinance. Other customers not within the service area are subject to the 
default days in sec.709.254. The Authority agrees and has modified sec.709.25(3) 
and (4) accordingly. 
Comments related to sec.709.27. 
SAWS supported the proposed emergency rules development time lines. 
SAWS also recommended that the residential water use credit be extended to Stage 
V. The Authority declines to accept this recommendation at this time, but will 
consider this recommendation when it considers specific Stage V rules. Vinson 
Pecans offered several comments related to the nature of any Stage V rules that 
might be adopted. The Authority will not respond to those comments at this time, 
but instead will wait until it develops proposed Stage V rules and the comment 
process for those proposed rules. The Authority has modified sec.709.1 to more 
specifically identify the CPM rules applicable to exempt wells. 
Inland Ocean, Inc. comments that sec.709.27 is inadequate because it contains no 
substantive provisions that would be enforceable during Stage V. The Authority 
acknowledges this comment but notes that the purpose of this section is to 
recognize the existence of a Stage V for CPM purposes and provide notice that 
the Authority will be proposing for adoption more specific Stage V rules on or 
before June 30, 1998. 
Comments related to sec.709.29. 
NBU recommends that the acronym "WSP" as used in sec.709.29(a)(1) and (2)(C) and 
(D) be defined. The Authority agrees and will propose a definition in its 
sec.703.1, Definition rules. 
NBU recommends that the term "conforming golf course" and "non-conforming golf 
course" as used in sec.709.29(b) be defined. The Authority agrees and will 
propose a definition in its sec.703.1, Definition rules. 
NBU recommends non-substantive editorial and stylistic changes to sec.709.29(b) 
which are not adopted by the Authority. 
Comments related to sec.709.31. 
NBU recommends that the acronym "WSP" as used in sec.709.31(b)(11) be defined. 
The Authority agrees and will propose a definition in its sec.703.1, Definition 
rules. 
Comments related to sec.709.33. 
NBU comments that sec.709.33(c) should not require a transferee to become an 
applicant for an initial regular permit. The Authority disagrees, a transferee 
who acquires by sale the transfer of an interim authorization status is required 
to become an applicant for an initial regular permit. 
NBU recommends that sec.709.33(e) require that the base withdrawal report be on 
a form prescribed by the Authority and to clarify this section to that effect. 
The Authority agrees that is the intent of sec.709.33(e) and has made 
appropriate modifications. 
EDF comments that the concept of "base withdrawals" should be discarded in favor 
of relating critical period withdrawals to regular withdrawals. The concept of 
"base withdrawals" is intended to standardize the time frame for determining 
each applicant's base usage or minimum amount of use. The Authority intends to 
consider this issue when it amends the CPM rules after its permit system is in 
place. While it is in interim authorization, however, in the Authority's 
judgement the preferred approach is to provide for base withdrawals.
Comments related to sec.709.35. 
SAWS comments that sec.709.35(c) should distinguish between enforcement actions 
against applicants for initial regular permits and their customers over whom 
they may have no critical period enforcement authority. The Authority declines 
to adopt this recommendation. 
Comments related to sec.709.37. 
SAWS recommends that sec.709.37(a) disallow a customer of a retail water utility 
from pursuing a variance directly with the Authority until it has sought a 
variance from the retail water utility. The Authority agrees and has modified 
this subsection to so reflect. 
The new sections are adopted under Senate Bill 1477, sec.1.11(a), which requires 
the board of directors of the EAA to adopt rules necessary to carry out the 
EAA's powers and duties, including critical period management rules. 

sec.709.1. Applicability. 
This chapter applies to all applicants or holders of regular permits, the 
customers of all applicants who are retail water utilities, and owners of exempt 
wells. Reference to "applicant" shall also refer to a regular permit holder. 
Owners of exempt wells will follow the reduction measures in sec.sec.709.19-
709.27 of this title (relating to Stage I Restrictions, Stage II Restrictions, 
Stage III Restrictions, Stage IV Restrictions, and Stage V Restrictions). 

sec.709.11. Beginning and End of Critical Period Stages. 
(a) The general manager will post by 10:00 a.m. every business day the most 
recently available index well levels, the ten-day rolling average of those 
levels, and the applicable critical period stage as established by 
sec.sec.709.5, 709.7, and 709.9 of this title (relating to Critical Period 
Stages-East Area; Critical Period Stages-Medina Area; Critical Period Stages-
Uvalde Area). 
(b) If a well index is not available on a particular day, the stage in effect in 
the applicable area will continue to the next day.
(c) A critical period stage will remain in effect for at least ten days unless a 
more restrictive stage is implemented and will not be rescinded until the ten-
day rolling average of the applicable well index triggers a less restrictive 
stage. (For example, if Stage III is in effect in the East area of the 
Authority, Stage II cannot be triggered in that area until the 10-day rolling 
average of the J-17 level rises above 636 ft. m.s.l.). 
(d) The reduction multipliers for each stage are as follows: Stage I: 1.7; Stage 
II: 1.6; Stage III: 1.4; and Stage IV: 1.3, or 1.4, Stage V: to be determined by 
the board. 
(1) In the event the Authority implements an WSP, the maximum allowable 
withdrawals in Stage IV for WSP participants shall be 1.4 times base 
withdrawals. The maximum allowable withdrawals for applicants who are retail 
water utilities with residential water use at or below 125 gallons per person 
per day who do not participate in an WSP shall be 1.3 times base withdrawals. 
(2) In the event the Authority does not implement an WSP, the maximum allowable 
withdrawals for applicants who are retail water utilities shall be 1.4 times 
base withdrawals for retail water utilities with residential water use at or 
below 125 gallons per person per day, and 1.3 times base withdrawals for all 
others. 
(e) Transfer Multiplier - The transfer multiplier for each stage is as follows: 
Stage I: none; Stage II: .95, Stage III: .90, Stage VI: .85, Stage V: to be 
determined by the Authority. The total amount of water that can be withdrawn 
monthly is the product of the transfer multiplier times the estimated monthly 
withdrawals indicated on the transfer schedule. 
(f) The well levels that trigger stages as described in this section and the 
applicable reduction multipliers are stated in the following table, which is 
incorporated herein. Stages are triggered independently in each of the three 
areas and will be in effect from March 1 to October 31. From November 1 to 
February 28 applicant will operate at base withdrawals or below, when a stage of 
the critical period is in effect. 
Figure: 31 TAC sec.709.11(f) 

sec.709.15. Determination of Base Withdrawals and Maximum Allowable Withdrawals. 
(a) The general manager will initially determine the base withdrawals and 
maximum allowable withdrawals, maximum transfer withdrawals and total 
withdrawals for each applicant, other than an irrigation user, based on the base 
withdrawal report and other data available to the Authority for the three lowest 
months of November, 1995 through February 1996. The general manager will notify 
applicants of the determinations in writing. 
(b) The general manager, with the approval of the board, may calculate base or 
maximum allowable withdrawal and maximum transfer withdrawals on different 
criteria than is otherwise required by these rules in particular cases, in order 
to better approximate the minimum amount of groundwater the applicant needs for 
nondiscretionary uses or to avoid penalizing the applicant for development of 
alternative water supplies. 
(c) Notwithstanding subsection (a) of this section, applicants have the duty to 
self-determine their base withdrawals and maximum allowable withdrawals and 
maximum transfer withdrawals regardless of whether the general manager has 
determined such amounts or notified the applicant of such determinations.

sec.709.17. Reduction Efforts for Discretionary Uses.
(a) Applicants shall achieve the maximum allowable withdrawals level at each 
critical period stage by conserving groundwater, minimizing waste, reducing 
discretionary uses of groundwater to the maximum extent feasible, and taking any 
other necessary steps to reduce withdrawals of groundwater from the aquifer. 
(b) Retail water utilities shall adopt and enforce inverted rate structures, and 
implement conservation programs. The Authority encourages all retail water 
utilities to adopt and enforce conservation charges, critical period surcharges, 
and other programs to conserve groundwater, minimize waste, comply with specific 
restrictions, utilize high-efficiency water systems such as low-flow toilets and 
shower heads, and reduce discretionary uses by all customers of groundwater from 
the aquifer to the maximum extent feasible. By January 1, 1999, all retail water 
utilities must file with the Authority their water service pricing orders or 
ordinances adopting rates, charges, and other critical period programs. 
(c) A retail water utility shall adopt and enforce a Critical Period Management 
Ordinance (or other appropriate legal instrument) substantially containing the 
elements in Appendix A, Critical Period Management Model Ordinance as shown in 
this subsection. 
Figure: 31 TAC sec.709.17(c) 
(d) All proposed ordinances (or appropriate legal instruments) will be submitted 
to the general manager for review and approval prior to adoption to ensure 
compliance with this chapter. 
(e) If a retail water utility believes that it does not have the authority to 
pass an ordinance (or appropriate legal instrument), then it shall provide an 
opinion of counsel supporting this proposition for the review and consideration 
by the general counsel of the Authority. If the general counsel of the Authority 
concludes that the applicant has the requisite legal authority to pass 
ordinances (or other appropriate legal instruments), then the applicant shall 
proceed to adopt and enforce the ordinance in accordance with subsection (c) of 
this section. 
(f) During all time in which an ordinance is not in effect, the provisions of 
this chapter shall apply. 
(g) The Critical Period Management Ordinance must be certified by the general 
manager, within 30 days of receipt by the Authority, unless the general manager 
requests additional information from the applicant, the ordinance shall be 
certified. The ordinance may be subject to at least an annual review by the 
general manager. All retail water utilities shall file with the Authority any 
updated water service pricing orders or ordinances adopting rates, charges, and 
other critical period programs by their effective date. 
(h) An applicant whose interim authorization or initial regular permit allows 
the applicant to annually withdraw groundwater in amounts greater than 100 acre-
feet may develop a Critical Period Management Plan. The Critical Period 
Management Plan must list the water conservation and reduction measures the 
applicant agrees to implement to reduce and minimize the amount of groundwater 
used for discretionary uses. An applicant receiving water service from a retail 
water utility shall submit a Critical Period Management Plan to the retail water 
utility. The applicant may submit the plan to the general manager for review. If 
the general manager concludes the plan is at least as effective in reducing 
discretionary use as the staged restrictions contained in this Chapter, the 
general manager shall submit the plan to the board for consideration. If the 
applicant's plan is approved by the board, the use of the groundwater pumped by 
the applicant shall be subject to the requirements of the approved Critical 
Period Management Plan and shall be subject to the requirements of the approved 
Critical Period Management Plan and shall be exempted from the requirements of 
sec.sec.709.19, 709.21, 709.23, 709.29, and 709.31 of this title (relating to 
Stage I Restrictions, Stage II Restrictions, Stage III Restrictions, Golf 
Courses and Athletic Fields). An applicant who violates the conditions and 
requirements of the approved Critical Period Management Plan is subject to 
enforcement as provided in the Edwards Aquifer Act. The applicant shall annually 
provide the general manager a certification of compliance with the provisions of 
the approved plan. 

sec.709.19. Stage I Restrictions. 
When Stage I is in effect, the following restrictions listed in paragraphs (1)-
(8) of this section apply to all persons throughout the applicable area of the 
Authority. 
(1) No person may waste groundwater. 
(2) No person may use groundwater for landscape watering between the hours of 
10:00 a.m. and 8:00 p.m. except by means of a bucket (not to exceed 5 gallons in 
capacity), hand-held or soaker hose, or properly-installed drip irrigation 
system). This paragraph does not apply to non-potable water.
(3) No person may use groundwater to wash an impervious outdoor ground covering 
such as a parking lot, driveway, street, or sidewalk unless for health or safety 
reasons. 
(4) No person may allow irrigation tailwater to escape from that person's land. 
(5) Restaurants and other eating establishments are prohibited from serving 
groundwater to customers except upon request of the customer.
(6) Every person who owns or has possession of a swimming pool must cover the 
pool with an effective evaporation cover or screen, or evaporation shields 
covering at least 25% of the surface of the pool, when the pool is not in active 
use. Active use includes necessary maintenance that requires removal of the 
cover, screen, or shields. Active use of public, commercial and apartment pools 
is whenever the pool is not officially closed. 
(7) No person may wash an automobile at a residence except on a watering day 
during water times as designated by these rules or by a retail water utility 
pursuant to these rules, and in no event may a person allow groundwater from 
automobile washing at a residence escape into the street or otherwise off the 
person's property. 
(8) Charity car washes are prohibited except at a commercial car wash that 
recycles at least 75% of the groundwater it uses or that is certified as a 
conservation car wash by a retail water utility. 

sec.709.21. Stage II Restrictions. 
When Stage II is in effect, the following restrictions listed in paragraphs (1)-
(5) of this section apply to all persons throughout the applicable area of the 
Authority. 
(1) All of the prohibitions applicable in Stage I. 
(2) No person may use groundwater for landscape watering on more than two 
watering days in any calendar week, except that landscape watering is permitted 
on any day before 10:00 a.m. and after 8:00 p.m. by means of a bucket (not to 
exceed 5 gallons in capacity), hand-held or soaker hose, or properly-installed 
drip irrigation system. This paragraph does not apply to non-potable water. 
(3) Retail water utilities must designate specific watering days on which 
persons within their jurisdictions are allowed to use groundwater for landscape 
watering, in accordance with this section. For all persons using groundwater for 
landscape watering of property located within a service area of a retail water 
utility, the watering days are those designated in that utility's Critical 
Period Management Ordinance. Retail water utilities are encouraged to stagger 
such days so as to reduce peaks of demand 
(4) For all persons using groundwater for landscape watering of property not 
located within a service area of a retail water utility, the watering days are 
Saturday and Wednesday. 
(5) No person may use groundwater for an ornamental outdoor fountain or similar 
feature, unless the water is recycled and the only additional groundwater used 
for the feature is to compensate for evaporative losses.

sec.709.23. Stage III Restrictions. 
When Stage III is in effect, the following restrictions listed in paragraphs 
(1)-(5) of this section apply to all persons throughout the applicable area of 
the Authority. 
(1) All of the prohibitions applicable in Stage I apply in Stage III. 
(2) No person may use groundwater for landscape watering on more than one 
watering day in any calendar week, except that landscape watering is permitted 
to maintain shrubs, trees, and other ornamental plants, but not grass or turf, 
on any day before 10:00 a.m. and after 8:00 p.m. by means of a bucket (not to 
exceed 5 gallons in capacity), hand-held or soaker hose, or properly-installed 
drip irrigation system. This paragraph does not apply to non-potable water. 
(3) Retail water utilities must designate a specific day or days of the calendar 
week on which persons within their jurisdictions are allowed to use groundwater 
for landscape watering, in accordance with this section. For all persons using 
groundwater for landscape watering of property located within a service area of 
a retail water utility, the watering days are those designated in that utility's 
Critical Period Management Ordinance. Retail water utility are encouraged to 
stagger such days so as to reduce peaks of demand. 
(4) For all persons using groundwater for landscape watering of property not 
located within a service area of a retail water utility, the watering day is 
Saturday. 
(5) No person may use groundwater for an ornamental outdoor fountain or similar 
feature. 

sec.709.25. Stage IV Restrictions. 
When Stage IV is in effect, the following restrictions listed in paragraphs (1)-
(5) of this section apply to all persons throughout the applicable area of the 
Authority. 
(1) All of the prohibitions applicable in Stage I and sec.709.23(5) of this 
title (relating to Stage III Restrictions) apply. 
(2) No person may use groundwater for landscape watering on more than one 
watering day in any calendar week. For purposes of this paragraph, "watering 
day" is limited to the morning hours of 3:00 a.m. to 7:00 a.m., and the evening 
hours of 8:00 p.m. to 11:00 p.m. However, landscape watering by means of a 
bucket (not to exceed 5 gallons in capacity), hand-held or soaker hose, or 
properly-installed drip irrigation system is permitted to maintain trees, 
shrubs, and other ornamental plants, but not grass or turf, on any day of the 
week during the morning hours of 7:00 a.m. to 11:00 a.m. Persons utilizing 
irrigation systems requiring more than 7 hours to complete one weekly watering 
cycle may request a variance in accordance with sec.709.37 of this title 
(relating to Variance Applications). Such a request must be accompanied by a 
conservation and reuse plan for the irrigation system. This paragraph does not 
apply to non-potable water. 
(3) Retail water utilities must designate a specific day or days of the calendar 
week on which persons within their jurisdictions are allowed to use groundwater 
for landscape watering, in accordance with this section. For all persons using 
groundwater for landscape watering of property located within a service area of 
a retail water utility, the watering days are those designated in that utility's 
Critical Period Management Ordinance. Retail water utilities are encouraged to 
stagger such days so as to reduce peaks of demand. 
(4) For all persons using groundwater for landscape watering of property not 
located within a service area of a retail water utility, the watering day is 
Saturday. 
(5) Filling of all new and existing swimming pools is prohibited, unless at 
least 30% of the water is obtained from a source other than the aquifer. 
Groundwater may be used to replenish swimming pools to maintenance level. 
Drainage of swimming pools is permitted only onto a pervious surface, or onto a 
pool deck where the water is transmitted directly to a pervious surface, only if 
necessary to: 
(A) remove excess water from the pool due to rain in order to lower the water to 
the maintenance level; 
(B) repair, maintain, or replace a pool component which has become hazardous; or 
(C) repair a pool leak.  

sec.709.31. Athletic Fields.
(a) Conservation and reuse plan. An owner or operator of an athletic field shall 
file a conservation and reuse plan with the general manager within 30 days of 
the effective date of these rules. 
(b) A conservation and reuse plan for athletic fields must contain the following 
information listed in paragraphs (1)-(13) of this subsection:
(1) the name, title, address, and telephone number of the owner or operator of 
the athletic field; 
(2) the name, title, address, and telephone number of the person(s) responsible 
for the watering of the field; 
(3) whether the field is public or private, and the populations served by the 
field; 
(4) the location, dimensions, type of athletic field, and type of turf; 
(5) a description of the water-delivery system used and how and when it is used; 
(6) a description of management practices relating to watering the field that 
are employed to control the amount of water applied to the field; 
(7) a description of any turf areas that are not essential to the functioning of 
the field that are or could be watered in accordance with the specific 
restrictions on landscape watering contained in this chapter;
(8) a statement of what the owner or operator believes is a minimum amount of 
water and a minimum watering regimen during critical periods that applies only 
the amount of water necessary to maintain the viability of the turf without 
creating a safety hazard to users of the field; 
(9) a statement of any actions or plans to obtain alternative water supplies 
such as reclaimed, reuse, or recycled water, and a copy of any letter of 
commitment from a retail water utility regarding supplying such water to the 
field; 
(10) a statement that the conservation and reuse plan is also in compliance with 
any local conservation plans; 
(11) contain a plan with projected implementation dates to convert to an 
alternate water supply to reduce and eliminate consumption of groundwater to the 
maximum extent feasible. This conversion may incorporate the use of reclaimed, 
reused, or recycled water, and/or the athletic field must participate in an WSP; 
(12) provide, where cost effective, methods of achieving enhanced conservation 
by utilizing a computer controlled irrigation system ("CCIS"), comprised of a 
computer controller (digital operating system), software, interface modules, 
satellite, field controller, soil sensors, weather station, or similar devices, 
which is capable of achieving maximum efficiency and conservation in the 
application of water to the athletic field. A CCIS, at a minimum, should be 
designed to prevent over-watering, flooding, pooling, evaporation and run-off; 
and prohibit sprinkler heads from applying water at an intake rate exceeding the 
soil holding capacity. The plan shall provide an analysis of the cost 
effectiveness of utilizing a CCIS. The plan must require the user to accomplish 
the following reductions listed in subparagraphs (A)-(D) of this paragraph:
(A) Stage I - 10% reduction in the replacement of daily evapotranspiration rate 
("ET rate") or daily soil holding capacity; 
(B) Stage II - 20% reduction in the replacement of daily ET rate or daily soil 
holding capacity; 
(C) Stage III - 30% reduction in the replacement of daily ET rate or daily soil 
holding capacity; provided that if the user has executed a letter of intent for 
reclaimed, reused, or recycled water, or is an WSP participant, the required 
reduction shall be 20%; 
(D) Stage IV - 30% reduction in the replacement of daily ET rate or daily soil 
holding capacity; provided that if the user has executed a letter of intent for 
reclaimed, reused, or recycled water, or is an WSP participant, the required 
reduction shall be 20%; and 
(13) any other information required by the general manager. 
(c) The general manager shall either approve or disapprove the conservation and 
reuse plan or request additional information within 30 days of the date of 
filing. The owner or operation of an athletic field may apply groundwater from 
the aquifer to the field if the general manager approves the plan. 
(d) The general manager shall approve the conservation and reuse plan if the 
general manager is satisfied that the plan meets the following criteria listed 
in paragraphs (1)-(4) of this subsection: 
(1) it contains all necessary information and documentation;
(2) the plan provides for a critical period wateringregimen that uses only the 
amount of groundwater necessary to maintain the viability of the turf and 
maintain the turf in a safe condition; 
(3) the plan provides that groundwater will not be applied to areas that are not 
essential to the use of the field in accordance withthe applicable maximum 
allowable withdrawals and specific restrictions imposed by this chapter; and 
(4) if non-potable water is available, or may be available to the field within 
five years, the owner or operator is committed to making use of such non-potable 
water for watering of athletic fields as soon as practicable.
(e) The general manager may require the revision of a conservation and reuse 
plan or require the owner or operator to provide additional or updated 
information, and may disapprove a plan previously approved if it appears that 
the plan no longer meets the criteria set forth in subsection (d) of this 
section. 
(f) The owner or operator of an athletic field must comply with all Stage V 
rules issued by the board under sec.709.27 of this title (relating to Stage V 
Restrictions). 
(g) Until a non-conforming athletic field becomes a conforming athletic field, 
it shall comply with the following reduction measures listed in paragraphs (1)-
(4) of this subsection: 
(1) Stage I - 10% reduction in the replacement of daily ET rate as monitored by 
a properly operating CCIS, if determined to be cost effective, or use of not 
more than 1.7 times the base withdrawal for athletic fields that are not 
equipped with a CCIS; 
(2) Stage II - 20% reduction in the replacement of daily ET rate as monitored by 
a properly operating CCIS, if determined to be cost effective, or use of not 
more than 1.6 times the base withdrawals for athletic fields that are not 
equipped with a CCIS; 
(3) Stage III - 30% reduction in the replacement of daily ET rate as monitored 
by a properly operating CCIS, if determined to be cost effective, or use of not 
more than 1.4 times the base withdrawals for athletic fields that are not 
equipped with a CCIS; and 
(4) Stage IV - 40% reduction in the replacement of daily ET rate as monitored by 
a properly operating CCIS, if determined to be cost effective, or use of not 
more than 1.3 times the base withdrawals for athletic fields that are not 
equipped with a CCIS. 

sec.709.33. Base Withdrawal Reports. 
(a) Every applicant other than an irrigation user, must file a base withdrawal 
report with the Authority which contains the following information listed in 
paragraphs (1)-(9) of this subsection: 
(1) the person's name, address, and telephone number; 
(2) contact person and title; 
(3) the location and name or number of all wells from which groundwater is 
withdrawn (attach map); 
(4) the monthly amount of groundwater withdrawn during the months of November 
and December of 1995 and January and February of 1996, or for conjunctive users, 
the monthly amount of groundwater withdrawn during the months of November and 
December and the following January and February during each of the three 
consecutive 12-month periods preceding the commencement of the applicant's use 
of the non-aquifer groundwater which qualifies the applicant as a conjunctive 
user; 
(5) the total amount of groundwater withdrawn each month during the 12 months 
prior to the date of the report, and the total amount of groundwater withdrawn 
for such months; 
(6) the estimated amount of groundwater actually beneficially applied without 
waste to nondiscretionary uses, and the nature of such uses;
(7) a summary of the applicant's past efforts to conserve water and reduce the 
amount of water required, and the efficacy of such efforts;
(8) a summary of any actions the applicant intends to take to conserve water and 
reduce the amount of water required in order to comply with these rules; and  
(9) any other information requested by the general manager.
(b) An applicant must file its base withdrawal report with the Authority within 
30 days after the effective date of these rules. 
(c) A person who, based on a transfer, becomes an applicant after the effective 
date of these rules must file a base withdrawal report within 7 days of the 
first day the person becomes a applicant. 
(d) An applicant who, without good cause, fails to timely file a completed base 
withdrawal report, is not entitled to exclude groundwater water use under 
sec.709.3 of this title (relating to Nondiscretionary Uses) from mandatory 
reductions until a base withdrawal report is filed with the Authority. 
(e) The base withdrawal report shall be filed on a form prescribed by the 
Authority. 

sec.709.37. Variance Applications. 
(a) A person may file with the Authority an application for a variance from this 
chapter on a form prescribed by the Authority. The Authority delegates to retail 
water utilities the power to grant or deny variance requests with regard to 
customers receiving water service from the utility. A customer receiving water 
services from a retail water utility may appeal an application of variance with 
the Authority after having completed the variance procedure of the utility. A 
retail water utility shall submit a copy of all variances approved by the 
utility to the Authority. The application must contain the following information 
listed in paragraphs (1)-(4) of this subsection: 
(1) the specific nature of the variance requested; 
(2) a detailed explanation of why the person believes it should be granted the 
variance, including any supporting documentation;
(3) a statement that the facts contained in the request are true and within the 
person's personal knowledge; and 
(4) any other information requested by the general manager.
(b) Variance applications shall be processed in accordance with Chapter 707, 
Subchapter L of this title (relating to Applications Processing).
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803755
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

CHAPTER 721. Interim Critical Period Management Rules
The Edwards Aquifer Authority (Authority) adopts the repeal of sec.sec.721.1-
721.8, 721.11, 721.12, 721.21-721.24, 721.31-721.33, 721.41-721.48, 721.51, 
721.52, 721.61-721.65, 721.71 and 721.72, concerning rules for the Authority's 
critical period management plan, without changes to the proposed text as 
published in the January 2, 1998, issue of the Texas Register (23 TexReg 95) and 
will not be republished.
The repeal of the sections is necessary to allow for the concurrent adoption of 
new Critical Period Management rules providing for the ongoing rules 
reorganization process of the Authority. 
No written comments were received regarding adoption of the repeals. 
Public hearings were held on January 21, 1998, in San Antonio, January 22, 1998, 
in New Braunfels, and January 29, in Hondo. No oral comments were received 
regarding adoption of the repeals. 

SUBCHAPTER A. General Provisions
31 TAC sec.sec.721.1-721.8
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803747
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER B. Applicability of Rules
31 TAC sec.721.11, sec.721.12
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sectionsof the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803748
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER C. Critical Period Stages
31 TAC sec.sec.721.21-721.24
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803749
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER D. Maximum Allowable Usage and Enforcement
31 TAC sec.sec.721.31-721.33
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803750
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER E. Restrictions on Specific Uses
31 TAC sec.sec.721.41-721.48
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803751
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER F. Reports
31 TAC sec.721.51, sec.721.52
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803752
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER G. Variance
31 TAC sec.sec.721.61-721.65
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803753
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

SUBCHAPTER H. Review and Reconsideration
31 TAC sec.721.71, sec.721.72
(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 Edwards Aquifer 
Authority or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The repeals are adopted under the following sections of the Edwards Aquifer Act, 
Act of May 30, 1993, 73rd Legislature, Regular Session, Chapter 626, 1993 Texas 
Session Laws 2353-2374, as amended (Act): sec.1.11 (relating to General Powers 
and Duties of the Board and Authority), and more specifically under subsection 
(a), requiring the board of directors of the Authority to adopt rules necessary 
to carry out the Authority's powers and duties under the Act, including rules 
governing procedure of the Authority and its board of directors, and 
sec.sec.1.03 (relating to Definitions), 1.08 (relating to General Powers), 1.14 
(relating to Withdrawals), and 1.26 (relating to Critical Period Management 
Plan). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803754
Gregory M. Ellis
General Manager
Edwards Aquifer Authority
Effective date: April 5, 1998
Proposal publication date: January 2, 1998
For further information, please call: (210) 222-2204

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART VI. Texas Department of Criminal Justice
CHAPTER 152.Institutional Division
SUBCHAPTER D.Other Rules
37 TAC sec.152.51
The Texas Department of Criminal Justice adopts an amendment to sec.152.51, 
concerning authorized witnesses to the execution of an inmate sentenced to 
death, with changes to the proposed text as published in the February 13, 1998, 
issue of the Texas Register (23 TexReg 1266). 
The amendment specifies those persons authorized to witness the execution of an 
inmate sentenced to death based upon the recommendation of the Victim Services 
Division and the approval of the Director of the Texas Department of Criminal 
Justice Institutional Division. 
The adoption will enable potential closure for family members of murder victims. 
One internal comment was received stating that the rule needed to reflect the 
statute's (Code of Criminal Procedure, sec.43.20) apparent allowance for five 
inmate relatives/friends as well as a spiritual advisor. The agency has made 
changes to the proposed version of the rule in order to incorporate the comment 
received. 
The amendment is adopted under the Government Code, sec.492.013, which grants 
general rulemaking authority and the Code of Criminal Procedure, Article 43.20. 

sec.152.51.Authorized Witnesses to the Execution of an Inmate Sentenced to 
Death.
(a) Purpose. The purpose of this rule is to specify those persons authorized to 
witness the execution of an inmate sentenced to death.
(b) Definition. "Close relative of the deceased victim" means the following 
persons in relation to the victim for whose death an inmate is sentenced to 
death: 
(1) the spouse of the victim at the time of the victim's death;
(2) a parent or stepparent of the deceased victim; or
(3) an adult brother, sister, child, or stepchild of the deceased victim (adult 
is defined as anyone 18 years of age or older); or 
(4) another individual with a close relationship to the deceased victim, or to a 
close relative of the victim, upon the recommendation of the Victim Services 
Division (VSD) and approval of the Director of the Texas Department of Criminal 
Justice Institutional Division (TDCJ-ID). 
(c) Witnesses. The only persons authorized to witness an execution are as 
follows: 
(1) departmental staff as deemed necessary by the Director of the TDCJ-ID; 
(2) members of the Texas Board of Criminal Justice; 
(3) chaplains of the Texas Department of Criminal Justice;
(4) Walker County Judge; 
(5) Walker County Sheriff; 
(6) media pool representatives consisting of: 
(A) one reporter from the Huntsville Item; 
(B) one reporter from the United Press International and the Associated Press; 
(C) one additional print media representative and one broadcast representative 
selected from rotating lists of applicants maintained by the TDCJ-ID Public 
Information Office. 
(7) relatives or friends requested by the condemned inmate, not to exceed five 
in number, who are eligible under subsections (d)(1) and (d)(2) of this section, 
and one spiritual advisor requested by the condemned inmate who is eligible 
under subsection (d) of this section; 
(8) close relatives of the deceased victim not to exceed five in number; and 
(9) if there are fewer than five close relatives of the deceased victim: 
(A) additional close relatives of a victim for whose death the inmate has been 
convicted but for whose death the inmate is not sentenced to death; and 
(B) if there are still fewer than five persons, additional close relatives of a 
victim for whose death the inmate is unequivocally responsible, upon the 
recommendation of the Victim Services Division and approval of the Director of 
TDCJ-ID. 
(d) Spiritual Advisor and Relatives or friends of the inmate.
(1) Five relatives or friends and a spiritual advisor, if requested by the 
condemned inmate, are eligible to attend the execution of the condemned inmate 
if: 
(A) the condemned inmate provides a list of witnesses and the name or type of 
spiritual advisor he/she wishes to attend the execution to the Bureau of 
Classification at least 14 days prior to the date of execution; and 
(B) the witnesses and spiritual advisor requested by the inmate are on the 
inmate's approved "Visitor's List." 
(2) If less than 14 days prior to the scheduled execution, the condemned inmate 
wishes to change the names of his/her witnesses or spiritual advisor, the inmate 
shall submit a request in writing to the Director of TDCJ-ID who shall approve 
or disapprove the changes. 
(3) The spiritual advisor must be a bonafide pastor or comparable official 
(e.g., minister, priest, or rabbi) of the church of the condemned inmate's 
elected religion. 
(e) Prohibition on attendance. Any inmate currently confined within the TDCJ-ID 
is specifically denied authorization to witness the execution of an inmate 
sentenced to death. 
(f) Victim Notification. 
(1) The TDCJ-ID Victim Services Liaison (VSL) shall be responsible for 
maintaining a list of scheduled executions. 
(2) The VSL/Emergency Action Center (EAC) shall provide a list of scheduled 
executions to the TDCJ (VSD). Subsequent updates regarding significant changes 
pertaining to the execution (e.g., dates, court rulings, etc.) shall also be 
provided to the TDCJ VSD by the VSL/EAC in an expedient manner. 
(3) The VSD is responsible for notifying the relatives of the victim of the 
scheduled execution date, time, and location, upon request. It is the 
responsibility of the relative to notify the TDCJ VSD of any subsequent address 
changes and their intent to attend. 
(4) The relative of the victim must be identified and approved by the VSD. 
(5) It is the responsibility of the VSD to notify the VSL, no later than five 
days prior to the scheduled execution date, of the names and contact numbers for 
those persons planning to attend. 
(6) The VSD shall contact the relative of the victim and provide information 
regarding the written procedures affecting their participation.
(g) Requirements for the execution chamber. The room provided for the execution 
shall be arranged so that: 
(1) there is sight and sound separation between any relative or friend of the 
condemned inmate and any close relative of a deceased victim; and 
(2) there is sound separation between the condemned inmate and those in 
attendance, except that arrangements shall be provided that allow those in 
attendance to hear the statements of the condemned inmate. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 16, 1998.
TRD-9803719
Carl Reynolds
General Counsel
Texas Department of Criminal Justice
Effective date: April 5, 1998
Proposal publication date: February 13, 1998
For further information, please call: (512) 463-9693

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART XX. Texas Workforce Commission
CHAPTER 800.General Administration
SUBCHAPTER D.Incentive Award Rules
The Texas Workforce Commission (Commission) adopts new sec.sec.800.101, 800.102, 
800.112-800.115, 800.118, 800.119, 800.151, 800.152, 800.161, 800.171-800.177, 
800.181, 800.182, and 800.191, concerning the Incentive Award and Sanctions 
Rules with changes to proposed text as published in the January 9, 1998, issue 
of the Texas Register (23 TexReg 340). The changed sections, sec.sec.800.101(b), 
800.102, 800.112, 800.113, 800.114, 800.119, 800.152, 800.161, 800.172, 800.174, 
800.175, 800.177, 800.181, 800.182, 800.191, will be republished here.
One of the primary goals of the Commission is to administer twenty-eight 
workforce programs in Texas. In order to meet that goal, the Commission proposed 
Incentive Award and Sanctions Rules to assist local programs in meeting 
performance requirements and encouraging a high level of performance. 
The rules provide for an adjustment model to be used to adjust the incentive 
measures for local conditions. The methodology proposed is based on the 
experience and logic of a model used by the federal government in a workforce 
training program. The methodology is based on a statistical technique called 
multiple regression analysis which addresses the relationship between the 
outcome and several explanatory factors. The relationship with each explanatory 
factor is determined while taking into account its relationship with all the 
other factors. Each adjustment weight represents how much the outcome can be 
expected to change with a one-unit change in an explanatory factor, while 
holding the other explanatory factors constant. The influence of a set of 
explanatory factors can be determined by summing the influence of each 
explanatory factor. Economic factors in the local areas which may be considered 
in the adjustment model include unemployment rate, three-year growth of earnings 
in retail and wholesale trade, annual earnings in retail and wholesale trade, 
employment in manufacturing, agriculture and wholesale trade, population 
density, percentage of families below the federally established poverty level, 
and employer/resident worker ratio. The data sources for the local economic 
factors are calculated from Bureau of Labor Statistics and Bureau of Census 
reports. Client characteristics which may be considered include the percentage 
of two-parent Temporary Assistance to Needy Families (TANF) families, education 
level, length of time on the welfare roll, gender, age, and ethnic groups. 
The adopted rules describe procedures used by the Commission to provide 
incentive awards. Section 800.101 states that the purpose of the incentive award 
rules is to recognize Local Workforce Development Boards (boards) which have 
achieved high levels of performance. Section 800.102 defines terms used in the 
incentive award rules. Section 800.112 lists the criteria used by the Commission 
in making incentive awards. Section 800.113 describes the non-monetary awards 
which may be made by the Commission. Section 800.114 describes the possible 
monetary awards. Section 800.115 lists the factors considered by  the Commission 
and a method of calculation used by the Commission to adjust incentive measures 
to ensure that the local conditions of each board are taken into consideration 
in the granting of incentive awards. Section 800.118 describes the distribution 
of incentive awards. Section 800.119 describes the requirements in the use of 
incentive award funds. 
The adopted rules also describe the sanctions which may be imposed by the 
Commission in the case of violations. Section 800.151 states that the purpose of 
the rules is to increase the accountability of the boards and to ensure that 
performance requirements are met. Section 800.152 defines terms used in the 
sanctions rules. Section 800.161 describes the preventive maintenance provided 
by the Commission in the form of technical assistance, program and fiscal 
monitoring, as well as quality assurance reviews. Section 800.171 lists some 
possible Level One sanctions that may be imposed by the Commission. Section 
800.172 lists some possible level two sanctions. Section 800.173 lists some 
possible level three sanctions. Section 800.174 lists some violations that might 
subject a board to Level One sanctions. Section 800.175 lists some violations 
that might subject a board to level two sanctions. Section 800.176 lists some 
violations that might subject a board to level three sanctions. Section 800.177 
describes program specific sanctions. Section 800.181 describes the procedures 
used by the Commission to enforce the sanctions. Section 800.191 describes 
appeal procedures. 
Some commenters were for the rules while others were against the rules. Comments 
were received from the following organizations: the Workforce Development Board 
of Central Texas, the West Central Texas Workforce Development Board, the North 
Central Texas Workforce Development Board, Inc., Dallas County Local Workforce 
Development Board, Tarrant County Workforce Development Board, Capital Area 
Workforce Development Board, Texas Legal Services Center, and Lockheed Martin 
IMS. Following each comment is the Commission's response. 
Comment: One commenter stated that she had only positive comments to make 
regarding the proposed rules. The commenter stated that the intent was well 
defined and that the proposed rules made good business sense. The commenter 
asserted that the rules utilize standardized performance measures parallel to 
those used previously in other programs. These previously used measures have 
proven very effective in planning and utilizing resources in the commenter's 
region. The commenter stated that the number of measures was reasonable and 
attainment clearly described. 
Comment: One commenter pointed out that sec.800.101(b) which states that the 
rule incorporates the existing rule for performance standards for the Job 
Training Partnership Act (JTPA) program seems unclear and could be interpreted 
to mean that JTPA standards are "subsumed" by this rule and will cease to exist 
following its adoption. The commenter suggests a clear statement that JTPA 
standards will remain in force and that these rules complement those JTPA 
standards would solve this problem.
Response: The Commission agrees to clarify the proposed rule by revising it to 
read "This rule incorporates by reference the existing rule for performance 
standards for the Job Training Partnership Act Program . . .." The proposed 
rules do not supersede the JTPA rule nor do they replace it or declare it null 
and void. 
Comment: Regarding sec.800.112(a)(4), one commenter asserted that this section 
should be revised for syntax. The second sentence in this item should be a 
separate paragraph of its own since it appears to apply to all parts of this 
section. The commenter suggested renumbering it as sec.800.112(a)(5).
Response: The Commission agrees that the sentence should be a separate 
paragraph. This sentence is a new subsection (b) and the subsequent section is 
renumbered appropriately. 
Comment: Two commenters stated that sec.800.112(a)(4), which is the Caseload 
Reduction outcome measure, should be revised for reasons of content. The 
commenters suggested revising the paragraph to permit caseload reduction as an 
outcome measure to the extent that it reflects true economic improvement, 
resulting in people advancing out of poverty. Another commenter recommended that 
the Caseload Reduction outcome measure be deleted. 
Response: The Commission disagrees that the Caseload Reduction outcome measure 
should be revised or deleted. The measure as defined is compatible with the 
definition of caseload reduction factors contained in the Personal 
Responsibility and Work Opportunities Act of 1996. The measure enhances the 
state's ability to meet federal work participation rates. The Commission 
therefore declines to revise the rule. 
Comment: Regarding sec.800.112(a)(4), one commenter suggested that this section 
would more easily reward boards serving smaller populations since it is easier 
for them to achieve a given percentage reduction. This commenter suggested that 
tying caseload reduction to economic improvement, before granting an award based 
on caseload reduction, will level the field of competition. The commenter 
asserted that this will also serve as an incentive to boards to foster real 
economic progress as a part of caseload reduction. 
Response: The Commission disagrees that this section would reward boards serving 
smaller populations. The adjustment model provides for a level playing field by 
calculating adjustments to the standards set out in sec.800.112. The adjustments 
are based on economic factors and client characteristics. The Commission 
believes that utilizing this adjustment model will put all boards on the same 
playing field. 
Comment: Regarding sec. 800.113(d), one commenter asked if entities other than 
boards are eligible for monetary or non-monetary incentives. 
Response: The Commission agrees to clarify this section. The reference to "...or 
center..." has been removed. The rules apply to boards only.
Comment: Regarding sec. 800.114, one commenter asked if it was the Commission's 
intent to award monetary incentives based on only one goal, rather than the 
outcome measures included in the rule and referenced in sec. 800.113, "Non-
Monetary Incentive Awards." 
Response: As stated in sec.800.114, the Commission will give priority to boards 
that achieve high performance in serving targeted populations when awarding 
monetary incentives for high performance. The Commission will award monetary 
incentives to as many as five boards who demonstrate high performance in serving 
that targeted population. The Commission will also award non-monetary incentive 
awards to the five top performers in any one of the four specified outcome 
measures listed in sec.800.112. The Commission has revised this rule to clarify 
the intent. 
Comment: Regarding sec.800.114, a commenter believes it would be more beneficial 
to the State as a whole if all twenty-eight boards were eligible for financial 
recognition based on surpassing their own predictive standards.
Response: The Commission agrees that it could be more beneficial if all twenty-
eight boards were eligible for incentives based on exceeding their own predicted 
standards. However, given the limited amount of funds available to award 
monetary incentives, this is not feasible. The method of distribution in the 
rules will provide for a more effective use of these funds. 
Comment: Regarding sec.800.114, a commenter asserted that there needs to be 
assurance that sanctions in one program do not lead to penalties in another. 
Response: It appears that the commenter was making a general comment. Section 
800.114 addresses Monetary Incentive Awards rather than Sanctions. While this 
policy does apply to all Commission-administered workforce development programs, 
the Commission recognizes the unique performance requirements within each 
program. The Commission can assure that meritorious performance within 
individual programs will not be adversely affected by poor performance in 
another program.
Comment: For sec.800.115, one commenter questioned what adjustments of local 
factors would be made that could reliably level the playing field for all 
workforce development areas wanting to receive an incentive, and recommended 
that the Commission perform such an analysis using current conditions. 
Response: An adjustment model, based upon the methodology utilized by the JTPA 
economic adjustment model, has been developed. It will be applied using client 
characteristics and local economic conditions that exist during the performance 
period. The Commission believes that this adjustment model levels the playing 
field among areas that exhibit a wide range of economic conditions and client 
characteristics. This preamble is not the appropriate place for the details of 
the adjustment model. The Commission will distribute a guidance letter that will 
describe the adjustment model in detail. 
Comment: Another commenter incorrectly referenced sec.800.115 in asking when and 
how an "SDA" accesses preventive maintenance services. 
Response: The comment regarding accessing preventive maintenance services is 
addressed in the comments to sec.800.161. 
Comment: Regarding sec.800.119, three commenters stated the need for a 
definition or examples of innovative workforce investment activities and 
requested that boards be allowed more control over the expenditure of incentive 
funds. A fourth commenter asked the Commission to provide examples of 
appropriate use of the incentive funds. 
Response: The Commission agrees that this rule should be revised to give the 
boards more control over the expenditure of incentive funds. House Bill 1863 
envisioned the boards designing creative programs that fit the unique 
characteristics and needs of their individual workforce development areas. In 
line with the Commission's commitment to local control, the phrase "as approved 
by the Commission" has been deleted and the phrase "as allowed by state and 
federal laws" has been substituted. 
Comment: Regarding sec.800.152, one commenter asked whether the performance 
standards are those included in federal legislation and whether they would be 
established by the Texas Council for Workforce and Economic Competitiveness 
(TCWEC) or the Commissioners. The commenter also asked if the standards will 
include the requirements in Commission contracts with the boards. A second 
commenter stated that it is unclear why TCWEC has a role in imposing sanctions.
Response: The Commission agrees to clarify this section. The definition for 
Performance Standard, at sec.800.152, is revised to read: "The contracted 
numerical value setting the minimum acceptable result to be achieved for a 
performance measure." In addition, sec.800.102 defines the outcome measures as 
the Workforce Development performance measures adopted by the Governor and 
developed and recommended through TCWEC. TCWEC's role in imposing sanctions is 
pursuant to state law, specifically the Texas Government Code. 
Comment: Regarding sec. 800.161, one commenter stated that it seems appropriate 
for the Commission to be more explicit about how it will perform preventive 
maintenance activities. 
Response: All preventive maintenance measures developed and implemented by the 
Commission will be designed to assist boards in their efforts to meet 
performance requirements and to ensure fiscal accountability. Technical 
assistance will focus on sharing information and best practices to assist the 
boards with program and fiscal issues. Ongoing program and fiscal monitoring 
will provide analyses of strengths and weaknesses for continued progress or 
immediate solutions to operational problems. Quality Initiative staff will 
identify quality indicators to combine with training initiatives to develop and 
maintain high performance. All these measures are ongoing and available to meet 
the specific needs of each individual board. 
Comment: Regarding sec.800.161, another commenter asked when and how does an 
"SDA" access preventive maintenance (this commenter incorrectly referenced 
sec.800.115). 
Response: This rule applies to boards. The Commission will provide technical 
assistance to the boards as the Commission determines necessary. Additionally, 
the Commission will conduct the preventive maintenance measures described 
throughout the year. The boards may request that the Commission provide 
preventive maintenance services. 
Comment: Regarding sec. 800.171, one commenter requested that the requirement 
for a board to participate in technical training and quality assurance workshops 
designated by the Commission should be extended to also apply to board 
contractors.
Response: The Commission is committed to the idea of local control embodied in 
House Bill 1863. The purpose of sanctions, as stated in the Scope and Purpose 
section, is to ensure accountability of boards. The boards are accountable for 
the actions and performance of their subcontractors. The board may require the 
subcontractor to participate in technical training and quality assurance 
workshops. However, as the Commission has no direct relationship with the 
board's subcontractor, the Commission may not require such participation. The 
Commission therefore declines to revise this rule. 
Comment: Regarding sec.800.171, one commenter stated any final determination of 
disallowed costs should be predicated upon the due process afforded under the 
contract with the Commission and references sec.31 of the contract. The 
commenter suggested that this section be clarified to state that costs will be 
examined and audited under the normal process, and final determination of 
disallowance will provide for the negotiation of appeal, off-set or final 
repayment. 
Response: The proposed rules provide for ample opportunity to provide 
information to the Commission prior to any decision to disallow costs. In 
addition, the rules provide for an appeals process in sec.800.191. The procedure 
described within the comment is reflective of procedures used within the JTPA 
program. These rules do not amend the JTPA rule and do not impact the JTPA 
process for resolving questioned costs. Regarding the reference to the contract, 
sec.31 of the contract simply provides a priority for recovery of funds after a 
determination that disallows funds has been made. For these reasons, the 
Commission declines to revise the rule. 
Comment: Regarding sec.800.172(5), one comment was received stating that the 
wording appears to indicate that advance approval would be needed to implement 
required Commission actions. The commenter believes that this section indicates 
that Commission approval would be required in advance, before certain actions 
were taken by a board. 
Response: The Commission agrees that this section needs clarification. To that 
end, this item is revised to read: "implement actions required by the Commission 
to address the deficiencies;" 
Comment: Regarding sec.800.173, one commenter recommended inclusion of 
assurances that TWC will not deobligate money which has already been spent by a 
board trying to achieve expected performance levels, and a formula developed to 
determine how much money will be deobligated. 
Response: Existing expenditures are subject to final approval during contract 
close-out. Deobligations will be based upon current contract funds and will not 
be dependent upon a formula. The Commission therefore cannot provide the 
assurance requested. 
Comment: Regarding sec.800.173, a commenter recommended that boards be afforded 
more than five days' notice of intent to deobligate. 
Response: The Commission agrees to afford the boards more than five days notice. 
To achieve consistency with the notice standards outlined in the board's 
contract with the Commission, the rule is revised to allow ten working days' 
notice. 
Comment: Concerning sec.800.174, one commenter stated that it is unclear what 
"attain and/or maintain" means. The commenter questioned whether it is possible 
to "maintain" a participation rate determined only once a year. 
Response: Performance standards and TANF participation rates will be reviewed by 
the state monthly. Each board is expected to attain and maintain contracted 
standards throughout the term of the contract. Section 800.174(1) and (2) is 
revised to read: type-name="italic">(1) failure to attain and maintain 
performance within 90% of established contracted standards; (2) failure to 
attain and maintain participation rates within 90% of established contracted 
standards; 
Additionally, sec.800.175(4) and (5) is revised to read: (4) failure to attain 
and maintain performance within 75% of established contracted standards; (5) 
failure to attain and maintain participation rates within 75% of established 
contracted standards; 
Comment: Regarding sec.800.175(3), one commenter said that it is too restrictive 
to require that reported threats be rectified within 30 days. The commenter 
suggested that areas should be required to take appropriate action to ensure 
that threats are being addressed and that participants are not continuing to be 
exposed to such threats. 
Response: The Commission believes that reported threats to health and safety 
must be investigated and if found valid, resolved quickly. When the health and 
safety of our citizens are at risk, quick resolution of the threat is essential. 
Therefore, the Commission declines to revise the rule. 
Comment: Regarding sec.800.177, one commenter said that a reduction of up to 25% 
of an area's TANF allocation is too severe, that there is no clear indication of 
the nature of the technical assistance to be provided, and questions what TWC 
will do with recovered funds not used to provide technical assistance. The 
commenter also stated that imposition of this sanction could result in reduction 
of staff or disruption of service. The commenter also stated that sanctions 
should be increasingly strenuous for continued failed performance and suggested 
that this area needs more development and discussion.
Response: The Commission is bound by the 1996 federal welfare law to meet 
certain participation rates. A consequence of failing to meet federal 
requirements is a severe statewide reduction of federal dollars. The Commission 
will consider any information provided by the board demonstrating that the 
reasons for not meeting federal requirements were not within the board's 
control. The amount of reduction for failure of a board to meet its targeted 
TANF participation rate for two consecutive quarters will not exceed 25% of the 
allocated TANF funding. The funds withheld will be used to provide assistance to 
the sanctioned board. The Commission has no other intended use for these funds. 
The specific technical assistance provided and the level of sanction imposed by 
the Commission will be based on the nature and severity of the failure(s). The 
Commission believes that the disruption in services due to the imposition of 
federal sanctions would be exceedingly severe and wants to ensure that the 
federal penalty is not imposed. The three levels of sanctions provide for 
progressively more severe sanctions that may be imposed for continued failure. 
The Commission therefore declines to revise the rule. 
Comment: Regarding sec.800.177, a commenter stated that this section is 
problematic, due to the structural reasons that cause some areas of the State 
difficulty in meeting participation rates. The commenter stated that harm should 
not be visited on individuals who have no control over the structure of the 
economy. The commenter recommended the addition of language regarding allowing 
the boards to obtain reduction or remission of the sanction to the extent that 
the board shows that economic factors beyond its control in the Local Workforce 
Development Area are the reason for the nonattainment of the targeted 
participation rates. The commenter asserts that the board must cooperate with 
the Commission's reasonable efforts and proposals for improving the economic 
factors that impede attainment of the targeted TANF participation rate. 
Response: The Commission reiterates that the state must meet certain 
participation rates imposed by the 1996 federal welfare law. If the state does 
not meet these federal requirements, the state will lose federal funds. The 
Commission will consider any information provided by the boards which 
demonstrates that the reasons for not meeting federal requirements were not 
within the board's control. Due to the requirements under federal law, the 
Commission declines to revise the rule. 
Comment: One commenter asked that, regarding the 75% and 90% of established 
contracted standards, the contracts with the local boards be reviewed. The 
commenter stated that the goals listed in the contract differ from the goals in 
the rules. The commenter asked which goal will be the contracted standards with 
regard to the policy. 
Response: Levels One, Two, and Three sanctions are based on the contracted 
measures. The rules specify that each board's performance must reach 75% and 90% 
of the established target range in the contract to avoid sanctions. To meet 
contract requirements, the board must satisfy the terms of the contract. 
Therefore, the Commission believes that there is no inconsistency between the 
proposed rules and the contracts. 
Comment: Regarding sec.800.177, another commenter asked for clarification of the 
relevance of this section in relationship to the explanation of 90% or 75% for 
two consecutive quarters in level one, two and three sanctions. It also stated 
that deobligation should be based upon the same criteria as the proportionate 
failure within the two significant groups (all-families and two-parent 
families). 
Response: Performance and participation rates will be reviewed by the state 
monthly. Section 800.177 takes effect only if TANF participation rates have not 
been met for two consecutive quarters, a period of six months. The Commission 
agrees that any reduction in the board's contracted TANF funds should be based 
on proportionate failure within the two significant groups. Funds subject to 
reduction will be the target-specific funds. 
Comment: A commenter asserted that the sanctions policy does not provide for any 
process for negotiation, fair hearing prior to staff action, or an opportunity 
to cure, prior to the imposition of sanctions. 
Response: Regarding a process for negotiation, fair hearing, or an opportunity 
to cure, prior to the imposition of sanctions, the rules provide for this 
process. Any reduction in funding imposed as a sanction will occur only if the 
board fails to meet targeted participation rates for two consecutive quarters. 
This allows six months for the boards to provide information to the Commission. 
The boards have two quarters to cure any deficiency. An appeals process is set 
out in the rules at sec.800.191.
Comment: Regarding sec.800.177, one commenter asked who would decide the 
deobligation amount and upon what factors this is determined. 
Response: The Welfare Reform Division will recommend to the Executive Director 
the appropriate sanction to be imposed. The amount will be based on the extent 
of the failure. The boards will have an opportunity to provide information 
relevant to the recommendation. 
Comment: Regarding sec.800.177, one commenter stated that a reduction of TANF 
funds by 25% is punitive and questions why the amount was 25%. The commenter 
asked why affect services to customers who have no role in performance. He asked 
what effect this would have on fixed costs. 
Response: The rule states that the reduction will not exceed 25%; this amount is 
not a set amount. The state has no desire to reduce services to customers. 
Rather, it is the intent of this rule to utilize the sanctioned funds to assist 
the board in delivering services in a manner that meets federal requirements. 
The Commission envisions that customers will be positively affected by this 
rule. The Commission does not believe that there will be an effect on fixed 
costs. 
Comment: Regarding sec.800.177, one commenter asserted that boards may have to 
access non-federal funds and asked what happens if non-federal funds are 
insufficient. The commenter asked if local governmental partners would be 
affected. The commenter also asked why the state would add state staff that 
would have to monitor and process these reductions. 
Response: The Commission has no interest in decreasing the amount of taxpayer 
dollars available to provide services to Texas residents. If successful, the 
boards will not have to access non-federal funds and local partners will not be 
affected. The Commission has no intention of adding staff to implement 
sanctions. The Commission intends to assist the boards in meeting their 
requirements. The consequence of the state failure to meet federal requirements 
is a severe reduction in federal dollars to the state. In order to ensure that 
federal dollars are not reduced, the Commission must do all it can to assist the 
boards in meeting those federal requirements. If a board is failing to meet the 
federal requirements, the Commission will work with the sanctioned board to 
overcome the failure. 
Comment: Regarding sec.800.181, four commenters stated that sanctions should be 
imposed by the Commission rather than Commission staff, and that TWC should 
inform the Administrative Entity as well as the CEO and Board Chair.
Response: The Commission believes that contract issues should be administered by 
Commission staff. Therefore, the Commission Executive Director will impose 
sanctions for violations of the contract. As to notification, the Commission 
agrees that the board's executive director, chair, and the chief elected 
official should be notified. The Commission will notify the elected official 
designated to represent the chief elected officials. Determining whether notice 
should be sent to the Administrative Entity is a local decision for the board to 
make. The Commission will revise the rule to reflect that notice will also be 
sent to the board's Executive Director. 
Comment: Regarding sec.800.181, a commenter stated that this section references 
the notice to include violation, the corrective action, and the impending 
sanction, and questions whether any agency, including TWC, would be able to 
address important issues, corrective action and have sanctions imposed without 
the benefit of response, guaranteed administrative process, and due process 
provided under the contract. This commenter also referred to the written notice 
sent at least five days in advance of the effective date of the sanction. The 
commenter also asserted that any notification of five days issued by staff could 
cause irreparable damage to a local program, clients and contractors. 
Response: The rules provide an opportunity for the Board to respond to reported 
violations prior to the imposition of sanctions. Administrative process and due 
process are provided for throughout the period before the sanction is imposed. 
The master contract sec.11 pertains only to contract amendments made as a result 
of Commission policy decisions and does not apply to sanctions. An opportunity 
to respond, administrative process and due process are built in to the system. 
At each level in the process, the boards have an opportunity to provide 
information to the Commission. Additionally, the boards have an appeals process 
under these rules, as specified in sec.800.161. Regarding the notice provisions, 
the Commission agrees to revise the proposed rules to allow ten working days. 
Comment: Regarding sec.800.181, one commenter suggested that a ten working day 
notice be utilized for any significant issues requiring immediate action to 
preserve the integrity of the fund. 
Response: The Commission agrees that ten working days should be provided and 
revises the rule to reflect the change. 
Comment: Regarding sec.800.182(b), which refers to enforcement fees, two 
comments were received asking whether there will be enforcement fees.
Response: As the Commission has no enforcement fees, the Commission agrees to 
revise the rule. The reference to "enforcement fee" in sec. 800.182(b) is 
removed. 
Comment: Regarding sec.800.182, one commenter suggested that adequate 
notification should not be faxed and recommended that only certified mail be 
used for any sanctions which affect funds. 
Response: The Commission agrees. Any notice of sanctions will be sent certified 
mail, return receipt requested. Notification by facsimile transmission will be 
used for early notification. The rule is revised to reflect the change.
Comment: One comment received recommended that the policy be taken "back to the 
drawing board" and measured against current management practices used by highly 
successful private sector organizations. 
Response: These rules have been under active development for over six months. 
Throughout the process, the comments and opinions of staff at local and state 
levels have been solicited and, where possible, incorporated. The rule 
development has included research on both national perspectives on performance 
measurements as well as state considerations for advancing the integrated local 
delivery system model outlined in House Bill 1863. The Commission believes that 
the implementation of these rules will support the goals of putting Texans to 
work and promoting local control. 
Comment: A commenter stated that prohibition on the use of boards' contractors, 
currently a Level Two sanction, should be reclassified as a Level Three 
sanction. Due to the adverse impact on clients and employees and the severe 
disruption of service delivery, this sanction should be used only as a last 
resort. The commenter asserted that this reclassification would be in keeping 
with the intent of House Bill 1863 and its giving local control to the boards. 
Response: As delineated in the proposed rule at sec.800.151, the sanctions rule 
serves to ensure the accountability of boards in meeting the needs of employers 
and job seekers, ensure performance in reaching outcome measures, ensure 
adequate returns on state investments and support the state in achieving its 
goals. The boards are in control of how services in their area are provided. If 
the boards' subcontractors are not performing, action must be taken. Considering 
the severe federal penalty, action must be taken quickly. Given the 
consequences, the Commission believes it is justified in maintaining its 
position on the stated sanctions. 
Comment: One commenter asked if there is a provision for "SDAs" that are in the 
process of contracting out services, and whether there is a "grace period" to 
allow contractors to transition effectively. 
Response: These issues are related to contract negotiations between the 
Commission and the boards and therefore not appropriate to these rules. Also, as 
stated earlier, the rules will apply to boards only. 
Comment: One commenter stated that boards and their contractors need a method 
for monitoring (client) sanctions requested to ensure they are actually imposed 
by the Texas Department of Human Services (DHS). The commenter also stated that 
a standardized level of service and duties needs to be developed and enforced 
for DHS. The same commenter said that "SDAs" cannot be held accountable for the 
actions or inactions of DHS. 
Response: The Commission agrees that DHS plays an essential role in correctly 
certifying individuals for TANF benefits and promptly initiating adverse actions 
when recipients fail to comply with work requirements. However, those 
requirements are contained in DHS policy. The board has the responsibility to 
work out local arrangements with DHS. 
Comment: One commenter stated that TWC should separate administrative and 
performance violations and ensure that client services are not affected for 
administrative infractions. 
Response: The tiered approach for levying sanctions provides the Commission with 
the flexibility necessary to preserve delivery of services to clients while the 
board is in the process of correcting a contract violation. The Commission is 
committed to giving control to the boards. While the Commission will work with 
the local boards, it is a board's responsibility to ensure that its 
subcontractor is complying with the contract between the board and the 
subcontractor. 
Comment: One commenter stated that the determinations that there will be no 
fiscal implications or economic costs to persons who are required to comply with 
the proposed rules "is simply not true." The commenter asserted that 
deobligating an area's funds has fiscal implications. 
Response: If a workforce area meets all requirements, there will be no negative 
impact. However, if it is necessary to impose sanctions due to failure to meet 
all requirements, there could be the possibility of a negative impact. The 
amount and nature of the impact would depend upon the nature and amount of the 
sanction and the conditions in the area. The Commission cannot predict the 
extent of any negative impact. Additionally, the award of incentives will have a 
positive impact on the area. 
Comment: One commenter asked what would be done for Commission programs in non-
board areas that fail participation rates for two consecutive quarters. The 
commenter recommended that if no sanctions are imposed, the incoming 
administrative board should have a full year to improve performance. Improvement 
should be relative to the condition of the program or programs upon receipt for 
all boards assuming failed programs. The commenter stated that this is equally 
true of boards receiving performing programs. Failure to perform after the board 
assumes responsibility for a previously performing program should not be allowed 
to continue for two consecutive quarters. 
Response: Boards that receive control of failing programs will not be 
accountable for performance prior to assuming control of that program. It is the 
practice of the Commission to negotiate contract performance goals with the 
board, taking program status into account. Sanctions are not imposed until after 
two consecutive quarters of failed participation rates in order to provide the 
boards with an opportunity to cure the issue. Preventive maintenance, however, 
is done on a continuous basis throughout the contract year. 
A comment was received concerning the absence of a statewide system for local 
performance management of the welfare programs and data. 
Response: The Commission acknowledges this issue. The development of a 
comprehensive management information system is a priority project of the 
Commission; however, this preamble and these rules cannot provide the format for 
resolving the matter. 
Comment: A commenter stated that a standardized level of service and duties 
needs to be developed and enforced for DHS. This should outline DHS' duties and 
obligations to the board and its contractors, along with specific deliverable 
time frames. 
Response: The nature of this comment relates to a stipulated service level 
offered by a separate agency and not of the Commission. Therefore, this comment 
does not apply to the language of the Incentive and Sanction Rules. Thus, the 
Commission declines to respond. 
Comment: A commenter stated that these rules should not be adopted at all. The 
commenter resented the suggestion that representatives volunteering to serve 
their community would work harder for a financial reward. The commenter stated 
that a "carrot and stick" approach is not what would improve participation rates 
in the TANF program across the state. 
Response: The Commission has tremendous respect for every member of every board 
and recognizes that the motivation for service to the community does not hinge 
on an incentive award. The Commission seeks to recognize boards for outstanding 
service to their communities by employing practices which result in self-
sufficient lifestyles for residents previously dependent on public assistance. 
The state's true reward is the successful transition of Texans off of public 
assistance. The severe federal consequences, however, require that the 
Commission do all it can to ensure that federal participation rates are met.
Comment: One commenter stated that performance must be based and measured on the 
activities that are within the complete control of the SDAs and/or contractors. 
Response: The proposed rule has been crafted to do exactly this. Boards are in 
control of designing a unique system of delivery suited to their area. To that 
end, boards select contractors who can best deliver performance within that 
design. 
As the Incentive Award and Sanctions Rules only apply to boards, the Commission 
has amended sec.800.191(a) by deleting "or subrecipients." This section will now 
read "Boards may appeal the decision of the Commission."

40 TAC 800.101, 800.102, 800.112-800.1115, 800.118, 800.119
The new rules are adopted under Texas Labor Code sec.301.061, which provides the 
Texas Workforce Commission with the authority to adopt, amend, or rescind such 
rules as it deems necessary for the effective administration of Texas Workforce 
Commission programs.

sec.800.101.Scope and Purpose. 
(a) The purpose of the incentive is to reward Local Workforce Development Boards 
(boards) that meet the stated goals of the Commission to increase the local 
control of workforce development programs and to put Texans to work. The board 
is responsible for providing strategic planning for the local area for all 
workforce development programs consolidated into the Texas Workforce Commission 
(Commission). The development of an integrated and coherent workforce 
development system at the local level is the primary focus of boards. Thus, this 
policy seeks to recognize boards for achieving high performance as a system, as 
well as high performance on behalf of the populations annually targeted by the 
Commission during the budget process. Incentives will emphasize accountability, 
high performance, continuous improvement and support the state in achieving 
workforce development goals. 
(b) This rule incorporates by reference the existing rule for performance 
standards for the Job Training Partnership Act Program cited in 40 TAC 805.160 
through 40 TAC 805.165. State variation of performance standards established by 
the U. S. Department of Labor and/or state standards shall be published in the 
Texas Register on an annual basis in a numbered TWC Letter.

sec.800.102.Definitions.
The following words and terms when used in this chapter shall have the following 
meanings, unless the context clearly indicates otherwise.
(1) Core Outcome Measures --Workforce Development Program performance measures 
adopted by the Governor and developed and recommended through the Texas Council 
on Workforce and Economic Competitiveness (TCWEC). TCWEC Core Outcome Measures 
have been adjusted to allow for a follow-up period of six months in lieu of the 
one year period established by TCWEC.
(2) Earnings Gains Measure --The average earnings of persons employed during the 
post-placement follow-up periods (six months) compared to the average earnings 
of the same persons six months prior to program entry.
(3) Employment Measure --The annual percentage of individuals who entered 
unsubsidized employment subsequent to participation in job preparation services, 
who remained employed (by the same or another employer) six months after 
entering employment.
(4) Skill Attainment Measure --The annual measure specified by the Commission 
based upon the percentage of individuals who completed skill attainment 
activities and acquired a skill as recognized by the state or an industry in the 
form of an achievement as specified below:
(A) board certification of youth/adult competency levels as specified by Job 
Training Partnership Act sec.106a(5); 
(B) a high school diploma; 
(C) GED certificate; 
(D) post secondary education degree; 
(E) occupational license; 
(F) occupational certification; or 
(G) other certifications recognized by the state.
(5) Workforce Development Programs --job-training, employment and employment-
related educational programs and functions as listed in Texas Labor Code 
sec.302.021. 
(6) High Performance Achievement --The top five boards as ranked by performance 
outcomes, adjusted for regional economic conditions according to the model cited 
in sec.800.115 of this title. 
(7) Caseload Reduction --The number of percentage points by which the annual 
average monthly number of families receiving TANF cash assistance has declined 
in a Local Workforce Development Area (LWDA) during the performance period as 
specified in TWC Letter ID/NO WD 88-97, "Incentive Policy Adjustment Model." 
(8) Local Workforce Development Boards --A board that is certified by the 
Governor of the State of Texas, has a plan approved by the Governor of the State 
of Texas, and is operating multiple workforce development programs through an 
executed contract with the Commission.
(9) Incentive Award Pool --Funding that the Commission shall reserve during the 
annual budget process in sufficient amount to use to reward boards for high 
performance achievement. 

sec.800.112.Criteria for Award. 
(a) To encourage system building and accountability in meeting the needs of 
employers and jobseekers, the state will apply four outcome measures to 
establish a high performance recognition. The four outcome measures are:
(1) Employment Measures -- retention in employment for six months following 
placement; 
(2) Earnings Gains Measures -- earnings over the same period; 
(3) Skill Attainment Measures -- work-related skills attained and documented by 
credentials accepted by states or industries; and 
(4) Caseload Reduction -- percentage decrease in TANF households. 
(b) Each board will be evaluated on these core outcome measures for high 
performance recognition. 
(c) In order to be eligible to receive an incentive, a board must be within 90% 
of the variance range established for each contract performance measure. 

sec.800.113.Non-Monetary Incentive Awards.
(a) Non-monetary awards for high performance achievement and continuous 
improvement in meeting performance measures may include, but are not limited to, 
plaques, certificates of achievement, or other formalized recognition accolades. 
(b) To be eligible for a non-monetary incentive award, a certified board must be 
one of the five outstanding performers for any one of the four specified core 
outcome measures. 
(c) Non-monetary incentive awards will be awarded annually based on performance 
beginning in Fiscal Year 1998, which commenced September 1, 1997. 
(d) A board may be recognized as an outstanding performer under more than one 
measure. 

sec.800.114.Monetary Incentive Awards. 
(a) Amounts from the Incentive Award Pool may be distributed to boards based on 
high performance achievement to a targeted population, and may be used to carry 
out innovative workforce investment activities consistent with state and federal 
requirements as determined by the Commission. 
(b) A targeted population will be annually identified by the Commission in the 
budget process. The first three measures set out in sec.800.112 above will be 
applied to this targeted population, while the fourth measure will be applied as 
written. Monetary incentives will reward up to five top performing boards based 
on high performance in meeting these four measures.
(c) Amounts from the Incentive Award Pool may be awarded annually based on 
performance beginning in Fiscal Year 1999, commencing September 1, 1998. 

sec.800.119.Use of Funds.
Boards that receive an incentive award shall use the incentive award to carry 
out innovative workforce investment activities as allowed by state and federal 
laws.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 12, 1998.
TRD-9803595
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Effective date: April 1, 1998
Proposal publication date: January 9, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER E.Sanction Rules
40 TAC sec.sec.800.151, 800.152, 800.161, 800.171-800.177, 800.181, 800.182, 
800.191
The new rules are adopted under Texas Labor Code sec.301.061, which provides the 
Texas Workforce Commission with the authority to adopt, amend, or rescind such 
rules as it deems necessary for the effective administration of Texas Workforce 
Commission programs. 

sec.800.152.Definitions.
The following words and terms when used in this chapter shall have the following 
meanings, unless the context clearly indicates otherwise.
(1) Performance Standard --The contracted numerical value setting the minimum 
acceptable result to be achieved for a performance measure.
(2) Level One Sanction --The sanction that the Texas Workforce Commission 
(Commission) may impose as a response to a contractual breach and/or failure to 
comply with specific state and federal requirements and Commission policies.
(3) Level Two Sanction --The sanction that either the Commission or the Texas 
Council on Workforce and Economic Competitiveness may impose as a response to a 
severe problem and the potential negative impact such a problem may have on the 
local workforce development area or the state.
(4) Level Three Sanction --The sanction that the Commission may impose where a 
severe and/or continued failure to comply with state and/or federal laws, 
regulations or Commission policies has gone uncorrected.

sec.800.161.Preventive Maintenance.
Preventive maintenance measures, developed to ensure program outcome and provide 
fiscal accountability, include technical assistance, timely and effective 
program and fiscal monitoring, and quality initiative reviews.
(1) Technical assistance is performance-driven and outcome-based, stressing the 
sharing of information and best practice models. Assistance is provided for both 
fiscal and program issues. 
(2) Program and Fiscal Monitoring assistance may include site visits, desk 
reviews, and analysis of both financial and program outcomes to help identify 
potential weaknesses before such weaknesses result in sub-standard performance 
or questioned costs. Monitoring may result in recommendations that provide 
practical solutions that can be used to take immediate corrective action. 
(3) Quality Initiative assistance includes routine evaluation of essential 
quality indicators and certification systems and will be enhanced with timely 
and relevant professional training to help develop and maintain the knowledge, 
skills, and abilities required across program lines. 

sec.800.172.Level Two Sanctions.
Level two sanctions may result in, but are not limited to, one or more of the 
following actions:
(1) imposition of one or more level one sanctions; 
(2) restrictions on ability to draw down funds; 
(3) possible delay, suspension, or denial of contract payments; 
(4) prohibition on the use of contracted service providers;
(5) implement actions required by the Commission to address the deficiencies; 
(6) formal Commission representation at all board meetings; and 
(7) reduction of grant or contract allocations in future periods. 

sec.800.174.Violations Subject to Level One Sanctions.
Violations which may result in the imposition of level one sanctions include, 
but are not limited to, the following: 
(1) failure to attain and maintain performance within 90% of established 
contracted standards; 
(2) failure to attain and maintain participation rates within 90% of established 
contracted standards; 
(3) failure to submit required financial and/or performance reports; 
(4) failure to take corrective action to resolve findings identified during 
monitoring, investigative or program reviews; 
(5) failure to rectify and/or resolve all independent audit findings and/or 
questioned costs within required timeframes; 
(6) failure to submit the annual audit required by OMB Circular A-133, as may be 
amended; 
(7) breach of administrative and service contract requirements; and 
(8) failure to retain required service delivery and financial records. 

sec.800.175.Violations Subject to Level Two Sanctions.
Violations which may result in the imposition of level two sanctions include, 
but are not limited to, the following:
(1) failure to rectify a level one sanction within 180 days of notice; 
(2) committing a second violation within the same fiscal year; 
(3) failure to rectify reported threats to health and safety of program 
participants within 30 days of notice; 
(4) failure to attain and maintain performance within 75% of established 
contracted standards; and 
(5) failure to attain and maintain participation rates within 75% of established 
contracted standards. 

sec.800.177.Program Specific Sanctions.
Failure of a board to meet its targeted Temporary Assistance to Needy Families 
(TANF) participation rate for two consecutive quarters may result in a reduction 
in the board's contracted TANF funds in an amount not to exceed 25% of the 
funding allocated to the Local Workforce Development Area. Funds retained by the 
Commission as a result of such a reduction in allocation shall be used to assist 
the sanctioned board in meeting the federal participation rates. This remedy is 
in addition to the other remedies available to the Commission.

sec.800.181.Enforcement. 
(a) The specific sanction(s) to be imposed by this policy shall be determined by 
the Commission Executive Director. 
(b) The Commission shall work in concert with the Texas Council on Workforce and 
Economic Competitiveness, whenever necessary, to impose sanctions as required by 
the Texas Government Code, 2308.268 and 2308.269. 
(c) The Commission shall send a written notice of pending sanctions indicating 
the violation, the corrective action, and the impending sanction.
(d) The written notice shall be sent to the board executive director, chair and 
the chief elected official of the Local Workforce Development Area. 
(e) The Commission shall send the written notice at least ten working days in 
advance of the effective date of the sanction. 

sec.800.182.Notice. 
(a) The date of notice shall be the date the notice is sent to the board by 
certified mail. 
(b) All notices of violations will be sent by the following methods: 
(1) facsimile (fax) transmission for all notices; and 
(2) letter by certified mail, return receipt requested.

sec.800.191.Appeal. 
(a) Boards may appeal the decision of the Commission. 
(b) Requests for appeal must be submitted within ten working days of the date of 
notice to the General Counsel, Texas Workforce Commission, 101 East 15th Street, 
Room 614, Austin, Texas 78778. 
(c) Requests for appeal will be referred to a hearing officer. The hearing 
officer will receive oral and written evidence from both parties and prepare a 
written proposal for decision. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 12, 1998.
TRD-9803594
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Effective date: April 1, 1998
Proposal publication date: January 9, 1998
For further information, please call: (512) 463-8812

TITLE 43. TRANSPORTATION
PART II. Texas Department of Transportation, Board of Director of the Texas 
Turnpike Authority Division
CHAPTER 50.Management
SUBCHAPTER A.General Provisions
43 TAC sec.50.2
The Board of Directors of the Texas Turnpike Authority Division of the Texas 
Department of Transportation (the "Board") adopts new sec.50.2, concerning 
definitions. Section 50.2, is adopted with changes to the proposed text as 
published in the January 30, 1998 issue of the Texas Register (23 TexReg 733). 
EXPLANATION OF PROPOSED RULE Senate Bill 370, 75th Legislature, 1997, created 
the Texas Turnpike Authority Division of the Texas Department of Transportation 
(the "authority"), to be governed by a Board of Directors. The Texas 
Transportation Commission employs the director of the authority. The director 
reports to the commission and the Board. 
Section 50.2. Defines general words and terms to be used in new Chapter 50, 
Management. This section has been changed to number the definitions in 
accordance with Texas Register requirements. 
RESPONSE TO COMMENTS No oral or written comments were received on the proposed 
new section. 
STATUTORY AUTHORITY The new section is adopted under Transportation Code, 
sec.361.042, which requires the Board to adopt rules for the regulation of its 
affairs and the conduct of its business. 

sec.50.2.Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
(1) Authority - The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Board - The board of directors of the authority. 
(3) Chair - The presiding officer of the Board. 
(4) Commission - The Texas Transportation Commission.
(5) Department - The Texas Department of Transportation.
(6) Director - The chief administrative officer of the authority. 
(7) Executive director - The chief administrative officer of the Texas 
Department of Transportation. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 13, 1998.
TRD-9803706
Bob Jackson
Acting General Counsel
Texas Department of Transportation Board of Directors of the Texas Turnpike 
Authority Division
Effective date: April 2, 1998
Proposal publication date: January 30, 1998
For further information, please call: (512) 463-8630

SUBCHAPTER C.Public Meeting and Hearings
43 TAC sec.50.32
The Board of Directors of the Texas Turnpike Authority Division of the Texas 
Department of Transportation (the "Board") adopts new sec.50.32, concerning 
public access to board meetings. Section 50.32 is adopted without changes to the 
proposed text as published in the January 30, 1998 issue of the Texas Register 
(23 TexReg 733) and will not be republished. 
EXPLANATION OF PROPOSED RULE Senate Bill 370, 75th Legislature, 1997, created 
the Texas Turnpike Authority Division of the Texas Department of Transportation 
(the "authority"), to be governed by a Board of Directors. 
Transportation Code, sec.361.051, requires the authority to make and implement 
policies that provide the public with a reasonable opportunity to appear before 
the Board to speak on any issue under the jurisdiction of the authority. 
In compliance with sec.361.051, sec.50.32 provides policies and procedures 
governing public access to the Board in order to facilitate that access and 
maximize public participation in the decision-making process while ensuring 
orderly and effective conduct of Board meetings. 
Section 50.32. Provides for the following: persons to speak on posted agenda 
items; for persons to request the department to add an item to the board agenda; 
for persons to speak on any matter under the board's jurisdiction during an 
open-comment period; that persons with special communication or accommodation 
needs may contact the authority which will make every effort to accommodate; for 
notice of board meetings in accordance with the Open Meetings Act; guidelines 
for meeting attendees to assure proper decorum, opportunity to be heard, and 
orderly proceedings; for the presiding officer of the board to waive 
requirements of this section in the public interest if necessary for the 
performance of the responsibilities of the authority. 
RESPONSE TO COMMENTS No oral or written comments were received on the proposed 
new section. 
STATUTORY AUTHORITY The new section is adopted under Transportation Code, 
sec.360.042, which requires the Board to adopt rules for the regulation of its 
affairs and the conduct of its business, and more specifically, Transportation 
Code, sec.361.042, which requires the division to make and implement policies 
that provide the public with a reasonable opportunity to appear before the Board 
to speak on any issue under the jurisdiction of the division. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of the Secretary of State on March 13, 1998.
TRD-9803707
Bob Jackson
Acting General Counsel
Texas Department of Transportation Board of Directors of the Texas Turnpike 
Authority Division
Effective date: April 2, 1998
Proposal publication date: January 30, 1998
For further information, please call: (512) 463-8630

SUBCHAPTER D.Employment Practices
43 TAC sec.sec.50.41-50.43
The Board of Directors of the Texas Turnpike Authority Division of the Texas 
Department of Transportation (the "Board") adopts new sec.sec.50.41-50.43, 
concerning employment practices. Sections 50.41-50.43 are adopted without 
changes to the proposed text as published in the January 30, 1998, issue of the 
Texas Register (23 TexReg 735) and will not be republished.
EXPLANATION OF NEW SECTIONS Senate Bill 370, 75th Legislature, 1997, created the 
Texas Turnpike Authority Division of the Texas Department of Transportation (the 
"authority"), to be governed by a Board of Directors. The Texas Transportation 
Commission employs the director of the authority. The director reports to the 
commission and the Board. 
Section 50.41. To clarify the status of authority employees in regard to 
policies and procedures governing employees of the Texas Department of 
Transportation, sec.50.41 provides that, unless otherwise provided by the Board, 
employees of the authority are subject to the same human resource rules, 
policies, and procedures applicable to other employees of the department. 
Section 50.42. To allow for participation of authority employees in the 
department's sick leave pool program, sec.50.42 adopts by reference the 
department's rules concerning its sick leave pool. 
Section 50.43. To allow for participation of authority employees in the 
department's employee training and education program, sec.50.43 adopts by 
reference the department's rules concerning employee training and education.
RESPONSE TO COMMENTS No oral or written comments were received on the proposed 
new sections. 
STATUTORY AUTHORITY The new sections are adopted under Transportation Code, 
sec.361.042, which requires the Board to adopt rules for the regulation of it 
affairs and the conduct of its business, and more specifically, Government Code, 
sec.661.002, which requires the governing body of a state agency to adopt rules 
and prescribe procedures relating to the operation of the agency sick leave 
pool, and Government Code, Chapter 656, which requires a state agency to adopt 
rules relating to its employees training and education. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be a valid exercise of the agency's legal authority. 
Filed with the Office of the Secretary of State on March 13, 1998.
TRD-9803708
Bob Jackson
Acting General Counsel
Texas Department of Transportation Board of Directors of the Texas Turnpike 
Authority Division
Effective date: April 2, 1998
Proposal publication date: January 30, 1998
For further information, please call: (512) 463-8630