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

TITLE 1. ADMINISTRATION
PART XII. Advisory Commission on State Emergency Communications
CHAPTER 251.Regional Plans-Standards
1 TAC sec.251.9
The Advisory Commission on State Emergency Communications proposes new 
sec.251.9, concerning the use and distribution of 9-1-1 funds and other related 
funds. The rule was developed to assist local governments in requesting funds 
for the maintenance of rural addressing systems in Texas. The Advisory 
Commission on State Emergency Communications has adopted a policy regarding 
rural addressing maintenance and the use of state funds. These guidelines 
address the use and distribution of 9-1-1 Funds and other related funds. The 
maintenance of street addresses is essential to E9-1-1 systems utilizing the 
Automatic Location Identification (ALI) feature, which displays the locations of 
9-1-1 callers. 
Mr. James D. Goerke, executive director, has determined that for the first five-
year period the section is in effect there may be limited fiscal implications 
for state or local government as a result of enforcing or administering the 
section. 
Mr. Goerke also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be the proper maintenance of maps and records associated with an 
addressing system for the proper operation of an E9-1-1 system and the delivery 
of a caller's location. There will be no effect on small businesses.
There are no anticipated economic costs to persons who are required to comply 
with the section as proposed. 
Comments on the proposal may be submitted to James D. Goerke, Executive 
Director, Advisory Commission on State Emergency Communications, 333 Guadalupe 
Street, Suite 2-212, Austin, Texas 78701. 
The new section is proposed under Texas Health and Safety Code, Chapter 771, 
sec.sec.771.051, 771.056, and 771.057, which provides the Advisory Commission on 
State Emergency Communications with the authority to develop and amend a 
regional plan that meets standards set for the operation of prompt and efficient 
9-1-1 services throughout a region. The maintenance of street addresses is 
essential to E9-1-1 systems utilizing the Automatic Location Identification 
feature which displays the locations of 9-1-1 callers.
The proposed section affects the Health and Safety Code, Chapter 771, 
sec.sec.771.051, 771.056, 771.057. 

sec.251.9.Guidelines for Addressing Maintenance Funds.
The Advisory Commission on State Emergency Communications (ACSEC) has adopted a 
policy regarding rural addressing maintenance and the use of state funds. These 
guidelines address the use and distribution of 9-1-1 Funds and other related 
funds. The maintenance of street addresses is essential to E9-1-1 systems 
utilizing the Automatic Location Identification (ALI) feature, which displays 
the locations of 9-1-1 callers. 
(1) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(A) 9-1-1 Database Record--A physical record, which includes the telephone 
subscriber information to include the caller's telephone number, related 
locational information, and class of service, and also conforms to NENA adopted 
database standards. 
(B) 9-1-1 Funds--Funds assessed and disbursed in accordance with the Texas 
Health and Safety Code, Chapter 771. 
(C) Addressing Completion--A county addressing project, based upon the 
inventory, has corrected address errors, assigned street address, provided all 
new or changed addresses to telephone companies, and established a maintenance 
method.
(D) Capital Replacement Cost--The non-recurring cost of replacing equipment 
purchased with 9-1-1 funds amortized over a selected period of time. 
(E) Digital Map--A computer generated and stored data set based on a coordinate 
system, which includes geographical and attribute information pertaining to a 
defined location. A digital map includes street name and locational information, 
data sets related emergency service provider boundaries, as well as other 
associated data. 
(F) Emergency Communications District--A public agency or group of public 
agencies acting jointly that provided 9-1-1 service before September 1, 1987, or 
that had voted or contracted before that date to provide that service; or a 
district created under Texas Health and Safety Code, Chapter 772, Subchapter B, 
C, D, or E.
(G) Graphical Display of Location Information--The ability to display a map on a 
telecommunicator's terminal in response to a 9-1-1 call or inquiry that relates 
to the caller's location. Features may include the display of an address or 
geographic based coordinate locations and the ability to zoom, pan, and show 
other related geographical information or features. 
(H) Geographic Information System (GIS)--A system necessary to map emergency 
service number (ESN) boundaries and reflect annexations and other feature 
changes; to list emergency service provider translations for ESNs to provide and 
maintain master street address guide (MSAG) format; to validate and resolve 
database discrepancies; to project new addresses and block ranges as an initial 
assignment or correction; for ongoing issuance of new addresses; and for locator 
maps for emergency services providers.
(I) Regional Planning Council--A commission established under Local Government 
Code, Chapter 391, also referred to as a regional council of governments (COG). 
(J) Strategic Plan--As part of a regional plan, a document identifying 9-1-1 
equipment and related activity, by strategic plan component, required to support 
planned levels of 9-1-1 service within a defined area of the state. The 
strategic plan normally covers at least a three year planning period and 
specifically projects 9-1-1 costs and revenues associated with this section 
including equalization surcharge requirements. 
(i) Strategic Plan Component. Within a 9-1-1 implementation priority level, a 
category of 9-1-1 activity and/or equipment generally associated with 9-1-1 
implementation cost. 
(ii) Strategic Plan Level. An ACSEC established statewide implementation 
priority generally associated with a level of 9-1-1 service - e.g., Automatic 
Number Identification (ANI). 
(K) Unaddressed County--A county in Texas which has not completely assigned new 
addresses and provided all new or changed addresses to telephone companies under 
a county addressing process. 
(2) Policy and procedures. As authorized by the Texas Health and Safety Code, 
Chapter 771, the ACSEC may impose 9-1-1 emergency service fees and equalization 
surcharges to support the planning, development, and provision of 9-1-1 service 
throughout the State of Texas. The implementation of such service involves the 
procurement, installation, and operation of equipment designed to either support 
or facilitate the delivery of an emergency call to an appropriate emergency 
response agency. In addition, the ACSEC has funded addressing projects 
throughout the state to allow for the implementation of Automatic Location 
Identification (ALI) level of service. In the funding of such projects, it has 
been the policy of the ACSEC to fund geographic information systems and the 
development of digital maps to support such activities. The ACSEC recognizes 
that the maintenance of addressing systems is essential to the proper operation 
of an E9-1-1 system and the delivery of a caller's location. If not properly 
maintained, the maps and records associated with an addressing system will soon 
become unreliable and problematic. 
(A) A regional planning council or emergency communication district applying on 
behalf of a county which is operating 9-1-1 service and has completed a county 
addressing project is considered eligible. 
(B) In accordance with state law, interlocal agreements shall be executed 
between the regional planning council and the county. The agreement shall 
identify the responsibilities of all parties and provide for the reporting of 
performance measures. 
(C) An addressing maintenance plan shall be submitted by the regional planning 
council in conjunction with the approved strategic plan. The maintenance plan 
shall provide an overview of all projected activities, identify all parties 
involved and their associated responsibilities. 
(D) Budgets shall be developed by the local governments each fiscal year, 
identifying all projected addressing maintenance expenditures. These budgets 
will be reviewed annually during the strategic plan review process. Activities 
performed by the regional planning council shall be identified within its 
administrative budget. 
(E) Addressing maintenance funds will be allocated based on need as justified by 
the local government and approved by the Commission. If equalization surcharge 
funds are required for addressing maintenance, they shall be allocated first to 
eligible recipients requiring such funds for administrative budgetary purposes, 
followed by Level I, II and III activities, in that order. 
(F) Annual budgeted costs associated with addressing maintenance shall be 
monitored by the ACSEC staff for consistency with approved strategic plans. 
(3) Requesting addressing maintenance funds. A strategic plan amendment from a 
regional planning council or a request from an emergency communication district 
is required as a means of requesting funds under this program. 
(A) A strategic plan amendment from a regional planning council or a request 
from an emergency communication district must contain the following:
(i) a fully executed interlocal agreement between the regional planning council 
and the county; 
(ii) an addressing maintenance plan identifying all activities and responsible 
parties involved; and 
(iii) an approved budget outlining addressing maintenance components and 
projected expenditures. 
(B) Funds requested by a regional planning council or an emergency communication 
district shall be reflected as an expenditure on the ACSEC Financial Status 
Report. 
(4) Budget components. A regional planning council or an emergency communication 
district must submit an addressing maintenance budget to the ACSEC for approval. 
Addressing maintenance budgets may include the following cost components listed 
in subparagraphs (A)-(K) of this paragraph:
(A) Personnel - Unless otherwise justified, 0.5 FTE will be the maximum 
allowable for each county. For each staff position, the following must be 
provided: 
(i) position title; 
(ii) duties related to addressing maintenance; 
(iii) total salary for the budget period; 
(iv) chargeable salary (total salary less release time); 
(v) percentage of time to be charged to addressing maintenance; and 
(vi) total salary chargeable to addressing maintenance. 
(B) Travel - Total local travel estimated for the budget period multiplied by 
the current reimbursement rate for use of personally owned vehicles as defined 
by the State of Texas. List the cost rate for county owned vehicles. 
(C) Supplies - Total costs associated with consumable office supplies to be 
purchased during the budget period. Also, total costs associated with the 
reproduction of maps for use by local emergency service agencies may be 
reflected as part of this item. 
(D) Rent - Total square feet of space devoted to addressing maintenance times 
the rental rate to be charged during the budget period.
(E) Maintenance and repairs - Total maintenance costs for addressing maintenance 
equipment during the budget period. Computers, printers, plotters, distance 
measuring devices (DMD), global positioning satellite (GPS) equipment and sign-
making machines may be included. 
(F) Communications - Total costs for communications including telephone, fax, 
courier, etc., during the budget period. 
(G) Postage and Mailing - Total costs for postage and mailing services expected 
during the budget period. 
(H) Utilities - Total costs for utilities such as electricity, gas, water, etc., 
expected during the budget period. 
(I) Training - Total costs for training associated with addressing maintenance 
functions expected during the budget period. 
(J) Other - Total costs for other items not identified in subparagraphs (A)-(I) 
of this paragraph. 
(K) Street Sign Replacement - Cost share of the replacement of existing street 
signs located in the unincorporated areas of the county. This item shall not 
include the purchase of new signs in the county subsequent to the completion of 
rural addressing. 
(5) Capital replacement. Costs for the replacement of equipment purchased with 
9-1-1 funds shall be reflected within the regional planning council strategic 
plan Capital Recovery (Addressing) component. Computers, printers, plotters, 
distance measuring devices (DMD), global positioning satellite (GPS) equipment 
and sign-making machines may be included. A capital replacement schedule will be 
submitted to the ACSEC by the regional planning council. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805856
James D. Goerke
Executive Director
Advisory Commission on State Emergency Communications 
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 305-6933

TITLE 7. BANKING AND SECURITIES
PART I. Finance Commission of Texas
CHAPTER 1.Consumer Credit Consumer
SUBCHAPTER A.Regulated Loan Licenses
Division <nl>5<ol>. Refund
7 TAC sec.1.102
The Finance Commission of Texas (the commission) proposes the amendment of 
sec.1.102 , concerning the definitions to be used in Chapter 3A. (Texas Civil 
Statutes, Article 5069-3A.101 et seq.). 
The amendment adds a new definition for the term "amount financed" as it is used 
in the chapter. 
Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that for the 
first five-year period the section as proposed will be in effect there will be 
no fiscal implications for state or local government as a result of 
administering or enforcing the section. 
Ms. Pettijohn also has determined that for each year of the first five-year 
period the section as proposed will be in effect the public benefit anticipated 
as a result of the adoption of the section is the clarification of the new 
statutory requirements set forth in Chapter 3A to aid the industry in 
compliance. No net economic cost will result to persons required to comply with 
the section. No difference will exist between the cost of compliance for small 
businesses and the cost of compliance for the largest businesses affected by the 
section.
Comments on the proposed adoption of the amendment may be submitted in writing 
to Leslie L. Pettijohn, Consumer Credit Commissioner, 2601 North Lamar 
Boulevard, Austin, Texas 78705-4207. 
The amendment is proposed under Texas Civil Statutes, Article 5069-3A.901, which 
authorizes the Finance Commission to adopt rules to enforce new Chapter 3A. 
Texas Civil Statutes, Articles 5069-3A.002, is affected by the proposed 
amendment. 

sec.1.102.Definitions.
Words and terms used in this chapter that are defined in Chapter 3A of Article 
5069 have the same meanings as defined in Chapter 3A. The following words and 
terms, when used in this chapter, shall have the following meanings, unless the 
context clearly indicates otherwise.
<nl>(1)<ol> Acquisition Charge-- An interest charge authorized for making the 
cash advance under authority of Article 3A.402 of Article 5069. 
<nl>(2)<ol> Add-on interest -- A method for calculating precomputed interest in 
which the borrower agrees to pay the total of payments, which includes both 
interest and principal, as opposed to agreeing to pay the principal plus 
interest as it accrues at a certain rate. Add-on interest is calculated at the 
outset of a loan on the cash advance for the full term, as if the principal did 
not decline over the course of the loan. For example, a $1,000 loan with 12 
monthly installments and an add-on interest amount of 8 dollars per hundred per 
annum would have a total charge of interest of $80.00 and monthly payments of 
$90.00, yielding an annual percentage rate ("APR") of 14.45%. 
<nl>(3)<ol> <nl>Amount Financed -- The amount of money which is used, forborne, 
or detained and upon which interest is charged. The cash advance plus any other 
amounts that are financed by the creditor are included. Any points or other 
prepaid finance charges, excluding the administrative loan fee, that are not 
paid at closing and that are financed as part of the transaction are included in 
the amount financed. This definition is only applicable for the purposes of this 
chapter for computing earnings, deferments, maximum charges, and determining 
refunds of unearned interest. It is not intended to be analogous with the 
similar term that is used in the Truth-in-Lending Act (15 U.S.C. sec.1601 et 
seq.).<ol>
<nl>(4)<ol> Authorized Charge -- Any charge authorized by applicable Texas law 
to be included in the credit transaction. 
<nl>(5)<ol> Authorized Lender -- A person who has obtained a license from the 
commissioner, or a bank, savings bank, savings and loan association, or credit 
union doing business under the laws of this State or the United States. Banks 
chartered in other states insured by the Federal Deposit Insurance Corporation 
are included in this term. Separate entities that are subsidiaries or affiliates 
of licensees or authorized banks, savings banks, savings and loan associations, 
or credit unions are not authorized lenders unless they meet the required 
elements of the definition of an authorized lender in their own right. 
<nl>(6)<ol> Commissioner -- Consumer Credit Commissioner of the State of Texas. 
<nl>(7)<ol> Date of Consummation -- The date of closing or execution of a loan 
contract. 
<nl>(8)<ol> Default Charge or Late Charge -- The additional interest charge for 
late payment on a loan. 
<nl>(9)<ol> Deferment Charge -- The payment of an additional interest charge to 
defer the payment date of a scheduled payment on a contract. 
<nl>(10)<ol> Dual Interest Coverage -- Insurance that provides benefits to both 
the holder of a loan and the borrower in the event of a loss of the security 
covered by the policy. The policy contains a loss payable clause or endorsement 
that provides benefits that are payable at the discretion of the holder. 
<nl>(11)<ol> Installment Account Handling Charge (IAHC) -- An interest charge 
authorized for making a loan under Article 5069-3A.402.
<nl>(12)<ol> Installment Loan -- Any type of closed-end loan with multiple 
scheduled payments. 
<nl>(13)<ol> Interest-bearing Loan -- A loan in which the borrower agrees to pay 
the principal and interest that accrues at a certain periodic rate. 
<nl>(14)<ol> Interpretation Letter -- A formal interpretation of Article 5069 
and the Texas Finance Code made by the Commissioner and approved by the Finance 
Commission under Texas Finance Code sec.14.408.
<nl>(15)<ol> Licensee -- Any person who has been issued a consumer loan license 
pursuant to Chapter 3A of Article 5069. Another name for a "consumer loan 
license" is "regulated loan license." 
<nl>(16)<ol> Making a Loan -- The act of making a loan is either the 
determination of the credit decision to provide the loan, or the act of funding 
the loan or transferring money from the lender to the borrower. A person whose 
name appears on the loan documents as the payee of the note is considered to 
have "made" the loan. 
<nl>(17)<ol> Negotiating a Loan -- The process of submitting and considering 
offers between a borrower and a lender with the objective of reaching agreement 
on the terms of a loan. The act of passing information between the parties can, 
by itself, be considered "negotiation" if it was part of the process of reaching 
agreement on the terms of a loan. "Negotiation" involves acts which take place 
before an agreement to lend or funding of a loan actually occurs. 
<nl>(18)<ol> OCCC -- Office of Consumer Credit Commissioner of the State of 
Texas. 
<nl>(19)<ol> Precomputed Loan -- A loan in which the borrower agrees to pay the 
total of payments that includes both principal and all anticipated interest 
through the full term of the loan. If a borrower prepays a precomputed loan, the 
borrower is entitled to a rebate of all unearned interest and unearned charges. 
<nl>(20)<ol> Prepaid Interest -- Interest paid separately in cash or by check 
before or at consummation in a transaction, or withheld from the proceeds of the 
credit at any time. Some common terms such as points, discounts, and origination 
fees have been used to identify this charge. 
<nl>(21)<ol> Principal -- The capital sum of the debt including any interest 
capitalized and added to the cash advance at the inception of the loan. This is 
the amount of money which is used, forborne, or detained and upon which interest 
is charged. The principal amount does not include any interest accrued after the 
inception of the loan, such as default charges. 
<nl>(22)<ol> Pro Rata Method -- A formula for determining the amount of unearned 
interest or other charges, such as insurance, to be refunded following 
prepayment or acceleration by applying the amounts to equal unit periods. This 
formula assumes that interest or other charges are earned in direct proportion 
to the time that a loan has been outstanding.
<nl>(23)<ol> Rebate -- Refund of all or part of a precomputed charge or 
interest. 
<nl>(24)<ol> Regulated Loan -- Loan made under the authority of Article 5069-
3A.101. 
<nl>(25)<ol> Renewal or Refinance -- A new loan contract that includes, in whole 
or in part, the net balance of one or more existing loan contracts. 
<nl>(26)<ol> Simple Annual Rate -- The interest rate under the loan agreement 
expressed as a percentage rate per year employing the U.S. Rule method. 
<nl>(27)<ol> Sum of the Monthly Balances or Sum of the Periodic Balances Method 
-- Another formula for determining the amount of unearned interest or other 
charges to be refunded. This is a variant of the Rule of 78. It provides that 
the fraction of the contract interest to be rebated at any given time in the 
loan term is the sum of the monthly loan balances for the months remaining in 
the originally scheduled loan term divided by the sum of the monthly balances 
for all of the months in the scheduled loan term. For example, for a 6-month 
loan of $600 which is scheduled to be repaid in $100 monthly installments, the 
rebate fraction after two months would be: 400 + 300 + 200 + 100 &divide; 600 + 
500 + 400 + 300 + 200 + 100 = 1000/2100 = 10/21 = 0.476 (rounded). For any loan 
which is paid off in equal installments, the sum of the balances method and the 
Rule of 78 will provide identical rebates. If, however, a loan schedule contains 
unequal payments and especially where the debt is retired by a final balloon 
payment, the rebates under the two formulas will be different. 
<nl>(28)<ol> Term Loan -- A loan made repayable in a single payment. 
<nl>(29)<ol> Transacting a Loan -- Any of the significant events associated with 
the lending process through funding, including the preparation, negotiation and 
execution of loan documents and the transfer of money by the lender to the 
borrower or to a third party on the borrower's behalf. This also includes the 
act of arranging a loan. 
<nl>(30)<ol> United States Rule -- Ruling of United States Supreme Court in 
Story v. Livingston, 38 U.S. (13 Pet.) 369, 371 (1839) that, in partial payments 
on a debt, each payment is applied first to interest and any remainder reduces 
the principal. Under this rule, accrued but unpaid interest cannot be added to 
the principal and interest cannot be compounded. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805819
Leslie L. Pettijohn
Commissioner
Finance Commission of Texas
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 936-7640

CHAPTER 4.Currency Exchange
7 TAC sec.4.3
The Finance Commission of Texas (the commission) proposes an amendment to 
sec.4.3, concerning reporting and recordkeeping requirements for currency 
transmitters that engage in currency exchange transactions.
Section 4.3 specifies the reporting and recordkeeping requirements which must be 
met by persons conducting currency exchange or currency transmission 
transactions. Section 4.3(a) as amended will clarify that "currency exchange" 
includes transactions wherein currency transmitters in Texas accept for 
transmission the currency of one government and pay out at the receiving end in 
the currency of another government. Thus, currency transmitters which also 
engage in currency exchange transactions must comply with the currency exchange 
reporting and recordkeeping requirements set forth in sec.4.3(e)(1). 
Section 4.3(i) as amended will also provide that persons engaged in currency 
exchange transactions may, with the prior written approval of the banking 
commissioner, comply with 31 Code of Federal Regulations, Part 103, in lieu of 
compliance with the currency exchange reporting and recordkeeping requirements 
set forth in sec.4.3(e)(1). The amendment to sec.4.3(i) is proposed in response 
to concerns raised by the Non-Bank Funds Transmitters Group (the "Group"). The 
Group raised concerns that sec.4.3(e)(1) may conflict with new federal reporting 
and recordkeeping regulations pertaining to currency exchange transactions which 
are expected to be adopted in the foreseeable future. The Group also asserted 
that the currency exchange reporting and recordkeeping requirements of 
sec.4.3(e)(1), unlike federal law, do not recognize the practical aspects of 
non-bank currency transmission businesses such as customers with accounts, 
"will-call transactions," and non-face-to-face transactions. These concerns are 
fully addressed by allowing currency transmitters engaging in currency exchange 
transactions to be exempt from the currency exchange reporting and recordkeeping 
requirements of sec.4.3(e)(1) if they comply with federal currency exchange 
regulations. 
Stephanie Newberg, Director, Special Audit Division, Texas Department of 
Banking, has determined that for each year of the first five-years the section 
as proposed will be in effect, there will be no fiscal implications for state or 
local government as a result of enforcing or administering the section. Ms. 
Newberg also has determined that for each year of the first five-year period the 
section as proposed will be in effect, the public benefit anticipated as a 
result of the amendment will be clarification of recordkeeping and reporting 
processes under Finance Code, Chapter 153, enhanced protection of the rights and 
interests of industry customers and the public at large, and a more efficient 
and effective examination process. If adopted, the proposed amendment will 
enhance the orderly administration of Finance Code, Chapter 153, and ensure that 
its purposes, as they relate to recordkeeping and reporting are substantially 
fulfilled. No economic cost will be incurred by a person required to comply with 
this section, and there will be no effect on small businesses. 
Comments on the proposal may be submitted in writing to Stephanie Newberg, 
Director, Special Audit Division, Texas Department of Banking, 2601 North Lamar 
Boulevard, Austin, Texas 78705-4294, or by e-mail to 
stephanie.newberg@banking.state.tx.us.
The amendment is proposed pursuant to the Finance Code, sec.153.002(2), which 
authorizes the commission to adopt rules "necessary to implement this chapter, 
including ... recordkeeping and reporting requirements of a license holder." 
Finance Code, Chapter 153, is affected by the proposed amendment.

sec.4.3.Reporting and Recordkeeping.
(a) For purposes of this section, a "currency business" refers to a person that 
engages in or has engaged in currency exchange or currency transmission 
transactions, whether the person is licensed under the Finance Code, Chapter 
153, or is exempt from licensing under the Finance Code, sec.153.117(a)(2). <nl> 
As used in this section, "currency exchange" includes transactions wherein 
currency transmitters accept for transmission in Texas the currency of one 
government and pay at another location in the currency of another 
government.<ol>
(b)-(h ) (No change.) 
(i) In lieu of compliance with this section, the commissioner may authorize a 
currency business to maintain records of currency transmission <nl> and currency 
exchange<ol> transactions in accordance with 31 CFR, <nl> Part 103<ol> 
[sec.103.33(f)]. Such authorization must be pursuant to the commissioner's 
written approval based on review of current audited financial statements of the 
currency business. To support authorization under this subsection, the audited 
financial statements must have been issued by a certified public accountant 
acceptable to the commissioner within the 18-month period prior to its 
submission to the department and must have an unqualified opinion. If at an 
examination or other review of the records of a currency business by the 
department a violation of 31 CFR, <nl>Part 103<ol> [sec.103.33(f)], or the 
Finance Code, Chapter 153, is cited, the authorization of the currency business 
pursuant to this subsection is subject to immediate revocation by order of the 
commissioner. 
(j) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805757
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

CHAPTER 9.Rules of Procedure for Contested Case Hearings, Appeals, and 
Rulemakings
SUBCHAPTER B.Contested Case Hearings
7 TAC sec.9.34
The Finance Commission of Texas, the Texas Department of Banking, the Savings 
and Loan Commissioner and the Consumer Credit Commissioner (the agencies) 
propose an amendment to sec.9.34, concerning post-hearing proceedings. 
The proposed amendment to sec.9.34 will clarify the original intent of the 
section. The amendment to subsections (a) and (b) should eliminate apparent 
confusion as to the time and manner in which exceptions, replies to exceptions, 
and briefs should be filed. The proposed amendment to subsection (b)(4) makes 
clear that, after the case is under submission, the agency head can remand it 
back to the administrative law judge for additional briefing from the parties or 
for reopening of the evidence. New subsection (b)(5) as proposed makes it clear 
that the agency head can also take any other lawful and appropriate action with 
regard to the case. New subsection (c) as proposed specifies how to notify the 
agency of pertinent court decisions that may come out after briefing on 
exceptions to the proposal for decision is complete and the case is under 
submission to the agency head for decision. Finally, the proposed amendment to 
subsection (d) will provide that the administrative law judge must recirculate a 
proposal for decision that on remand has been substantially revised, before it 
is sent back to the agency head for consideration. 
Larry Craddock, administrative law judge for the agencies, has determined that 
for the first five-year period the section is in effect, there will be no fiscal 
implication for state or local government as a result of enforcing or 
administering the section. 
Mr. Craddock also has determined that for each year of the first five-year 
period the section as proposed will be in effect, the public benefit anticipated 
as a result of the amendment will be clarification of ambiguous language to 
facilitate prompt and efficient administrative hearings at the agencies. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the amendment as proposed.
Comments on the proposal may be submitted in writing to Larry Craddock, 
Administrative Law Judge, Finance Commission of Texas, 2601 North Lamar 
Boulevard, Austin, Texas 78705-4294, or by e-mail to 
larry.craddock@banking.state.tx.us.
The amendment is proposed pursuant to Government Code sec.2001.004, which 
requires all administrative agencies to adopt rules of practice stating the 
nature and requirements of all available formal and informal procedures. The 
amendment is also proposed under specific rulemaking authority in the 
substantive statutes administered by the agencies. 
Finance Code, sec.31.003(a)(5), authorizes the finance commission to adopt rules 
necessary or reasonable to facilitate the fair hearing and adjudication of 
matters before the banking commissioner and the finance commissioner. 
Finance Code, sec.152.102, authorizes the finance commission to adopt rules 
necessary for the enforcement and orderly administration of that chapter 
(regulating sale of checks). 
Finance Code, sec.153.002, authorizes the finance commission to adopt rules 
necessary to implement that chapter (regulating currency exchange and 
transmission). 
Finance Code, sec.154.051(b), authorizes the department of banking to adopt 
rules concerning matters incidental to the enforcement and orderly 
administration of that chapter (regulating prepaid funeral benefits). 
Finance Code, sec.11.302, authorizes the finance commission to adopt rules 
applicable to state savings associations or to savings banks. Finance Code, 
sec.96.002(a)(2), and sec.66.002, also authorize the savings and loan 
commissioner and the finance commission to adopt procedural rules for deciding 
applications filed with the savings and loan commissioner or the savings and 
loan department. 
Finance Code, sec.11.304, authorizes the finance commission to adopt rules 
necessary for supervising the consumer credit commissioner and for ensuring 
compliance with Finance Code, Chapter 14 and Title 4, plus amendments to the 
source law made by Acts 1997, 75th Legislature, Chapter 1396). Texas Civil 
Statutes, Article 5069-3A.901, also authorizes the finance commission to adopt 
rules necessary for the enforcement of Article 5069-3A.001. Finance Code, 
sec.371.006, further authorizes the consumer credit commissioner to adopt rules 
necessary for the enforcement of Finance Code, Chapter 371.

sec.9.34.Post-hearing Proceedings.
(a) Following the hearing the administrative law judge upon request shall give 
the parties an opportunity to file written briefs and proposed findings of fact 
and conclusions of law. Pursuant to Government Code, sec.2001.062, the 
administrative law judge shall review these materials and all evidence and 
testimony, and prepare a proposal for decision containing a statement of the 
reasons for the proposed decision and of each finding of fact and conclusion of 
law necessary to the proposed decision. The administrative law judge shall also 
prepare a proposed final order for the agency head to sign adopting the proposed 
decision. Upon completion, the administrative law judge shall serve copies of 
the proposal for decision and proposed final order on all parties and give each 
adversely affected party an opportunity to file exceptions and present briefs. 
If a party files exceptions or presents briefs, the administrative law judge 
shall give an opportunity to other parties to file replies to the exceptions or 
briefs. <nl>Exceptions, replies to exceptions, and related briefs must be filed 
within deadlines established by the administrative law judge.<ol> The [parties 
shall send these materials to the] administrative law judge [who] may amend the 
proposal for decision and proposed final order in response to the exceptions, 
replies, or briefs submitted. If the administrative law judge makes substantive 
revisions, the administrative law judge shall circulate the amended proposal for 
decision and proposed final order to the parties for additional exceptions and 
briefs before submitting the proposal for decision and the proposed final order 
based thereon to the agency head(s) for approval. 
(b) After the administrative law judge has circulated the proposal for decision 
and proposed order to the parties and the parties have had an opportunity to 
file exceptions and briefs in the manner provided in subsection (a) of this 
section, the administrative law judge shall submit the proposal for decision and 
proposed order together with all materials listed in Government Code, 
sec.2001.060, to the agency head(s) for review. <nl> No additional briefs may be 
submitted after the case is under submission to the agency head(s) for decision 
unless requested by the agency head(s).<ol> The agency head(s) may: 
(1)-(3) (No change). 
(4) remand the proceeding for further examination by the administrative law 
judge<nl>, including for the limited purpose of receiving additional briefing or 
evidence from the parties on specific issues<ol>; or 
(5) <nl>take another lawful and appropriate action with regard to the case<ol> 
[direct the administrative law judge to give further consideration to the 
proceeding with or without reopening the hearing
<nl>(c)<ol> <nl>If a court renders a decision that may be pertinent to the 
outcome of the case after it is under submission to the agency head, a party may 
direct the agency's attention to such decision by a cover letter transmitting a 
copy of the decision to the administrative law judge and agency head(s) (at the 
same time furnishing a copy to opposing parties). The cover letter may reference 
the case to which the decision pertains but may not contain arguments.<ol> 
<nl>(d)<ol> [(c)] If [on] remand <nl> pursuant to subsection (b) of this section 
results in a substantially revised proposal for decision and order<ol> 
[additional evidence is received which results in a substantial revision of the 
administrative law judge's recommendation for final action], the administrative 
law judge shall <nl> circulate the revised proposal for decision and order to 
the parties for additional exceptions and replies<ol> [prepare a new proposal 
for decision and proposed final order and serve them on the parties and give the 
parties an opportunity to file exceptions and make replies to the new proposal 
for decision and proposed final order] in the manner provided by subsection (a) 
of this section. <nl>After the parties have had an opportunity to file 
additional exceptions and replies, the administrative law judge shall submit the 
revised proposal for decision and order, together with the supplemental record, 
to the agency head(s) for consideration in the manner provided by subsection (b) 
of this section.<ol> 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805758
Everette D. Jobe
Certifying Official
Finance Commission of Texas
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

PART II. Texas Department of Banking
CHAPTER 17.Trust Company Regulation
SUBCHAPTER A.General
7 TAC sec.17.3
The Finance Commission of Texas (the commission) proposes new sec.17.3, 
concerning sale or lease agreements between a trust company and an officer, 
director, manager, managing participant, principal shareholder, or principal 
participant of the trust company, or an affiliate of the trust company 
(insider). 
Under Texas Civil Statutes, Article 342a-4.107(a), if the approval of a 
disinterested majority of a trust company's board cannot be obtained, a trust 
company may not sell or lease an asset to an insider or purchase or lease an 
asset from an insider without the prior approval of the banking commissioner.
However, under Texas Civil Statutes, Article 342a-4.107(b), a trust company may 
not consummate, renew, or extend a lease involving real property in which an 
insider has an interest without the prior written approval of the banking 
commissioner. 
As proposed, subsection (a) requires a sale or lease agreement between a trust 
company and an insider to be in writing. 
As proposed, subsection (b) specifies that such agreements must have terms and 
rates that are substantially equivalent to or more favorable to the trust 
company than those prevailing at the time for comparable transactions with or 
involving nonaffiliated parties. 
As proposed, subsection (c) clarifies the phrase "approval of a disinterested 
majority of the board," and requires board consideration of all insider sale or 
lease agreements.
As proposed, subsection (d) specifies the form and content of the written 
request which must be submitted to the banking commissioner if a trust company 
must seek the prior written approval of the banking commissioner to enter into a 
sale or lease agreement with an insider.
Finally, as proposed, subsection (e) sets out applicable record keeping 
requirements, and proposed subsection (f) specifies that subsection (c) is not 
applicable to a legally binding, written lease, entered into by a trust company 
prior to June 16, 19 91, until such lease is renewed or extended beyond its 
original term. 
Proposed sec.17.3 is comparable to and drawn from existing sec.3.22.
Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the section is in effect, there will be no 
fiscal implication for state or local government as a result of enforcing or 
administering the section. 
Mr. Jobe also has determined that for each year of the first five years the 
section is in effect, the public benefit anticipated as a result of enforcing 
this section is the clarification of highly complex statutory standards to aid 
the industry in compliance. No net economic cost will result to persons required 
to comply with the proposed section. No difference will exist between the cost 
of compliance for small businesses and the cost of compliance for the largest 
businesses affected by this sect ion. 
Comments on the proposed section may be submitted in writing to Jerry Sanchez, 
Assistant General Counsel, Texas Department of Banking, 2601 North Lamar 
Boulevard, Austin, Texas 78705-4294, or by e-mail to 
jerry.sanchez@banking.state.tx.us.
The section is proposed under Texas Civil Statutes, Article 342a-1.003(a), which 
authorizes the commission to adopt rules to implement and clarify the law and to 
preserve or protect the safety and soundness of trust companies.
Texas Civil Statutes, Article 342a-4.107, is affected by the proposal.

sec.17.3.Sale or Lease Agreements With an Officer, Director, Principal 
Shareholder, or Affiliate.
(a) Agreement in writing. A sale or lease agreement between a trust company and 
an officer, director, principal shareholder, or affiliate of the trust company 
must be in writing. Existing verbal agreements must be reduced to writing and 
approved by the board. 
(b) Terms of agreement. A sale or lease agreement between a trust company and an 
officer, director, principal shareholder, or affiliate must comply with 
applicable laws and regulations, be subject to the exercise of prudent judgment, 
and have terms and rates that are substantially equivalent to or more favorable 
to the trust company than those prevailing at the time for comparable 
transactions with or involving nonaffiliated parties. 
(c) Board action. All transactions subject to Texas Civil Statutes, Article 
342a-4.107(a), must receive the prior approval of at least a majority of a 
quorum composed entirely of disinterested directors of the Board or the 
transaction at issue must be submitted for prior approval of the banking 
commissioner. For purposes of this section, a quorum shall consist of a majority 
of the number of directors elected at the last meeting of shareholders. Even if 
the transaction is subject to the prior approval of the banking commissioner 
because a quorum composed entirely of disinterested directors cannot be 
obtained, as a matter of good corporate policy, a trust company proposing to 
enter into a transaction subject to Texas Civil Statutes, Article 342a-4.107, 
should obtain the affirmative vote of a majority of the disinterested directors 
of the board. 
(d) Application for approval. If a sale or lease agreement requires the written 
approval of the banking commissioner prior to consummating, renewing, or 
extending a sale or lease agreement, a written request for approval must be 
submitted to the banking commissioner at least 60 days prior to the proposed 
effective date of the sale or lease agreement and must include the following 
information: 
(1) a copy of the proposed sale or lease agreement; 
(2) a complete description of the personal or real property to be sold or 
leased; 
(3) a full disclosure of all existing transactions and/or relationships, whether 
direct or indirect, between the trust company and the parties involved; 
(4) in the case of a lease agreement involving real property, a copy of the 
minutes of the board meeting reflecting an analysis of the information contained 
in this subsection; 
(5) a certified copy of a board resolution approving the transaction and 
indicating those directors voting or abstaining, as the case may be, and either: 
(A) evidence that the transaction received the affirmative vote of at least a 
majority of disinterested directors on the board; or 
(B) a statement explaining the reasons the affirmative vote of at least a 
majority of disinterested directors on the board could not be obtained; 
(6) copies of appropriate supporting documentation, including analysis of 
comparable terms and rates for the real or personal property to be sold or 
leased; 
(7) in the case of a lease agreement, evidence demonstrating that the trust 
company will account for the lease in accordance with Financial Accounting 
Standards Board Statement Number 13; and 
(8) other information which the banking commissioner may request. 
(e) Records. A trust company shall maintain the originals of all sale or lease 
agreements with an officer, director, manager, managing participant, principal 
shareholder, or principal participant of the trust company, or an affiliate, 
which documents must be made available at all times to the Texas Department of 
Banking for examination and review. For purposes of this subsection, required 
documentation need not be retained beyond three years after the expiration of 
the sale or lease agreement to which the documentation pertains. 
(f) Exemption. Subsection (d) of this section does not apply to a legally 
binding, written lease entered into by a trust company prior to June 16, 1991, 
until such lease is renewed or extended beyond its original term. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805760
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

CHAPTER 21.Trust Company Corporate Activities
The Finance Commission of Texas (the commission) proposes new sec.21.1, an 
amendment to sec.21.2, and new sec.sec.21.3, 21.31, 21.32, 21.41, and 21.42 
concerning corporate filings for trust companies.
Effective September 1, 1997, Texas Civil Statutes, Articles 342a-1.001 et seq, 
became the governing law for trust companies under the jurisdiction of the Texas 
Department of Banking (the department). New regulations implementing this law 
require proposal and adoption. 
Proposed sec.21.1 pertains to definitions applicable to corporate filings.
Proposed sec.21.1 is comparable to and drawn from existing sec.15.1. The 
proposed amendment to sec.21.2 will add correct cross-references to the new 
proposed sections. Proposed sec.21.3 will act to reduce regulatory burden on 
trust companies by establishing guidance for utilizing the expedited procedure 
for certain corporate applications that require the approval of the banking 
commissioner. 
Proposed sec.21.31 specifies the information which must initially be filed with 
the banking commissioner by a trust company before the trust company may 
exercise its authority to accept trust deposits pursuant to Texas Civil 
Statutes, Article 342a-5.40 1. Proposed sec.21.31 also specifies recordkeeping 
requirements. Proposed sec.21.31 further specifies that exempt trust companies 
may not engage in trust deposits. The commission believes deposit taking is an 
inappropriate activity for exempt trust companies, limited by definition to a 
narrow range of clientele. The commission specifically invites comments from 
interested parties on this issue. 
Proposed sec.21.32 specifies the investments which a trust company may utilize 
for purposes of maintaining security for trust deposits pursuant to Texas Civil 
Statutes, Article 342a-5.401, authorizes a trust company to utilize certificates 
of deposit for purposes of maintaining security for trust deposits, and requires 
a trust company to disclose to its clients that the trust deposits are not 
insured by the Federal Deposit Insurance Corporation if that is the case. 
Proposed sec.21.32 also requires that the value of the securities may be 
evaluated daily to ensure that the deposits are fully secured, or a margin of 
10% must be maintained at all times; however, the value of the securities must 
be evaluated at least monthly to ensure that the deposits are fully secured. The 
market value of the securities must be equal to or greater than the total amount 
of the deposits plus any interest, accrued and unpaid. Proposed sec.21.32 also 
specifies recordkeeping requirements. 
Proposed sec.21.41, concerning written notices and applications for change of 
home office, sets out when a notice and an application are necessary, the 
information which must be included in the filing with the banking commissioner, 
sets publication standards, and clarifies the role of the banking commissioner 
in the process. 
Proposed sec.21.42, concerning establishing and closing of additional offices by 
trust companies subject to regulation by the banking commissioner, sets out the 
regulatory procedures for establishing and closing an additional office other 
than the home office of a trust company. 
Several of the proposed sections refer to supervisory or regulatory concerns as 
a basis for denial or conditions on approval of an application. The industry 
should specifically note that the banking commissioner will evaluate whether the 
applicant is adequately prepared to address Year 2000 issues, a source of 
significant supervisory concerns. The Federal Financial Institutions Examination 
Council provides useful information at http://www.ffiec.gov/y2k/default.htm.
Everette D. Jobe, General Counsel, Texas Department of Banking, has determined 
that for the first five-year period the sections as proposed will be in effect, 
there will be no fiscal implications for state or local government as a result 
of enforcing or administering the sections. 
Mr. Jobe also has determined that for each year of the first five-year period 
the sections as proposed will be in effect, the public benefit anticipated as a 
result of the proposed sections will be guidance for the trust company industry 
in engaging in a significant new activity with due regard for safety and 
soundness. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the sections as 
proposed.
Comments on the proposal may be submitted in writing to Everette D. Jobe, 
General Counsel, Texas Department of Banking, 2601 North Lamar Boulevard, 
Austin, Texas 78705-4294, or by e-mail to everette.jobe@banking.state.tx.us.

SUBCHAPTER A.Fees and Other Provisions of General Applicability
7 TAC sec.sec.21.1-21.3
The sections are proposed under Texas Civil Statutes, Article 342a-1.003(1), 
(a)(2), which authorize the commission to adopt rules necessary or reasonable to 
implement and clarify Texas Civil Statutes, Article 342a-1.001 et seq, to 
preserve the safety and soundness of trust companies, to provide for recovery of 
the cost of maintenance and operation of the department and the cost of 
enforcing the law through the imposition and collection of ratable and equitable 
fees for notices, applications, and examinations, and to facilitate the fair 
hearing and adjudication of matters before the commissioner and the commission. 
Texas Civil Statutes, Articles 342a-1.003, 342a-3.202, and 342a-3.203, are 
affected by the proposal. 

sec.21.1.Definitions.
Words and terms used in this chapter that are defined in Texas Civil Statutes, 
Articles 342a-1.001 et seq, have the same meanings as defined therein. The 
following words and terms, when used in this chapter, shall have the following 
meanings, unless the context clearly indicates otherwise. 
(1) Accepted filing--An application, request, notice, or protest filed under 
Texas Civil Statutes, Articles 342a-1.001 et seq, this chapter, or another rule 
adopted pursuant to Texas Civil Statutes, Articles 342a-1.001 et seq, for which 
the appropriate fee has been paid pursuant to sec.21.2 of this title (relating 
to Filing and Investigative Fees), and regarding which the banking commissioner 
has notified the person or entity who submitted the filing, in writing, that the 
submission is complete and has been accepted for filing.
(2) Additional office--A location of a trust company other than the trust 
company's home office, at which the trust company engages in the trust business.
(3) Day--A calendar day. Eligible trust company--A Texas chartered trust company 
that: 
(A) possesses capital and surplus that equals or exceeds current minimum 
statutory or regulatory requirements; 
(B) received a satisfactory rating at the most recent examination by the 
department or federal regulatory agencies; 
(C) is not operating in violation of a regulatory condition or commitment 
letter; and 
(D) is not operating under a memorandum of understanding, determination letter 
or other notice of determination, order to cease and desist, or other state or 
federal administrative enforcement order. 
(4) General interest items--Include, but are not limited to, local and 
international news, weather, sports, features, comics, entertainment and 
advertisements directed to the general public.
(5) Newspaper of general circulation--A newspaper that:
(A) devotes not less than 25% of its total column lineage to general interest 
items, provided that a newspaper of general circulation does not include a 
specialized newspaper or other periodical directed to a specific interest group 
or occupation, such as a legal notice or court related newspaper; 
(B) is published at least once a week; 
(C) is entered as second class postal matter in the county where published; and 
(D) has been published regularly and continuously for at least 12 months before 
the applicant, protesting party or other entity publishes notice, provided that 
a weekly newspaper is considered to have been published regularly and 
continuously if the newspaper omits not more than three issues in a twelve month 
period.
(6) Public notice--A matter, including an application, request, notice, or 
protest, whether by proclamation or declaration, required or authorized to be 
published in a newspaper of general circulation by Texas Civil Statutes, 
Articles 342a-1.001 et seq, this chapter, or another rule adopted pursuant to 
Texas Civil Statutes, Articles 342a-1.001 et seq, or required to be published by 
the banking commissioner. 
(7) Submitted filing--An initial application, request, notice, or protest filed 
under Texas Civil Statutes, Articles 342a-1.001 et seq, this chapter, or another 
rule adopted pursuant to Texas Civil Statutes, Articles 342a-1.001 et seq, that 
has not been abandoned and is not an accepted filing. 

sec.21.2.Filing and Investigation Fees.
(a) (No change.) 
(b) Filing fees. Simultaneously with a submitted application or notice, an 
applicant shall pay to the department: 
(1)-(8) (No change.) 
(9) $200 for a notice to change home office with no abandonment of existing 
office pursuant to Texas Civil Statutes, Article 342a-3.202(c)<nl>, and 
sec.21.41(a) of this title (relating to Written Notice and Application for 
Change of Home Office)<ol>; 
(10) $1,500 for an application to relocate the home office with abandonment of 
existing office pursuant to Texas Civil Statutes, Article 342a-3.202(d)<nl>, and 
sec.21.41(b) of this title, except as otherwise provided in paragraph (11) of 
this subsection <ol>; 
<nl>(11)<ol> <nl>$500 for an application by an eligible trust company to 
relocate the home office with abandonment of existing office pursuant to 
sec.21.3 of this title (relating to Expedited Filings);<ol>
<nl>(12)<ol> [(11)] $200 for a notice of additional office pursuant to Texas 
Civil Statutes, Article 342a-3.203(a)<nl>, and sec.21.42 of this title (relating 
to Establishment, Relocation and Closing of an Additional Office), plus an 
additional $1,300 if the banking commissioner notifies the applicant pursuant to 
Texas Civil Statutes, Article 342a-3.203(b), and sec.21.42(c) of this title that 
additional information and analysis is required<ol>; 
[(12) $1,500 for an application to open an additional office pursuant to Texas 
Civil Statutes, Article 342a-3.203(b)
(13)-(18) (No change). 
(19) $1,000 for an application for authority to accept deposits pursuant to 
Texas Civil Statutes, Article 342a-3.101 and Article 342a-5.401, and 
<nl>sec.21.31<ol> [sec.21.24] of this title (relating to <nl>Notice to Engage 
in<ol> Trust Deposits); 
(20)-(21) (No change). 
(c)-(f) (No change). 

sec.21.3.Expedited Filings.
(a) Eligible trust companies may file an expedited filing according to forms and 
instructions provided by the department solely for home office relocations 
within the same city pursuant to Texas Civil Statutes, Article 342a-3.202(d), 
and sec.21.41(b) of this title (relating to Written Notice and Application for 
Change of Home Office), together with the fee required by sec.21.2 of this title 
(relating to Filing and Investigation Fees). Notice must be published as 
required by sec.21.41(e) of this title. 
(b) Notwithstanding another provision of this section, the banking commissioner 
may deny expedited filing treatment to an eligible trust company, in the 
exercise of discretion, if the banking commissioner finds that the filing 
involves one or more of the following: 
(1) the proposed transaction involves significant policy, supervisory, or legal 
issues; 
(2) approval of the proposed transaction is contingent on additional statutory 
or regulatory approval by the banking commissioner or another state or federal 
regulatory agency; 
(3) the proposed transaction will result in a fixed asset investment in excess 
of the limitation contained in Texas Civil Statutes, Article 342a-5.001(b); 
(4) the proposed transaction significantly impacts the strategic plan of the 
trust company; 
(5) the proposed transaction would cause capital and surplus to fall below 
current minimum statutory or regulatory requirements;
(6) the proposed transaction involves an issue of regulatory concern as 
determined by the banking commissioner in the exercise of discretion; or 
(7) the application is deficient and specific additional information is 
required, or the filing fee has not been paid. 
(c) The banking commissioner may deny or withdraw expedited filing treatment if 
a protest is filed. If a protest is filed, the application will be processed 
under sec.21.41 of this title. 
(d) The department shall notify the applicant on or before the 15th day 
following the date the application is accepted for filing if expedited filing 
treatment is not available under this section. Such notification must be in 
writing and must indicate the reason why expedited treatment is not available. 
Notification is effective when mailed by the department and is not subject to 
appeal. 
(e) Unless the applicant is otherwise notified by the department, an expedited 
filing is approved on the 15th day after the date the applicant is notified that 
expedited filing treatment is available or the expiration of the period for 
filing a public comment or protest, whichever is the last to occur. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805761
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

SUBCHAPTER C.Trust Deposits
7 TAC sec.21.31, sec.21.32
The new sections are proposed under Texas Civil Statutes, Article 342a-
1.003(a)(1), which authorizes the commission to adopt rules to implement and 
clarify Texas Civil Statutes, Articles 342a-1.001 et seq to preserve the safety 
and soundness of trust companies, and to facilitate the fair hearing and 
adjudication of matters before the commissioner and the commission. Texas Civil 
Statutes, Article 342a-3.011 and Article 342a-5.401, are affected by the 
proposal. 

sec.21.31.Notice To Engage In Trust Deposits.
(a) Compliance required. A trust company may not deposit trust funds with itself 
as an investment pursuant to Texas Civil Statutes, Article 342a-5.401, unless it 
first complies with this section and sec.21.32 of this title (relating to 
Acceptance of Trust Deposits). 
(b) Notice of activity. At least 30 days before accepting trust deposits, a 
trust company shall file a notice with the banking commissioner containing the 
following information, together with the filing fee required by sec.21.2 of this 
title (relating to Filing and Investigation Fees): 
(1) an estimate of the anticipated dollar volume of trust deposits, an estimate 
of the maximum trust deposit for any one account, and an estimate of the total 
number of accounts that will invest in trust deposits;
(2) a copy of the added or revised portion of the trust company's strategic plan 
that addresses the acceptance of trust deposits, in compliance with Texas 
Department of Banking Policy Memorandum Number 1009, regarding strategic plans; 
(3) if trust deposits are to be insured by the Federal Deposit Insurance 
Corporation (FDIC), or its successor, evidence of such insurance;
(4) if trust deposits are to be secured by a pledged fund of securities: 
(A) a description of the initial fund of securities securing the anticipated 
trust deposits, including disclosure of current market value and an evaluation 
of the securities under the standards of Texas Civil Statutes, Article 342a-
5.101(f); and 
(B) identification of the federal reserve bank, state or nationally chartered 
depository institution, or clearing corporation, that controls the securities 
pledged against the trust deposits and a copy of the executed pledge agreement 
with such institution; 
(5) if trust deposits are to be secured by a pledged certificate of deposit: 
(A) evidence of the certificate of deposit that discloses its value and 
associated costs, including penalties, for early redemption or withdrawal; and 
(B) identification of the FDIC-insured depository institution that issued the 
certificate of deposit, a copy of the executed pledge agreement with such 
institution, and an acknowledgment of the pledge from the issuing institution; 
(6) a certified copy of a board resolution directing management of the trust 
company to: 
(A) maintain adequate security and/or FDIC insurance to fully secure and/or 
insure the trust deposits; and 
(B) maintain adequate policies, procedures, and records regarding trust 
deposits; and 
(7) such other information that the banking commissioner may reasonably request. 
(c) Action by banking commissioner. 
(1) the trust company may begin accepting trust deposits on the 31st day after 
the date the banking commissioner receives the trust company's completed notice 
letter unless the banking commissioner specifies an earlier or later date, 
requests additional information, or prohibits the activity as provided in this 
subsection. The banking commissioner may prohibit the trust company from 
accepting trust deposits only if the banking commissioner concludes that: 
(A) the trust deposits would not be fully insured or secured as required by 
Texas Civil Statutes, Article 342a-5.401, and this section;
(B) the activity would adversely affect the safety and soundness of the trust 
company; 
(C) the trust company has a less than satisfactory rating as of the trust 
company's most recent examination; or 
(D) the trust company is subject to an enforcement order under Texas Civil 
Statutes, Article 342a-6.001 et seq, or is not otherwise operating in 
substantial compliance with all applicable state and federal laws and 
regulations.
(2) The banking commissioner may extend the 30-day period under paragraph (1) of 
this subsection if the banking commissioner determines that the trust company's 
notice raises issues requiring additional information or additional time for 
analysis. If the 30-day period is extended, the trust company may accept trust 
deposits only on prior written approval by the banking commissioner, except that 
the banking commissioner must approve or prohibit the proposed activity or 
convene a hearing under Texas Civil Statutes, Article 342a-3.009, not later than 
the 60th day after the date the banking commissioner receives the trust 
company's notice. If a hearing is convened, the banking commissioner must 
approve or prohibit the proposed activity not later than the 30th day after the 
date the hearing is completed. 
(3) A trust company that is denied the right to accept trust deposits by the 
banking commissioner under this section may appeal as provided by Texas Civil 
Statutes, Article 342a-3.010, or may file a new notice under this section with 
additional information relevant to the banking commissioner's determination, 
with applicable filing fee. 
(d) Authority to accept trust deposits. Only a trust company which transacts 
business with the public may deposit trust funds with itself as an investment 
pursuant to Texas Civil Statutes, Article 342a-5.401. An exempt trust company 
under Texas Civil Statutes, Articles 342a-3.011 through 342a-3.019, may not 
accept trust deposits. 
(e) Records. A trust company shall maintain written documentation adequate to 
demonstrate compliance with this section, which documents must be available at 
all times to the department for examination and review. For purposes of this 
subsection, required documentation need not be retained beyond three years. 

sec.21.32.Acceptance of Trust Deposits.
(a) Compliance required. A trust company may not deposit trust funds with itself 
as an investment pursuant to Texas Civil Statutes, Article 342a-5.401, unless it 
first complies with this section and sec.21.31 of this title (relating to Notice 
to Engage in Trust Deposits). Trust deposits must be fully insured by deposit 
insurance issued by the Federal Deposit Insurance Corporation (FDIC), or its 
successor, or fully secured by a separate fund of pledged securities, by pledged 
certificates of deposit, or a combination of the foregoing. 
(b) Pledged collateral. A separate fund of securities or certificates of deposit 
that are pledged to secure trust deposits must be maintained in a federal 
reserve bank, a state or nationally chartered depository institution, or a 
clearing corporation, as defined by Business & Commerce Code, sec.8.102, either 
in this state or elsewhere, and must: 
(1) for a fund of securities, contain only bonds, notes, or other evidences of 
indebtedness which are investment grade, convertible to cash within three 
business days, at least 80% of which have a maturity date of not later than the 
91st day after the d ate of purchase. For purposes of this subsection, 
investment grade refers to a security that is rated "Baa" or better by Moody's 
or "BBB" or better by Standard & Poor's rating services in accordance with the 
terms of the Uniform Agreement on Classification Of Assets And Appraisal Of 
Securities by the Federal Financial Institutions Examination Council; 
(2) for a fund of securities, the value of the securities must at all times 
equal or exceed 110% of the deposits held plus accrued and unpaid interest; 
provided, however, that if the value of the securities is evaluated daily and 
reduced to writing, the value of the securities must at all times equal or 
exceed 100% of the deposits held plus accrued and unpaid interest. In any event, 
the value of the securities must be evaluated at least monthly to ensure that 
the deposits are fully secured; and 
(3) for a certificate of deposit, be fully insured by the FDIC. 
(c) Noninsurability by FDIC. If a trust company's trust deposits are not insured 
by the FDIC, a trust company must provide each client related to an account from 
which deposits may be accepted with a written notice conspicuously stating that: 
"Your de posit with this trust company is not insured by the FDIC." This notice 
must be provided to the client prior to any deposit activity regarding the 
related account and must be signed by both the client and the trust company. The 
notice must be in type that is boldfaced, capitalized, underlined or otherwise 
set out from surrounding written material so as to be conspicuous. Furthermore, 
all documents issued by a trust company evidencing a deposit transaction, must 
contain a notice complying with the requirements of this subsection. 
(d) Records. A trust company shall maintain all written documentation adequate 
to demonstrate compliance with this section, which documents must be available 
at all times to the department for examination and review. For purposes of this 
subsection, required documentation need not be retained beyond three years. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805762
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

SUBCHAPTER D.Trust Company Offices
7 TAC sec.21.41, sec.21.42
The new sections are proposed under Texas Civil Statutes, Articles 342a-1.003, 
which authorizes the commission to adopt rules necessary and reasonable to 
implement and clarify the statute, to preserve the safety and soundness of trust 
companies, and to facilitate the fair hearing and adjudication of matters before 
the commissioner and the commission. 
Texas Civil Statutes, Article 342a-3.202 and Article 342a-3.203, are affected by 
the proposal. 

sec.21.41.Written Notice and Application for Change of Home Office.
(a) Relocation by notice. If the location that is the home office of a trust 
company prior to a proposed relocation of the home office is to remain an 
additional office of the trust company after the relocation, the trust company 
may relocate its home office by filing a written notice pursuant to Texas Civil 
Statutes, Article 342a-3.202(c). The filed notice must contain all information 
required by subsection (c) of this section, accompanied by the required filing 
fee pursuant to sec.21.2 of this title (relating to Filing Fees and Cost 
Deposits), and notice of the submission must be published as required by 
subsection (e) of this section. A trust company filing notice of a home office 
relocation under this subsection may relocate its home office on the 31st day 
after the required notice and fee have been received by the banking 
commissioner, unless the banking commissioner gives notice in writing, prior to 
the expiration of that time period, that an earlier or later date is authorized 
or that additional information and additional time for analysis is required. 
Upon issuance of a notice requiring additional information and additional time 
for analysis, the trust company may relocate its home office only on written 
approval of the banking commissioner. Except as otherwise provided in this 
section, the banking commissioner shall evaluate the notice under the criteria 
of sec.21.42(e) of this title (relating to Establishment and Closing of an 
Additional Office). 
(b) Relocation by application. If Texas Civil Statutes, Article 342a-3.202(c), 
and subsection (a) of this section do not apply, a trust company desiring to 
change its home office location must file an application with the banking 
commissioner pursuant to Texas Civil Statutes, Article 342a-3.202(d), setting 
forth all information required by subsection (d) of this section, accompanied by 
the required filing fee pursuant to sec.21.2 of this title, and notice of the 
submission must be published as required by subsection (e) of this section. The 
banking commissioner shall issue a written notice no later than 15 days after 
the date the initial filing is received, as required by sec.21.4 of this title 
(relating to Required Information and Abandoned Filings), informing the 
applicant either that all filing fees have been paid and the application is 
complete and accepted for filing, or that the application is deficient and 
specific additional information is required. Except as otherwise provided in 
this section, the banking commissioner shall evaluate the application under the 
criteria of sec.21.42(e) of this title. An applicant under this subsection may 
not relocate its home office without the prior written approval of the banking 
commissioner. 
(c) Contents of notice. The notice filed under subsection (a) of this section 
must disclose: 
(1) the name of the trust company requesting the home office relocation; 
(2) the street address of the trust company's home office before the requested 
home office relocation; 
(3) the street address of the trust company's proposed home office; 
(4) the desired effective date of the home office relocation under subsection 
(a) of this section; 
(5) a copy of the resolution adopted by the trust company's board of directors 
authorizing the proposed home office relocation; 
(6) the cost to be incurred in connection with the relocation and a statement of 
the impact of such cost on the trust company's ability to meet liquidity 
requirements; 
(7) evidence that the trust company has considered applicable federal law, if 
any; 
(8) a description of any actual, proposed, or contemplated financial involvement 
by an officer, director, manager, managing participant, or principal shareholder 
or participant of the trust company with respect to its home office relocation; 
and 
(9) such other information as the banking commissioner may require. 
(d) Contents of application. The application submitted under subsection (b) of 
this section must disclose: 
(1) the name of the trust company requesting the home office relocation; 
(2) the street address of the trust company's home office before the requested 
home office relocation; 
(3) the street address of the trust company's proposed home office; 
(4) the desired effective date for the home office relocation;
(5) a copy of the resolution adopted by the trust company's board of directors 
authorizing the home office relocation; 
(6) the cost to be incurred in connection with the relocation and a statement of 
the impact of such cost on the trust company's ability to meet liquidity 
requirements; 
(7) a written statement signed by the principal executive officer of the trust 
company or a majority of the trust company's board of directors stating whether 
the home office relocation will result in an abandonment of all or a part of the 
community served by the trust company present home office location and, if so, 
an explanation of how the abandonment is consistent with the original 
determination of public convenience and advantage for the establishment of the 
trust company at its existing home office location; 
(8) a written statement signed by the principal executive officer of the trust 
company or a majority of the trust company's board of directors stating whether 
the home office relocation is anticipated to result in a reduction of trust 
services presently offered by the trust company at its present location within 
the 18-month period after the proposed effective date of the relocation and, if 
so, an explanation of the anticipated reduction in trust and fiduciary services 
and how the diminution in services is consistent with the original determination 
of public convenience and advantage for the establishment of the trust company 
at its existing home office location; 
(9) a description of any actual, proposed, or contemplated financial involvement 
by an officer, director, manager, managing participant, or principal shareholder 
or participant of the trust company with respect to the home office relocation; 
(10) evidence that the trust company has considered applicable federal law, if 
any; and 
(11) such other information as the banking commissioner may require. 
(e) Public notice and participation. 
(1) Within 14 days of the initial submission of a notice or application under 
subsection (a) or (b) of this section, the trust company shall publish notice of 
the submission as required by sec.21.5 of this title (relating to Public 
Notice). Notice must be published in the community where the current home office 
of the trust company is located and in the community where the proposed home 
office will be located, and must disclose the locations of the existing and 
proposed home offices. 
(2) For a period of 14 days after publication of notice or such longer period as 
the banking commissioner may allow for good cause shown, the public may submit 
written comments or protests. Persons submitting comments are not entitled to 
further notice of or participation in the proceedings. In the event of a 
properly filed protest, each protesting party has the rights and 
responsibilities of a protesting party to a notice of additional office under 
sec.21.42 of this title. 
(f) Articles of association. An amendment to the articles of association of the 
trust company is not required to effect a change in the location of its home 
office under this section. However, if the articles of association are 
subsequently restated for any reason, the trust company must include the address 
of its then current home office in the restated articles of association. 

sec.21.42.Establishment, Relocation and Closing of an Additional Office.
(a) Establishment or relocation by notice. A trust company may establish or 
relocate an additional office pursuant to Texas Civil Statutes, Article 342a-
3.203, by filing a written notice with the banking commissioner containing all 
information required by subsection (b) of this section, accompanied by the 
required filing fee pursuant to sec.21.2 of this title (relating to Filing Fees 
and Cost Deposits), and notice of the submission must be published as required 
by subsection (d) of this section. A trust company filing notice of an 
additional office under this subsection may establish the additional office on 
the 31st day after the date the required notice and fee are received by the 
banking commissioner unless the banking commissioner gives notice in writing, 
prior to the expiration of that time period, that an earlier or later date is 
authorized or that additional information is required pursuant to subsection (c) 
of this section. 
(b) Contents of notice. The notice filed under subsection (a) of this section 
must disclose: 
(1) the name and home office location of the trust company requesting the 
additional office; 
(2) the street address of the trust company's proposed additional office; 
(3) a description of the activities proposed to be conducted at the proposed 
additional office; 
(4) the desired effective date for establishment of the additional office; 
(5) a certified copy of the resolution adopted by the trust company's board of 
directors authorizing the proposed additional office;
(6) the cost to be incurred in connection with the establishment of the 
additional office and a statement of the impact of such cost on the trust 
company's ability to meet liquidity requirements; 
(7) a description of any actual proposed, or contemplated financial involvement 
by any officer, director, manager, managing participant, or principal 
shareholder or participant of the trust company with respect to establishing the 
additional office; 
(8) evidence that the trust company has considered applicable federal law, if 
any; and 
(9) such other information as the banking commissioner may require. 
(c) Request for additional information. At any time before the 31st day after 
the date the notice required by subsection (a) of the section is filed, the 
banking commissioner may issue written notice to the trust company specifying a 
later date for establishing or relocating an additional office and requiring the 
submission of additional information and additional time for analysis. Upon 
issuance of a notice requiring the submission of additional information and 
additional time for analysis, the trust company may establish or relocate the 
additional office only on written approval of the banking commissioner. 
(d) Public notice and participation. 
(1) Within 14 days of the initial submission of the notice required under 
subsection (a) of this section, the trust company shall publish notice of the 
submission as required by sec.21.5 of this title (relating to Public Notice). 
Notice must be published in the community where the proposed additional office 
will be located and must specifically disclose the location of the proposed 
additional office. 
(2) For a period of 14 days after publication of notice or such longer period as 
the banking commissioner may allow for good cause shown, the public may submit 
written comments or protests. Persons submitting comments will not be charged 
fees or costs, but are not entitled to further notice of or participation in the 
proceedings. Each protesting party has the rights and responsibilities set forth 
in subsections (f) and (g) of this section.
(e) Criteria for determining significant supervisory or regulatory concern. The 
banking commissioner may deny permission to establish or relocate an additional 
office of a trust company if the commissioner has significant supervisory or 
regulatory concern about the proposed transaction. 
(1) In evaluating whether significant supervisory concerns exist regarding a 
proposed additional office, the banking commissioner shall consider the 
financial condition of the trust company, the financial effect of the additional 
office on the trust company, the management abilities of the trust company, and 
the history and prospects of the trust company and its affiliates regarding 
fulfillment of responsibilities to regulatory agencies and to the public. A 
request will ordinarily be denied if the trust company is in less than 
satisfactory financial condition as of its most recent examination.
(2) In evaluating whether significant regulatory concerns exist regarding a 
proposed additional office, the banking commissioner will consider the relevant 
marketplace and the convenience of the public in accessing desired trust 
services and preferred trustees. The banking commissioner will follow the 
principles that the marketplace normally is the best regulator of economic 
activity, and that healthy competition promotes a sound and more efficient trust 
company system that serves customers well. Accordingly, absent significant 
supervisory concerns, the general policy of the banking commissioner is to 
approve applications, requests and notices to establish and relocate additional 
offices, provided that approval would not otherwise violate applicable 
provisions of federal or state law (including any requirements for federal 
banking agency approval). 
(3) In evaluating whether the banking commissioner should have significant 
supervisory or regulatory concerns as set forth in paragraphs
(1) and (2) of this subsection, the banking commissioner will consider written 
material in the record, including the contents of the application, notice or 
request, comments on file, the department's files as they relate to the current 
financial condition of the trust company, and other data that the banking 
commissioner may properly officially notice. Specifically, the banking 
commissioner shall approve the establishment or relocation of an additional 
office if the following considerations are met: 
(A) the department's files do not indicate significant supervisory concerns as 
they relate to the current financial condition of the trust company, including 
but not limited to its capital, asset quality, management, earnings and 
liquidity; 
(B) the costs of establishing or relocating the office, including costs of 
purchasing or leasing the office site, necessary furnishings, staffing and 
equipment, do not significantly affect the operations of the trust company as a 
whole; 
(C) the projected earnings appear reasonable and sufficient to support expenses 
attributable to the establishment and relocation of the office without 
jeopardizing the safety and soundness of the trust company;
(D) the depth and quality of management of the trust company and of the proposed 
additional office are sufficient to justify a belief that the trust company will 
operate in compliance with law; 
(E) the trust company has demonstrated a responsiveness to recommendations made 
in past state and federal regulatory examinations or other regulatory findings 
and the trust company has generally been operated in substantial compliance with 
all applicable state and federal laws; and
(F) no areas of general supervisory concern exist as determined by the banking 
commissioner in the exercise of discretion. 
(4) The banking commissioner shall direct the department to assemble, evaluate, 
and make a recommendation regarding all relevant documentation and data as set 
forth in this subsection on or before the 30th day after the date the 
application is accepted for filing. 
(5) The banking commissioner shall either approve, conditionally approve, or 
deny the application, notice, or request on or before the 30th day after the 
date of the department's recommendation. 
(f) Protest. 
(1) A protest may be initiated by notifying the department in writing of the 
intent to protest the establishment of an additional office at the specified 
location within the time period allowed by subsection (d) of this section, 
accompanied by the filing fee as set forth in sec.21.2(c) of this title 
(relating to Filing and Investigation Fees). If the protest is untimely, the 
filing fee will be returned to the protesting party. If the protest is timely, 
the department will notify the applicant of the protest and mail or deliver a 
complete copy of the non-confidential sections of the application to the 
protesting party on or before the 14th day after receipt of the protest or the 
application, whichever occurs later. 
(2) The protesting party shall file a detailed protest responding to each 
substantive statement contained in the notice on or before the 20th day after 
the date of receipt of the application. The protesting party's response must 
indicate with regard to each such statement whether it is admitted or denied. 
The applicant shall file a written reply to the detailed response on or before 
the 10th day after the date the response is filed. Both the detailed response 
and the reply thereto must be verified by affidavit and must contain a 
certificate of service on the opposing party. When applicable, statements in the 
response and in the reply may be supported by references to data available in 
sources of which official notice may properly be taken. Comments received by the 
department and any replies of the applicant to such comments will also be made 
available to the protesting party. 
(3) The banking commissioner may extend any time period set forth in this 
subsection for good cause shown. Good cause includes, but is not limited to, 
failure of the department to furnish required documentation, forms, or 
information within a reasonable time to permit its effective use by the 
recipient, or failure of a party to timely serve a filed document on an opposing 
party. The filing date is the date the document is actually received by the 
department and not the date of mailing. Failure to timely file a required 
document is considered an abandonment of the application or protest, as 
applicable. Rule 21a, Texas Rules of Civil Procedure, governs the methods and 
manner of authorized service and the computation of time periods under this 
subsection.
(g) Hearing. 
(1) The banking commissioner may not be compelled to hold a hearing prior to 
allowing or not allowing an additional office to be established. In the exercise 
of discretion, the banking commissioner may consider granting a hearing on a 
notice of additional office at the request of either the filing trust company or 
a protesting party. The banking commissioner may order a hearing even if no 
hearing has been requested. 
(2) A party requesting a hearing must indicate with specificity what issues are 
involved that cannot be determined on the basis of the record compiled pursuant 
to subsection (e) of this section and why the issues cannot be so determined. 
The request for hearing and the banking commissioner's decision with regard to 
granting a hearing will be made a part of the record. If a hearing is not 
requested or if a request for hearing is denied, the banking commissioner will 
consider the notice in the manner set forth in and solely on the basis of the 
written record established pursuant to subsection (e) of this section. 
(3) If a hearing is granted, the administrative law judge shall enter 
appropriate order(s) and conduct the hearing within 30 days after the date the 
hearing was granted, or as soon thereafter as is reasonably possible, under 
Chapter 9 of this title (relating to Rules of Procedure for Contested Case 
Hearings, Appeals, and Rulemakings) and the Administrative Procedure Act (Texas 
Government Code, Chapter 2001). Issues will be limited to those on which 
testimony is absolutely necessary, and the administrative law judge may require 
testimony to be submitted in written form and prefiled. No evidence will be 
received on matters that are not in dispute. No issues or evidence will be 
considered that are not relevant to the standards set forth in subsection (e) of 
this section or that are not supported by the notice, response, or reply. A 
proposal for decision, exceptions and replies to such proposal for decision, the 
final decision of the banking commissioner, and motions for rehearing are 
governed by Chapter 9 of this title. 
(h) Closing an additional office. 
(1) Subject to paragraph (2) of this subsection, at least 30 days prior to the 
date a trust company proposes to close an additional office, the trust company 
shall file written notice with the banking commissioner disclosing: 
(A) the name and home office location of the trust company seeking to close the 
additional office location; 
(B) the street address of the additional office location to be closed; 
(C) the effective date of the proposed closing; 
(D) evidence of distribution of written notice of closing to all customers and 
account holders at least 45 days prior to the proposed closing date. 
(E) the place and street address of location where records from the closed 
office will be transferred; 
(F) a copy of the resolution adopted by the trust company's board of directors 
authorizing the proposed closing of the additional location; and 
(G) such other information as the banking commissioner may require. 
(2) If the trust company must comply with notice requirements of federal banking 
law applicable to closing a branch office, in lieu of compliance with paragraph 
(1) of this subsection, the trust company may provide the banking commissioner 
with a copy of the closing notice filed with the appropriate federal banking 
regulator simultaneously with its filing.
(3) Once the additional office has been closed, the trust company may not reopen 
the additional office except upon notice or application for a new additional 
office in compliance with this section. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805763
Everette D. Jobe
General Counsel
Texas Department of Banking
Proposed date of adoption: June 12, 1998
For further information, please call: (512) 475-1300

PART VI. Credit Union Department
CHAPTER 91.Chartering, Operations, Mergers, Liquidations
SUBCHAPTER <nl>B.<ol>Organization Procedures
7 TAC sec.91.209
The Texas Credit Union Commission proposes amendments to sec.91.209, concerning 
reports and charges for late filing. The commission proposes the amendment to 
help administer the Credit Union Department's responsibility to regulate credit 
unions in Texas. The department is charged, generally, with the duty to regulate 
state-chartered credit unions to ensure safety and soundness and compliance with 
state or federal laws, among other purposes. To implement its duties, the 
department, through the Credit Union Commissioner, regularly examines the 
financial condition and operations of credit unions When needed, the 
commissioner may require submission of a report or other document to carry out 
the department's regulatory duty. A credit union's failure to timely file a 
required report or document impedes the efficient administration of the laws 
regulating credit unions and causes the department to incur additional expense. 
The commission intends the amendment of sec.91.209 to motivate timely filing of 
reports and other documents required by the commissioner with the assessment of 
a separate charge of $100 per day when the credit union fails to meet the 
submission deadline. In addition, if the required report or other document is 
not filed, the department would have the authority to conduct a supplemental 
examination for the purposes of completing the report or document and to assess 
a supplemental examination fee as prescribed in 7 TAC 97.113(c), which 
represents an additional expense being incurred as a result of the credit 
union's failure to submit the required report or document. The activities of the 
department are funded with assessments paid by credit unions and the charges and 
fees proposed under this proposal are expressly authorized under Texas Finance 
Code, sec.15.402. 
Lynette Pool-Harris, Deputy Commissioner, has determined that there will be no 
fiscal implications as a result of enforcing or administering the proposed 
amended rule. 
Ms. Pool-Harris has also determined that for each year of the first five years 
the amended section, as proposed, is in effect, the public benefit anticipated 
as a result of enforcing the section will be greater assurance that the state 
regulator is making every effort to ensure that their credit unions are 
complying with state law and regulations and are operating in a safe and sound 
manner. There will be no effect on small businesses as a result of enforcing 
this section as amended. There is an economic cost anticipated only to those 
parties who do not comply with the rule and are therefore subject to the late 
filing penalties. 
Written comments on the proposed amendments must be submitted within 30 days 
after their publication in the Texas Register to Carol P. Shaner, Staff Services 
Officer, Credit Union Department, 914 East Anderson Lane, Austin, Texas 78752-
1699.
The amendments are proposed under the provision of the Texas Finance Code, 
sec.15.402, which authorizes the commission to adopt reasonable rules for 
administering Title 2, Chapter 15 and Title 3, Subchapter D of the Texas Finance 
Code; and to set reasonable supervision fees, charges, and revenues to be paid 
by a credit union. 
The specific section affected by the proposed amendments is Texas Finance Code, 
sec.15.402.

sec.91.209.<nl>Reports <ol>[Filing Fee] and <nl>Charges<ol> [Penalties] for Late 
Filing.
[The fee for late filing of reports of condition is $100 per day.] 
<nl>(a)<ol> <nl>A credit union shall prepare and forward to the Department any 
report or other document which the Commissioner requires and will comply with 
all instruction relating to submitting the report or document. For the purposes 
of this Section, the Commissioner's request shall be in writing and must 
specifically advise the credit union that the provisions of this Section apply 
to the request.<ol> 
<nl>(b)<ol> <nl> If a credit union fails to file a report or provide a document 
within the timeframe specified in the instruction and after notice of non-
receipt, the commissioner may assess a charge for the late filing of $100 per 
day. The credit union shall pay the late charge to the department within 30 days 
of the assessment. <ol>
<nl>(c)<ol> <nl> If a credit union fails to file a report or provide the 
requested information within the specified time, the commissioner or any person 
designated by the commissioner may examine the books, accounts and records of 
the credit union, prepare the report or gather the information and charge the 
credit union a supplemental examination fee as prescribed in sec.97.113(c) of 
this title (relating to supplemental examinations). The credit union shall pay 
the fee to the department within 30 days of the assessment. <ol> 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 20, 1998.
TRD-9805561
Harold E. Feeney
Commissioner
Credit Union Department
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 837-9236

TITLE 10. COMMUNITY DEVELOPMENT
PART I. Texas Department of Housing and Community Affairs
CHAPTER 80. Manufactured Housing
The Texas Department of Housing and Community Affairs (Department) Manufactured 
Housing Division proposes repeal of sec.80.1, sec.sec.80.21 - 80.29, 
sec.sec.80.36 - 80.41, sec.sec.80.51 - 80.65, sec.80.67, sec.80.118, sec.80.121, 
sec.sec.80.123 - 80.126, sec.sec.80.129 - 80.132, sec.80.135, sec.sec.80.181 - 
80.186, sec.sec.80.201 - 80.208, the Manufactured Housing Rules. The sections 
are repealed to allow for proposal of new sections that will update the rules 
substantially in order to comply with the Texas Manufactured Housing Standards 
Act, Article 5221f, effective on September 1, 1997. 
Hershal E. Blankenship, Director of the Manufactured Housing Division of the 
Department, has determined that for the first five years the sections are 
repealed there is expected to be an estimated reduction in cost to state 
government of $36,000 each year for the repeal of sec.80.28, sec.80.123, and 
sec.80.203, which deletes the requirement to process monthly used home inventory 
reports, monthly installation summary reports and sales summary reports. These 
repealed sections will not be included in the proposed new rules. There is 
expected to be no fiscal implications for local government as a result of 
repealing the sections as proposed. 
Mr. Blankenship also has determined that for each year of the first five years 
the sections are repealed, license holders, consumers and the general public 
will benefit because unnecessary information will be deleted and replaced by new 
sections with updated and clarified responsibilities and requirements that 
comply with the Texas Manufactured Housing Standards Act, Article 5221f.
There is expected to be a probable reduction in economic cost as a result of 
repealing sec.80.28(a), sec.80.64(g), sec.80.123, sec.80.129, sec.80.186, and 
sec.80.203. The savings will be as followings: 
Repeal of sec.80.28(a) is expected to have a probable reduction in economic cost 
of approximately $30 each month to retailer/installer license holders as a 
result of deleting the provision for reporting monthly installation summaries to 
the department. It is anticipated that these savings in retailer/installer 
license holder costs will be passed on to the consumer. 
Repeal of sec.80.64(g) is expected to have a probable reduction in economic cost 
of $25 for each home installed with air conditioning to retailer/installer 
license holders as a result of deleting the requirement for a notarized air 
conditioning installation report. 
Repeal of sec.80.123 is expected to have a probable reduction in economic cost 
of $15 per month to retailer license holders as a result of deleting the 
requirement for a monthly sales summary report to be sent to the department. It 
is anticipated that the public will benefit when these savings in retailer 
license holder costs are passed on to the consumer. 
Repeal of sec.80.129 is expected to have a probable reduction in economic cost 
of approximately $10 per repossessed home to retailer license holders as a 
result of deleting the requirement for retailers to provide the department with 
repossession sales reports. 
Repeal of sec.80.186 is expected to have a probable reduction in economic cost 
of approximately $10 for each used home inventory to licensed retailers as a 
result of deleting the requirement for posting used homes with notices regarding 
habitability requirements. 
Repeal of sec.80.203 is expected to have a probable reduction in economic cost 
of $15 per month to retailer license holders as a result of deleting the 
requirement for a monthly used home inventory report to be sent to the 
department. It is anticipated that the public will benefit when these savings in 
retailer license holder costs are passed on to the consumer. 
It is anticipated that these savings in retailer/installer license holder costs 
will be passed on to the consumer. There is expected to be no economic costs to 
persons/businesses as a result of repealing the sections as proposed.
Comments may be submitted to Hershal E. Blankenship, Director of the 
Manufactured Housing Division, of the Texas Department of Housing and Community 
Affairs, 507 Sabine Street, Austin, Texas 78701 within 30 days of the date of 
this publication. 

Codes and Standards
10 TAC sec.80.1
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Department 
of Housing and Community Affairs or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
The repealed section is proposed under the Texas Manufactured Housing Standards 
Act, Article 5221f, sec.9, which provides the department with authority to 
amend, add, and repeal rules governing the Manufactured Housing Division of the 
department.
No other statute, code, or article is affected by the repealed section.
sec.80.1. Texas Manufactured Home Code Effective Dates. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805843
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

Fee Structure
10 TAC sec.sec.80.21-80.29, 80.36-80.41
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Housing and Community Affairs or in the Texas Register office, 
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repealed sections are proposed under the Texas Manufactured Housing 
Standards Act, Article 5221f, sec.9, which provides the department with 
authority to amend, add, and repeal rules governing the Manufactured Housing 
Division of the department. 
No other statute, code, or article is affected by the repealed sections.
sec.80.21. Engineering Services Fees.
sec.80.22. Initial 100% Inspection Fees. 
sec.80.23. Plant Inspection Fee. 
sec.80.24. Manufactured Housing Increased Frequency Inspection Fee.
sec.80.25. Retailer Alteration Fee. 
sec.80.26. Texas Seal Fee for Used Homes. 
sec.80.27. Monitoring Inspection Fee. 
sec.80.28. Installation Inspection Fee. 
sec.80.29. Fees for Certificate of Registration.
sec.80.36. Authorized Fee Distributions. 
sec.80.37. Fee for Homeowner's Temporary Installer's Registration. 
sec.80.38. Educational Fee. 
sec.80.39. Rebuilt Homes Fee. 
sec.80.40. Fee for Inspection of Use Change. 
sec.80.41. Fee for Consumer Complaint Inspection.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805844
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

Standards and Requirements
10 TAC sec.sec.80.51-80.65, 80.67
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Housing and Community Affairs or in the Texas Register office, 
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repealed sections are proposed under the Texas Manufactured Housing 
Standards Act, Article 5221f, sec.9, which provides the department with 
authority to amend, add, and repeal rules governing the Manufactured Housing 
Division of the department. 
No other statute, code, or article is affected by the repealed sections.
sec.80.51. Mobile Home and Hud-Code Manufactured Home Installation Requirements. 
sec.80.52. Definitions. 
sec.80.53. Provisions for Stabilizing Systems. 
sec.80.54.Generic Installation Requirements. 
sec.80.55. Approval of Stabilizing Devices and Systems.
sec.80.56. Requirements for Ground Anchor Approval.
sec.80.57. Approval of Devices of Anchoring Systems Used with Ground Anchors. 
sec.80.58. Approval of Anchoring Systems Employing Anchoring Devices Other than 
Ground Anchors.
sec.80.59. Quality Control.
sec.80.60. Withdrawal of Approval of Anchoring Systems, Equipment, or Device. 
sec.80.61. Notification of Withdrawal of Approval Anchoring Systems. 
sec.80.62. Blocking Standards. 
sec.80.63. Other Materials and Methods for Mobile Homes and Hud-Code 
Manufactured Homes.
sec.80.64. Procedures for Retailer Alterations. 
sec.80.65. Texas Manufactured Housing Standards Code.
sec.80.67. Hud-Code Custom Construction. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805845
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

General Requirements
10 TAC sec.sec.80.118, 80.121, 80.123-80.126, 80.129-80.132, 80.135
The repealed sections are proposed under the Texas Manufactured Housing 
Standards Act, Article 5221f, sec.9, which provides the department with 
authority to amend, add, and repeal rules governing the Manufactured Housing 
Division of the department. 
No other statute, code, or article is affected by the repealed sections.
sec.80.118. Definitions.
sec.80.121.Installation Responsibilities.
sec.80.123.Retailer Sales Information. 
sec.80.124. Security Requirements. 
sec.80.125.Registration Requirements. 
sec.80.126.Rules for Hearings. 
sec.80.129.Repossessions Sales Reports.
sec.80.130.Delivery of Warranty.
sec.80.131. Correction Requirements. 
sec.80.132.Procedures for Handling Consumer Complaints.
sec.80.135. Manufactured Housing Auctions. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805846
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

Consumer Notice Requirements
10 TAC sec.sec.80.181-80.186
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Housing and Community Affairs or in the Texas Register office, 
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repealed sections are proposed under the Texas Manufactured Housing 
Standards Act, Article 5221f, sec.9, which provides the department with 
authority to amend, add, and repeal rules governing the Manufactured Housing 
Division of the department. 
No other statute, code, or article is affected by the repealed sections.
sec.80.181.Formaldehyde Emission Controls for Certain Wood Products. 
sec.80.182. Health Notice on Formaldehyde Emissions.
sec.80.183. Air Chamber Test Method for Certification
and Qualification of Formaldehyde Emission Levels. 
sec.80.184. Venting, Ventilation, and Combustion Air. 
sec.80.185. Additional Retailer Requirements. 
sec.80.186.Posting Used Homes. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805847
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

Titling
10 TAC sec.sec.80.201-80.208
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Housing and Community Affairs or in the Texas Register office, 
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The repealed sections are proposed under the Texas Manufactured Housing 
Standards Act, Article 5221f, sec.9, which provides the department with 
authority to amend, add, and repeal rules governing the Manufactured Housing 
Division of the department. 
No other statute, code, or article is affected by the repealed sections.
sec.80.201. Definitions Concerning Titling. 
sec.80.202. Fees for Title Documents. 
sec.80.203. Reports. 
sec.80.204. Titling Forms. 
sec.80.205. Titling Transactions. 
sec.80.206. Assignment of Lien. 
sec.80.207. Reinstatement of Canceled Documents of Title. 
sec.80.208. Recording Tax Lien on Manufactured Homes.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805848
Larry Paul Manley
Executive Director
Texas Department of Housing and Comunity Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

CHAPTER 80.Texas Department of Housing and Community Affairs
The Texas Department of Housing and Community Affairs (Department) proposes a 
new sec.80.10, sec.80.11, sec.80.20, sec.sec.80.50 - 80.56, sec.sec.80.62 - 
80.64, sec.80.66, sec.sec.80.119 - 80.123, sec.sec.80.125 - 80.128, 
sec.sec.80.130 - 80.132, sec.80.135, sec.80.180, and sec.sec.80.202 - 80.208, 
the Manufactured Housing Rules. 
New sec.80.10 describes the historical record for standards adopted for 
manufactured housing in accordance with the Texas Manufactured Housing Standards 
Act (Act), Article 5221f and clarifies the identity of the standards adopted. 
New sec.80.11 concerns definitions related to manufactured housing. Definition 
sections previously existed in several locations throughout the repealed rules. 
To allow the reader a way to easily reference the definitions, the separate 
sections previously in the repealed rules have been combined into one section 
and alphabetized in Subchapter B named "Definitions." 
New sec.80.20 concerns required fees to the department for services rendered for 
inspections, issuance of Texas Seals, licensing, educational instruction, 
training and administrative costs. 
New sec.80.50 concerns wind zone regulations that require homes manufactured on 
or after September 1, 1997, to meet the U.S. Department of Housing and Urban 
Development standards for Wind Zone II in order to be installed in Wind Zone II. 
Homes constructed prior to September 1, 1997, will be allowed to be installed in 
Wind Zone I and II without restriction. The selling retailer of a home 
constructed on or after September 1, 1997, to Wind Zone I standards must give a 
written notice to the buyer that states the home was not designed nor 
constructed to withstand hurricane force winds, and is not permitted to be 
installed in Wind Zone II counties in Texas, and there may be restrictions in 
other states prohibiting installation in Wind Zone II or III areas. 
New sec.sec.80.51 - 80.56, sec.sec.80.62 - 80.64, and sec.80.66 concern 
standards and requirements for installation of the manufactured homes, 
stabilizing system requirements, procedures for retailer alterations, and 
rebuilding or repairing "salvaged" manufactured homes for purposes of issuance 
of a manufactured home document of title. The new rules clarify and organize 
installation inspection requirements, wind zone installation requirements, and 
stabilizing system requirements; ensure that homes are installed in a safe and 
proper manner for the general public and the consumers protection; enhance the 
durability of manufactured homes; and establish generic installation standards 
for use statewide. 
New sec.sec.80.119 - 80.123, sec.sec.80.125 - 80.128, sec.sec.80.130 - 80.132, 
and sec.80.135 concern responsibilities for the installation of manufactured 
homes; requirements for correcting deviations to a manufactured home 
installation; responsibilities of the manufacturer, retailer, and installer; 
security, license, and advertising requirements; procedures for hearings and 
arbitrations; delivery of warranties; consumer complaint handling procedures; 
correction requirements pertaining to consumer complaints; and manufactured 
housing auctions. The new rules explain various types of administrative actions 
related to licensing, and reference new and revised sections in the Act, Article 
5221f. The new rules update procedures for handling consumer complaints to 
include the federal requirements and clarify the consumer complaint inspection 
process. New sec.sec.80.119 - 80.123 concern the requirements for installers, 
manufacturers, retailers, security, and licensing. These rules do the following: 
encourage use of knowledgeable installers, protect the general public, 
consumers, and license holders by allowing better detection of unauthorized and 
unlawful activities; effectively administer the Act by requiring up-to-date 
reports and installation manuals from the manufacturers; require the retailers 
to provide proof to the department that the consumers receive the required 
information; assure that license holders conform to security requirements; 
clarify licensing terminology and requirements; assure that manufactured homes 
are rebuilt according to standards; and protect the general public and consumers 
by ensuring review and analysis of pertinent documents before issuing a license. 
The new rule sec.80.128 concerning arbitration requirements establishes 
procedures to comply with the requirements in sec.13A(h) of the Act, Article 
5221f. New sec.80.135 clarifies requirements for manufactured housing auctions 
to protect consumers and give homeowners authority to auction their own home. 
New sec.80.180 concerns notice to the consumer of formaldehyde emissions in 
manufactured homes. The notice must be posted in the home as outlined in the 
Federal Manufactured Home Construction and Safety Standards. Retailers shall 
deliver a copy of the "Important Health Notice" prescribed by the U.S. 
Department of Housing and Urban Development to the consumer before the execution 
of any mutually binding sales agreement. 
New sec.sec.80.202 - 80.208 concern the method and requirements in obtaining a 
title or filing a tax lien, and instructions regarding required reports from the 
manufacturer and retailer. The new rules do the following: clarify the 
requirements and procedures for issuance of a title; provide information that 
will assist license holders, consumers, and the general public in conforming 
with the requirements in the Act, Article 5221f; clarify the procedures for 
filing a lien; and assist the department in data entry of information. 
Hershal E. Blankenship, Director of the Manufactured Housing Division of the 
Department, has determined that for each year of the first five years the rules 
will be in effect, the net fiscal implications are expected to be an additional 
$955,500 in expense to the Manufactured Housing Division of the Texas Department 
of Housing and Community Affairs on an annual basis.
The expected fiscal implications by section are as follows: 
sec.80.10 - $ 0 sec.80.11 - $ 0 sec.80.20 - Increase in Revenue $5,000 & Savings 
of $12,000 sec.80.50 - $ 0 sec.80.51 - $ 0 sec.80.52 - $ 0 sec.80.53 - $ 0 
sec.80.54 - $ 0 sec.80.55 - $ 0 sec.80.56 - $ 0 sec.80.62 - $6,500 sec.80.63 - $ 
0 sec.80.64 - $ 0 sec.80.66 - $ 0 sec.80.119 - $630,000 sec.80.120 - $ 0 
sec.80.121 - Savings of $24,000 sec.80.122 - $ 0 sec.80.123 - $ 0 sec.80.125 - $ 
0 sec.80.126 - $0 sec.80.127 - $ 0 sec.80.128 - $ 0 sec.80.130 - $ 0 sec.80.131 
- $ 0 sec.80.132 - $360,000 sec.80.135 - $ 0 sec.80.180 - $ 0 sec.80.202 - $ 0 
sec.80.203 - $ 0 sec.80.204 - $ 0 sec.80.205 - $ 0 sec.80.206 - $ 0 sec.80.207 - 
$ 0 sec.80.208 - $ 0 
Hershal E. Blankenship, Director of the Manufactured Housing Division of the 
Department, has determined that for each year of the first five years the rules 
will be in effect, the expected fiscal implications for each section of the 
rules are as follows: 
New sec.80.10 is expected to have no fiscal implications for state or units of 
local government as a result of enforcing or administering the section.
New sec.80.11 is expected to have no fiscal implications for state or units of 
local government as a result of enforcing or administering the section.
New sec.80.20 is expected to be a reduction in estimated cost for state 
government of $12,000 each year as a result of deleting the requirement 
(repealed sec.80.28) to process monthly installation summary reports. There is 
expected to be an increase in state revenue of approximately $5,000 per year as 
a result of a new provision in sec.80.20 which provides that a $100 fee will be 
charged to either a license holder or the consumer for an additional inspection. 
An additional inspection may be requested when there is a dispute between the 
license holder and the consumer. This fee is to be paid by the party deemed 
responsible by the department for requiring the additional inspection. There are 
expected to be no fiscal implications for units of local government as a result 
of enforcing or administering the section. 
New sec.sec.80.50 - 80.56 are expected to have no fiscal implications for state 
or units of local government as a result of enforcing or administering these 
sections. 
New sec.80.62 is expected to have an additional estimated cost to state 
government of $6,500 each year as a result of a new requirement (sec.80.62(l)) 
to mail to all licensed installers, retailers, and manufacturers, a list of all 
approved stabilizing components and systems. There are expected to be no fiscal 
implications for units of local government as a result of enforcing or 
administering the section. 
New sec.80.63, sec.80.64, and sec.80.66 are expected to have no fiscal 
implications for state or units of local government as a result of enforcing or 
administering these sections. 
New sec.80.119 is expected to have an additional estimated cost to state 
government of $630,000 each year as a result of a new requirement 
(sec.80.119(f)(2)) for expanded field inspector oversight of the installation 
process. The new process will enable the field inspector to be present, when 
possible, when the sections of the home are joined together to allow inspection 
of this critical element of the installation before the joints are covered. The 
cost will be more than offset by decreased license holder service costs and 
consumer maintenance costs and improved construction integrity of the 
manufactured home. 
New sec.80.120 is expected to have no fiscal implications for state or units of 
local government as a result of enforcing or administering the section.
New sec.80.121 is expected to have an estimated reduction in cost to state 
government of $24,000 each year as a result of deleting the requirements 
(repealed sec.80.123 and sec.80.203) for department staff to process monthly 
sales summary reports, monthly installation summary reports, and used home 
inventory reports. There are expected to be no fiscal implications for units of 
local government as a result of enforcing or administering the section.
New sec.80.122, sec.80.123, sec.sec.80.125 - 80.128, sec.80.130, and sec.80.131 
are expected to have no fiscal implications for state or units of local 
government as a result of enforcing or administering these sections. 
New sec.80.132 is expected to have an additional estimated cost to state 
government of $360,000 each year as a result of a new requirement 
(sec.80.132(2)(C)) for more detailed field inspector consumer complaint reports. 
There are expected to be no fiscal implications for units of local government as 
a result of enforcing or administering the section. 
New sec.80.135 is expected to have no fiscal implications for state or units of 
local government as a result of enforcing or administering these sections. 
New sec.80.180 is expected to have no fiscal implications for state or units of 
local government as a result of enforcing or administering this section.
New sec.sec.80.202 - 80.208 are expected to have no fiscal implications for 
state or units of local government as a result of enforcing or administering 
these sections. 
Mr. Blankenship also has determined that for each year of the first five years 
the sections as proposed will be in effect, the public benefit as a result of 
enforcing the sections is clarification and increased detail regarding various 
aspects of manufactured housing rules; and benefit from increased safety, 
improved quality of home installations, and improved consumer complaint 
procedures. The public benefit/probable economic costs for each section of the 
rules is as follows: 
New sec.80.10 improves clarification of the section by identifying the standards 
adopted that concern the enforcement of the Texas Manufactured Housing Standards 
Act, Article 5221f. This clarification will also benefit small businesses. There 
are expected to be no economic costs to persons/businesses who are required to 
comply with the section as proposed. 
New sec.80.11 provides easy referencing by combining the definitions into one 
section that previously existed in separate definition sections in the repealed 
rules. There are expected to be no economic costs to persons/businesses who are 
required to comply with the section as proposed. 
New sec.80.20 consolidates existing fee structures under a single section so 
information regarding all fees can be located by reference to this single 
section. There is expected to be a probable reduction in economic cost to 
consumers and license holders as a result of changes to this section as follows: 
There is expected to be a economic cost of $100 for each additional inspection 
requested by either consumers or license holders as a result of collection of a 
$100 fee for an additional inspection as proposed in sec.80.20(i)(2). An 
additional inspection may be requested when required to resolve a dispute 
between the license holder and the consumer. The fee is to be paid by the party, 
license holder or consumer deemed responsible by the department for requiring 
the additional inspection. There is expected to be a probable reduction in 
economic cost of approximately $30 each month to retailer/installer license 
holders as a result of deleting a provision (repealed sec.80.28(a)) for 
reporting monthly installation summaries to the department. It is anticipated 
that these savings in retailer/installer license holder costs will be passed on 
to the consumer. 
New sec.80.50 clarifies the wind zone regulations and the written notice to 
consumers regarding wind zone regulations will help educate consumers about the 
importance of having the correct type of home for the wind zone where the home 
is to be located. There are expected to be no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed. 
New sec.80.51 is expected to have a probable reduction in economic cost as a 
result of the provisions in this section of the proposed rules. There is 
expected to be a probable economic cost of $2 per appendix to manufacturer 
license holders as a result of a new provision (sec.80.51(a)(2)) requiring 
manufacturers to file an appendix with this department describing how the 
generic standards are not applicable to a particular home model. There is 
expected to be an additional probable economic cost of $5 per updated manual and 
appendix to manufacturer license holders as a result of a new provision 
(sec.80.51(a)(3)) requiring manufacturers to send copies of updated installation 
manuals and appendixes to their retailers. Consumers and the general public will 
benefit from increased safety, having current installation instructions 
available, and having timely updates of the state generic standards. There is 
expected to be a probable reduction in economic cost of $200 per engineered 
drawing to retailer and installer license holders as a result of a new provision 
(sec.80.51(d)) that eliminates the requirement for separately engineered 
drawings on each home site of a development using the same permanent foundation 
system. Consumers will also benefit from the availability of permanent 
foundation systems at less cost. 
New sec.80.52 will benefit the consumers and the general public by disseminating 
more detailed descriptions and instructions for permanent foundation criteria 
which will potentially upgrade the quality of the installations and safety of 
the occupants. There are expected to be no economic costs to persons/businesses 
who are required to comply with this section of the rules as proposed. 
New sec.80.54 will benefit consumers by providing increased knowledge of the 
importance of site preparation and more specific information regarding the 
importance of drainage and ground vapor control. There is expected to be a 
probable economic cost each year to retailer/installer license holders and/or 
consumers as a result of the provisions in this section. This includes a 
probable economic cost of $33.60 per average manufactured home section to 
retailer/installer license holders as a result of incorporating a provision 
regarding ground vapor control (sec.80.54(b)(5)). Moisture penetration can lead 
to accelerated deterioration and reduction in the value of manufactured homes. 
This provision will enhance the durability of homes and although this cost will 
likely be passed to consumers, it is expected to be offset by savings in service 
costs to consumers resulting from required maintenance and repair to homes from 
water vapor damage. There is expected to be a probable economic cost of $10 per 
home sold to retailer/installer license holders and/or consumers as a result of 
a new provision (sec.80.54(c)) requiring a notice be given to consumers 
regarding proper site preparation for installation of their home. This will 
benefit consumers by making them more aware of their responsibilities regarding 
one of the most important aspects of manufactured home installation, site 
preparation. It is estimated that this cost will be more than offset by savings 
in service costs and costs to consumers resulting from required maintenance and 
repair when home site is not properly prepared. 
New sec.80.55 will benefit consumers and license holders by providing increased 
detail and illustrations regarding anchor system standards. This section will 
also increase the likelihood that anchoring systems are installed correctly, 
upgrading the quality of the installations and safety of the occupants. There is 
expected to be a probable economic cost of $140 per manufactured home section to 
retailer/installer license holders as a result of a new provision 
(sec.80.55(f)(6)) requiring two longitudinal ties at each end of a home section 
less than 60 feet in length. The purpose of this provision is to provide 
additional safety for the home occupants by providing additional stability in 
the anchoring system. While this cost will likely be passed to the consumer, it 
is estimated that this cost will be more than offset by increased safety for 
home occupants and savings from homes that might otherwise be damaged or 
destroyed by windstorms. 
New sec.80.56 will benefit consumers and license holders by providing increased 
detail and illustrations regarding multi-section connection standards. This 
section will also increase the likelihood that multi-section manufactured homes 
will be installed correctly, upgrading the quality of the installations and 
safety of the occupants. There are expected to be no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed. 
New sec.80.62 will benefit consumers and license holders by providing increased 
detail regarding the approval process for stabilizing components and systems. 
This section will also increase the likelihood that manufactured homes will be 
installed using approved systems, upgrading the quality of the installations and 
safety of the occupants. There are expected to be no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed. 
New sec.80.63 will benefit consumers and license holders by providing increased 
detail regarding stabilizing systems, components, other materials, and methods 
for manufactured homes. This section will also increase the likelihood that 
manufactured homes will be installed using approved stabilizing systems and 
components, upgrading the quality of the installations and safety of the 
occupants. There are expected to be no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed.
New sec.80.64 will benefit consumers and license holders by providing increased 
detail regarding procedures for alterations of manufactured housing. This 
section will also increase the likelihood that manufactured homes will be 
installed using approved alterations, improving the quality of the home and 
safety of the occupants. There are expected to be no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed. 
New sec.80.66 will benefit consumers and license holders by providing increased 
detail regarding the requirements for rebuilding or repairing a "salvaged" 
manufactured home. This section will also increase the likelihood that 
manufactured homes will be rebuilt to the required standards, upgrading the 
quality of rebuilt homes and safety of the occupants. There is expected to be a 
probable reduction in economic cost of $25 for each home installed with air 
conditioning to retailer/installer license holders as a result of repealed 
sec.80.64(g), regarding the requirement for a notarized air conditioning 
installation report. 
New sec.80.119 will benefit consumers and license holders by providing increased 
detail regarding the installation responsibilities. There is expected to be a 
fiscal impact of $10 per multi-section home installed to retailer/installer 
license holders as a result of a new requirement (sec.80.119(f)(2)) to notify 
the department field office prior to installation of a multi-section home. The 
purpose of the notification is to enable a field inspector to be present, when 
possible, when the sections of the home are joined together. This procedure will 
enable inspection of this critical element of the installation before the 
marriage line connection points are covered. The cost will be more than offset 
by decreased license holder service costs, consumer maintenance costs, and 
improved construction integrity of the manufactured home. 
New sec.80.120 is expected to have no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. 
New sec.80.121 is expected to have a probable reduction in economic cost of $15 
per month by retailer license holders as a result of deleting the current 
requirement for a monthly sales summary report (repealed sec.80.123) to be sent 
to the department. This section is expected to have an additional probable 
reduction in economic cost of $15 per month by retailer license holders as a 
result of deleting the current requirement (repealed sec.80.203) for a monthly 
used home inventory report to be sent to the department. It is anticipated that 
the public will benefit when these savings in retailer license holder costs are 
passed on to the consumer. 
New sec.80.122 is expected to have no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. 
New sec.80.123 will benefit license holders by providing increased detail 
regarding licensing requirements. There is expected to be a probable economic 
cost of approximately $375 to each licensed rebuilder as a result of a new 
requirement sec.80.123(d) for rebuilders to be certified by the department. The 
certification will be given by demonstrating to a state inspector that a home 
was rebuilt in accordance with applicable laws, codes, standards, rules, order, 
and directives of the department. This section will also increase the likelihood 
that license holders know and comply with licensing requirements.
New sec.80.125 is expected to have no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. This section 
will benefit license holders by clarifying prohibited advertising methods and 
benefit consumers who might be enticed by false, deceptive or misleading 
advertising regarding manufactured housing. 
New sec.80.126 is expected to have no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. 
New sec.80.127 will benefit license holders by clarifying rules regarding 
sanctions and penalties which can be imposed by the department for violations of 
the Act and rules. There are expected to be no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed.
New sec.80.128 will benefit license holders and consumers by clarifying rules 
regarding binding arbitration. There is expected to be a minimal fiscal impact 
to license holders and consumers for arbitration costs as a result of new rules 
providing for binding arbitration as directed in the Act. 
New sec.80.130 will benefit consumers by a changed provision in this rule which 
requires that warranty documents be delivered to the consumer at the time the 
contract for sale is signed rather than when the home is tendered for 
possession. There is expected to be a probable reduction in economic cost of 
approximately $10 per repossessed home to retailer license holders as a result 
of deleting the previous requirement (repealed sec.80.129) for retailers to 
provide the department with repossession sales reports. 
New sec.80.131 will benefit consumers by clarifying warranty responsibilities 
and correction requirements when deviations from standards are reported. There 
are expected to be no economic costs to persons/businesses who are required to 
comply with this section of the rules as proposed. 
New sec.80.132 will benefit consumers and license holders from increased detail 
regarding the procedures for handling consumer complaints associated with 
manufactured homes. This section will also increase the likelihood that 
manufactured homes with deviations from standards are repaired in a timely 
fashion. There are expected to be no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. 
New sec.80.135 will benefit consumers and license holders through clarification 
and increased detail regarding the procedures for auctioning manufactured homes 
to consumers and licensed retailers. There are expected to be no economic costs 
to persons/businesses who are required to comply with this section of the rules 
as proposed. 
New sec.80.180 is expected to have no economic costs to persons/businesses who 
are required to comply with this section of the rules as proposed. In addition, 
there is expected to be a savings of approximately $10 for each home in 
inventory to licensed retailers as a result of deleting the current requirement 
(repealed sec.80.186) for posting used homes with notices regarding habitability 
requirements. 
New sec.sec.80.202 - 80.208 are expected to have no economic costs to 
persons/businesses who are required to comply with this section of the rules as 
proposed. 
Comments may be submitted to Hershal E. Blankenship, Director of the 
Manufactured Housing Division, of the Texas Department of Housing and Community 
Affairs, 507 Sabine Street, Austin, Texas 78701 within 30 days of the date of 
this publication. 

SUBCHAPTER A.Codes and Standards
The new section is proposed under the Texas Manufactured Housing Standards Act, 
Article 5221f, sec.9, which provides the department with authority to amend, 
add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rule. 

sec.80.10.Texas Manufactured Housing Standards Code. 
(a) The Texas Manufactured Housing Standards Code for HUD-Code manufactured 
homes shall be the Federal Standards established under Title VI of the Housing 
and Community Development Act of 1974 and each change, amendment, or requirement 
shall become effective in conjunction with the effective date set by the federal 
program. 
(b) The historical record of standards adopted for manufactured homes in 
accordance with the Standards Act, is as follows: 
(1) Prior to December 11, 1969: none; 
(2) December 12, 1969 - August 31, 1971: American National Standards Institute 
(ANSI), A119.1-1963, plumbing, heating and electrical;
(3) September 1, 1971 - December 15, 1971: none; 
(4) December 15, 1971 - February 16, 1972: ANSI, A119.1-1969, plumbing, heating 
and electrical; 
(5) February 17, 1972 - January 31, 1973: ANSI, A119.1-1973, plumbing, heating 
and electrical; 
(6) February 1, 1973 - September 19, 1973: ANSI, A119.1-1973, plumbing, heating, 
electrical and construction; 
(7) September 20, 1973 - August 31, 1974: ANSI, A119.1-1973, plumbing, heating, 
electrical and construction; 
(8) September 1, 1974 - June 14, 1976: ANSI, A119.1-1974, plumbing, heating, 
electrical and construction; and 
(9) June 15, 1976 - Future: HUD-Code - National Manufactured Home Construction 
and Safety Standards, Part 3280, promulgated by the United States Department of 
Housing and Urban Development (HUD), Code of Federal Regulations (CFR), Title 
24. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805836
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER B.Definitions
10 TAC sec.80.11
The new section is proposed under the Texas Manufactured Housing Standards Act, 
Article 5221f, sec.9, which provides the department with authority to amend, 
add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rule. 

sec.80.11.Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
(1) Alteration - The replacement, addition, and modification or removal of any 
equipment or its installation after sale by the manufacturer to a retailer, but 
prior to sale and installation to a purchaser which may affect the construction, 
fire safety, occupancy plumbing, heat-producing, or electrical system. An 
alteration is deemed to be prior to sale if the alteration is part of the retail 
sales contract. It includes any modification made in the manufactured home which 
may affect the compliance of the home with the standards, but it does not 
include the repair or replacement of a component or appliance requiring plug-in 
to an electrical receptacle where the replaced item is of the same configuration 
and rating as the one being replaced. It also does not include the addition of 
an appliance requiring "plug-in" to an electrical receptacle, which appliance 
was not provided with the manufactured home by the manufacturer, if the rating 
of the appliance does not exceed the rating of the receptacle to which it is 
connected (FMHCSS sec.3287.7(c)).
(2) Anchoring components - Any component which is attached to the manufactured 
home and is designed to resist the horizontal and vertical forces imposed on the 
manufactured home as a result of wind loading. These components include auger 
anchors, rock anchors, slab anchors, ground anchors, stabilizing plates, 
connection bolts, j-hooks, buckles, and split bolts.
(3) Anchoring equipment - Straps, cables, turnbuckles, and chains, including 
tensioning devices, which are used with ties to secure a manufactured home to 
anchoring components or other approved devices. 
(4) Anchoring systems - Combination of ties, anchoring components, and anchoring 
equipment that will resist overturning and lateral movement of the manufactured 
home from wind forces. 
(5) APA - Administrative Procedure Act, Texas Government Code, Chapter 2001. 
(6) Business use - Any use other than for dwelling purposes.
(7) Calendar days - Includes every day on the calendar.
(8) Certificate of Attachment to Real Estate - A certificate issued by the 
department to the person who surrenders the manufacturer's certificate of origin 
or document of title when the home has been permanently affixed to real estate. 
(9) Coastline - The shoreline that forms the boundary between the land and the 
Gulf of Mexico or a bay or estuary connecting to the Gulf of Mexico that is more 
than five miles wide. 
(10) Credit document - The credit sale contract or the loan instruments 
including all the written agreements between the consumer and creditor that 
relate to the credit transaction. 
(11) Creditor - A person involved in a credit transaction who: 
(A) extends or arranges the extension of credit; or 
(B) is a retailer or broker as defined in the Standards Act and participates in 
arranging for the extension of credit. 
(12) Custom designed stabilization system - An anchoring and support system that 
is not an approved method as prescribed by the state generic standards, 
manufacturer's installation instructions, or other systems pre-approved by the 
department. 
(13) DAPIA - The Design Approval Primary Inspection Agency.
(14) Defect - A failure to comply with an applicable federal manufactured home 
safety and construction standard that renders the manufactured home or any part 
or component thereof not fit for the ordinary use for which it was intended, but 
does not result in an unreasonable risk of injury or death to occupants of the 
affected manufactured home (FMHCSS sec.3282.7(j)). 
(15) Department - The Texas Department of Housing and Community Affairs (TDHCA). 
(16) Diagonal tie - A tie intended to primarily resist horizontal forces, but 
which may also be used to resist vertical forces.
(17) Director - The Executive Director of the Texas Department of Housing and 
Community Affairs (TDHCA). 
(18) Dwelling unit - One or more habitable rooms which are designed to be 
occupied by one family with facilities for living, sleeping, cooking and eating. 
(19) FMHCSS - Federal Manufactured Home Construction and Safety Standards that 
implement the National Manufactured Home Construction and Safety Standards Act 
of 1974, 42 USC 5401, et seq., and means a reasonable standard for the 
construction, design, and performance of a manufactured home which meets the 
needs of the public including the need for quality, durability, and safety. 
(20) Footing - That portion of the support system that transmits loads directly 
to the soil. 
(21) Ground anchor - Any device at the manufactured home site designed to 
transfer manufactured home anchoring loads to the ground.
(22) HUD-Code manufactured home - A structure constructed on or after June 15, 
1976, according to the rules of HUD, transportable in one or more sections, 
which, in the traveling mode, is eight body feet or more in width or 40 body 
feet or more in length, or, when erected on site, is 320 or more square feet, 
and which is built on a permanent chassis and designed to be used as a dwelling 
with or without a permanent foundation when connected to the required utilities, 
and includes the plumbing, heating, air-conditioning, and electrical systems. 
The term does not include a recreational vehicle as that term is defined by 24 
CFR, sec.3282.8(g). 
(23) Imminent safety hazard - A hazard that presents an imminent and 
unreasonable risk of death or severe personal injury that may or may not be 
related to failure to comply with an applicable federal manufactured home 
construction and safety standard (FMHCSS sec.3282.7(q)).
(24) Independent testing laboratory - An agency that tests products for 
conformance to standards and employs at least one engineer or architect licensed 
in at least one state. 
(25) Installation information - A term used to describe the reports used to 
inform the department of information needed to perform installation inspections 
(includes "Affidavit of Installation" and "Form E - Statement of Home 
Location").
(26) IPIA - The Production Inspection Primary Inspection Agency which evaluates 
the ability of manufactured home manufacturing plants to follow approved quality 
control procedures and/or provides ongoing surveillance of the manufacturing 
process. 
(27) Main frame - The structural components on which the body of the 
manufactured home is mounted. 
(28) Manufactured home - A HUD-Code manufactured home or a mobile home and 
collectively means and refers to both. 
(29) Manufactured home identification numbers - For purposes of title records, 
the numbers shall include the HUD label number(s) and the serial number(s) 
imprinted or stamped on the home in accordance with HUD departmental 
regulations. For homes manufactured prior to June 15, 1976, the Texas seal 
number, as issued by the department, shall be used instead of the HUD label 
number. If a home manufactured prior to June 15, 1976, does not have a Texas 
seal, or if a home manufactured after June 15, 1976, does not have a HUD label, 
a Texas seal shall be purchased from the department and attached to the home and 
used for identification in lieu of the HUD label number. 
(30) Manufactured home site - That area of a lot or tract of land on which a 
manufactured home is installed. 
(31) Mobile home - A structure that was constructed before June 15, 1976, 
transportable in one or more sections, which, in the traveling mode, is eight 
body feet or more in width or 40 body feet or more in length, or, when erected 
on site, is 320 or more square feet, and which is built on a permanent chassis 
and designed to be used as a dwelling with or without a permanent foundation 
when connected to the required utilities, and includes the plumbing, heating, 
air-conditioning, and electrical systems. 
(32) Permanent foundation - A system of supports, including piers, either 
partially or entirely below grade which is constructed or certified in 
accordance with the criteria outlined in sec.80.52(a) and (b), of this title 
(relating to Permanent Foundation Performance Criteria). 
(33) Permanently affixed - Having been anchored to the real estate by attachment 
to a permanent foundation. 
(34) Rebuild - To make a salvaged manufactured home habitable in accordance with 
sec.80.66 of this title (relating to Rebuilding or Repairing a "Salvaged" 
Manufactured Home). 
(35) Rebuilder - Any person, within the state, who has been certified by the 
department to rebuild a salvaged manufactured home, as defined in the Standards 
Act, sec.8(g), in accordance with the rules and regulations of the department. 
(36) Serious defect - Any failure to comply with an applicable federal 
manufactured home construction and safety standard that renders the manufactured 
home or any part thereof not fit for the ordinary use for which it was intended 
and which results in an unreasonable risk of injury or death to occupants of the 
affected manufactured home (FMHCSS sec.3282.7(gg)).
(37) Shim - A wedge-shaped piece of cedar, oak, walnut, pecan, gum, ash, 
hickory, elm, or other comparable hardwood not to exceed one (1) inch vertical 
(actual) height. 
(38) Stabilizing components - All components of the anchoring and support system 
such as piers, footings, ties, anchoring equipment, ground anchors, and any 
other equipment which supports the manufactured home and secures it to the 
ground. 
(39) Standards Act - Texas Revised Civil Statutes, Article 5221f. 
(40) Support system - A combination of footings, piers, caps and shims that 
support the manufactured home. 
(41) TDHCA - The Texas Department of Housing and Community Affairs (Department). 
(42) TDHCA inspector - An inspector who is an employee of the department or an 
inspector who is an employee of an entity performing inspection services under 
contract with the department. 
(43) TMHSA - Texas Manufactured Housing Standards Act, Texas Revised Civil 
Statutes, Article 5221f. 
(44) Used manufactured home - Any manufactured home for which a document or 
certificate of title has previously been issued by an appropriate agency of any 
state. 
(45) Vertical tie - A tie intended to primarily resist the uplifting and 
overturning forces. 
(46) Wind Zone I - All Texas counties not in Wind Zone II. 
(47) Wind Zone II - Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, 
Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Orange, Refugio, San Patricio, 
and Willacy counties. 
(48) Working days - Includes every day on the calendar except Saturday, Sunday, 
and federal and state holidays. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805837
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER C.Fee Structure
10 TAC sec.80.20
The new section is proposed under the Texas Manufactured Housing Standards Act, 
Article 5221f, sec.9, which provides the department with authority to amend, 
add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rule. 

sec.80.20. Fees. 
(a) Annual License Fees: 
(1) $375 for each manufacturer's plant license; 
(2) $225 for each retailer's sales license; 
(3) $225 for each rebuilder's license; 
(4) $125 for each broker's license; 
(5) $125 for each installer's license; and 
(6) $50 for each salesperson's license. 
(b) Installation Fees: 
(1) There is a fee of $20 for the installation of each manufactured home which 
is not installed on a permanent foundation. 
(2) There is a fee of $100 for the installation of a manufactured home on a 
permanent foundation. 
(3) Installation fees shall be submitted to the department as follows: 
(A) When the installation occurs in conjunction with a title transfer, the fee 
must be submitted to the department along with the application for title and the 
Form E (Affidavit of Installation); or 
(B) For secondary moves (when there is no title transfer), the fee must be 
submitted to the department along with a completed Form T (Installation Report) 
within ten (10) working days following the installation date. 
(4) Fee distributions to local governmental entities performing inspection 
functions pursuant to contract with the department shall be made in accordance 
with department procedures and the provisions of the contract. 
(c) Alteration Fee: There is a fee of $30 per hour or a minimum fee of $30 for 
the inspection of alterations made upon the structure, plumbing, heating, or 
electrical systems of manufactured homes. The fee is paid to the department by 
the person making the alterations. The person shall also reimburse the 
department for mileage and per diem incurred by department personnel to and from 
the place of inspection. 
(d) Seal Fee: There is a fee of $15 for the issuance of Texas Seals. Any person 
who sells, exchanges, lease purchases, or offers for sale, exchange, or lease 
purchase a used HUD-Code manufactured home manufactured after June 15, 1976, 
that does not have a HUD label affixed, or a used mobile home manufactured prior 
to June 15, 1976, that does not have a Texas Seal affixed shall file an 
application to the department for a Texas Seal. The application shall be 
accompanied by the seal fee of $15 made payable to the department. 
(e) Monitoring Fee: There is a fee, as required by HUD, to be paid by each 
manufacturer in this state for each HUD-Code manufactured home produced. The 
monitoring inspection fee is established by the secretary of HUD, (pursuant to 
24 CFR sec.3282.307) who shall distribute the fees collected from all 
manufacturers among the approved and conditionally approved states based on the 
number of new homes whose first location after leaving the manufacturing plant 
is on the premises of distributor, retailer, or purchaser in that state, and the 
extent of participation of the state in the joint monitoring program established 
under the National Manufactured Housing Construction and Safety Standards Act of 
1974. 
(f) Homeowner's Temporary Installer's License: There is a fee of $40 for the 
issuance of a homeowner's temporary installer's license, which shall also 
include the cost of the installation inspection. The fee shall be made payable 
to the department. 
(g) Education Fee: Each attendee at the course of instruction in the law and 
consumer protection regulations for license applicants shall be assessed a fee 
of $125. If a manufacturer requests the training be performed at his or her 
facility, the manufacturer shall reimburse the department for the actual costs 
of the training session (educational fee plus actual cost of travel). 
(h) Habitability Inspection: 
(1) There is a fee of $100 for the inspection of a manufactured home which is to 
be titled for use as a residence after the title has been previously canceled 
for other purposes and has been surrendered. The inspection is to determine if 
the home is habitable. The fee shall accompany a written request for the 
inspection. The person requesting the inspection for the use change of a 
manufactured home shall be charged for mileage and per diem incurred by 
department personnel traveling to and from the location of the manufactured 
home. 
(2) There is a fee of $125 for the plan review and inspection of a salvaged 
manufactured home which has been rebuilt to determine if the home is habitable 
for the issuance of a new title. The fee shall accompany a written request for 
the inspection. The rebuilder shall also be charged for mileage and per diem 
incurred by department personnel traveling to and from the location of the home. 
(i) Consumer Complaint Inspection: 
(1) There is a fee of $100 for the initial inspection of a consumer's home in 
accordance with a consumer complaint when requested by a license holder or party 
other than a consumer. The fee shall accompany a written request for the 
inspection. 
(2) There is a fee of $100 for the reinspection of a consumer's home. The fee 
shall be paid by the license holder, party other than the consumer, or the 
consumer. The fee shall be paid by the party deemed responsible by the 
department. 
(j) Titles: Fees relating to titles and title transactions are set forth in 
sec.80.202 of this title (relating to Fees for Title Documents).
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805838
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER D.Standards and Requirements
10 TAC 80.50-80.56, 80.62-80.64, 80.66
The new sections are proposed under the Texas Manufactured Housing Standards 
Act, Article 5221f, sec.9, which provides the department with authority to 
amend, add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rules. 

sec.80.50. Wind Zone Regulations.
(a) Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, 
Kleberg, Matagorda, Nueces, Orange, Refugio, San Patricio, and Willacy counties 
are in Wind Zone II. All other counties are in Wind Zone I. 
(b) A manufactured home constructed on or after September 1, 1997 must meet the 
Wind Zone II standards adopted by HUD in order to be installed in a Wind Zone II 
county. 
(c) All manufactured homes constructed prior to September 1, 1997 may be 
installed in Wind Zone I or Wind Zone II without restriction.
(d) A consumer purchasing a manufactured home constructed on or after September 
1, 1997 to Wind Zone I standards must be given a written notice by the selling 
retailer that: 
(1) The home was not designed nor constructed to withstand hurricane force winds 
which may occur in Wind Zone II or III areas; and 
(2) The home is not permitted to be installed in Wind Zone II counties in Texas, 
and there may be restrictions in other states prohibiting installation in Wind 
Zone II or III areas. 
(e) The notice required by this section shall be given to the consumer prior to 
the execution of any mutually binding sales agreement or retail installment 
sales contract. 
(f) A manufactured home constructed on or after September 1, 1997 shall not be 
installed within 1,500 feet of the coastline in Wind Zone II, unless the home 
and its anchoring and support systems have been designed for the increased 
requirements specified for Exposure D in ANSI/ASCE 7-88.

sec.80.51. Manufactured Home Installation Requirements. 
(a) The following tasks are the responsibility of the manufacturer:
(1) Manufacturers shall file with the department copies, in the number specified 
by the department, of installation instructions approved by the manufacturer's 
DAPIA. DAPIA approval stamps, engineer or architect approval stamps, and the 
installation manual effective date shall be on each page of the installation 
instructions or on the cover pages of bound installation manuals. 
(2) A manufacturer may file an appendix to the state's generic standards as a 
part of the manufacturer's installation instructions if the design of one or 
more of its homes requires a change in the generic standards to protect the 
structural integrity of the home. The appendix shall specify which provision of 
the generic standards is being changed and clearly set forth in detail the 
change that is necessary. 
(3) At least thirty (30) calendar days prior to the effective date of any 
change, modification, or update to the manufacturer's installation instructions 
or any appendix, the manufacturer shall file such change, modification, or 
update with the department and mail a copy(s) to all the manufacturer's 
retailers. 
(b) Manufactured homes installed in Wind Zone I shall be installed in accordance 
with the manufacturer's installation instructions or the generic standards 
approved by the department for Wind Zone I. 
(c) Manufactured homes installed in Wind Zone II shall: 
(1) if constructed before September 1, 1997, be installed in accordance with the 
manufacturer's installation instructions for Wind Zone II or the department's 
generic standards for Wind Zone II; 
(2) if constructed on or after September 1, 1997, have data plates indicating 
Wind Zone II construction and be installed in accordance with the manufacturer's 
installation instructions for Wind Zone II or the department's generic standards 
for Wind Zone II. 
(d) In lieu of the requirements of subsections (b) and (c) of this section, a 
manufactured home or an identified class of manufactured homes may be installed 
at a particular area with similar soil properties according to county soil 
survey or other geotechnical reports in accordance with a custom designed 
stabilization system drawing that is stamped by a Texas licensed professional 
engineer or architect. A custom designed stabilization system may or may not 
meet the definition of a permanent foundation, but a copy of the stabilization 
system drawing must be forwarded to the department along with the installation 
report. It must be reported on the permanent foundation installation inspection 
report form and sent to the department at least ten (10) working days prior to 
the date of construction, along with the required fee, if the bottoms of the 
footings or piers are embedded more than 24 inches below the finished natural 
grade or engineered fill. 

sec.80.52.Permanent Foundation Criteria. 
(a) The permanent foundation system shall be either: 
(1) capable of transferring all design loads imposed by or upon the structure 
into soil or bedrock without failure; 
(2) placed at an adequate depth below grade to prevent frost damage; 
(3) constructed of concrete, metal, treated lumber or wood, masonry, or other 
materials conforming to nationally recognized standards;
(4) designed so that all of the components of the foundation system cannot be 
easily removed from the site and used at any other location and the drawings 
state that the foundation is a permanent foundation for a manufactured home; 
(5) designed so that the attached structure resists overturning due to wind 
pressure by the dead load resisting moment of the structure and foundation. The 
weight of earth superimposed over footings may be used to calculate the dead 
load resisting moment. The overturning moment shall not exceed the dead load 
resisting moment and the overturning moment, multiplied by a safety factor of 
1.5, shall be less than or equal to the dead load stabilizing moment plus the 
stabilizing moment due to ground anchor reactions; 
(6) designed to have the structure attached without the towing hitch, axles, 
brakes, wheels and other parts of the chassis that operate only during 
transportation; and 
(7) designed in accordance with accepted engineering practice to resist damage 
due to decay, insects, and condensation. A Texas licensed engineer or architect 
shall stamp and sign each foundation drawing. If the foundation drawing is 
approved by the DAPIA, the engineer or architect may be licensed in another 
state; or 
(b) In the alternative, it is a system which is certified by the 
consumer/mortgagor and the lender/mortgagee in a real estate loan transaction, 
or certified by the owner if there is no lien or the lien has been released, as 
having permanently affixed the structure to the real estate. 

sec.80.53. Manufacturer's Design Requirements. 
(a) Each new manufactured home shall be designed and constructed as a completely 
integrated structure capable of sustaining the design load requirements of the 
FMHCSS and shall be capable of transmitting the loads to anchoring systems 
without causing an unsafe deformation or an abnormal internal movement of the 
structure or its structural parts. 
(b) Each new manufactured home shall have provisions for anchoring systems 
which, when properly designed and installed, will resist overturning and lateral 
movement of the manufactured home up to the respective design loads. 
(c) The provisions of this section shall be followed and the support and 
anchoring systems shall be designed by a licensed professional engineer or 
architect. 
(d) The manufacturer shall design homes to make provisions for the necessary 
support and anchoring systems, but is not required to provide the anchoring 
equipment. Printed installation instructions for support and anchoring systems 
for each model shall be filed with the department as required by the department. 
When the manufacturer's installation instructions provide for the main frame 
structure to be used as the point for connection to diagonal ties, no specific 
connecting devices need to be provided on the frame. Ties shall be designed and 
installed to prevent self disconnection when the ties are slack. For example, 
open end hooks shall have set screws or other mechanisms to prevent 
disconnection when there is slack in the strapping. 
(e) The manufacturer shall provide printed instructions with each new home 
specifying the location, orientation and required capacity of stabilizing 
components on which the design is based. The installer must use stabilizing 
components that have the required capacity and install them according to the 
anchor or stabilizing component manufacturer's current installation 
instructions. When soil auger anchor shafts are not installed in-line with the 
diagonal frame ties or the combined loads of two ties, approved stabilizer 
plates, or other approved methods, must be used in accordance with the 
installation instructions for the soil auger anchors and stabilizer plates. 
(f) The minimum number of ties required per side shall be sufficient to resist 
the wind load stated in the FMHCSS sec.3280.305(c).

sec.80.54. Standards for the Installation of Manufactured Homes. 
(a) All manufactured homes shall be installed in accordance with one of the 
following: 
(1) the home manufacturer's installation instructions; 
(2) the state's generic standards set forth in this section and sec.80.55 
(relating to Anchoring Systems) and sec.80.56 (relating to Multi-Section 
Connection Standards); 
(3) a custom designed stabilization system; 
(4) a stabilization system pre-approved by the department; or 
(5) on a permanent foundation. 
(b) Site Preparation Responsibilities and Requirements: 
(1) The purchaser is responsible for the proper preparation of the site where 
the manufactured home (new or used) is to be installed unless the home is 
installed in a rental community. Except in rental communities, the purchaser 
shall remove all debris, sod, tree stumps and other organic materials from all 
areas where footings are to be located. In areas where footings are not to be 
located, all debris, sod, tree stumps and other organic material shall be 
trimmed, cut, or removed down to a maximum height of 8 inches above the ground 
or to a lower level if needed to properly install the vapor retarder material. 
The retailer must give the purchaser a site preparation notice as described in 
this section prior to the execution of any binding sales agreement. If the 
installation is a secondary move, not involving a retail sale, the installer 
must give the homeowner the site preparation notice prior to any agreement for 
the secondary installation of the home. 
(2) If the retailer or installer provides the materials for skirting or 
contracts for the installation of skirting, the retailer or installer is 
responsible for installing the ground vapor retarder and for providing for the 
proper cross ventilation of the crawl space. If the purchaser or homeowner 
contracts with a person other than the retailer or installer for the skirting, 
the purchaser or homeowner is responsible for installing the ground vapor 
retarder and for providing for the proper cross ventilation of the crawl space. 
(3) Clearance: A minimum clearance of 18 inches between the ground and the 
bottom of the floor joists must be maintained. In addition, the installer shall 
be responsible for installing the home with sufficient clearance between the I-
Beams and the ground so that after the crossover duct prescribed by the 
manufacturer is properly installed it will not be in contact with the ground. 
Refer to sec.80.56 (relating to Multi-Section Connection Standards) for 
additional requirements for access openings to the crawl space and utility 
connections. It is strongly recommended that the installer not install the home 
unless all debris, sod, tree stumps and other organic materials are removed from 
all areas where footings are to be located. 
(4) Drainage: Except in rental communities, proper drainage is the 
responsibility of the homeowner. It is strongly recommended that the installer 
not install the home unless the exterior grade is sloped away from the home or 
another approved method to prohibit surface runoff from draining under the home 
is provided. Drainage prevents water build-up under the home. Water build-up may 
cause shifting or settling of the foundation, dampness in the home, damage to 
siding and bottom board, buckling of walls and floors, delamination of floor 
decking and problems with the operation of windows and doors. 
(5) Ground Vapor Control: If the space under the home is to be enclosed with 
skirting and/or other materials provided by the retailer and/or installer, a 
vapor retarder that keeps ground moisture out of the home must be installed to 
prevent moisture damage to the structure. The installer shall ensure that a 
minimum 6 mil polyethylene sheeting or its equivalent is properly installed and 
the area under the home is covered with sheeting and overlapped approximately 12 
inches at all joints. Any tear larger than 18 inches long or wide must be taped 
using a material appropriate for the sheeting used. The laps should be weighted 
down to prevent movement. Any small tears and/or voids around construction 
(footings, anchor heads, etc.) are acceptable. In addition, crawl space 
ventilation must be provided at the rate of minimum 1 square foot of net free 
area, for every 150 square feet of floor area. At least six openings shall be 
provided, one at each end of the home and two on each side of the home. The 
openings shall be screened or otherwise covered to prevent entrance of rodents 
(note: screening will reduce net free area). The vapor retarder prevents water 
vapor build-up under the home. Water vapor build-up may cause dampness in the 
home, damage to siding and bottom board, buckling of walls and floors, 
delamination of floor decking and problems with the operation of windows and 
doors. For example, a 16'x76' single section home has 1216 square feet of floor 
area. This 1216 square feet divided by 150 equals 8.1 square feet or 1166 square 
inches of net free area crawl space ventilation. 
(c) Notice: The site preparation notice to be given to the consumer shall be as 
follows: 
Figure 1: 10 TAC sec.80.54(c) 
(d) Footers and Piers: 
(1) Proper sizing of footings depends on the load carrying capacity of both the 
piers and the soil. To determine the load bearing capacity of the soil, the 
installer may use any of the following methods: 
(A) Pocket penetrometer: 
(i) Test a typical area adjacent to or within 10 feet of the perimeter of the 
unit; 
(ii) Dig down to undisturbed soil. This should be a minimum of 1 square foot 
surface area; and 
(iii) Using the pocket penetrometer take seven (7) readings, eliminate the 
highest and the lowest and average the remaining five (5). 
(B) Soil surveys from the U.S. Department of Agriculture;
(C) Values from tables of allowable or presumptive bearing capacities given in 
local building codes. Such tables are commonly available from the local 
authority having jurisdiction; or 
(D) Any other test data from soil analysis reports. 
(2) The footing must be placed on firm, undisturbed soil, or fill compacted to 
at least 90% of its maximum relative density. Installation on loose, 
noncompacted fill may invalidate the home's limited warranty. 
(3) Footer configurations: 
Figure 2: 10 TAC sec.80.54(d)(3) 
(4) Footer sizing and capacities: The following tables represent maximum loads 
and spacings based on footer size and soil bearing capacity. Other approved 
footers may be used if equal or greater in bearing area than those footer sizes 
tabulated. 
Figure 3: 10 TAC sec.80.54(d)(4) 
(5) Piers and pier spacings: One of the most important parts of home 
installation is proper pier installation. Incorrect size, location or spacing of 
piers may cause serious structural damage to the home. Spacing and location of 
piers shall be in accordance with the tables listed in these standards (Table 
3B, without perimeter piers; Table 3C, with perimeter piers).
(A) Spacing shall be as even as practicable along each main I-Beam. Pier spacing 
may exceed tabulated values up to 30% so long as the total pier count remains 
the same. End piers are to be located within 24 inches of the end of the main 
frame. 
(B) Piers shall extend at least 6 inches from the centerline of the I-Beam or be 
designed to prevent dislodgment due to horizontal movement of less than 4 
inches. 
(C) Load bearing supports or devices shall be listed by an independent testing 
laboratory, nationally recognized inspection agency, or other nationally 
recognized organization and approved by the department. Engineers or architects 
licensed in Texas may design load bearing supports or devices for a single 
installation. A copy of the design for this particular home and site shall be 
provided to the department before the home is installed, but department approval 
is not required. 
(D) Sidewall openings greater than 4 feet shall have perimeter piers located 
under each side of the opening, i.e. patio doors, recessed porches/entries, bay 
windows and porch posts. Perimeter piers for openings are not required for 
endwalls. 
(6) Pier design: Piers shall be constructed per the following details: 
Figure 4: 10 TAC sec.80.54(d)(6) 
(A) Shimming (if needed): Hardwood shims are commonly used as a means for 
leveling the home and filling any voids left between the bottom flange of the I-
Beam and the top of the pier cap. Wedge shaped shims must be installed from both 
sides of the I-Beam to provide a level bearing surface. The allowable height 
must not exceed 1 inch. Shims shall be at least 4 inches wide (nominal) and 6 
inches long. Over shimming should be avoided. 
(B) Table 3B - Pier loads (pounds) at tabulated spacings WITHOUT perimeter 
supports: 
Figure 5: 10 TAC sec.80.54(d)(6)(B) 
(C) Table 3C - Pier loads (pounds) at tabulated spacings WITH perimeter 
supports: 
Figure 6: 10 TAC sec.80.54(d)(6)(C)
Figure 7: 10 TAC sec.80.54(d)(6)(C) 
(7) Typical multi-section pier layout: 
Figure 8: 10 TAC sec.80.54(d)(7) 
(8) Typical single section pier layout: 
Figure 9: 10 TAC sec.80.54(d)(8) 
(9) Multi-section units mating line column supports:
(A) On multi-section units, openings larger than 4 feet must have piers 
installed at each end of the opening. To determine the pier loads, refer to 
Table 3D in subparagraph (D) of this paragraph. 
Figure 10: 10 TAC sec.80.54(d)(9)(A) 
(B) Column loads for each section may be combined when the columns are opposite 
each other. The footer must be sized for the combined loading. 
(C) Additional piers are required under marriage walls (see wall between column 
#3 and #4 in the Marriage Line Elevation drawing in subparagraph (A) of this 
paragraph). The maximum spacing is the same as the spacing at the main I-Beams, 
without perimeter piers, and one half the spacing of the perimeter piers, with 
perimeter piers installed. 
(D) Table 3D: Mating line column loads (pounds). 
Figure 11: 10 TAC sec.80.54(d)(9)(D) 

sec.80.55. Anchoring Systems. 
(a) General Requirements: For units built on or after September 1, 1997, the 
installer must verify that the unit is designed for the Wind Zone in which it is 
to be installed. Note: A Wind Zone I unit, built on or after September 1, 1997, 
may not be installed in a Wind Zone II area. However, a Wind Zone II unit may be 
installed in a Wind Zone I area. 
Figure 1: 10 TAC sec.80.55(a) 
(b) Material Specifications: 
(1) Strapping shall be Type 1, Finish B, Grade 1 steel strapping, 1&shy;1/4 
inches wide and 0.035 inches in thickness, certified by a licensed professional 
engineer or architect as conforming with the American Society for Testing and 
Materials (ASTM) Standard Specification D3953 91, Standard Specification for 
Strapping, Flat Steel, and Seals. Tie materials shall be capable of resisting an 
allowable working load of 3,150 pounds with no more than 2% elongating and shall 
withstand a 50% overload (4,725 pounds total). Ties shall have a resistance to 
weather deterioration at least equivalent to that provided by coating of zinc on 
steel of not less than 0.30 ounces per square foot on each side of the surface 
coated (0.0005 inches thick), as determined by ASTM Standards Methods of Test 
for Weight of Coating on Zinc-coated (galvanized) Iron or Steel Articles (ASTM A 
90-81). Slit or cut edges of zinc-coated steel strapping are not required to be 
zinc coated. 
(2) All anchoring components must be approved by the department. Installers 
shall only use approved anchoring components. An installer may obtain a list of 
approved anchoring components from the department, anchor manufacturer and/or 
supplier of anchoring components. 
(c) Anchors shall be installed per the following details:
(1) in direction of load, 
Figure 2: 10 TAC sec.80.55(c)(1) 
(2) installed against direction of load (vertical and/or angled), a stabilizer 
plate must be installed. 
Figure 3: 10 TAC sec.80.55(c)(2) 
(d) WIND ZONE I Installation: 
(1) Typical anchor layout, single and multi-section units (WIND ZONE I ONLY): 
Figure 4: 10 TAC sec.80.55(d)(1) 
(2) Table 4A: The following table describes the maximum spacing for diagonal 
ties along each side of the unit. 
Figure 5: 10 TAC sec.80.55(d)(2) 
(3) Table 4B: Minimum number of diagonal ties required per side, per unit 
length. Table based on 2 feet inset of anchors at each end. 
Figure 6: 10 TAC sec.80.55(d)(3) 
(e) WIND ZONE II Installation: 
(1) In place of the requirements as shown in subsection (d) of this section, 
units designed for Wind Zone I and built prior to September 1, 1997, and units 
designed for Wind Zone II and built prior to July 13, 1994, require diagonal 
ties as set forth in Table 5A when these units are installed in Wind Zone II. 
See also sec.80.50 of this title (relating to Wind Zone Regulations). Items not 
specifically addressed in this section are the same as for Wind Zone I 
installations. 
Figure 7: 10 TAC sec.80.55(e)(1) 
(2) Units built to Wind Zone II on or after July 13, 1994. 
(A) Units built to Wind Zone II on or after July 13, 1994, should have either 
built-in, or provisions for connecting, vertical ties along the sidewall(s) of 
each unit(s). A diagonal tie must be installed at each vertical tie location 
(except for designated shearwall tie). Built-in vertical ties shall be connected 
to anchors. If there are brackets or other provisions for connecting vertical 
ties, vertical ties shall be added at the brackets or provisions and connected 
to anchors. 
(B) Only factory installed vertical ties may be closer than 4 feet from each 
other. 
(C) Where tie locations are clearly marked as a shear wall strap, a perimeter 
pier must be installed at that location. See subsection sec.80.54(c) of this 
title (relating to Standards for the Installation of Manufactured Homes) for 
perimeter pier construction. Diagonal tie is not required.
(D) Where the vertical tie spacing exceeds 8'-0" on-center (see also note 6 in 
table 5A for exception), the anchoring system must be approved by the home 
manufacturer's installation manual, or designed by a professional engineer or 
architect licensed in the state of Texas. 
(E) Where pier heights exceed 36 inches in height, the diagonal strap shall be 
connected to the opposite I-Beam (see Figure 1). 
Figure 8: 10 TAC sec.80.55(e)(2)(E) 
(F) Where vertical tie locations are not easily discernable, the vertical ties 
may be connected to the main I-Beam rails and the anchor installed directly 
below that connection point. The diagonal tie must be connected to the opposite 
main I-Beam. In no case shall the distance between those ties exceed 5'-4" on-
center (see Figure 2). 
Figure 9: 10 TAC sec.80.55(e)(2)(F) 
(3) Multi-section centerline anchoring requirements (Wind Zone II only): 
(A) centerline anchor ties are required for ALL Wind Zone II installations, 
regardless of the date the unit was manufactured, when installation occurs on or 
after the effective date of these rules. 
(B) factory installed centerline vertical ties, brackets, buckles or any other 
connecting devices must be connected to a ground anchor. No additional anchors 
as described in subparagraph (D) of this paragraph are required. 
(C) to avoid obstructions and/or piers and footers, the anchor may be offset up 
to 12 inches perpendicular to the centerline. 
(D) where factory preparations do not exist, install anchors and angle iron 
brackets at each side of mating line openings wider than 48 inches per table 5B 
(see Figure 5B for detail). 
(i) Where equal spans exist opposite each other (i.e., each section), a double 
bracket assembly may be used. The maximum opening is per table 5B. Total uplift 
load may not exceed the anchor and/or strap capacity (i.e., 3150 pounds). 
(ii) the angle iron bracket is minimum 11 gauge. The holes for the lag screws 
are a maximum of 4 inches apart. 
(iii) lag screws/bolts are minimum 5/16 x 3 inches, full thread.
(4) For openings separated by a wall or post 16 inches or less in width, the 
opening span is the total of the spans on each side of the wall/post. 
(f) Bracket Installation. 
(1) Table 5B: Maximum Centerline wall opening for column uplift brackets (see 
figure 5B for typical installation details). 
Figure 10: 10 TAC sec.80.55(f)(1) 
(2) Figure 5B shows both single and double bracket assemblies for illustration 
purposes only. Use a single bracket for openings which exist on one section 
only. Use double bracket where openings are opposite each other on two sections 
of the home. 
(3) When only one bracket assembly is required, it may be installed on either 
side of the column/opening stud(s), but no more than 12 inches from the column 
or opening stud(s). (See examples in figure 5C.)
(4) When two bracket assemblies are required, they must be installed on each 
side of the column/opening stud(s), but no more than 12 inches from the 
column/opening stud(s) (see examples in figure 5C), and they must be angled away 
from each other a minimum of 12 inches. 
Figure 11: 10 TAC sec.80.55(f)(4) 
(5) Example: A double section unit with each section being 14 feet wide; 
(A) Span "A" is 18'-0", matching span both sections; 
(B) Span "B" is 14'-8", matching span both sections; 
(C) Span "C" is 6'-8", matching span both sections; and 
(D) Span "D" is 13'-4", one side only. 
Figure 12: 10 TAC sec.80.55(f)(5) 
(6) Longitudinal ties: 
(A) Longitudinal ties are required for ALL Wind Zone II installations, 
regardless of date of manufacture, when installation occurs after the effective 
date of these rules. 
(B) Longitudinal ties are designed to prevent lateral movement along the length 
of the home. 
(C) The strap may be connected or wrapped around front or rear chassis header 
members, around existing chassis cross members, or spring hangers. Their 
location along the length of the home is not critical, as long as the number of 
longitudinal ties required for each end of each home section are installed with 
their pull in opposite directions. See Figures 1 and 2 in subparagraph (D) of 
this paragraph. 
(D) Units less than 60 feet in box length require at least two longitudinal ties 
per end per section. These longitudinal ties are in addition to the sidewall 
ties. 
Figure 13: 10 TAC sec.80.55(f)(6)(D) 

sec.80.56. Multi-Section Connection Standards. 
(a) Air infiltration at mating surfaces: Before positioning additional sections, 
the mating line surfaces along the floor, endwall and ceiling require material 
to limit air infiltration. The following are acceptable materials and/or 
procedures: 
(1) expanding foam (this may also be applied after the units are joined); 
(2) carpet or carpet pad (should be held in place with fasteners); and 
(3) insulation, sill sealer (should be held in place with fasteners). 
Figure 1: 10 TAC sec.80.56(a)(3) 
(b) Floor Connections: 
(1) gaps between floors up to 1-1/2 inches maximum which do not extend the full 
length of the floor may be filled with lumber, plywood or other suitable 
shimming materials. Fastener lengths in shimmed areas may need to be increased 
to provide minimum 1-1/4 inches penetration into opposite floor rim joist. 
(2) gaps less than 1/2 inch width need not be shimmed.
(3) the floor assemblies of multi-section units must be fastened together. 
Fastener options and maximum spacings are listed in table 6A in paragraph (5) of 
this subsection. 
(4) any tears or damages to the bottom board due to fastener installation must 
be repaired. 
(5) Table 6A: Floor connections - Wind Zone I and II:
Figure 2: 10 TAC sec.80.56(b)(5) 
(c) Endwall Connections: 
(1) endwalls must be fastened together at the mating line with minimum #8x4 inch 
wood screws or 16d nails at maximum 8 inches on-center or 12 inches on-center 
maximum for 5/16 lags; toed or driven straight; and
(2) fastener length may need to be adjusted for gaps and/or toeing, to provide 
minimum 1-1/2 inch penetration into opposite endwall stud. 
Figure 3: 10 TAC sec.80.56(c)(2) 
(d) Roof Connection: (Note: Fasteners must not be used to pull the sections 
together.)
(1) roofs shall be connected with the fasteners and spacings specified in Table 
56(6)(c); 
(2) gaps between the roof sections (at ridge beam and/or open beam ledgers) of 
up to 1-1/2 inches wide maximum which do not extend the full length of the roof 
must be filled with lumber and/or plywood shims. Gaps up to 1/2 inch need not be 
shimmed. The fastener length used in the shimmed area may need to be increased 
to provide a minimum 1-1/4 inch penetration into the adjacent roof structural 
member; 
(3) Table 56(d)(3): Roof Connection - Fastener type and spacing: 
Figure 4: 10 TAC sec.80.56(d)(3) 
(4) Figure 56(6)(c). 
Figure 5: 10 TAC sec.80.56(d)(4) 
(e) Exterior Roof Close Up: 
(1) Ensure that shingles are installed to edge of roof decking at peak. Follow 
nailing instructions on the shingle wrapper. Note: Wind Zone II (high wind) 
installations require additional fasteners. 
(2) Before installing ridge cap shingles, a minimum 6 inch wide piece of 30 
gauge galvanized flashing must be installed the length of the roof. 
(3) When flashing is not continuous, lap individual pieces a minimum of 6 
inches. 
(4) Fasten flashing into roof sheathing with minimum 16 gauge staples with 1 
inch crown or roofing nails of sufficient length to penetrate roof decking. 
Maximum fastener spacing is 6 inches on-center each roof section. Place 
fasteners a minimum of 3/4 inches along edge of flashing.
(5) Install ridge shingles directly on top of flashing.
(6) Check remainder of roof for any damaged or lose shingles, remove any 
shipping plastic or netting, wind deflectors, etc. Make sure to seal any 
fastener holes with roofing cement. 
Figure 6: 10 TAC sec.80.56(e)(6) 
(f) Exterior Endwall Close Up: Cut closure material to the shape and size 
required and secure in place, starting from the bottom up, i.e.: bottom starter, 
vertical or horizontal siding, then roof overhang, soffit and fascia. All 
closure material should be fitted and sealed as required to protect the 
structure or interior from the elements. 
(g) HVAC (heat/cooling) Duct Crossover: 
(1) Crossover duct must be listed for EXTERIOR use. 
(2) Duct R-value shall be a minimum of R-4. 
(3) The duct must be supported 48 inches on-center (maximum) and must not be 
allowed to touch the ground. Either strapping, to hang the duct from the floor, 
or pads to support it off the ground are acceptable.
(4) The duct to the collar or plenum connections must be secured with bands or 
straps approved for such use. Keep duct as straight as possible to avoid kinks 
or bends that may restrict the air flow. Extra length must be cut off. 
Figure 7: 10 TAC sec.80.56(g)(4) 
(h) Water Crossover Connection (multi-sections only): 
(1) If there is water service to other sections, connect the water supply 
crossover lines as shown in the applicable detail. 
Figure 8: 10 TAC sec.80.56(h)(1) 
(2) If the water crossover connection is not within the insulated floor 
envelopes, wrap the exposed water lines in insulation and secure with a good 
pressure sensitive tape or nonabrasive strap, or enclose the exposed portion 
with an insulated box. 
(3) If water piping at the inlet is exposed, a heat tape should be installed to 
prevent freezing. A heat tape receptacle has been provided near the water inlet. 
When purchasing a heat tape, it must be listed for manufactured home use, and it 
must be installed per manufacturer's instructions. 
(i) Drain, Waste and Vent System (DWV): 
(1) Portions of the DWV system which are below the floor may not have been 
installed, to prevent damage to the piping during transport. Typically, the DWV 
layout is designed to terminate at a single connection point to connect to the 
on-site sewer system. For a new home where on-site DWV connections are not 
assembled per the manufacturer's instructions, the DWV system must be assembled 
in accordance with Part 3280 of the FMHCSS. 
(2) The following guidelines apply: 
(A) All portions of the DWV system shall be installed to provide a minimum of 
1/4 inch slope per foot, in the direction of the flow. 
(B) Changes in direction from vertical to horizontal, and horizontal to 
horizontal, shall be made using long sweep elbows and/or tees.
(C) All drain piping shall be supported at intervals not to exceed 4 feet on-
center. The support may be either blocking or strapping. When strapping is used, 
it should be nonabrasive. 
(D) Piping must be assembled with the appropriate cleaners, primers and solvents 
(note: both ABS and PVC systems are common, but require different adhesives). Be 
sure to follow the instructions of the product used.
(E) A cleanout must be installed at the upper (most remote) end of the floor 
piping system (see diagrams in subparagraph (F) in this paragraph).
(F) Typical details: 
Figure 9: 10 TAC sec.80.56(i)(2)(F)
(j) Electrical Connections: Depending on the model and/or manufacturer of the 
home, electrical crossovers may be located in either the front end and/or rear 
end of the home. Check along mating line for other labeled access panels. 
(1) Crossover connections may be one of the following: 
(A) approved snap or plug-in type; 
(B) junction boxes inside floor cavity (note: crossover wiring routed outside 
the floor cavity must be enclosed in conduit). If the boxes and/or covers are 
metal, they must be grounded by the use of the ground wire; or 
(C) pigtail between receptacles/switches between sections (one circuit only). 
(2) Chassis Bonding: Each chassis shall be bonded to the adjacent chassis with a 
solid or stranded, green insulated or bare, number 8 copper conductor. The 
conductor is connected to the steel chassis with a solderless lug. Alternate 
bonding: A 4 inch wide by 30 gauge continuous metal strap may be used as an 
alternate, when attached to the chassis members with two #8x 3/4 inch self 
tapping metal screws each end of the strap. 
Figure 10: 10 TAC sec.80.56(j)(2)
(3) typical crossover details: 
Figure 11: 10 TAC sec.80.56(j)(3) 
(4) Shipped loose equipment: 
(A) Electrical equipment such as ceiling fans, chandeliers, exterior lights, 
etc., which may have been shipped loose, must be installed in accordance with 
the adopted National Electric Code (NEC). Connect all corresponding color coded 
or otherwise marked conductors per the applicable sections of the NEC. 
(B) Bonding strap removal: 240 volt appliances (range, dryer, etc.) shall have 
the bonding strap removed between the ground and the neutral conductors. Cords 
used to connect those appliances shall be four conductor, four prong. 
(5) Electrical testing: At the time of installation, the following tests must be 
performed: 
(A) all site installed or shipped loose fixtures shall be subjected to a 
polarity test to determine that the connections have been properly made. 
(B) all grounding and bonding conductors installed or connected during the home 
installation shall be tested for continuity, and 
(C) all electrical lights, equipment, ground fault circuit interrupters and 
appliances shall be subjected to an operational test to demonstrate that all 
equipment is connected and functioning properly. 
(6) Main panel box feeder connection: The main panel box is wired with the 
grounding system separated from the neutral system (4-wire feeder). The 
grounding bus in the panel must be connected through a properly sized green 
colored insulated conductor to the service entrance equipment (meter base) 
located on or adjacent to the home. Refer to the following table for proper 
feeder conductor sizes. 
Figure 12: 10 TAC sec.80.56(j)(6) 
(k) Fuel Gas Piping Systems: 
(1) Crossover Connections: All underfloor fuel gas pipe crossover connections 
shall be accessible and be made with the connectors supplied by the home 
manufacturer, or, if not available, with flexible connectors listed for exterior 
use and a listed quick disconnect (Method A), or a shut-off valve (Method B). 
When shut-off valve is used, it must be installed on the supply side of the gas 
piping system. The crossover connector must have a capacity rating (btuh) of at 
least the total btuh's of all appliances it serves. 
(2) Testing: The fuel gas piping system shall be subjected to an air pressure 
test of no less than 6 ounces and no more than 8 ounces. While the gas piping 
system is pressurized with air, the appliance and crossover connections shall be 
tested for leakage with soapy water or bubble solution. This test is required of 
the person connecting the gas supply to the home, but may also be performed by 
the gas utility or supply company. 
Figure 13: 10 TAC sec.80.56(k)(2)

sec.80.62.Approval of Stabilizing Components and Systems. 
(a) Installers shall only use prefabricated or site built stabilizing components 
and systems approved by the department, specified by the home manufacturer's 
DAPIA approved installation instructions, or specified for one or more homes in 
a particular area by a Texas licensed engineer or architect. Before granting 
approval for any prefabricated stabilizing component or system that will be used 
for more than one home, the department will require the component or system to 
be certified by an engineer, architect, or independent testing laboratory. The 
engineer or architect may be licensed in any state. The independent testing 
laboratory must have at least one engineer or architect licensed in at least one 
state. The producer or vendor of the component or system seeking department 
approval must send a request letter to the department with at least two copies 
of the certification report. The department may accept certification reports in 
electronic formats. The certification report copies must have letter size (8.5 
inch by 11 inch) pages. In the request letter, the producer or vendor must grant 
the department the right to reproduce the certification report. If the 
department approves the certification report, the department shall place a stamp 
of approval on the copies, keep one copy, and return all other stamped copies to 
the producer or vendor. The stamp of approval will have the following 
information: 
(1) the title "Texas Department of Housing and Community Affairs";
(2) the phrase "Approved stabilizing component or system"; and 
(3) date of approval. 
(b) The department will maintain a list of stabilizing components and systems 
that have been approved by the department for use in Texas. 
(c) A report that certifies a stabilizing component or system shall contain, at 
the minimum, the following: 
(1) the name, address, phone number, facsimile number, and trademark of the 
agency issuing the certification report or the name, signature, license number, 
state where licensed, address, phone number, facsimile number, and seal of the 
engineer or architect; 
(2) date of certification report; 
(3) the name, address, phone number, and facsimile number of the vendor or 
producer of the component or system; 
(4) drawing or photograph of component or system; 
(5) a description of the vendor's or producer's method for identifying the 
component or system; 
(6) at least a 2 inch by 4 inch blank space for the department approval stamp on 
each page or the cover page of a bound document; 
(7) a unique number or other identification for the certification report; 
(8) the initial qualifying test report or information about how the report can 
be obtained; 
(9) a description of the continuing validation system and the time period of the 
certification; 
(10) installation instructions for the component or system that are shipped to 
each purchaser; 
(11) a description of the working load capacity for the component or system. If 
the component is a ground anchor, the anchor shall be certified by a 
professional engineer, architect or nationally recognized testing laboratory as 
to its resistance, based on the maximum angle of diagonal tie and/or vertical 
tie loading and angle of anchor installation, and type of soil in which the 
anchor is to be installed; 
(12) a description of all allowable conditions for use of the component or 
system such as (but not limited to) types of soil, weather exposure, atmospheric 
environment (rural, industrial, coastal), and characteristics of other 
associated components; and 
(13) a statement that the certifying independent testing laboratory, certifying 
engineer, or certifying architect certifies the component or system to be in 
conformance with a specific standard adopted by the department. This statement 
shall be on each page or shall be on the cover sheet of a bound document. 
(d) The department adopts the applicable standards and publications set forth in 
Chapter 47 of the Council of America Building Officials (CABO) One and Two 
Family Dwelling Code, 1995 Edition, for materials used to fabricate stabilizing 
components and systems. The department adopts the stabilizing component 
destruction test failure criteria of the following publications:
(1) The FMHCSS, 24 CFR, Part 3280; 
(2) Appendix A - CABO One and Two Family Dwelling Code, 1995 Edition, published 
by CABO, 5203 Leesburg Pike, Suite 708, Falls Church, Virginia 22041; and 
(3) Appendix H - Standard Building Code, 1994 Edition, published by Southern 
Building Code Congress International, Inc., 900 Montclair Road, Birmingham, 
Alabama 35213-1206. 
(e) Applicable reports of the National Evaluation Service Committee of the 
Council of American Building Officials, applicable evaluation reports from the 
International Conference of Building Officials (ICBO) Evaluation Service, Inc. 
of the ICBO, Southern Building Code Congress International, or applicable 
reports from a successor of any of the preceding organizations are acceptable as 
certification reports. 
(f) The department may withhold approval if the certification information: 
(1) is incomplete; 
(2) does not conform to the rules of the department;
(3) contradicts the qualifying tests; or 
(4) has contradictory statements. 
(g) Conditions that may cause the executive director to issue an administrative 
order that withdraws approval (or a renewal of approval) from a stabilizing 
component or system may include but are not limited to:
(1) the engineer, architect, or independent testing laboratory withdraws the 
certification; 
(2) the engineer, architect, or independent testing laboratory improperly 
certified the component or system; 
(3) a significant characteristic of a device or system has been changed without 
a revision of the original certification; 
(4) the producer distributes installation instructions that are substantively 
different from those in the certification or original qualifying tests; 
(5) changes in the law, rules, or standards; 
(6) the continuing validation system for a component has been changed without a 
revision of the original certification; 
(7) information provided by the original certification is obsolete; 
(8) the department receives evidence that the component or system often fails to 
anchor or support the home, and 
(9) the producer fails to provide test results after the department directs the 
producer to test the component or system. The test will be performed by a 
recognized independent testing laboratory under the observation of a qualified 
representative or designee of the department.
(h) Notice of withdrawal of approval of a component or system must be given to 
all license holders. 
(i) The department's approval letters for stabilizing components and systems are 
valid for a period of ten (10) years or for the time period of certification, 
whichever is less. The approval letter expires at the end of the shorter period. 
(1) If the time period for certification exceeds the ten (10) year approval 
period, the producer of the stabilizing components and systems may apply for a 
renewal of the approval letter. The renewal shall be valid for an additional 
period: 
(A) of ten (10) years; or 
(B) if the time period of certification expires prior to the end of the ten (10) 
year period, for a lesser period ending with the expiration of the time period 
of certification. 
(2) All department approval letters issued prior to the effective date of this 
section remain valid for a period of ten (10) years and expire ten (10) years 
following the effective date of this section.
(j) The vendor or producer of the component or system must apply for a renewal 
letter at least ninety (90) calendar days prior to the date the approval letter 
expires and supply the information necessary for the department to issue a 
renewal letter. The department may issue a temporary renewal letter for a period 
of not more than six (6) months in order to have time to review all the 
information submitted by a producer or vendor. The contents of a renewal letter 
issued by the department are as follows: 
(1) conditions of the renewal with a description of the department approval 
stamp that will appear on the document shipped by the producer or vendor to 
purchasers; 
(2) a unique number or other identification for the renewal letter; 
(3) the name, address, phone and facsimile number of the producer or vendor of 
the device or system; 
(4) a description of the continuing validation system and the time period of the 
renewal; 
(5) a reference to the document (single sheet or bound document) attached to the 
renewal letter which is shipped to each purchaser by the producer or vendor 
which includes: 
(A) the name, address, phone and facsimile number of the vendor of the component 
or system; 
(B) a description of the vendor's method of marking the component or system; 
(C) drawing or photograph of component or system with a reference to the 
detailed drawing stamped by an engineer or architect; 
(D) installation instructions; 
(E) reference to the initial qualifying test report; 
(F) reference to a previous Texas approval letter; 
(G) at least a 2 inch by 4 inch blank space for the department approval stamp on 
each page or a cover page for a bound document; 
(H) description of method for identifying the soil for ground anchors and 
footings; 
(I) a description of the working load capacity for the component or system; 
(J) if the component is a ground anchor, a certification by a professional 
engineer, architect, or nationally recognized testing laboratory as to its 
resistance, based on the maximum angle of diagonal tie and/or vertical tie 
loading and angle of anchor installation, and type of soil in which the anchor 
is to be installed; and 
(K) a description of all allowable conditions for use of the component or system 
such as (but not limited to) types of soil, weather exposure, atmospheric 
environment (rural, industrial, coastal), and characteristics of other 
associated devices. 
(k) Approved components and systems sold to retailers or installers prior to the 
expiration of the applicable approval letter or renewal letter may be used and 
installed for a period of not more than ninety (90) calendar days following the 
date of expiration of the approval or renewal letter. 
(l) In December of each year, the department shall mail to all licensed 
installers, retailers, and manufacturers a list of all approved components and 
systems and the date on which the approval letter for each component or system 
expires. 

sec.80.63.Other Materials and Methods for Manufactured Homes. 
(a) Unique stabilizing systems to be used on more than one home, designed for a 
particular area with similar soil properties according to county soil survey 
maps, must be approved by an engineer or architect, licensed in Texas, or the 
home manufacturer's DAPIA. 
(b) Stabilizing components or systems which are unique for one identified home 
at one identified location shall be designed by an engineer or architect, 
licensed in Texas, and the design documents shall be filed with the installation 
report. No department approval letter is required. 
(c) All stabilizing components must be resistant to all effects of weathering 
including that encountered along the Texas gulf coast. Nonconcrete stabilizing 
components and systems for use within 1500 feet of the coastline shall be 
specifically certified for this use. Treated wood components shall only be used 
in permanent foundations conforming to the CABO One and Two Family Dwelling 
Code, 1995 Edition. 
(d) All stabilizing components shall be installed in accordance with the 
provisions of this chapter and to resist overturning and lateral movement of the 
home. 
(e) The following types of stabilizing systems are special stabilizing systems, 
not associated with a particular location, and shall meet the requirements of 
subsection (f) of this section: 
(1) a preapproved permanent foundation system; 
(2) a stabilizing system with piers over 60 inches high (measured from top of 
footing to top of the last concrete block) which have diagonal tie angles over 
50 degrees; 
(3) a stabilizing system designed to resist damage due to flooding; 
(4) a stabilizing system for manufactured homes located within 1500 feet of the 
coastline, unless approved by the manufacturer's DAPIA; and 
(5) a site built stabilizing component or system with materials and methods in 
accordance with the applicable standards and publications set forth in Chapter 
47 of the CABO One and Two Family Dwelling Code, 1995 Edition. 
(f) This subsection refers only to special systems as listed in subsection (e) 
of this section. A Texas licensed engineer or architect must design a special 
stabilizing system. If a special stabilizing component, device, or system is not 
designed for a particular area with similar soil properties according to county 
soil survey maps, the department must also approve the stabilization system 
drawing, photographs, calculations, test reports, and specifications before any 
home is installed on the special stabilizing system. The department will issue a 
letter that references the submitted documents and describes any conditions of 
approval. An approval letter will have an expiration date. The department may 
renew an approval letter for a special stabilizing system if the owner of the 
documents describing the special stabilizing system notifies the department and 
requests another review. The department will review to determine if the special 
stabilizing system still conforms to present standards. DAPIA approved 
stabilizing system designs with appropriate effective dates for specified makes 
and models of homes shall not require an approval letter from the department. 
The installer shall send the department a copy of the DAPIA approved stabilizing 
system design before the home is installed. The prefabricated components and 
stabilizing systems specified by the DAPIA approved stabilizing system shall be 
installed in accordance with the applicable conditions and instructions for the 
components and systems.

sec.80.64.Procedures for Alterations.
(a) No alteration shall be made by a retailer or installer without prior 
approval of the department. A written request for any alteration approval shall 
be filed with the department, except for the alterations which are pre-approved 
as described in this section. 
(1) If the alteration is not approved, the department will notify the retailer 
in writing of the reason for the refusal. If additional information is necessary 
to complete the evaluation of the request for approval, the retailer shall 
furnish any additional information deemed necessary by the department. 
(2) If the alteration is approved, the alteration shall be completed in 
accordance with the department's approval and any requirements made as a 
condition of the approval. Following completion of an approved alteration, the 
retailer shall notify the department in writing, and the department may accept 
the certification of the retailer that the alteration was made as approved. The 
department may inspect the home, as altered, to assure compliance with the 
applicable standards. 
(b) The installation of self-contained or split system ("A" coil) comfort 
cooling equipment and devices shall not be considered an alteration, if the 
installation is performed in accordance with the specific instructions of the 
manufacturer of the home as approved by the manufacturer's DAPIA, and if the 
specific equipment and devices used have been expressly approved by the 
manufacturer's DAPIA. 
(c) Other than as set forth in subsection (b) of this section, the installation 
of self-contained or split system ("A" coil) comfort cooling equipment and 
devices is an alteration and is pre-approved if done by a state licensed air 
conditioning contractor. 
(d) If the sale of a home includes air conditioning, the selling retailer shall 
maintain in the sales file a record of the name and license number of the air 
conditioning contractor which installed the air conditioning system. 

sec.80.66.Rebuilding or Repairing a "Salvaged" Manufactured Home. 
(a) Any home which has sustained sufficient damage to be declared salvage as 
defined in the Standards Act, sec.8, may be rebuilt/repaired for purposes of 
issuance of a manufactured home document of title at the option of the 
department after inspection in accordance with department procedures. 
Notification in writing to the department at its Austin headquarter's office 
shall be required before rebuilding/repair begins. 
(b) The rebuilder must: 
(1) notify the department in writing ten (10) working days before rebuilding (or 
monthly for continuous activity) and provide the following, if available: 
(A) HUD or Texas Seal number; 
(B) data plate and comfort cooling certificate information (applicable wind and 
roof load zones, manufacturer's name and address, home model, list of appliance 
models, home production date, thermal zones, transmission coefficients, furnace 
certification temperatures, and duct capacity for cooling);
(C) copy of salvage declaration report; 
(D) description of damage; 
(E) description of cause of damage (water, wind, impact, fire, etc.); and 
(F) location of home during rebuilding. 
(2) provide a plan for rebuilding, sealed by a licensed professional engineer, 
that contains the following: 
(A) drawings and specifications that describe the rebuilding;
(B) if more than one home is rebuilt in any one (1) month period, then a quality 
assurance manual that describes the following: 
(i) system testing; 
(ii) inspection process of cavities before concealment; and
(iii) record keeping. 
(C) list of new parts and appliances; 
(D) list of reused or salvaged parts and appliances; and 
(E) rebuilder's data plate (if applicable). 
(3) notify the department when concealed cavities will be exposed for department 
inspectors; 
(4) remove damaged material and equipment; 
(5) add new or used materials and equipment; 
(6) repair all defects; and 
(7) repair and test all systems. 
(c) The department may schedule inspections of the home during the rebuilding 
process. 
(d) Any person who purchased a rebuilt manufactured home and received a salvage 
title as evidence of ownership after June 18, 1987, may be issued a document of 
title upon application to the department. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805839
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER E.General Requirements
10 TAC sec.sec.80.119-80.123, 80.125-80.128, 80.130-80.132, 80.135
The new sections are proposed under the Texas Manufactured Housing Standards 
Act, Article 5221f, sec.9, which provides the department with authority to 
amend, add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rules. 

sec.80.119.Installation Responsibilities.
(a) For new manufactured homes, the retailer is the installer and must warrant 
the proper installation of the home. If the retailer subcontracts with an 
independent licensed installer, then the subcontractor is jointly and severally 
liable for the portion of the installation that the subcontractor performed. 
(b) For used manufactured homes, the person contracting with the consumer for 
the installation of the home is the installer and must warrant the proper 
installation of the home. If the contracting installer subcontracts with an 
independent licensed installer, then the subcontractor is jointly and severally 
liable for the portion of the installation that the subcontractor performed. The 
contracting installer is responsible to furnish the consumer with the 
installation warranty and site preparation notice. All verification and copies 
of the installation warranty and site preparation notice must be maintained in 
the installer's installation file for a period of no fewer than six (6) years 
from the date of installation. 
(1) The person contracting directly with the consumer for only the 
transportation of the used home to a manufactured home site is not an installer 
if the person does not contract to perform or perform any installation 
functions. In this case, the installer is the person that contracts for the 
construction of the foundation systems, whether temporary or permanent, and the 
placement and erection of the used home and its components on the foundation 
system. 
(2) The selling retailer may sell a used home and deliver possession to the 
consumer at the sales location (e.g. F.O.B. the sales location). In this case, 
the retailer shall not perform any installation functions nor transport the home 
to the home site. 
(c) The installer is fully responsible for the complete installation even though 
the installer may subcontract certain installation functions to independent 
contractors pursuant to the Standards Act, sec.7(j). It is unlawful for a 
subcontractor who is acting as an agent for a licensed installer to advertise 
and/or offer installation services to any person unless the licensed installer's 
name appears prominently in the advertisement. 
(d) The sale of a new or used home by a retailer which includes an agreement to 
deliver the home and install the home at the home site is not completed until 
possession of the home is tendered to the consumer at the home site. 
(e) Electrical, fuel, mechanical, and plumbing system crossover connections for 
multi-section homes, and completions of drain lines underneath all homes in 
accordance with DAPIA approved on-site assembly drawings are installer 
responsibilities and cannot be excluded by wording of the installation contract. 
The installation of air conditioning at the home site must be performed by a 
licensed air conditioning contractor. The installation and ventilation of 
skirting or other material that encloses the crawl space underneath a 
manufactured home is an installer responsibility, if it is part of the sales or 
installation contract. 
(f) Notice of Installation. 
(1) Except as otherwise specified for permanent foundations, the installer shall 
forward the installation report (Form T) to the department within ten (10) 
working days after the installation is completed. The installation report form 
shall be furnished by the department. 
(A) When the installation occurs in conjunction with a title transfer, the 
installation report must be sent to the appropriate TDHCA field office. DO NOT 
SEND INSTALLATION FEES TO THE FIELD OFFICE. 
(B) For secondary moves (when there is no title transfer), the installation 
report and the required installation fee must be submitted to the department. 
(2) In addition, if the home is a multi-section home, the installer must notify 
the appropriate TDHCA field office by telephone, facsimile, or in person, the 
last working day prior to the day that the sections are scheduled to be 
connected. This notification must include the home serial numbers, label/seal 
numbers, names and addresses of the purchaser, the manufacturer, the retailer, 
the installer and the installer's phone and facsimile numbers, the exact 
location of the home and complete directions and instructions for the inspector 
to find the home, and an approximate time when the sections will be joined 
together. This notice may be satisfied by submitting a completed Form T with an 
added note of the approximate time the sections will be joined together. No 
additional notice is required if the scheduled connection of the sections is 
delayed for any reason; however, installers are expected to cooperate with the 
inspector and provide accurate information regarding any changes to previous 
installation plans, upon request. 
(g) The installer shall file an application to install a manufactured home on a 
permanent foundation on a form approved by the department. The fee for the 
permanent foundation installation shall be forwarded with the application.
(1) A copy of the foundation system drawing as stamped and signed by the 
licensed engineer or architect must be filed with the application.
(2) The application must be received by the department at least ten (10) 
calendar days prior to the date on which construction of the permanent 
foundation system is scheduled to begin. No additional notice is required if the 
scheduled construction is delayed. 
(3) Installers shall provide a copy of the application and the foundation system 
drawing to the TDHCA inspector at the time an inspection is performed. 
(4) If the permanent foundation system design is approved by the authorized 
local government official and if the applicable building inspection fees are 
paid to the local government, the provisions of this section do not apply. The 
installer must, however, file a sworn statement of these facts with the 
department prior to the date on which the construction of the foundation system 
is scheduled to begin. 
(5) If the permanent foundation is certified by the consumer/mortgagor and the 
lender/mortgagee in a real estate transaction, or is certified by the owner if 
there is no lien or the lien has been released, as having permanently affixed 
the structure to the real estate, the provisions of this section do not apply. 
The fee for the permanent foundation installation must be paid and sent to the 
department along with the certification. 
(h) The installer must complete the installation in accordance with the 
standards and requirements of this chapter. 

sec.80.120. Manufacturer's Responsibilities.
Manufacturers licensed with the department shall: 
(1) Submit the reports required by sec.80.203 of this title (relating to 
Manufacturer's Monthly Shipment Report); 
(2) Use the Manufacturer's Certificate of Origin (MCO) prescribed by the 
department for homes shipped to retailers in Texas; and
(3) Supply to the department current and revised copies of approved installation 
manuals required by sec.80.51 of this title (relating to Manufactured Home 
Installation Requirements). 

sec.80.121. Retailer's Responsibilities.
(a) Manufactured housing retailers shall retain as part of each sales record and 
make available for review by department personnel, upon request, the following 
information: 
(1) For all manufactured homes: 
(A) name and address of the purchaser and the date of purchase;
(B) verification that the purchaser received the Formaldehyde Health Notice 
required by the Act, sec.20; 
(C) verification that the purchaser was advised of the Wind Zone, thermal zone, 
and roof load zone for which the home was constructed. If this information is 
not available for a used home, the purchaser will be advised of this fact and 
the used home will be disclosed as being constructed to Wind Zone I, thermal 
zone 1, and the roof load design for the South; 
(D) verification that the purchaser received the Wind Zone notice as required by 
sec.80.50 of this title (relating to Wind Zone Regulations);
(E) verification that the purchaser received the site preparation notice; and 
(F) verification that the purchaser received written notice of the two (2) year 
limitation of notice for filing a claim with the department.
(2) For all new manufactured homes:
(A) verification that the manufacturer's new home warranty, consumer's manual, 
and retailer's installation warranty were delivered to the purchaser; 
(B) verification of the date that the manufactured home information card was 
mailed to the manufacturer; and 
(C) verification of delivery of conspicuous notice relating to defect or damage 
under the new home warranty as required by the Standards Act, sec.14(l). 
(3) For used manufactured homes: 
(A) verification that the purchaser received the written 60-day habitability 
warranty; and 
(B) verification that the purchaser received the retailer's installation 
warranty if the retailer contracted for the installation as a part of the sales 
agreement. 
(b) All verifications and copies of notices required by this chapter must be 
maintained in the retailer's sales file, and the sales file must be maintained 
for a period of not less than six (6) years from the date of sale. 

sec.80.122.Security Requirements.
(a) For purposes of meeting the security requirements of Standards Act, sec.13, 
"other security" means an assignment of a certificate of deposit from or on a 
state or federally chartered bank or savings and loan association, properly 
signed and filed with the department. Such deposits are hereinafter referred to 
as security. Forms shall be furnished by the department for filing an assignment 
of such security. If such security is reduced by a claim, the license holder 
shall, within twenty (20) calendar days, make up the deficit as required by 
Standards Act, sec.13(i). No advance notice is required by the department to the 
license holder, but the department shall verify receipt of the deposit. 
(b) An assignment of such security filed with the department for compliance with 
the Standards Act, sec.13, shall remain on file with the department for two (2) 
years after the person ceases doing business as a manufacturer, retailer, 
broker, rebuilder, or installer, or until such later time as the director may 
determine that no claims exist against the security. A bond or certificate of 
deposit may be filed in lieu of or to replace the assigned security. In the 
event a bond is filed to replace the assigned security and the initial effective 
date of the bond is the same or prior to the date of the assignment of security, 
such security or deposit may be immediately withdrawn upon request. 
(c) If the security requirement of a license holder is canceled during the 
annual license period, the license shall be automatically canceled on the date 
security coverage ceases. 
(d) To be exempt from the additional security as required by the Standards Act, 
sec.13(f), a manufacturer who does not have a manufacturing plant in this state 
must have a bona fide service facility. 
(1) The manufacturer shall provide the department with the name, address and 
phone number of the service facility, conspicuous notice of which shall be 
provided to each Texas retailer who purchases homes from the manufacturer. 
(2) The service facility shall be capable of compliance with the provisions of 
Sub-part I of the procedural and enforcement regulations promulgated by HUD, and 
capable of providing warranty service within the reasonable time requirements 
set by the department, and shall be subject to periodic review and inspection by 
department personnel. 
(3) If the department determines that the requirements of paragraph (2) of this 
subsection have not been met, notice must be sent of that determination and of 
the requirement of an additional bond amount.

sec.80.123.License Requirements.
(a) Manufacturer. Any person constructing or assembling new manufactured housing 
for sale, exchange, or lease purchase within this state shall be licensed as a 
manufacturer. An application shall be submitted on the form required by the 
department and shall be completed giving all the requested information. The 
application shall be accompanied by the required security and payment of the 
license fee. Every distinct corporate entity must be separately licensed. Each 
separate plant location operated by a license holder which is not on property 
which is contiguous to or located within 300 feet of the license holder's 
licensed manufacturing facility requires a separate license and security. 
(b) Retailer. Any person engaged in the business of buying for resale, selling, 
or exchanging manufactured homes or offering such for sale, exchange, or lease 
purchase to consumers shall be licensed as a retailer. An application for 
license shall be submitted on the form required by the department and be 
completed giving all the requested information. The application shall be 
accompanied by the required security and payment of the license fee. No person 
shall be considered a retailer unless engaged in the sale, exchange, or lease 
purchase of two or more manufactured homes to consumers in any consecutive 
twelve (12) month period. Sales, exchanges, or lease purchases by any employee 
or agent of a business entity are deemed to be sales of the business entity. 
Each separate sales location which is not on property which is contiguous to or 
located within 300 feet of a licensed sales location requires a separate license 
and security. 
(c) Broker. 
(1) Any person engaged by one or more other persons to negotiate or offer to 
negotiate bargains or contracts for the sale, exchange, or lease purchase of a 
manufactured home to which a certificate or document of title has been issued 
and is outstanding shall be licensed as a manufactured housing broker. An 
application for license shall be submitted on the form required by the 
department and be completed giving all the requested information. The 
application shall be accompanied by the required security and payment of the 
license fee. Each office location of the broker shall be licensed and proper 
security posted unless an office is on property which is contiguous to or 
located within 300 feet of an office licensed with the department. 
(2) A broker shall not maintain a location for the display of manufactured homes 
without being licensed as a retailer. 
(3) Paragraphs (1) and (2) of this subsection shall not apply to the sale, 
exchange, or lease purchase of a manufactured home in a single real estate 
transaction when the home and land are sold as realty with improvements. 
(d) Rebuilder. Any person who desires to be certified by the department to 
alter, repair, or otherwise rebuild a salvaged manufactured home, as that term 
is defined in the Standards Act, sec.8(g), within this state, shall be licensed. 
An application shall be submitted on the form required by the department and 
shall be completed, giving all the requested information. The application shall 
be accompanied by the required license fee. In addition to the license 
requirements, the licensed rebuilder must be certified by the department. In 
order to be certified by the department, the department must observe the 
rebuilding process of the first home to verify that the manufactured home will 
be rebuilt in accordance with applicable laws, codes, standards, rules, orders, 
and directives of the department. The department will certify the applicant as a 
rebuilder once all requirements have been met. 
(e) Installer. 
(1) Every person who contracts to perform or performs installations shall submit 
the required security, complete the necessary license forms and any other 
information needed, and be issued a license prior to performing an installation 
function. The required license fee must accompany the application for license. 
(A) Each applicant for license shall have public liability insurance coverage, 
including completed operations coverage in an amount of not less than $300,000 
for bodily injury each occurrence and property damage insurance in an amount of 
not less than $100,000 each occurrence. A combined single limit of $300,000 will 
be considered to be in compliance with this section. If the applicant will be 
engaged in the transportation of manufactured housing incidental to the 
installation, the applicant must also have motor vehicle liability insurance 
coverage in an amount of not less than $250,000 bodily injury each person, 
$500,000 bodily injury each occurrence, $100,000 property damage each 
occurrence. A combined single limit of $500,000 will be considered to be in 
compliance with this section. Cargo insurance on each home or transportable 
section of not less than $50,000 per towing motor vehicle is required. 
(B) At the time of initial license and on renewal, a certificate of insurance 
must be filed with the department by the insurance carrier or its authorized 
agent certifying the kind, type and amount of insurance coverage and which 
provides for thirty (30) calendar days notice of cancellation. If the applicant 
does not provide proof of the required motor vehicle liability insurance and the 
cargo coverage, the applicant must sign an affidavit that the applicant will not 
engage in any transportation of manufactured housing. If the applicant 
transports only his/her own property, and furnishes the department with an 
affidavit attesting to that fact, cargo coverage is not required.
(C) An installer, also licensed as a retailer, may satisfy the insurance 
requirements by filing a certificate of insurance which shows that the license 
holder has motor vehicle-garage liability coverage including completed 
operations, and has dealer's physical damage (open lot) including transit 
insurance coverage in amounts not less than those set forth in subsection (e)(A) 
of this section. 
(D) If the required insurance coverage expires or is canceled, and proof of 
replacement coverage is not received prior to the expiration date or date of 
cancellation, the installer's license is automatically terminated.
(2) The installer responsible for the installation in accordance with the 
provisions of sec.80.119 of this title (relating to Installation 
Responsibilities) shall maintain a file containing a copy of the installation 
report as filed with the department. 
(f) Homeowner's Temporary Installation. 
(1) A homeowner may apply for a temporary license as an installer for the 
purpose of installing such owner's used manufactured home. The application shall 
be submitted on a form and contain such information as required by the 
department, and it must be accompanied by a cashier's check or money order 
payable to TDHCA in payment for the required fee. The issuance of a homeowner's 
temporary installer's license by the department shall not relieve any warranty 
responsibility required by the Standards Act except for damage or defects which 
may occur as a result of the installation of the home by the homeowner.
(2) The application must be accompanied by a certificate of insurance issued by 
the insurance carrier or its authorized agent to prove insurance coverage for 
the installation of the home as follows: public liability insurance coverage 
including completed operations in an amount of not less than $300,000 for bodily 
injury each occurrence and property damage insurance in an amount of not less 
than $100,000 each occurrence, for which a combined single limit of $300,000 
will be considered to be in compliance with this section; and motor vehicle 
liability insurance coverage of not less than $250,000 bodily injury each 
person, $500,000 bodily injury each occurrence and $100,000 property damage each 
occurrence, for which a combined single limit of $500,000 will be considered to 
be in compliance with this section. A copy of the manufacturer's installation 
instructions or installation instructions stamped by a licensed professional 
engineer or architect shall accompany the application. 
(3) Upon approval of the application, the homeowner will be issued a temporary 
license for the installation of that home set out in the application and a 
temporary installer's (TI) number. The temporary license shall be valid only for 
the period of time set forth on the license certificate.
(4) The temporary installer's (TI) number must be displayed on the back of the 
home in letters and figures not less than 8 inches in height when the home is 
moved over the roads, streets, or highways in this state.
(g) Salesperson. 
(1) A salesperson means an individual, partnership, company, corporation, 
association, or other group who, for any form of compensation, sells or lease-
purchases or offers to sell or lease-purchase manufactured housing to consumers 
as an employee or agent of a retailer or broker. A person or entity licensed as 
a retailer or broker with the department is not required to register as a 
salesperson, and the owner of a sole proprietorship, a partner in a partnership, 
or an officer in a corporation which is duly licensed does not have to register 
as a salesperson so long as such individual is properly listed in the retailer's 
or broker's application for license. 
(2) The salesperson is an agent of the retailer or broker for whom sales or 
lease-purchases, or offers, are made. The retailer or broker is liable and 
responsible for the acts or omissions of a salesperson in connection with the 
sale or lease-purchase of a manufactured home. It is a violation of the 
Standards Act and this chapter for a retailer or broker of manufactured housing 
to employ a salesperson who is not licensed with the department. 
(3) An application for license must be made by every salesperson. Each applicant 
for certificate of license as a salesperson must file with the department an 
application for license on a form provided by the department containing: 
(A) the full legal name, permanent mailing address, date of birth, telephone 
number, Texas driver's license number or Texas identification number, and social 
security number of the applicant; 
(B) places of employment of the applicant for the preceding three (3) years, 
providing the name of firm(s), address(es), and dates of employment; 
(C) a statement that the applicant is the authorized agent for a manufactured 
housing retailer or broker; the statement shall be signed by the employer. 
(4) Except as may otherwise be authorized, the fee for a salesperson's license 
shall be submitted to the department in the form of a cashier's check or money 
order. Salesperson licenses shall be valid for a period of one (1) year from the 
date of issuance. 
(5) Salesperson annual renewal license forms shall be available at manufactured 
housing retailer and broker locations, or any office of the department. Renewal 
forms and payment of the renewal fee shall be made by the salesperson prior to 
the expiration of the current license. 
(6) Salespersons shall be issued a license card by the department containing 
effective date and license number. The salespersons shall be required to present 
a valid license card upon request. 
(h) Applicable License Holder Ownership Changes. 
(1) A license holder shall not change the location of a licensed business unless 
the license holder first files with the department: 
(A) a written notification of the address of the new location; and 
(B) an endorsement to the bond reflecting the change of location.
(2) The change of location is not effective until the notification and 
endorsement are received by the department. 
(3) For a change in ownership of less than fifty percent (50%) of the licensed 
business entity, no new license is required provided that the existing bond or 
other security continues in effect. 
(4) For a change in ownership of fifty percent (50%) or more, the license holder 
must file with the department, along with the appropriate fee: 
(A) a license application by the purchaser providing information as may be 
required by the department; and 
(B) certification by the surety that the bond for the licensed business entity 
continues in effect after the change in ownership; or 
(C) an application for a new license along with a new bond or other security and 
proof that the education requirements of the Standards Act, sec.7(p), have been 
met. 
(i) Education Requirements. Effective September 1, 1987, all applicants for 
license, except salespersons, shall attend and complete 20 hours of educational 
instruction as required by the Standards Act and this title. A manufacturer may 
request a one-day in-plant training session be presented by the department in 
lieu of completing the instruction requirement. The license will not be issued 
until the owner, partner, corporate officer, or other person who will personally 
have the day-to-day management responsibility for the business location, or the 
salesperson to be licensed, attends and completes this educational requirement. 
This section shall not apply to the renewal of licenses, nor to the license of 
additional business locations. 
(j) Denial, Suspension, or Revocation of License Relating to Criminal 
Background. 
(1) The following criteria shall be utilized to determine whether an applicant 
shall be issued a license if that applicant states in his/her application for 
said license that he/she has a record of criminal convictions within five (5) 
years preceding the date of the application: 
(A) the nature and seriousness of the crime; 
(B) the relationship of the crime to the intended manufactured housing business 
activity; 
(C) the extent to which a license holder might engage in further criminal 
activity of the same or similar type as that in which the applicant previously 
had been involved; 
(D) the relationship of the crime to the ability, capacity, or fitness required 
to perform the duties and discharge the functions and responsibilities of the 
license holder's occupation or industry; and 
(E) whether the offenses were defined as crimes of moral turpitude by statute or 
common law, from Class A misdemeanors to first, second, and third degree 
felonies carrying fines and/or imprisonment or both. Special emphasis shall be 
given to the crimes of robbery, burglary, theft, embezzlement, sexual assault, 
and conversion. 
(2) In addition to the factors that may be considered in paragraph (1) of this 
subsection, the department, in determining the present fitness of a person who 
has been convicted of a crime, may consider the following:
(A) the extended nature of the person's past criminal activity;
(B) the age of the person at the time of the commission of the crime; 
(C) the amount of time that has elapsed since the person's last criminal 
conviction; 
(D) the conduct and work activity of the person prior to and following the 
criminal conviction; 
(E) evidence of the person's rehabilitation or attempted rehabilitation effort 
while incarcerated or following release; and 
(F) other evidence of the person's present fitness, including letters of 
recommendation from prosecution, law enforcement, and correctional officers who 
prosecuted, arrested, or had custodial responsibility for the person; the 
sheriff and chief of police in the community where the person resides; and any 
other persons in contact with the convicted person. 
(3) It shall be the responsibility of the applicant to the extent possible to 
secure and provide to the department the recommendations of the prosecution, law 
enforcement, and correctional authorities as required by this subsection. 
(4) The applicant shall furnish proof in any form, as may be required by the 
department, that he/she has maintained a record of steady employment and has 
otherwise maintained a record of good conduct and has paid all outstanding court 
costs, supervision fees, fines, and restitution as may have been ordered in all 
criminal cases in which the applicant was convicted. 
(5) If the department suspends or revokes a valid license, or denies a person a 
license or the opportunity to be examined for a license in accordance with this 
subsection because of the person's prior conviction of a crime and the 
relationship of the crime to the license, the department shall: 
(A) notify the person in writing stating reasons for the suspension, revocation, 
denial, or disqualification; and 
(B) offer the person the opportunity for a hearing on the record. 
(k) License Renewal Requirements. It is the responsibility of the license holder 
to renew the license prior to its expiration date; however,
(1) the department will mail each license holder a renewal notice and 
application for renewal at least forty-five (45) calendar days prior to the date 
on which the current license expires. Notice will be mailed to the last known 
address indicated in department records; 
(2) in order to prevent the expiration of a certificate of license, all 
applications for license renewals must be received by the department prior to 
the date on which the current license expires; and 
(3) if an application for license renewal is received by the department after 
the date on which the current license expires, the license will not be 
reinstated except with approval of the director. The director may require a 
hearing prior to reinstatement. 
(4) All renewal licenses and a reinstatement license approved by the director 
shall be dated as of the day following the date on which the current license 
expires. 
(l) Application and Appeals. 
(1) Initial application processing. 
(A) It is the policy of the department to issue the license within seven (7) 
working days after receipt of all required information and the following 
conditions have been met: 
(i) all required forms are properly executed; and 
(ii) all requirements of applicable statutes and department rules have been met. 
(B) Applicants may make application for license in person at the department's 
headquarters office in Austin during regular working hours. However, the 
issuance of a license number will be delayed until the application has been 
thoroughly reviewed. 
(C) License applications and accompanying documents received shall be processed 
and issued within seven (7) working days if all conditions for license have been 
met. 
(D) Within seven (7) working days of the date received by the department, 
license applications and accompanying documents found to be incomplete or not 
properly executed shall be returned to the applicant with an explanation of the 
specific reason and what information is required to complete license. Upon 
receipt of all required information, the license will be issued within seven (7) 
working days. 
(E) Upon written request, the department will call the license holder and 
provide the license number assigned. 
(2) Appeals. Applicants may appeal any dispute arising from a violation of the 
time periods set for processing an application. An appeal is perfected by filing 
with the director a letter explaining the time period dispute. The letter of 
appeal must be received by the director no later than twenty (20) calendar days 
after the date of the letter of explanation from the department outlined in 
subparagraph (D) of this subsection. The department will decide the appeal 
within twenty (20) calendar days of the receipt of the letter of appeal by the 
director. 

sec.80.125. Advertising Regulations.
(a) A license holder is prohibited from publishing or distributing any form of 
advertising which is false, deceptive, or misleading. 
(b) There are no restrictions on: 
(1) the use of any advertising medium; 
(2) a person's personal appearance or the use of a person's voice in an 
advertisement; 
(3) the size or duration of an advertisement; or 
(4) the use of a trade name in an advertisement. 
(c) A retailer or broker must not advertise any interest rate or finance charge 
which is not expressed as an annual percentage rate and must comply with the 
disclosure requirements of the federal Truth-in-Lending Act. 

sec.80.126.Rules for Hearings. 
(a) Unless otherwise expressly set forth in the Standards Act or this chapter, 
all hearings shall be held and conducted pursuant to the applicable provisions 
of Government Code, Chapter 2001. 
(b) Any party to a hearing may request that a record of the hearing be made and 
transcribed by an independent court reporter, other than an employee of the 
department. Such request must be made not later than seven (7) calendar days 
prior to the hearing. The additional cost and expense of the independent court 
reporter may be assessed against the party making the request. In all hearings, 
the published rules and regulations of the secretary of HUD shall be considered, 
if relevant. If the department believes that such rules and regulations are 
relevant to any issue to be involved in the hearing, the notice of hearing shall 
specifically refer to such HUD rules and regulations.
(c) If, after receiving notice of a hearing, a party fails to appear in person 
or by representative on the day and time set for hearing or fails to appear by 
telephone in accordance with Government Code, Chapter 2001, the hearing may 
proceed in that party's absence and a default judgment may be entered. 
(d) Any person for whom a license was revoked, denied, or suspended by a final 
order issued after a hearing under Government Code, Chapter 2001, may only be 
issued a new license after a hearing under Government Code, Chapter 2001, and 
determination by the director that the certificate of license may be issued. 
(e) Pursuant to the Administrative Procedures Act, each party has the right to 
file exceptions to the Proposal for Decision and present a brief with respect to 
the exceptions. All exceptions must be filed with the department within ten (10) 
working days of the Proposal for Decision, with replies to be filed ten (10) 
working days after the filing of exceptions.

sec.80.127. Sanctions and Penalties.
(a) In accordance with the provisions of Government Code, Chapter 2306, 
sec.2306.604, the director may assess and enforce penalties and sanctions 
against a person who violates any applicable law, rule, regulation, or 
administrative order of the department. The director may: 
(1) issue to the person a written reprimand that specifies the violation; 
(2) revoke or suspend the persons license; 
(3) place on probation a person whose license is suspended; or 
(4) assess an administrative penalty in an amount not to exceed $1,000 for each 
violation in lieu of, or in addition to, any other sanction or penalty. 
(b) In determining the amount of a sanction or penalty, the board and the 
director shall consider: 
(1) the kind or type of violation and the seriousness of the violation; 
(2) the history of previous violations; the kind or type of previous violations, 
and the length of time between violations; 
(3) the amount necessary to deter future violations;
(4) the efforts made to correct the violation or previous violations; and 
(5) any other matters that justice may require. 
(c) Violations will be subject to sanctions and penalties as set forth in 
Government Code, Chapter 2306.604. Revocation or suspension of a license may be 
assessed only for multiple, consistent, and/or repeated violations. For first-
time violations of a department rule which does not relate to the construction 
or installation of the home, a voluntary letter of compliance will be issued in 
lieu of other sanctions. 
(d) Consumer complaints relating to warranties are not considered violations 
until there has been a determination that the complaint is subject to a warranty 
and the license holder giving the warranty fails or refuses to respond to a 
warranty order of the department for correction of the warranty item. The 
failure to correct a serious defect, an imminent safety hazard, or a defect 
pursuant to applicable state and federal regulations and/or warranty orders is a 
violation. 
(e) All written notices and preliminary reports of violations shall specify in 
detail the particular law, rule, regulation, or administrative order alleged to 
have been violated along with a detailed statement of the facts on which the 
allegation is based. 
(f) The respondent in an administrative hearing shall be entitled to due process 
and a hearing under the provisions of Government Code, Chapter 2001 and Chapter 
2306. The respondent and the director may enter into a compromise settlement 
agreement in any contested matter prior to signing of the final order. 

sec.80.128. Arbitration Rules. 
(a) Definitions For Arbitration. The following words and terms when used in this 
chapter shall have the following meanings, unless the context clearly indicates 
otherwise: 
(1) Authorized representative - An attorney authorized to practice law in the 
State of Texas or a person designated by a party to represent the party. 
(2) Award - The written decision of the arbitrator. 
(3) Chief judge - The chief administrative law judge of the State Office of 
Administrative Hearings (SOAH) or his/her designee.
(4) Department - The Texas Department of Housing and Community Affairs (TDHCA). 
(5) Dispute - The factual and/or legal controversy including the amount of the 
claim. 
(6) Manufactured Homeowners' Recovery Fund (HORF) - A special fund reserved for 
the payment of valid consumer claims and other authorized expenses of the 
department. 
(7) Party/Parties - Consumer, manufactured housing license holder of the 
department, or a surety company, or the department in cases that potentially 
impact the HORF, and persons who hold, or have previously held, a security 
interest in the manufactured home, and any other person involved in the dispute 
who agrees to the arbitration. 
(8) Surety bond - A bond or security filed with the department which shall be 
open to successive claims. 
(9) Surety - Person or organization which undertakes to pay money or perform 
another act if his principal fails to do so. 
(b) Election of Arbitration and Options.
(1) The department finds that the manufacture and sale of manufactured homes 
affects interstate commerce; accordingly, the parties may agree on binding 
arbitration under Title 9, United States Code. 
(2) The binding arbitration shall not supersede nor interfere with the 
department's informal dispute resolution process. The parties must submit all 
disputes involving warranties to the department for processing through the 
informal dispute resolution process. 
(3) The parties may elect to use private, local, regional, or national 
arbitration services or may select arbitrators proposed by the SOAH as set forth 
in this section. This election must be set forth in the written agreement for 
binding arbitration. 
(4) Arbitrators shall be selected by mutual agreement of the parties or in 
accordance with the specific provisions of the written agreement for binding 
arbitration.
(c) Qualifications for Arbitrators. Unless provided by the SOAH, potential 
arbitrators must have the following minimum standards: 
(1) at least five (5) years of experience in the legal profession; or 
(2) at least five (5) years experience in the resolution of claims with 
experience as a presiding officer; or 
(3) at least ten (10) years of experience in the regulation of the manufactured 
housing industry; and 
(4) the attributes necessary to be a successful arbitrator, including expertise, 
honesty, integrity, impartiality, and the ability to manage the arbitration 
process. 
(d) Awards. 
(1) The arbitrator may grant any remedy or relief that the arbitrator deems just 
and equitable within the scope of the parties, including, but not limited to, 
specific performance of a contract. However, the award must be consistent with 
applicable state and federal law, including the Standards Act, Government Code, 
Chapter 2306, Title 9, United States Code, and this chapter. 
(2) The award shall be based on the facts established in the arbitration 
proceeding, in the opinion of the arbitrator or a majority of the arbitrators, 
including stipulations of the parties and on the state and federal statutes and 
formal rules and regulations, as properly applied to those facts. 
(3) Subject to the limitations set forth in this section, the arbitrator may 
assess arbitration fees, expenses, and compensation. 
(4) If there is more than one arbitrator, all decisions must be made by a 
majority. 
(5) The award must: 
(A) be in writing; 
(B) be dated and signed by the arbitrator or a majority of the arbitrators; and 
(C) state the basis of, and the rationale for, the award.
(6) The award is final and binding on all parties. Parties may apply to the 
state or federal district courts for confirmation, vacation, modification, or 
correction of the award only to the extent allowed under Title 9, United States 
Code. 
(7) Solely for the purpose of correcting clerical errors, the arbitrator retains 
jurisdiction of the award for twenty (20) calendar days after the date of the 
award. 
(e) Duties of the Arbitrator. 
(1) The arbitrator shall afford a full and equal opportunity to all parties for 
the presentation of any material and relevant evidence and shall protect the 
interests of all parties. 
(2) If the dispute may involve the HORF, the arbitrator shall notify the 
department in writing as soon as she/he has knowledge of this fact and shall 
provide the department the opportunity to introduce evidence or present 
arguments relating to the claim against the HORF. 
(3) Copies of the award shall be served on all parties and to the department. 
(f) Costs of Arbitration.
(1) The costs of arbitration shall be paid by the parties. The arbitrator shall 
apportion the costs between the parties as in her/his discretion is fair, just, 
and equitable, subject to the limitation of consumers' costs in this subsection. 
(2) The costs of arbitration to the consumer are limited to a maximum of: 
(A) $250 if the claims for damages do not exceed $50,000;
(B) $500 if the claims for damages exceed $50,000 but do not exceed $250,000; 
and 
(C) $1,000 if the claims for damages exceed $250,000. 
(3) The costs of arbitration shall include the fee or fees for the arbitrator or 
arbitrators and all incidental expenses directly related to the conduct of the 
arbitration proceeding. 
(4) Subject to the limitation of consumers' costs in this subsection, costs 
shall be paid in accordance with the rules of the arbitrator, or if the SOAH is 
selected to handle the arbitration, in accordance with the provisions of 
subsection (j) of this section. 
(g) Notice To Department. All notices required to be sent to the department 
shall be sent to TDHCA, Manufactured Housing Division, P. O. Box 12489, Austin, 
Texas 78711. 
(h) Notice To Surety Companies. Upon receipt of a notice of intent to arbitrate, 
the department shall furnish the selected arbitrator with a list of the surety 
companies of the license holders involved in the dispute to be given notice of 
the proceeding and an opportunity to participate. 
(i) Arbitration Not Using SOAH. The provisions of this subsection relate only to 
arbitrations for which the parties have agreed to use the services of a private, 
local, regional, or national arbitration service. 
(1) Subject to the provisions of subsections (a)-(h), the parties shall follow 
the rules of the applicable arbitration service. 
(2) The party requesting the arbitration shall file a written notice of intent 
to arbitrate with the department. The written notice shall: 
(A) contain the name, address, telephone and facsimile number of the selected 
arbitrator or arbitrators and, if applicable, the arbitration organization 
through which the arbitration will be conducted; 
(B) contain a description of the nature of the dispute and the remedy sought 
along with a description of the manufactured home by HUD/Seal number and serial 
number and the date of sale or occurrence; and 
(C) have attached a copy of the written agreement for the binding arbitration. 
(j) Arbitration Using SOAH. The provisions of this subsection relate only to 
arbitrations for which the parties have agreed to use the services of SOAH. 
Subject to the provisions of subsections (a)-(h), the parties shall follow these 
additional rules. 
(1) A written notice of intent to arbitrate shall be filed with the Manufactured 
Housing Division of the department and all involved parties by certified mail, 
return receipt requested. This notice of intent shall include a written 
statement that contains the following: 
(A) a statement that the parties have agreed in writing to submit their dispute 
to arbitration under these rules; 
(B) the nature of the dispute that is being submitted to arbitration, including 
a complete description of the manufactured home by HUD/Seal and serial number, 
and date of sale or occurrence; 
(C) a brief description of the factual and/or legal controversy, including the 
amount in controversy, if any; 
(D) the remedy sought; 
(E) any special information that should be considered in compiling a panel of 
potential arbitrators; in the event the parties fail to indicate the number of 
arbitrators to be used, the dispute shall be heard and determined by one 
arbitrator; 
(F) a statement that the hearing locale shall be determined by the arbitrator 
pursuant to paragraph 14(D) of this subsection; 
(G) a list of all parties, and their attorneys or representatives, including 
addresses, telephone and facsimile numbers; 
(H) a nonrefundable filing fee of $100 made payable to the department; 
(I) an estimate of length of the hearing in hours. This estimate must be 
approved by the department before arbitration can begin; and 
(J) a deposit equal to 150% of the estimated cost of the hearing, payable to the 
department. This deposit is calculated by multiplying the estimated length of 
number of hearing hours by $70. This figure is then multiplied by 1.5, and the 
product multiplied by the number of arbitrators to be used. 
(2) Costs of Arbitration.
(A) The filing fee of $100 which is nonrefundable. 
(B) Each arbitrator's fee is not to exceed $70 an hour for case preparation, 
travel, pre-hearing conferences, hearings, preparation of the Award, and any 
other required post-hearing work. 
(C) The unused portion of the deposit shall be refunded by the department after 
an accounting from the arbitrator. 
(D) If the cost of the arbitration exceeds the deposit of the estimated cost, 
the department shall invoice the appropriate parties and collect any monies due 
the department. 
(E) All fees and deposits are payable to the department at P. O. Box 12489, 
Austin, Texas 78711. 
(F) The department shall distribute arbitration fees to SOAH in response to 
monthly billing statements. 
(3) Initiation of Arbitration.
(A) Immediately upon receipt of notice of intent to arbitrate, the filing fee, 
and the deposit of estimated cost, the department shall forward the information 
to SOAH so that arbitration can be initiated. The department shall furnish SOAH 
with a list of the surety companies of the license holders involved in the 
dispute so that they may be given notice of the arbitration and an opportunity 
to seek to be made parties of the arbitration. Also the department shall furnish 
SOAH an accounting of the filing fee and deposit of the estimated cost. The case 
shall be file stamped and given a SOAH docket number which identifies it as a 
case submitted for arbitration. The docket number will be used on all subsequent 
correspondence and documents filed with SOAH relating to this arbitration. 
(B) The party that did not initiate the arbitration must file an answering 
statement with SOAH within ten (10) calendar days after receipt of the notice of 
intent from the electing party. That answering statement shall include a 
statement that the party agrees to arbitrate and an indication of whether the 
party agrees or disagrees with the statements in the initial notice of intent to 
arbitrate. 
(4) Changes of Claim. If either party desires to make any new or different 
claim, it shall be made in writing and filed with SOAH. The other party shall 
have ten (10) calendar days from the date of such mailing in which to file an 
answer with SOAH. After the arbitrator is appointed, however, no new or 
different claim may be submitted except with the arbitrator's consent. 
(5) Filing and Service of Documents.
(A) All documents filed by either party with SOAH shall be simultaneously served 
on the other parties, using the same method of service, if possible. Documents 
required to be filed with SOAH shall be delivered to the docket clerk before 
5:30 p.m. local time. The time and date of filing shall be determined by the 
file stamp affixed by the SOAH docket clerk. 
(B) Service may be made by first class mail, overnight courier, or certified 
mail return receipt requested to the party or its representative at its last 
known address. Documents containing 20 or fewer pages, including exhibits, may 
be filed with SOAH by electronic transmission according to requirements set out 
in its rules. All documents served on another party shall have a certificate of 
service signed by the party or its representative that certifies compliance with 
this rule. A proper certificate shall give rise to a presumption of service.
(C) If any document is sent to the SOAH clerk by certified mail or first class 
mail in an envelope or wrapper properly addressed and stamped and is deposited 
in the mail on or before the last day for filing same, and it is received within 
three (3) working days of the filing date, it shall be deemed properly filed. 
(D) Documents filed by facsimile that are received at SOAH after 5:30 p.m. shall 
be deemed filed the first day following that is not a Saturday, Sunday, or 
official state holiday. 
(6) Selection of Arbitrator.
(A) Any Administrative Law Judge (ALJ) employed by SOAH may be selected as an 
arbitrator. The parties may propose the name of a particular ALJ to arbitrate in 
a particular case in the notice of intent to arbitrate. However, the usual 
procedure will be for SOAH to provide the parties with a list of potential 
arbitrators, for selection to be made as described in subparagraph (B) of this 
paragraph. 
(B) SOAH will provide a list of potential arbitrators to the parties in the 
case. The list of potential arbitrators in each case will be created by 
selecting persons employed as an ALJ at SOAH, giving due regard to the 
complexity of the dispute, the expertise needed to understand the dispute, the 
experience and training of the proposed arbitrators, and the requests of the 
parties concerning the location of the hearing. 
(C) SOAH shall send each party an identical list of persons qualified to serve 
as an arbitrator in the dispute within ten (10) calendar days after receipt of 
the notice of intent to arbitrate by SOAH. SOAH will also give the parties a 
copy of the resumes of these persons. The number of persons on the list shall be 
equal to the sum of the number of parties involved in the arbitration plus the 
number of arbitrators agreed to be used. 
(D) Each party shall have ten (10) calendar days from the transmittal date to 
strike one name. The remaining names should be numbered in order of preference, 
if such preference exists. If a party does not return the list within the time 
specified, all persons named therein shall be deemed acceptable. It is not 
necessary for the parties to exchange the name of the candidate that they are 
striking, nor will those names be disclosed to the candidates. 
(E) SOAH will notify the parties of the arbitrator or arbitrators selected. 
(7) Disclosure Requirements and Challenge Procedure. 
(A) A potential arbitrator must not become or continue to be the arbitrator in 
any dispute if she/he believes or perceives that participation as an arbitrator 
would be a conflict of interest. A potential arbitrator must disclose any bias 
or any financial or personal interest she/he may have in the result of the 
particular arbitration as well as any past or present relationship with the 
parties, their principals, or their representatives. 
(B) The duty to disclose is a continuing obligation throughout the arbitration 
process. 
(C) Upon receipt of such information from the arbitrator or another source, SOAH 
shall communicate the information to the parties and, if appropriate, to the 
arbitrator and others. Upon objection of a party to the continued service of an 
arbitrator, the chief judge shall determine whether the arbitrator should be 
disqualified and shall inform the parties of his/her decision, which shall be 
conclusive. 
(8) Vacancies. If for any reason an arbitrator is unable to perform the duties 
of the office, the chief judge may, on proof satisfactory to him/her, declare 
the office vacant. Vacancies shall be filled in accordance with the applicable 
provisions of this chapter for initial appointment of an arbitrator. 
(9) Qualifications of Arbitrators.
(A) The chief judge shall designate impartial third parties who shall be subject 
to the standards and duties prescribed by the applicable sections of the Civil 
Practices and Remedies Code (CPRC), and who shall have the qualified immunity 
prescribed therein. 
(B) Potential arbitrators shall have a current resume on file, available to 
persons interested in utilizing the arbitration process, that shows her/his 
experience, education, professional licenses and certifications, and 
professional associations and publications. 
(10) Record. The Arbitrator may make a tape recording of the proceeding which 
may be destroyed after the time for final appeal has passed. 
(11) Interpreters. Any party intending to use an interpreter for themselves or 
any of their witnesses must provide the other parties notice of their intent to 
use an interpreter and the identity of the interpreter at least thirty (30) 
calendar days prior to the arbitration. The other parties may file objections to 
the use of that interpreter which will be ruled upon by the arbitrator or have 
present their own interpreter selected and paid for by them. Any other party 
retaining an interpreter in response to another party's designation of their 
intent to use an interpreter must notify the other parties within fifteen (15) 
calendar days prior to the arbitration proceeding of the identity of the 
interpreter.
(12) Duties of the Arbitrator. In addition to the duties set forth in subsection 
(e) of this section, the arbitrator: 
(A) shall notify the department when the arbitrator's fees and expenses have 
exceeded the deposit estimated by the electing party so the department can 
collect additional expenses; and 
(B) shall not issue an Award until notified by the department in writing that 
all monies have been received by the department as described in subsection 
(j)(2) of this section. 
(13) Communication of Parties with Arbitrator. The parties shall not communicate 
with the arbitrator concerning the issues of the dispute other than at an oral 
hearing, or through properly filed documents, unless the parties and the 
arbitrator agree otherwise.
(14) Date, Time, and Place of Hearing. 
(A) The arbitration hearing shall be scheduled to begin no later than the 
ninetieth day after the date that the arbitrator is selected.
(B) The arbitrator shall set the date, time, and place for each hearing. She/he 
shall send a notice of hearing to the parties at least thirty (30) calendar days 
in advance of the hearing date, unless otherwise agreed to by the parties. 
(C) The arbitrator may grant a continuance of the arbitration at the request of 
any party. 
(D) All hearings shall be held in Austin or in the region where one or more 
parties are located, as determined by the arbitrator. Preference will be given 
to using government facilities. 
(15) Representation. Any party may be represented by counsel or other authorized 
representative.
(16) Public Hearings and Confidential Material. The arbitrator shall maintain 
the privacy of the hearings unless the law provides to the contrary. Any person 
having a direct interest in the arbitration is entitled to attend hearings. It 
shall be discretionary with the arbitrator to determine the propriety of the 
attendance of any other person. 
(17) Preliminary Conference. The arbitrator may set a preliminary conference and 
may require parties to file a statement of position prior to that conference. 
(18) Exchange of Information. By the thirtieth day after the date SOAH mailed 
notice to the parties of the name of the appointed arbitrator, the parties shall 
have exchanged the following information: 
(A) list of witnesses that a party expects to call identifying the subject 
matter on which the witness may testify; and 
(B) copies of documents or other tangible things relevant to the dispute. 
(19) Discovery. The arbitrator may authorize discovery upon a showing of good 
cause. Parties are to voluntarily disclose information related to the dispute 
being arbitrated, as provided in paragraph (18) of this subsection. 
(20) Control of Proceedings. The presiding arbitrator shall exercise control 
over the proceedings, including but not limited to, determining the consequences 
of any party's failure to comply with these rules and/or the rulings of the 
arbitrator, the manner and order of interrogating witnesses and presenting 
evidence so as to: 
(A) make the interrogation and presentation effective for the determination of 
the truth; 
(B) avoid needless consumption of time; and 
(C) protect witnesses from harassment or undue embarrassment.
(21) Evidence. 
(A) The parties may offer evidence as they desire and shall produce additional 
evidence that the arbitrator considers necessary to understand and resolve the 
dispute. However, any documentary evidence not timely exchanged between the 
parties before the hearing will be excluded from consideration unless good cause 
is shown. 
(B) The arbitrator is the judge of the relevance and materiality of the evidence 
offered. Strict conformity to the rules of judicial proceedings is not required. 
The Texas Rules of Civil Evidence are not binding on the arbitrator but may be 
used as a guideline. 
(C) All privileges recognized by the Texas Rules of Civil Procedure may be 
invoked to protect privileged documents. If requested, the arbitrator shall 
decide whether a document is in fact privileged. 
(D) Each party shall produce any witnesses under its control without the 
necessity of a subpoena. Individuals may be compelled by the arbitrator, as 
provided in Title 9, United States Code sec.7, to attend and give testimony or 
to produce documents at the arbitration proceeding or at a deposition authorized 
under subsection (j)(19) of this section. 
(22) Witnesses. Witnesses shall testify under oath. Testimony may be presented 
in a narrative, without strict adherence to a "question and answer" format. 
(23) Exclusion of Witnesses. Any party may request that the arbitrator exclude 
witnesses from the hearing except when they are testifying. If such a request is 
made, the arbitrator shall instruct the witnesses not to discuss the case 
outside the official hearing other than with the designated representatives or 
attorneys in the case. However, an individual who is a party or any other party 
representative shall not be excluded under this rule. A witness or other person 
violating these instructions may be punished by the exclusion of evidence as the 
arbitrator deems appropriate. 
(24) Evidence by Affidavit. The arbitrator may receive and consider evidence of 
witnesses by affidavit. Affidavit testimony must be filed with the arbitrator 
and served on the other party no later than thirty (30) calendar days before the 
hearing. The other party will have fifteen (15) calendar days to file any 
objection to the admissibility of the affidavit or to file controverting 
affidavits. The arbitrator shall give such evidence only such weight as the 
arbitrator deems it entitled to after consideration of any objection made to its 
admission. 
(25) Order of Proceedings.
(A) The arbitrator may allow each party to make an opening statement, clarifying 
the issues involved. 
(B) The parties shall present the evidence supporting their respective claims in 
the order directed by the arbitrator. Witnesses for each party shall answer 
questions propounded by the other parties and the arbitrator.
(C) Exhibits offered by either party may be received in evidence by the 
arbitrator. 
(D) The parties may make oral closing statements or, at the request of the 
arbitrator, may submit arguments in writing. 
(26) Attendance Required.
(A) The arbitrator may proceed in the absence of any party or representative of 
a party who, after notice of the proceeding, fails to be present or to obtain a 
continuance. 
(B) An arbitrator may not make an award solely on the default of a party and 
shall require the party who is present to submit evidence, as required by the 
arbitrator, before making an Award. 

sec.80.130. Delivery of Warranty.
(a) For purposes of the Standards Act, sec.sec.7, 8, and 14, the written 
warranty documents shall have been timely delivered if given to the homeowner at 
the time the contract for sale is signed. 
(b) The "installer" as defined in sec.80.119(a) of this title (relating to 
Installation Requirements), shall deliver the installation warranty required by 
the Standards Act, sec.14(d) and (m), to the consumer at the time of entering 
into the installation contract. If the retail sale of a used manufactured home 
includes installation, the selling retailer must, as the contracting installer, 
give the installation warranty. The installer must keep a copy of the 
installation warranty and proof of delivery to the consumer in a permanent file 
for review by the department. 

sec.80.131. Correction Requirements.
(a) The retailer, installer, or manufacturer shall take immediate corrective 
action when notification is received from a consumer and the nature of the 
complaint indicates an imminent safety hazard or serious defect. 
(b) Except as provided in subsection (a) of this section, manufacturers, 
retailers, and installers shall perform their obligations in accordance with 
their respective written warranty within a reasonable period of time. A 
reasonable period of time is deemed to be forty (40) calendar days following 
receipt of the consumer's written notification unless there is good cause 
requiring more time. The consumer's written notification must be received by the 
manufacturer, retailer, or installer within forty (40) calendar days following 
the end of the one (1) year warranty period for new homes and for used homes 
within sixty (60) calendar days after the date of the sale. 
(c) The manufacturer, installer, and retailer shall make available for review by 
department personnel, records relating to their respective warranty 
responsibilities, to assure that warranty work has been accomplished and that 
warranty work has been done in accordance with design or standards criteria and 
properly completed. 

sec.80.132. Procedures for Handling Consumer Complaints. 
In order to comply with the Standards Act, sec.2, to provide for the protection 
of the citizens who purchase manufactured housing and to provide fair and 
effective consumer remedies, the following procedures will be followed:
(1) On initial contact by a consumer, the department will attempt to verify if 
the consumer has a valid complaint that is subject to the department's 
authority. If the department determines that the department has jurisdiction: 
(A) If the consumer has not previously notified the manufacturer, retailer or 
installer in writing, the department will instruct the consumer to provide 
written notification to the manufacturer, retailer, or installer and give the 
license holder a reasonable amount of time to make repairs. 
(B) If the consumer has previously provided written notification to the 
manufacturer, retailer or installer of the need for warranty service or repairs, 
but believes such has not been completed in a satisfactory manner, the 
department shall mail a complaint form to the consumer with instructions to 
complete it and return it to the department. On receipt of the complaint form, 
the department will make a determination regarding whether or not to open a 
consumer complaint. If a consumer complaint is opened, the department shall 
forward copies of the complaint form to the manufacturer, retailer and/or 
installer, as appropriate, by certified mail, return receipt requested. The 
department shall also include in the certified mail the "Manufacturer's Response 
Form" or "Retailer's Response Form," as appropriate, which must be completed and 
returned to the department within ten (10) working days. The department shall 
perform a home inspection, if required. If a home inspection is performed, the 
department will assign responsibilities for repair, and notify the manufacturer, 
retailer, installer, and consumer of their responsibilities to complete such 
warranty or service repair in accordance with sec.80.131(b) of this title 
(relating to Correction Requirements). 
(2) The department shall make a consumer complaint home inspection if a 
consumer, manufacturer, or retailer requests such inspection.
(A) Consumer Request. The consumer may, at any time, request that the department 
perform a consumer complaint home inspection if the consumer has not been 
provided proper warranty service. The department may require that the request be 
in writing on a form provided by the department. If the department has reason to 
believe that the consumer complaint is covered by a warranty of a license 
holder, the department shall conduct a home inspection. There is no fee for an 
inspection performed at the request of the consumer when the department 
determines that a home inspection is warranted. 
(B) Industry Request. Manufacturer or retailer requests for a consumer complaint 
home inspection must be in writing on such form as the department may require, 
shall identify the home by HUD label and serial number(s), and shall provide the 
necessary information for the department to contact the consumer and determine 
the physical location of the home. The request must be accompanied by the 
required fee. The manufacturer or retailer may request a consumer complaint home 
inspection if the manufacturer or retailer:
(i) believes that the consumer's complaints are not covered by the respective 
written warranty, or implied warranties; or 
(ii) believes that the warranty service was previously properly provided; or 
(iii) has a dispute as to the respective responsibilities pursuant to the 
warranties. 
(C) The department will perform the inspection within fifteen
(15) working days from the date an inspection is requested. The inspector shall: 
(i) inspect all items included in the consumer complaint filed with the 
department and any additional items identified by the consumer prior to 
completion of the inspection. Any items identified by the consumer after the 
home inspection is complete shall be handled as a new consumer complaint.
(ii) For each item inspected, the inspector shall determine whether or not the 
item is covered by either the manufacturer's, retailer's, or installer's 
warranty and, if covered, by which of the respective warranties. In addition, 
the inspector shall categorize items as follows: 
(I) The item is a warranty item (also identify which warranty);
(II) The result of normal wear and tear, not a warranty item;
(III) The result of owner abuse neglect or modification, not a warranty item; 
(IV) Within commercially acceptable standards, not a warranty item; 
(V) Meets the current federal and state standards, not a warranty item; 
(VI) Cosmetic, not a warranty item; 
(VII) License holder not notified within warranty period;
(VIII) Unable to determine, additional information is required; or 
(IX) Other (explain). 
(D) Within five (5) working days following the consumer complaint home 
inspection, the department shall mail its written report and orders, if any, to 
the consumer, manufacturer, retailer, and installer by certified mail, return 
receipt requested. 
(3) When service or repairs are completed following any notice or orders from 
the department pursuant to paragraph 2(D) of this section, the manufacturer, 
retailer, and/or installer shall forward to the department copies of service or 
work orders reflecting the date the work was completed, or other documentation 
to establish that the warranty service or repairs have been completed. If the 
consumer refuses to sign the service or work order, the license holder shall 
note this fact on the service or work order. These service or work orders must 
be received by the department within ten (10) calendar days after the expiration 
of the period of time specified in the warranty order issued by the department. 
(4) Each license holder must maintain both a current physical location address 
and a current mailing address with the department. Service of notice of hearing 
or other notice sent by certified mail will be sent to the license holder's 
current mailing address according to the department's records. If the department 
sends a notice to the manufacturer, retailer, or installer at the mailing 
address by certified mail, and the notice is refused or unclaimed, the 
department may presume that the license holder was provided proper notice. 
(5) Once the department receives the service or work orders with the consumer's 
signature indicating that all items have been satisfactorily completed, the 
department shall send a notice to the consumer that the department has closed 
the complaint file. 
(6) If service or repairs cannot be made within the specified time frame, the 
license holder shall notify the department in writing prior to the expiration of 
the specified time frame by certified mail. The notice shall list those items 
which have been, or will be, completed within the time frame and shall show good 
cause why the remainder of the service or repairs cannot be made within the 
specified time frame. The license holder shall request an extension for a 
specific time. If the department fails to respond in writing to the request 
within five (5) working days of the date of receipt of the notice of request for 
extension, the extension has been granted. 
(7) If the department decides that another inspection is necessary because of 
conflicts among the parties to a complaint regarding the nature or quality of 
the corrective work, whomever the department deems to be responsible for errors 
requiring the additional inspection will be required to pay the inspection fee 
to the department. 

sec.80.135.Manufactured Housing Auctions. 
(a) Auction of Manufactured Housing to Texas Consumers. 
(1) The person(s) selling more than one home through an auction in a twelve (12) 
month period must be licensed as a retailer with this department and the 
specific location at which the auction is to be held must be bonded in 
accordance with the Standards Act. 
(2) The auctioneer must be licensed as a manufactured housing salesperson with 
the Texas Department of Housing and Community Affairs and licensed as an 
auctioneer, pursuant to the Texas Auctioneer Act, Article 8700. 
(3) The retailer must notify this department in writing at least thirty (30) 
calendar days prior to the auction with such notice to contain the date, time, 
and physical address and location of the proposed auction. 
(4) The retailer must keep and maintain a file copy of all notices, circulars, 
or advertisements of any kind relating to the auction of manufactured housing. 
(5) A manufactured home that is not habitable may not be sold to a consumer as a 
manufactured home for dwelling purposes. The seller must surrender the title and 
HUD label or Texas Seal, or a statement that there was no label or seal, to the 
department along with the required fee and an application to cancel the title to 
business use, before the home is auctioned. 
(6) The retailer must give notice to each person attending the auction, and the 
notice shall contain the following: 
(A) a statement that the homes offered for sale are habitable pursuant to the 
Standards Act, sec.8(b); 
(B) a statement that any home purchased at the auction must be installed by a 
installer licensed with this department; 
(C) the appropriate warning concerning formaldehyde as required by the Standards 
Act, sec.20; and 
(D) the appropriate notice regarding home construction and Wind Zone standards 
as outlined in the Standards Act. 
(7) The retailer shall retain sales records as required by sec.80.121 of this 
title (relating to Retailer's Responsibilities) if the home is sold to a 
consumer. 
(b) Auction of Manufactured Housing to Licensed Retailers.
(1) No license with the department is required of a lender whose repossessed 
manufactured homes are being auctioned, if the lender is selling to a retailer 
who is licensed with the department. The auctioneer must be licensed only 
pursuant to the Texas Revised Civil Statutes, Texas Auctioneer Act, Article 
8700.
(2) The auctioneer must notify the Texas Department of Housing and Community 
Affairs at least thirty (30) calendar days prior to the auction. Such notice 
must contain the date, time, and physical address and location of the proposed 
auction. 
(3) The auctioneer must keep and maintain a file copy of all notices, circulars, 
or advertisements of any kind relating to the auction of manufactured housing. 
(4) The auctioneer must keep and maintain an accurate register of all persons 
attending the auction. This register should show the name of the individual, the 
manufactured housing retailer business name, the address of the retailer, and 
the current license number of the manufactured housing retailer. 
(5) The auctioneer must keep and forward to the Texas Department of Housing and 
Community Affairs immediately following the auction, a complete list of all 
manufactured homes sold at such auction including the name of manufacturer, 
model, serial and HUD numbers, along with the name, address, and license number 
of the retailer purchasing the home. 
(6) In lieu of the auctioneer maintaining and filing the information in 
paragraphs (1)-(5) of this subsection with the department, the consigner of the 
manufactured homes may contract with the auctioneer to file the information with 
the department. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805840
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER F.Consumer Notice Requirements
10 TAC sec.80.180
The new section is proposed under the Texas Manufactured Housing Standards Act, 
Article 5221f, sec.9, which provides the department with authority to amend, 
add, and repeal rules governing the Manufactured Housing Division of the 
department.
No other statute, code, or article is affected by the new rule.

sec.80.180.Formaldehyde Notice Requirements.
(a) The consumer notice related to formaldehyde must be posted in the home in 
accordance with the FMHCSS. 
(b) In addition to the requirement of subsection (a) of this section: 
(1) A retailer shall deliver a copy of the "Important Health Notice" prescribed 
by HUD to the consumer before the execution of any mutually binding sales 
agreement. If it is a cash sale, the copy of the notice must be delivered before 
the acceptance of payment or the execution of title transfer documents. An 
agreement to order a HUD-Code manufactured home from the manufacturer, or an 
agreement to hold a home in inventory for a period of time, which is secured by 
a forfeitable consumer deposit, is a "mutually binding sales agreement" for 
purposes of this section. 
(2) The consumer must sign the copy of the notice. The retailer shall keep the 
originally signed copy in the permanent sales file and shall give a copy to the 
consumer at the time the original copy is signed. If requested, the retailer 
shall deliver a copy of the signed notice to the manufacturer of the home. 
(3) The copy of the notice to be signed by the consumer may be reduced in size 
from the notice required to be posted in the home and may be entirely reproduced 
in either red or black. This copy of the notice must be on a form approved by 
the department, dated, and must contain the following certification immediately 
above the place for the consumer's signature in bold face type which is at least 
eight points in size: "I (We) certify that this Important Health Notice was 
prominently displayed in the kitchen of the manufactured home being purchased 
and further that this notice was given to me (us) on the date shown and prior to 
the signing of any binding agreement. I (We) have read the notice and understand 
it." 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805841
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

SUBCHAPTER G.Titling
10 TAC sec.sec.80.202-80.208
The new sections are proposed under the Texas Manufactured Housing Standards 
Act, Article 5221f, sec.9, which provides the department with authority to 
amend, add, and repeal rules governing the Manufactured Housing Division of the 
department. 
No other statute, code, or article is affected by the new rules. 

sec.80.202. Fees for Title Documents.
(a) Title Transaction Fees. 
(1) There shall be a fee of $35 for each title transaction. Except as otherwise 
expressly provided, the fee shall be submitted in the form of a cashier's check 
or money order payable to the Texas Department of Housing and Community Affairs. 
The fee shall accompany the required documents forwarded to the Manufactured 
Housing Division of the department at its principal office in Austin. Ten 
dollars of the fee for each title transaction shall be deposited in the HORF. A 
title transaction is: 
(A) the issuance, reissuance, reinstatement, or cancellation of a manufactured 
home document of title including issuance of corrected titles (unless the 
correction is required because of an error by the department);
(B) the issuance of a salvage title; 
(C) the cancellation of a manufacturer's certificate of origin;
(D) the filing of an inventory financing lien; 
(E) the filing of foreclosure documents or a repossession affidavit; and 
(F) the recording of a transfer of ownership from a lienholder to or through a 
retailer. 
(2) There shall be a separate transaction fee of $35 for Quick Title Service 
related to the issuance or cancellation of titles in addition to the $35 for 
each title transaction. Quick Title Service shall be defined as the processing 
of the documents related to a title transfer or cancellation within three (3) 
working days from the day the application is received in the Manufactured 
Housing Division. Title transfer documents must received in good transfer order 
in the department's manufactured housing division in Austin for the issuance of 
a manufactured housing title or cancellation on a Quick Title Service basis. 
Title transfer documents which are not in good transfer order or which are 
incomplete will be returned to the sender, and the title application will be 
processed within three (3) working days from the date that correct and completed 
documents are received. 
(b) The $35 fee is payable for any subsequent issuance or reissuance of a 
manufactured home document of title except for the issuance of a corrected 
document of title in those instances where an error was made by the department 
in the document of title. 
(c) All persons licensed with the department as a manufacturer, retailer, 
broker, or installer may submit company or business firm checks in payment of 
the fee for the issuance of titles. All state or federally chartered banks, 
savings banks or savings institutions and all commercial lenders or mortgage 
bankers who extend credit for the retail purchase of manufactured homes may also 
pay title transaction or title search fees with company or business firm checks 
at the discretion of the department. All checks shall be made payable to the 
Texas Department of Housing and Community Affairs.
(d) One check may be submitted in payment of the aggregate fees for multiple 
title transactions or the issuance of more than one document of title. When 
multiple applications are submitted, a form prescribed by the department must be 
included which shall identify each application and reconcile the $35 fee for 
each application with the total amount of the check. 
(e) There shall be a fee of $10 for any title search which shall be paid to the 
department by the requesting party in the form of a cashier's check or money 
order. The request must be in writing and must state the specific information 
being requested. 

sec.80.203.Manufacturer's Monthly Shipment Report. 
(a) Every manufacturer shall submit a monthly report to the department of all 
manufactured homes produced during the preceding month for shipment to any point 
in Texas. The report shall contain the following information:
(1) the HUD label number(s); 
(2) the serial number(s); 
(3) the license number of the retailer as assigned by the department; 
(4) a designation as to single or multiple sections; and 
(5) the name and address of the purchaser, consignee, or person to whom it was 
shipped. 
(b) The manufacturer's monthly shipment report shall be filed with the 
department by the 15th day of the month following the manufacture of the home 
and/or shipment. 
(c) If a manufacturer has no sales, consignments, or shipments to any person or 
place during any month, the report must be filed stating such fact. 

sec.80.204.Titling Forms.
(a) Manufacturer's Certificate of Origin (MCO). 
(1) The manufacturer shall issue a Manufacturer's Certificate of Origin (MCO) 
for each new home which is consigned, transferred, or sold by the manufacturer 
to a retailer in this state. The certificate of origin information shall be on a 
form prescribed by the department or it will be returned for reissuance. 
(2) The MCO shall be surrendered to the department upon application for the 
issuance of an initial document of title to the home.
(3) If a new home is sold by an out-of-state retailer to a consumer in this 
state and the MCO is not on the form prescribed by the department, there must be 
attached to the original MCO a separate sheet certified by the manufacturer 
which contains all of the information required by the Texas MCO. 
(b) Application for Issuance of Document of Title to a Manufactured Home. 
(1) The manufactured home document of title shall be issued on the basis of 
information submitted on a properly executed application for title containing 
the following information: 
(A) a description of the home including the manufacturer's name and address; 
(B) the model designation; 
(C) the number of sections of the home; 
(D) the total square feet of the home; 
(E) the HUD label or Texas seal number and serial number;
(F) the weight and size of each section, excluding the hitch;
(G) the Wind Zone reflected on the MCO if available; and 
(H) if available, the date of manufacture reflected on the MCO (the "date of 
manufacture" is the date the home was produced and the HUD label affixed to the 
home and is not to be construed as the "year model").
(2) The MCO shall accompany the application for title on the original sale from 
retailer to private individual. 
(3) Other information shall include, but not be limited to, the following: 
(A) the name(s) and address(es) of the seller(s) and the county where currently 
installed; 
(B) the name(s) and address(es) of the purchaser(s) and the county and location 
where the home will be installed; 
(C) the name and address of the lienholder, if any, and the date of the lien. 
(4) The department will not process the application if the lienholder 
information is not complete. 
(5) The right of survivorship may be elected when husband and wife are 
purchasers or transferees. The document of title shall indicate whether the 
right of survivorship has been elected. 
(6) The application must contain the signatures of seller(s) and purchaser(s). 
(7) The application shall be submitted to the Texas Department of Housing and 
Community Affairs at the Austin headquarter's office, with supporting documents. 
(c) Installation Information. 
(1) The installation information, on forms approved by the department, must 
accompany each application for title, and shall contain the following 
information: 
(A) description of the home, including: 
(i) serial number; 
(ii) HUD label number or Texas seal number; 
(iii) size of home; 
(iv) name of manufacturer; and 
(v) Wind Zone, if available. 
(B) whether or not the home was, or will be, moved as a result of the sale or 
transfer; 
(C) whether or not the home was, or will be, installed at a new location as a 
result of the sale or transfer; 
(D) the location of the home immediately prior to the sale or transfer; 
(E) if moved, or to be moved, the location of the home after the move and the 
name and address of the person or company that moved, or will move, the home; 
and 
(F) if installed, or to be installed, the location of the home after 
installation; and the name and address of the person or company that installed, 
or will install, the home. 
(2) If the home was installed as a result of the sale or transfer, the 
installation fee required under sec.80.20(b) of this title (relating to Fees) 
must be submitted along with the installation information (Form E). The 
installation fee may be combined with the titling fee for each home. 
(d) Manufactured Home Document of Title. 
(1) The department shall maintain records of ownership of manufactured homes. 
The department shall issue a manufactured home document of title for each 
manufactured home, which shall set forth the ownership of the home in accordance 
with the records of the department. 
(2) The document of title shall contain the following information: 
(A) the date of the certificate and the number of the certificate;
(B) the name(s) and address(es) of the purchaser(s) of the home and the county 
where the home is installed for occupancy; 
(C) the name and address of the manufacturer, the model designation of the home, 
the number of sections, and the total square feet of living space in the home; 
(D) the HUD label and/or Texas seal number, the serial number, and the size 
(excluding hitch) and the weight of each transportable section of the home; 
(E) the name and address of the seller of the home; 
(F) the date of any lien(s) and the name(s) and address(es) of the 
lienholder(s); 
(G) space for the signature(s) of the purchaser(s) and a designation of right of 
survivorship; 
(H) the date of manufacture reflected on the MCO if available (the "date of 
manufacture" is the date the home was produced and the HUD label affixed to the 
home and is not to be construed as the "year model"); 
(I) Wind Zone, if available; 
(J) a statement to the effect that the document of title may not reflect the 
existence of a tax lien notice filed for the manufactured home since the 
document of title was issued and that information about tax liens for which 
notice has been filed may be obtained from the department on written request. 
(3) Each certificate shall be authenticated by the facsimile signature of the 
director. The facsimile signature shall be that of the person holding such 
position at the time the certificates are printed, and the validity of the 
certificates is not affected by any subsequent change.
(4) The department shall issue a manufactured home document of title in the 
following cases: 
(A) after receipt of a properly executed application for title, installation 
information on forms approved by the department, and the MCO upon the initial 
retail sale; and 
(B) after receipt of a properly executed application for title, installation 
information on forms approved by the department, and the original manufactured 
home document of title when there is a transfer of ownership or the addition of 
a lien or lienholder. 
(5) If the home is subject to any lien, the original of the document of title 
shall be mailed to the first lienholder of record. A nontransferable copy shall 
be mailed to the purchaser(s) and to the second lienholder, if any. If no lien 
exists, the original shall be mailed to the purchaser(s). 

sec.80.205. Titling Transactions.
(a) Corrected Manufactured Housing Document of Title. 
(1) The department shall make corrections to a manufactured home document of 
title upon receipt of a properly executed application for title and the 
previously issued original. 
(2) The corrected certificate of ownership shall be mailed to the lienholder of 
record if a lien is recorded and a copy shall be mailed to the purchaser(s) and 
any other lienholder(s). If no lien exists, the original shall be mailed to the 
purchaser(s). 
(3) No fee shall be required for this transaction if an error was made by the 
department. 
(b) The department shall issue a certified copy of the original manufactured 
home document of title or of the nontransferable copy upon receipt of a properly 
executed application for title. If a lien is recorded on the document of title, 
the certified copy of the original document of title shall be mailed to the 
lienholder of record. 
(c) Inventory Financing Liens. 
(1) A lien and security interest on manufactured homes in the inventory of a 
retailer is perfected by filing an inventory finance security form approved by 
the department and in compliance with these sections. 
(2) The creditor-lender financing the inventory and the retailer must execute a 
security agreement which expressly sets forth the rights and obligations of the 
two parties in the inventory finance arrangement.
(3) The inventory finance security form shall contain the following: 
(A) the date of the security agreement between the parties;
(B) signatures of both the retailer and the creditor-lender;
(C) the name, address, and license number of the retailer; and 
(D) the name and address of the creditor-lender. 
(4) A separate form must be filed for each licensed retailer. 
(5) The filing of the inventory-finance security form perfects a security 
interest in all manufactured homes which have been financed by the creditor-
lender or for which the creditor-lender has advanced any funds or has incurred 
any obligation which enabled the retailer to acquire the manufactured home. The 
filing of the inventory-finance security form also perfects a security interest 
in all manufactured homes which are thereafter acquired by the retailer, for 
which the creditor-lender advances any funds or incurs any obligation. The 
security interest for these future acquisitions attaches immediately upon the 
advancement of funds or the incurrence of the obligation. The creditor-lender is 
not required to file additional inventory-finance security forms. 
(6) No provision in the security agreement between the parties to an inventory 
financing arrangement shall in any way modify, change, or supersede the 
requirements of this section for the perfection of security interests in 
manufactured homes in the inventory of a retailer. 
(d) For Release of Lien. 
(1) The lienholder shall deliver a properly executed release of lien form 
prescribed by the department to the owner of record. 
(2) The lien recorded on a manufactured home document of title shall be released 
by the department upon receipt of a release of lien form properly executed by 
the lienholder of record, and a new document of title shall be issued to the 
owner(s) of record. 
(e) Foreclosure or Repossession. 
(1) In the event of foreclosure or repossession of a manufactured home, the 
department shall issue a new manufactured home document of title in the name of 
the lienholder, upon receipt of a properly executed application for title 
containing the following information: 
(A) The description of the home shall be included along with an indication of 
whether the home is a foreclosure or repossession; 
(B) The name and address of the lienholder and name of the person authorized to 
sign for the lienholder; and 
(C) An indication of whether the home was repossessed by judicial order or 
sequestration. A true copy of the order or bill of sale shall be attached. 
(2) In the event of foreclosure or repossession of a manufactured home, the 
department will not issue a new manufactured home document of title until 
receipt of release of lien. 
(f) Surrender of Title Documents for Cancellation. 
(1) The department shall cancel any outstanding title to a manufactured home 
upon receipt of a properly executed application. Title documents shall be 
surrendered for cancellation in the following instances: 
(A) The manufactured home, or transportable section, has been permanently 
affixed to real estate and is defined as real estate by the Property Code; 
(B) The manufactured home, or transportable section, has been declared salvage 
as defined in the Standards Act, sec.8; or 
(C) The manufactured home has been sold, exchanged or transferred by lease 
purchase for business use. 
(2) The department will not cancel a document of title if a lien is filed with 
the department or recorded on the manufactured home document of title. In either 
such instance, the department will notify the owner and each lienholder that the 
title has been surrendered for cancellation, and that the department will not 
cancel the title unless the lien is released.
(g) Right of Survivorship: If both husband and wife are shown as purchasers or 
transferees, they may execute the right of survivorship election on an 
application for title. Such election constitutes an agreement for the right of 
survivorship. If the survivorship election is taken, then the department will 
issue a new document of title to the surviving spouse upon receipt of a copy of 
the death certificate of the deceased spouse, and a properly executed 
application for title. 

sec.80.206. Assignment of Lien.
(a) A lien may be assigned from one lienholder to another by completing a 
properly executed application for title requesting the assignment of lien. The 
application for title must be signed by both lienholders and supported by the 
outstanding title, a copy of the assignment agreement, and the fee. 
(b) Should two lienholders anticipate assignments of lien for a large number of 
homes, they may prefile a copy of the assignment agreement with the department. 
The department will assign a file number, and the lienholder may reference the 
file number in place of including a copy of the assignment agreement with each 
application. 

sec.80.207. Reinstatement of Canceled Documents of Title. 
(a) A manufactured home document of title issued by the department which has 
been canceled because the home has been permanently affixed to real estate may 
be reinstated subject to the following documents being filed with the 
department: 
(1) a properly executed release of lien releasing any lien resulting from a 
security interest in the home from the lender; 
(2) if no lien or security interest exists, an affidavit executed before a 
notary public that no lien or security interest exists;
(3) a properly executed application for reinstatement accompanied by a certified 
check or money order for $35; 
(4) a certification from a title insurance company authorized to do business in 
Texas that no other liens exist on the manufactured home and if a certificate of 
attachment to real estate has been filed in the deed records of the county in 
which the real estate is located, that a notice of removal from real estate has 
been filed in the deed records of the county in which the real estate from which 
the home was removed is located; and 
(5) written request for a habitability inspection to ensure that the home is 
habitable. The request must be accompanied by the required fee of $100. 
(6) If the title is being transferred, a properly executed application for title 
must be submitted along with the fee required by sec.80.202 of this title 
(relating to Fees for Title Documents). 
(b) If a manufactured home document of title has been canceled as a result of 
the home having been previously sold for business use, the department will 
reinstate the title subject to the following: 
(1) receipt of a written request for an inspection of the home to determine if 
the home is habitable. The required fee must accompany the application; and 
(2) following the inspection, a written finding by the inspector that the home 
is habitable; and, if so 
(3) the receipt of a properly executed application for reinstatement accompanied 
by the proper transaction fee; and 
(4) if title is being transferred, a properly executed application for title 
accompanied by the proper fee. 

sec.80.208. Recording Tax Lien on Manufactured Homes. 
(a) The collector for a taxing unit may file notice of the unit's tax lien on a 
manufactured home with the department, if the tax has not been paid by January 
31 of the year following the year for which the tax is assessed. The notice must 
include: 
(1) name and address of owner of the manufactured home; 
(2) address and location of the manufactured home as shown on the collector's 
records; 
(3) amount of tax owed, tax year for which tax was imposed, and name of taxing 
unit that imposed the tax; 
(4) tax roll account number and taxing unit identification (ID) number; and 
(5) manufacturer name, correct serial number and HUD label number or Texas seal 
number. 
(b) The notice must be on a form prescribed by the department, and will consist 
of four parts: 
(1) white - for TDHCA; 
(2) blue - for lienholder; 
(3) orange - for notice of cancellation; 
(4) yellow - for collector. 
(c) The white and blue portions of the notice are sent to the department to file 
the notice of tax lien. The department will stamp both portions received and 
recorded. The white portion will be returned to the collector, and the blue 
portion will be returned to the lienholder, if applicable. The orange portion 
will be retained by the collector for notice of lien cancellation. Upon 
cancellation of the lien, the orange portion should be completed and sent to the 
department where it will be date stamped upon receipt, recorded, and returned to 
the collector. 
(d) The collector may simultaneously file notice of tax liens of all the taxing 
units served by the collector. However, notice of any lien for taxes for the 
prior calendar year must be filed with the department prior to September 1 of 
the following year. Any lien for which the notice is not received and recorded 
by the department by the September 1 deadline is extinguished and is not 
enforceable. 
(e) If the information on the tax lien notice matches that of the title of 
record, the department shall record a tax lien notice, and shall indicate the 
existence of the lien on any document of title for the manufactured home issued 
by the department, until the collector for the taxing unit files a notice 
canceling the tax lien. Simultaneously with the recording of a tax lien, the 
department must mail a notice of the tax lien to any other lienholders of 
record. 
(f) If the information on the tax lien notice does not match that of the title 
of record, the notice will be returned to the taxing unit.
(g) For all manufactured homes sold, or to which ownership is transferred, after 
December 31, 1985, the recording of a tax lien notice filed with the department 
constitutes constructive notice of the existence of the lien to all purchasers 
of the manufactured home who purchase it after the date or recordation of the 
lien and before the collector for the taxing unit files a notice canceling the 
tax lien. 
(h) If a tax lien ceases to exist, the collector for the taxing unit shall file 
a notice with the department stating that the lien no longer exists. Such notice 
shall be filed no later than ten (10) calendar days after payment of the taxes. 
(i) For the purposes of this section, the term "manufactured housing" has the 
meaning assigned by the Standards Act, sec.3(17), but does not apply to any 
manufactured home which has been declared to be real estate and for which the 
document of title has been canceled. 
(j) A personal property tax lien may not be enforced against a manufactured home 
transferred to a bona fide purchaser who does not have constructive notice of 
the existence of the lien. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805842
Larry Paul Manley
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 475-3726

TITLE 13. CULTURAL RESOURCES
PART I. Texas State Library and Archives Commission
CHAPTER 2.General Policies Procedures
SUBCHAPTER A.Principles and Policies of the Commission
13 TAC sec.sec.2.1, 2.111-2.1555
The Texas State Library and Archives Commission proposes new sec.2.1 which 
defines terms used in Chapter 2. The commission also proposes a new Subchapter C 
pertaining to grants policies containing new sec.sec.2.111 - 2.155 which 
establish policies for awarding and administering grants. The sections establish 
the guidelines for different grant programs whose general purpose is to assist 
local governments to improve their library services. These sections set forth 
the general conditions and criteria for possible grant awards for specific 
purposes. Grants will aid local communities to establish new library services, 
maintain and foster cooperative library services with other communities, provide 
outreach services for populations with special needs, and provide interlibrary 
loan services. The Commission previously adopted its guidelines for 
administration of various grant programs as part of a State Plan for Library 
Services and Construction Act, which was updated and submitted annually to the 
U.S. Department of Education. The Commission's authority for adopting such a 
plan is contained in Government Code sec.441.009. Under new federal legislation, 
the Library Services and Technology Act, the federal administrative agency has 
changed to the Institute of Museum and Library Services, and the requirement to 
submit a plan to the federal government has changed in frequency from every year 
to every five years. With this new federal procedure the Commission will no 
longer adopt by rule an annual plan that contains specific grant guidelines each 
year. The proposed sections will establish Commission policy for administration 
of specific grant programs. 
Raymond Hitt, Assistant State Librarian, has determined that for each year of 
the first five years the sections are in effect there will be fiscal 
implications for state and local government. State and local governments will 
receive approximately an additional $2.5 million dollars each year for the next 
five years in grants depending on subsequent appropriation levels. There will be 
no fiscal implications for small businesses or individuals as a result of 
enforcing or administering the section. 
Mr. Hitt also has determined that for each of the first five years the section 
is in effect the public benefits anticipated as a result of enforcing the 
section will be to establish clear policy for the administration of grant 
programs of the commission. The programs will improve library services available 
to the public. 
Comments may be submitted to Jeanette Larson, Director of the Library 
Development Division, Texas State Library and Archives Commission, P. O. Box 
12927, Austin, Texas 78711-2927. 
The new sections are proposed under the Government Code sec.441.006 and 
sec.441.0091. 
The proposed new sections affect the Government Code sec.441.006 and 
sec.441.0091. 

sec.2.1.Definitions.
The following words and terms when used in this chapter shall have the following 
meanings, unless the context clearly indicates otherwise: 
(1) Commission -- The Texas State Library and Archives Commission.
(2) Library -- The staff, collections, archives, and property of the Texas State 
Library and Archives Commission organized to carry out the Commission 
responsibilities. 
(3) Loan Period -- A period of time beginning with the date the Library delivers 
or mails an item to a customer and ending with the date that the customer 
returns it to the Library. 
(4) Over-size paper copy -- Any printed impression on paper larger than 8 1/2 
inches by 14 inches. Each side of a piece of paper is counted as a single-copy. 
A piece of paper that is printed on both sides is counted as two copies. 
(5) State Archives -- A non-circulating collection of Texas state government 
records, private papers, maps, photographs, newspapers, and published materials 
that document the history of the State of Texas and the growth and actions of 
its government. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 18, 1998.
TRD-9805407
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

13 TAC sec.2.11
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas State 
Library and Archives Commission or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas State Library and Archives Commission proposes to repeal sec.2.11. The 
repealed section contains definitions for Chapter 2 General Policies and 
Procedures. The commission will propose a new sec.2.1 that will contain the 
definitions used in Chapter 2. 
Raymond Hitt, Assistant State Librarian, has determined that for each year of 
the first five years the sections are in effect there will not be fiscal 
implications for state or local government. There will be no fiscal implications 
for small businesses or individuals as a result of enforcing or administering 
the section. 
Mr. Hitt also has determined that for each of the first five years the section 
is in effect the public benefits anticipated as a result of enforcing the 
section will be to have better organized policies. 
Comments may be submitted to Jeanette Larson, Director of the Library 
Development Division, Texas State Library and Archives Commission, P. O. Box 
12927, Austin, Texas 78711-2927. 
The repeal is proposed under the Government Code sec.441.006. The proposed 
repeal affects the Government Code sec.441.006. Rules to be repealed.
sec.2.11.Definitions.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 18, 1998.
TRD-9805406
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

SUBCHAPTER C.Grant Policies
<nl>Division 1. General Grant Guidelines<ol>
13 TAC sec.sec.2.111-2.119
The new sections are proposed under the Government Code sec.441.006 and 
sec.441.0091. 
The proposed new sections affect the Government Code sec.441.006 and 
sec.441.0091.

sec.2.111.Scope of Subchapter. 
The commission operates a variety of grant programs including competitive, 
formula, and negotiated grants. This subchapter applies to all types of grant 
programs. However, sec. 2.115 of this subchapter (relating to Peer Review) 
applies only to competitive grant programs.

sec.2.112. General Selection Criteria.
(a) Grants shall be awarded based on guidelines that reflect applicable state 
and federal mandates. Selection criteria are designed to select applications 
that provide the best overall value to the state. 
(b) The award criteria include: 
(1) program quality as determined by a peer review process; and 
(2) the cost of proposed service. 
(c) The commission may consider additional factors in determining best value, 
including: 
(1) financial ability to perform services; 
(2) state and regional service needs and priorities;
(3) improved access for poorly served areas and populations;
(4) ability to continue services after grant period;
(5) past performance and compliance. 

sec.2.113. Content of Grant Guidelines. 
Grant guidelines shall include at a minimum: 
(1) goals describing the purpose of the grant program; 
(2) eligibility requirements; 
(3) description of the services to be provided; 
(4) applicable priorities and restrictions; and 
(5) the selection criteria and the process to evaluate grant applications and 
select awards. 

sec.2.114. Screening of Applications. 
(a) Commission staff will screen applications to determine if all requested 
information has been provided in a timely fashion, on prescribed forms. 
(b) An application must be complete with proper authorization for consideration. 
(c) The commission staff will provide written notification to applicants 
eliminated though the screening process. 

sec.2.115.Peer Review.
(a) The commission may use peer reviewers to evaluate applications in 
competitive grant programs. 
(b) The director and librarian may select professionals and citizens to evaluate 
grant applications. Peer reviewers must have appropriate training or service on 
citizen boards in an oversight capacity and may not evaluate specific 
applications in which there is, or is an appearance of, a conflict of interest. 
(c) The commission staff will provide written instructions and training for all 
peer reviewers. 
(d) The reviewers score each application according to the review criteria stated 
in the grant guidelines. 

sec.2.116.Funding Decisions.
(a) The commission staff will submit a recommended priority ranked list of 
applicants for possible funding. Final approval of a grant award is solely at 
the determination of the Commission. 
(b) Applications for grant funding will be evaluated only upon the information 
provided in the written application. 
(c) The commission staff may negotiate with selected applicants to determine the 
terms of the award. To receive an award, the applicant must accept any 
additional or special terms and conditions listed in the grant contract and any 
changes in the grant application. 
(d) The commission staff will notify unsuccessful applicants in writing. 

sec.2.117.Cancellation or Suspension of Grants.
The commission has the right to reject all applications and cancel a grant 
solicitation at any point before a contract is signed. 

sec.2.118.Adoption of Uniform Grants Management Standards (UGMS).
The commission adopts by reference the Uniform Grant and Contract Management 
Standards. The standards adopted by reference have been published as 1 TAC 
5.141-5.167. 

sec.2.119.Negotiated Grants.
(a) The commission may award negotiated grants to provide interlibrary loan 
services if it determines that the best value will be achieved without 
competition. 
(b) An award shall be made and/or renewed each year if: 
(1) the provider demonstrates capability of delivering interlibrary loan service 
in a timely fashion at a reasonable cost; 
(2) the commission finds a continuing regional and statewide need for the 
services (relative to other services); and 
(3) funds are available to continue the award. 
(c) Renewal of an award is not automatic. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805896
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

<nl>Division 2: Library Services and Technology Act, Library Cooperation Grants 
- Part A, Technology, Guidelines for Public Libraries. <ol>
13 TAC sec.sec.2.120-2.125
The new sections are proposed under the Government Code sec.441.006 and 
sec.441.0091. 
The proposed new sections affect the Government Code sec.441.006 and 
sec.441.0091.

sec.2.120.Goals and Purposes.
(a) This grant program promotes access to learning and information resources in 
all types of libraries for individuals of all ages; and promote library services 
that provide all users access to information through state, regional, national, 
and international electronic networks; and provides linkages among and between 
libraries. 
(b) Programs may be in one of the following categories: 
(1) Establish or enhance electronic linkages among or between libraries-to 
establish a new network or update the electronic technology in an existing one 
by providing better or enhanced access to library resources and materials in 
more than one system member public library or with multi-type libraries; or 
(2) Encourage libraries in different areas, and encourage different types of 
libraries to establish consortia and share resources - to encourage public 
libraries to participate in public library consortia or participate in multi-
type library consortia that include a public library (which is a member of the 
Texas Library System) and to share between themselves the technology-based 
resources of all libraries within the consortium. 

sec.2.121.Eligible Applicants.
(a) Texas Library System member public libraries, Major Resource Systems, and 
regional library systems through their governing authority (city, county, or 
corporation) are eligible to apply for funds. These funds are awarded to public 
libraries but may be used with all types of libraries as defined in the Library 
Services and Technology Act (LSTA), P.L. 104-208, and that are members of a 
consortia as defined by the LSTA. 
(b) Successful applicants are eligible to apply for grant funds for the two 
years following the initial grant year. The second and third application will be 
evaluated with the same criteria as new applications. No applicant will be 
eligible for a fourth year of funding for the same project.

sec.2.122.Eligible Expenses. 
(a) This grant program will fund costs for staff, equipment, capital 
expenditures, materials, and professional services needed to: 
(1) create a new or enhance an existing network of system member public 
libraries; 
(2) create a multi-type library network that includes a system member public 
library; 
(3) create linkages between system member public libraries and educational, 
social, or cultural information services; 
(4) create linkages between system member public libraries separated by 
geographical barriers. 
(b) This grant program will not fund the following costs:
(1) building construction or renovation; 
(2) food, beverages, or gifts; 
(3) equipment or technology not specifically needed to carry out the goals of 
the grant; 
(4) transportation/travel for participants or non-grant funded personnel; 
(5) programs to enhance service within existing library structures, i.e. branch 
libraries; 
(6) dumb terminals; or 
(7) American Standard Code for Information Interchange (ASCII) connections; or 
(8) databases currently offered or similar to ones offered by the Texas State 
Library and Archives Commission (i.e., a magazine index database may not be 
purchased since one is already provided by the Texas State Electronic Library, 
TSEL). 

sec.2.123. Criteria for Award.
The Library Services and Technology Act Advisory Council will score proposals in 
nine criteria. The maximum number of points for each category is as follows: 
(1) Community Profile. (15 points) The applicant describes the greater community 
to be served by the grant. Identifies a service that might be used if it were 
available; and includes demographic, statistics, library records, or surveys to 
support these statements. Attaches letters of cooperation showing their 
commitment to the project from agencies to be involved in the shared service. 
The applicant thoroughly describes services, programs, activities; describes the 
location where they will be offered; and explains how these services will 
attract shared library users. 
(2) Shared Services. (15 points) The application should show details of the 
existing technology plan of the system member public library, Major Resources 
System, or regional library system and how the shared service is designed to 
mesh with technology purchased or to be purchased with Telecommunications 
Infrastructure Fund (TIF) grants, the service provided by Universal Service Fund 
Education Rate discounts, and House Bill 2128. 
(3) Personnel. (5 points) List who will administer the funds. List which 
positions will provide the services. List how much time will be spent in each 
position on assigned duties. List how the qualifications of each person relate 
to their job duties. Full job descriptions are required for new hires. 
(4) Timetable. (5 points) The applicant presents a timetable for project 
activities within the fiscal year (i.e., a list of actions with a date by which 
they will be accomplished); provides verification that facilities will be 
available, equipment and materials delivered; and explains how the staff will be 
hired and trained in time to carry out the services as planned.
(5) Objectives. (10 points) The applicant sets achievable, measurable outcomes; 
describes how the outcomes will demonstrate expanded library services; and 
presents a reasonable method to collect data. 
(6) Reaching a Shared Target Area. (10 points) The applicant submits a plan for 
introducing the shared library services to targeted users; the plan uses a 
variety of communication techniques and includes verbal communication.
(7) Expenses Justified. (15 points) The applicant fully justifies the budget by 
describing how budgeted items will contribute to the shared services; quotes a 
source for the stated costs (e.g., city pay classification for staff, catalog or 
city/county bid list for equipment); the costs are reasonable to achieve project 
objectives. 
(8) Adequacy of Resources. (15 points) The applicant describes the joint 
resources which will be used to support this expansion of services during the 
grant year; submits estimated costs for continuing the expanded services next 
year, with a plan for how the library or group of libraries will assume those 
costs in the future. A written commitment of future support from governing 
bodies is desirable, but not required.
(9) Evaluation. (10 points) The applicant presents a method to count users of 
the shared services as well as the effectiveness of the service. Provides a 
method to identify any new library users. 

sec.2.124. Grant Review and Award Process. 
(a) Commission staff will review each application for the following: 
(1) legal eligibility of the institution to participate in a grant program and 
appropriate authorizing signature; 
(2) conformance to the federal and state regulations pertaining to grants; 
(3) inclusion of unallowable costs; 
(4) errors in arithmetic or cost calculations; 
(5) submission of all required forms; and 
(6) whether the application arrived at the Texas State Library and Archives 
Commission by the required date and time. 
(b) Commission staff will raise issues and questions regarding the needs, 
methods, staffing and costs of the applications. Staff comments will be sent to 
the LSTA Council with the applications for consideration by the council. 
(c) Applicants will be sent a copy of the staff comments to give applicants an 
opportunity to respond in writing. Applicants may not modify the proposal in any 
way; however, applicants' responses to staff comments will be distributed to the 
council. 
(1) Applications with significant errors, omissions, or eligibility problems 
will not be rated. 
(2) Commission staff will be available to offer technical assistance to council 
members. 
(d) Applications will be scored using the following process:
(1) The Library Services and Technology Act Advisory Council will review all 
complete and eligible grant applications forwarded to them by commission staff 
and complete a rating form for each. Each member will evaluate the proposal in 
relation to the specific requirements of the criteria and will mark a weighted 
rating, ranging from 0 - 15 points depending on the points assigned to each 
criteria. 
(2) No council member who is associated with an applicant or with an 
application, or who stands to benefit directly from an application will evaluate 
that application. Any council member who feels unable to fairly evaluate a 
particular application may choose not to review that application.
(3) Council members will consider and assess the strengths and weaknesses of any 
proposed project only on the basis of the documents submitted. Considerations of 
geographical distribution, demographics, type of library, or personality will 
not influence the assessment of a proposal by the council. 
(4) Council members may not discuss proposals with any applicant before the 
proposals are reviewed. Commission staff is available to provide technical 
assistance to council members. Commission staff will conduct all negotiations 
and communication with the applicants. 
(5) Council members may offer a motion to set conditions for funding a given 
application, e.g., reduction of project budget, revision of project objectives. 
Such motions must be approved by a majority vote of council members present and 
eligible. The motion must include a statement of the reasons for setting such 
conditions. Council members who are ineligible to evaluate a given proposal will 
not vote on funding conditions. 
(6) Council members who do not attend the meeting may mail the evaluation forms 
to the chairperson in care of the Library Development Division of the Texas 
State Library and Archives Commission. In order to be counted, the mailed forms 
must arrive before the meeting. 

sec.2.125. Decision Making Process. 
To be considered for funding by the Texas State Library and Archives Commission, 
an application must receive a minimum adjusted mean score of 50 points. 
Commission staff will tabulate the council's work using a method that eliminates 
the high and low score, called an adjusted mean score. 
(1) Applications will be ranked in priority order by score for consideration by 
the commission. 
(2) If insufficient funds remain to fully fund the next application, the staff 
will negotiate a reduced grant with the next ranked applicant. 
(3) If the council recommends funding an application which, for legal, fiscal, 
or other reasons, is unacceptable to the staff, a contrary recommendation will 
be made. The council will be informed of this situation prior to presentation to 
the commission. A positive recommendation to the commission will be contingent 
upon successfully completing these negotiations prior to the commission meeting. 
If Council is unable to produce a set of recommendations for funding, the staff 
will use the same evaluation procedures to develop recommendations to the 
commission. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805897
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

<nl>Division 3. Library Services and Technology Act, Library Cooperation Grants-
Part B, Services , Guidelines for Public Libraries<ol>
13 TAC sec.sec.2.130-2.135
The new sections are proposed under the Government Code sec.441.006 and 
sec.441.0091. 
The proposed new sections affect the Government Code sec.441.006 and 
sec.441.0091. 

sec.2.130.Goals and Purposes. 
(a) This grant program promotes access to learning and information resources in 
all types of libraries for individuals of all ages; and promotes library 
services that provide all users access to information through state, regional, 
national, and international electronic networks; and provides linkages among and 
between libraries. 
(b) The grant encourages libraries in different areas, and encourages different 
types of libraries to establish consortia and share resources-encourages public 
libraries to participate in public library consortia or participate in multi-
type library consortia that include a public library (which is a member of the 
Texas Library System) and to share between themselves the services of all 
libraries within the consortium. 

sec.2.131.Eligible Applicants.
(a) Texas Library System member public libraries, Major Resource Systems, and 
regional library systems through their governing authority (city, county, or 
corporation) are eligible to apply for funds. These funds are awarded to public 
libraries but may be used with all types of libraries as defined in the Library 
Services and Technology Act (LSTA) P.L. 104-208, and that are members of a 
consortium as defined by the LSTA. 
(b) Successful applicants are eligible to apply for grant funds for the two 
years following the initial grant year. The second and third application will be 
evaluated with the same criteria as new applications. No applicant will be 
eligible for a fourth year of funding for the same project.

sec.2.132. Eligible Expenses. 
(a) This grant program will fund costs for staff, equipment, capital 
expenditures, materials, and professional services needed to provide:
(1) cooperative multi-library or multi-type library training programs, ; 
(2) cooperative multi-library or multitype library literacy volunteer training 
programs; 
(3) coooperative multi-library or multi-type library programs; 
(4) cooperative multi-library or multi-type library preservation projects. 
(b) This grant program will not fund the following costs:
(1) building construction or renovation; 
(2) food, beverages, or gifts; 
(3) equipment or technology not specifically needed to carry out the goals of 
the grant; 
(4) transportation/travel for participants or non-grant funded personnel; or 
(5) programs to enhance service within existing library structures, i.e. branch 
libraries. 

sec.2.133. Criteria for Award.
The Library Services and Technology Act Advisory Council will score proposals in 
nine criteria. The maximum number of points for each category is as follows: 
(1) Community Profile. (15 points) The applicant describes the greater community 
to be served by the grant. Identifies a service that might be used if it were 
available; and includes demographic, statistics, library records, or surveys to 
support these statements. Attaches letters of cooperation showing their 
commitment to the project from agencies to be involved in the shared service. 
The applicant thoroughly describes services, programs, activities; describes the 
location where they will be offered; and explains how these services will 
attract shared library users. 
(2) Shared Services. (15 points). The applicant describes thoroughly the shared 
services, programs, activities, and materials to be purchased; describes 
locations where they will be offered; and explains how these services will 
attract shared library users. 
(3) Personnel. (5 points) List who will administer the funds. List which 
positions(s) will provide the services. List how much time will be spent in each 
position on assigned duties. List how the qualifications of each person relates 
to their job duties. Full job descriptions are required for new hires. 
(4) Timetable. (5 points) The applicant presents a timetable for project 
activities within the fiscal year (i.e., a list of actions with a date by which 
they will be accomplished); provides verification that facilities will be 
available, equipment and materials delivered; and an explanation of how the 
staff will be hired and trained in time to carry out the services as planned. 
(5) Objectives. (10 points) The applicant sets achievable, measurable outcomes; 
describes how the outcomes will demonstrate expanded library services; and 
presents a reasonable method to collect data. 
(6) Reaching a Shared Target Area. (10 points) The applicant submits a plan for 
introducing the shared library services to targeted users; the plan uses a 
variety of communication techniques, and includes verbal communication. 
(7) Expenses Justified. (15 points) The applicant fully justifies the budget by 
describing how budgeted items will contribute to the shared services; quotes a 
source for the stated costs (e.g., city pay classification for staff, catalog or 
city/county bid list for equipment); the cost are reasonable to achieve project 
objectives. 
(8) Adequacy of Resources. (15 points) The applicant describes the joint 
resources which will be used to support this expansion of services during the 
grant year; submits estimated costs for continuing the expanded services next 
year, with a plan for how the library or group of libraries will assume those 
costs in the future. A written commitment of future support from governing 
bodies is desirable, but not required.
(9) Evaluation. (10 points) The applicant presents a method to count the users 
of the shared services as well as the effectivness of the service. Applicant 
provides a method to identify any new library users.

sec.2.134.Grant Review and Award Process.
Commission staff will review each application for the following: 
(1) legal eligibility of the institution to participate in a grant program and 
appropriate authorizing signature; 
(2) conformance to the federal and state regulations pertaining to grants; 
(3) inclusion of unallowable costs; 
(4) errors in arithmetic or cost calculations; 
(5) submission of all required forms; and 
(6) whether the application arrived at the Texas State Library and Archives 
commission by the required date and time. 
(b) Commission staff will raise issues and questions regarding the needs, 
methods, staffing and costs of the applications. Staff comments will be sent to 
the LSTA Council with the applications for consideration by the council. 
(c) Applicants will be sent a copy of the staff comments to give applicants an 
opportunity to respond in writing. Applicants may not modify the proposal in any 
way; however, applicants' responses to staff comments will be distributed to the 
council. 
(1) Applications with significant errors, omissions, or eligibility problems 
will not be rated. 
(2) Commission staff will be available to offer technical assistance to council 
members. 
(d) Applications will be scored using the following process:
(1) The Library Services and Technology Act Advisory Council will review all 
complete and eligible grant applications forwarded to them by commission staff 
and complete a rating form for each. Each member will evaluate the proposal in 
relation to the specific requirements of the criteria and will mark a weighted 
rating, ranging from 0 - 15 points depending on the points assigned to each 
criteria. 
(2) No council member who is associated with an applicant or with an 
application, or who stands to benefit directly from an application will evaluate 
that application. Any council member who feels unable to fairly evaluate a 
particular application may choose not to review that application.
(3) Council members will consider and assess the strengths and weaknesses of any 
proposed project only on the basis of the documents submitted. Considerations of 
geographical distribution, demographics, type of library, or personality will 
not influence the assessment of a proposal by the council. 
(4) Council members may not discuss proposals with any applicant before the 
proposals are reviewed. Commission staff is available to provide technical 
assistance to council members. Commission staff will conduct all negotiations 
and communication with the applicants. 
(5) Council members may offer a motion to set conditions for funding a given 
application, e.g., reduction of project budget, revision of project objectives. 
Such motions must be approved by a majority vote of council members present and 
eligible. The motion must include a statement of the reasons for setting such 
conditions. Council members who are ineligible to evaluate a given proposal will 
not vote on funding conditions. 
(6) Council members who do not attend the meeting may mail the evaluation forms 
to the chairperson in care of the Library Development Division of the Texas 
State Library and Archives Commission. In order to be counted, the mailed forms 
must arrive before the meeting. 

sec.2.135. Decision Making Process.
To be considered for funding by the Texas State Library and Archives Commission, 
an application must receive a minimum adjusted mean score of 50 points. 
Commission staff will tabulate the council's work using a method that eliminates 
the high and low score, called an adjusted mean score. 
(1) Applications will be ranked in priority order by score for consideration by 
the commission. 
(2) If insufficient funds remain to fully fund the next application, the staff 
will negotiate a reduced grant with the next ranked applicant. 
(3) If the council recommends funding an application which, for legal, fiscal, 
or other reasons, is unacceptable to the staff, a contrary recommendation will 
be made. The council will be informed of this situation prior to presentation to 
the commission. A positive recommendation to the commission will be contingent 
upon successfully completing these negotiations prior to the commission meeting. 
If council is unable to produce a set of recommendations for funding, the staff 
will use the same evaluation procedures to develop recommendations to the 
commission. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805898
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

<nl>Division 4. Library and Technology Act, Special Projects Grants, Guidelines 
for Public Libraries<ol>
13 TAC sec.sec.2.150-2.155
The new sections are proposed under the Government Code sec.441.006 and 
sec.441.0091. 
The proposed new sections affect the Government Code sec.441.006 and 
sec.441.0091. 

sec.2.150. Goals and Purposes.
This grant program expands public library services to all members of the 
library's community. It enables libraries to develop local programs for 
populations with special needs. Programs may be in one of the following 
categories:
(1) Services to People with Limited English Proficiency-To improve access to 
library resources and services to individuals not born in the United States or 
whose native language is not English and therefore have difficulty speaking, 
reading, writing, or understanding the English language. 
(2) Services to Older Adults-To provide services, programs, and library 
materials for persons who are over 60 years of age. 
(3) Community Information and Referral Centers-To provide patrons with specific 
information of a utilitarian or practical nature on groups or organizations in 
the library's service area or to refer patrons to an organization, agency, or 
individual capable of providing the information.
(4) Literacy Programs-To provide literacy programs for adults, school dropouts, 
and persons incarcerated in correctional facilities, in cooperation with other 
agencies and organizations, if appropriate. 
(5) Services for People with Disabilities-To provide library services to 
individuals who have physical, mental, visual, or hearing disabilities.. 
(6) Intergenerational Library Programs-To develop intergenerational library 
programs that will match older adult volunteers with libraries interested in 
developing after school literacy and reading skills programs for unsupervised 
school children during after school hours. 
(7) Child Care Center Library Programs -To provide library services and programs 
to child care providers or child care centers, which are licensed or certified 
by the State, or otherwise meet the requirements of State law. 
(8) Services for the Disadvantaged in Urban and Rural Areas - To make public 
library services accessible to disadvantaged individuals who are unable to 
benefit from public library services regularly made available to the general 
public. Disadvantages include, but are not restricted to, distance, socio-
economic or educational deprivation, or cultural isolation from the general 
community. 

sec.2.151. Eligible Applicants.
(a) Public libraries and public library systems, through their governing 
authority (city, county, or corporation) are eligible to apply for grants. 
Applicants must be members of the Texas Library System at the time of 
application. 
(b) Successful applicants are eligible to apply for funding the two years 
following their initial grant. The second and third application will be 
evaluated with the same criteria as new applications. No applicant will be 
eligible for a fourth year of funding for the same project. 

sec.2.152.Eligible Expenses. 
(a) This grant program will fund costs for staff, equipment, capital 
expenditures, materials, and professional services needed to take library 
services, materials and activities into the community to: 
(1) create new library services, which will attract new members of the 
appropriate target group into the library; 
(2) train and develop library staff and volunteers in appropriate ways to 
provide service to the new users; and 
(3) develop a structure for a complex service project (example: information and 
referral system) which may not provide services during the funding year, but 
intends to do so with local funding the following year. 
(b) This grant program will not fund the following costs:
(1) building construction or renovation; 
(2) food, beverages, or gifts; 
(3) equipment or technology not specifically needed to provide services to the 
target population; or 
(4) transportation/travel for participants or non-grant funded personnel. 

sec.2.153. Criteria for Award.
The Library Services and Technology Act Advisory Council will score proposals on 
nine criteria. The maximum number of points for each category is as follows: 
(1) Community Profile. (15 points) The applicant describes the community which 
the library serves and describes the segments of that community which it is not 
serving; identifies a service that the non-users might use if it were available; 
and includes demographic, statistics, library records, or surveys to support 
these statements. 
(2) New Services. (15 points) The applicant describes thoroughly services, 
programs, activities, and material to be purchased; describes the location where 
they will be offered; and explains how these services will attract new library 
users. 
(3) Personnel. (5 points) The applicant describes who will administer the grant 
funds and who will provide the services; how much time they will spend on their 
assigned duties; and how their qualifications relate to their job duties. Full 
job descriptions are required for new hires.
(4) Timetable. (5 points) The applicant presents a timetable for project 
activities within the fiscal year (i.e., a list of actions with a date by which 
they will be accomplished); provides verification that facilities will be 
available, equipment and materials delivered; and explains how the staff will be 
hired and trained in time to carry out the services as planned.
(5) Objectives. (10) The applicant sets achievable, measurable outcomes; 
describes how the outcomes will demonstrate expanded library services; and 
presents a reasonable method to collect data. 
(6) Reaching the Hard-to-Reach. (10 points) The applicant submits a plan for 
introducing the new library services to traditionally hard-to-reach nonusers; 
the plan uses a variety of communication techniques, and includes verbal 
communication. 
(7) Expenses Justified. (15 points) The applicant fully justifies the budget by 
describing how budget items will contribute to the new services; quotes a source 
for the stated cost (e.g., city pay classification for staff, catalog or 
city/county bid list for equipment); the costs are reasonable to achieve project 
objectives. 
(8) Adequacy of Resources. (15 points) The applicant describes the local 
resources which will be used to support this expansion of services during the 
grant year; submits estimated costs for continuing the expanded services next 
year, with a plan for how the library will assume those costs in the future. A 
written commitment of future support from the governing body is desirable, but 
not required. 
(9) Evaluation. (10 points) The applicant presents a method to count how many of 
the users of the new services are former nonusers. If the project proposes to 
educate individuals, the applicant describes educational outcomes and how they 
will be measured. 

sec.2.154. Grant Review and Award Process.
(a) Commission staff will screen each application for the following: 
(1) legal eligibility of the institution to participate in the grant program and 
appropriate authorizing signatures; 
(2) conformance to the federal and state regulations pertaining to grants; 
(3) inclusion of unallowable costs; 
(4) errors in arithmetic or cost calculations; 
(5) submission of all required forms; and 
(6) whether the application arrived at the Texas State Library and Archives 
Commission by the required date and time. 
(b) Commission staff will raise issues and questions regarding the needs, 
methods, staffing, and costs of the applications. Staff comments will be sent to 
the LSTA Council with the applications for consideration by the council. 
(c) Applicants will be sent a copy of the staff comments to give applicants an 
opportunity to respond in writing. Applicants may not modify the proposal in any 
way; however, applicants' responses to staff comments will be distributed to the 
Council. 
(1) Applications with significant errors, omissions, or eligibility problems 
will not be rated. 
(2) Commission staff will be available to offer technical assistance to council 
members. 
(d) Applications will be scored using the following process:
(1) The Library Services and Technology Act Advisory Council will review all 
complete and eligible grant applications forwarded to them by commission staff 
and complete a rating form for each. Each member will evaluate the proposal in 
relation to the specific requirements of the criteria and will mark a weighted 
rating, ranging from 0 - 15 points depending on the points assigned to each 
criteria. 
(2) No council member who is associated with an applicant or with an 
application, or who stands to benefit directly from an application will evaluate 
that application. Any council member who feels unable to fairly evaluate a 
particular application may choose not to review that application.
(3) Council members will consider and assess the strengths and weaknesses of any 
proposed project only on the basis of the documents submitted. Considerations of 
geographical distribution, demographics, type of library, or personality will 
not influence the assessment of a proposal by the council. 
(4) Council members may not discuss proposals with any applicant before the 
proposals are reviewed. Commission staff is available to provide technical 
assistance to council members. Commission staff will conduct all negotiations 
and communication with the applicants. 
(5) Council members may offer a motion to set conditions for funding a given 
application, e.g., reduction of project budget, revision of project objectives. 
Such motions must be approved by a majority vote of council members present and 
eligible. The motion must include a statement of the reasons for setting such 
conditions. Council members who are ineligible to evaluate a given proposal will 
not vote on funding conditions. 
(6) Council members who do not attend the meeting may mail the evaluation forms 
to the chairperson in care of the Library Development Division of the Texas 
State Library and Archives Commission. In order to be counted, the mailed forms 
must arrive before the meeting. 

sec.2.155. Decision Making Process.
To be considered for funding by the Texas State Library and Archives Commission, 
an application must receive a minimum adjusted mean score of 50 points. 
Commission staff will tabulate the council's work using a method that eliminates 
the high and low score, called an adjusted mean score.
(1) Applications will be ranked in priority order by score for consideration by 
the commission. 
(2) If insufficient funds remain to fully fund the next application, the staff 
will negotiate a reduced grant with the next ranked applicant. 
(3) If the council recommends funding an application which, for legal, fiscal, 
or other reasons, is unacceptable to the staff, a contrary recommendation will 
be made. The council will be informed of this situation prior to presentation to 
the commission. A positive recommendation to the commission will be contingent 
upon successfully completing these negotiations prior to the commission meeting. 
If council is unable to produce a set of recommendations for funding, the staff 
will use the same evaluation procedures to develop recommendations to the 
commission. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805894
Raymond Hitt
Assistant State Librarian
Texas State Library and Archives Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 463-5440

TITLE 16. ECONOMIC REGULATION
PART II. Public Utility Commission of Texas
CHAPTER 23.Substantive Rules
SUBCHAPTER C.Rates
16 TAC sec.23.24
The Public Utility Commission of Texas proposes an amendment to sec.23.24, 
relating to Form and Filing of Tariffs. This amendment is proposed under Project 
Number 19205. The amendment is intended to aid in the regulation of retail 
electric service provided by jurisdictional electric utilities and to facilitate 
the provision of competitive energy services. The amendment to sec.23.24 would 
clarify the commission's requirements relating to the filing of tariffs by 
electric utilities. Electric utilities would be required to include in their 
tariffs any discounts or other compensation offered to customers. The amendment 
would reorganize the provisions of sec.23.24 relating to requirements for 
electric utilities and telecommunications utilities; however, the amendment 
would not affect the regulation of telecommunications utilities. 
In Project Number 14400, the commission's rulemaking to address integrated 
resource planning (completed in 1996), the commission indicated that it would 
address at a later date the issues of distribution unbundling and utilities' 
relationships with their affiliates. This proceeding addresses the unbundling of 
energy service. This proceeding includes new sec.25.223, relating to Unbundling 
of Energy Service, which is separately published but which requires coordination 
of comments as explained more fully below. The unbundling of costs (cost 
separation and the form of electric bills) is being addressed in Project Number 
16536 and affiliate activities are being addressed in Project Number 17549. 
Nat Treadway, policy analyst, Office of Policy Development, has determined that 
for the first five years that the proposed amendment is in effect there will be 
no fiscal implications for state and local government as a result of enforcing 
or administering the section. 
Mr. Treadway also has determined that for the first five years that the proposed 
section is in effect the public benefit anticipated as a result of enforcing the 
section includes increased competition in the provision of energy service, 
enhanced customer awareness of the availability, price, and terms and conditions 
of electric service, and improved regulatory oversight of retail electric 
service. 
The proposed amendment relating to the filing of tariffs is likely to increase 
the costs to utilities of complying with the commission's rules, but the 
benefits described above are expected to outweigh the costs. The costs of 
complying with the proposed regulations are difficult to estimate and are likely 
to vary from utility to utility. Utilities that have already set forth all 
electric services in their tariffs may incur no significant costs with respect 
to compliance with aspects of the amendment. Utilities that provide many energy 
services that are not described in their tariffs may incur a significant cost. A 
rough estimate of the annual cost for utilities that must substantially 
reorganize operations is from $500 to $50,000, depending on the size of the 
utility. To put these figures in context, the cost of service for the largest 
electric utility in the state is about $5.6 billion, while the revenue of a 
small utility is measured in millions of dollars. 
For each year of the first five years the proposed amendment is in effect, there 
will be no effect on small businesses as a result of enforcing the proposed 
sections. The amendment may increase the opportunities for small businesses to 
provide services directly to customers, but the magnitude of this benefit is 
uncertain. 
It is anticipated that the economic impact of the rules on the persons that are 
required to comply with them will be favorable, but it is impossible to estimate 
the magnitude of this benefit. The amendment should improve utility services by 
permitting a more focused application of the state's resources to the regulation 
of electric utilities and by bringing better pricing information and a wider 
array of services to customers. 
Mr. Treadway has further determined that for the first five years the proposed 
amendment is in effect there will be a favorable effect on the opportunities for 
employment in the geographic areas of Texas affected by implementing the 
requirements of the rules, but it is impossible to estimate the magnitude of the 
benefit. 
Comments on the proposed rule (16 copies) may be submitted to Filing Clerk, 
Public Utility Commission of Texas, 1701 N. Congress Avenue, P.O. Box 13326, 
Austin, Texas, 78711-3326, within 31 days after publication. Reply comments may 
be submitted within 45 days after publication. All comments should refer to 
Project Number 19205: Unbundling of Energy Service, and the comments should be 
incorporated within the comments filed on the proposed new sec.25.223, relating 
to Unbundling of Energy Service. 
The commission requests that electric utilities that could be affected by the 
proposed amendment provide an estimate of the cost of compliance with the 
proposed amendment with the utility's initial comments. A utility's cost 
estimates should indicate its cost of revising its tariffs. Interested persons 
may reply to each utility's cost estimates. In addition, the commission invites 
specific comments regarding the costs associated with, and benefits that will be 
gained by, implementation of the amendment. The commission will consider the 
costs and benefits in deciding whether to adopt the amendment. The commission 
staff will conduct a public hearing on this rulemaking under Government Code 
sec.2001.029 at the commission's offices on Wednesday, July 1, 1998, at 9:00 
a.m. in the commissioners' hearing room, seventh floor of the William B. Travis 
Building, 1701 N. Congress Avenue, Austin, Texas, 78701. Interested persons may 
make oral comments concerning the proposed regulations at that time. 
These sections are proposed under the Public Utility Regulatory Act, Texas 
Utilities Code Annotated sec.sec.14.002, 31.001(c), 32.101, 36.001, 36.003, 
38.002, 38.003, 38.021, and 38.022 (Vernon 1998) (PURA). Section 14.002 provides 
the Public Utility Commission of Texas with the authority to make and enforce 
rules reasonably required in the exercise of its powers and jurisdiction. 
Section 31.001(c) requires that the commission formulate and apply rules, 
policies, and principles to protect the public interest in a more competitive 
electric marketplace. Section 32.101 requires an electric utility to file 
tariffs with each regulatory authority showing each rate that is in effect for a 
utility service, product, or commodity. Section 36.001 authorizes the regulator 
to establish the rates of an electric utility, and to adopt rules for 
determining the classification of customers and the applicability of rates. 
Section 36.003 directs the regulatory authority to ensure that each rate is just 
and reasonable. Sections 38.002 and 38.003 provide the commission with authority 
to adopt reasonable standards and classifications with respect to electric 
services. Section 38.021 addresses unreasonable preference or prejudice, and 
prohibits the utility from granting unreasonable preference or advantage to a 
person in a classification. Section 38.022 prohibits the utility from 
discriminating against a person who sells or leases equipment or performs 
services in competition with the electric utility, and prohibits the utility 
from engaging in a practice that tends to restrict or impair competition.
Cross Index to Statutes: Public Utility Regulatory Act sec.sec.14.002, 
31.001(c), 32.101, 36.001, 36.003, 38.002, 38.003, 38.021, and 38.022.

sec.23.24.Form and Filing of Tariffs. 
(a) Application. 
<nl>(1)<ol> <nl>Telecommunications utilities. Unless the context clearly 
indicates otherwise, in this section the term "utility" insofar as it relates to 
telecommunications utilities, shall refer to dominant carriers.<ol>
<nl>(2)<ol> <nl>Electric utilities. This section applies to all electric 
utilities. <ol>
(b) Effective tariff. 
<nl>(1)<ol> <nl> Telecommunications utilities.<ol> No utility shall directly or 
indirectly demand, charge, or collect any rate or charge, or impose any 
classifications, practices, rules, or regulations different from those 
prescribed in its effective tariff filed with the commission. 
<nl>(2)<ol> <nl>Electric utilities. No utility shall directly or indirectly 
offer any service, collect any rate or charge, give any compensation or discount 
to a customer, or impose any classification, practice, or regulation different 
from that which is prescribed in its effective tariff filed with the commission. 
Customer contracts approved by the commission are part of the effective tariff. 
<ol>
(c) (No change.) 
(d) Composition of tariffs. 
<nl>(1)<ol> <nl>Telecommunications utilities.<ol> The tariff shall contain 
sections setting forth: 
<nl>(A)<ol> [(1)] a table of contents; 
<nl>(B)<ol> [(2)] a preliminary statement containing a brief description of the 
utility's operations; 
<nl>(C)<ol> [(3)] a list of the cities, exchanges, and counties in which service 
is provided; 
<nl>(D)<ol> [(4)] the rate schedules; and 
<nl>(E)<ol> [(5)] the service rules and regulations, including forms of the 
service agreements. 
<nl>(2)<ol> <nl>Electric utilities. The tariff shall contain sections and 
subsections setting forth: <ol>
<nl>(A)<ol> <nl>a table of contents; <ol>
<nl>(B)<ol> <nl> a list of the cities and counties in which service is provided; 
<ol>
<nl>(C)<ol> <nl>a brief description of the utility's operations;<ol>
<nl>(D)<ol> <nl>the rate schedules; and <ol>
<nl>(E)<ol> <nl> the service regulations, including the service agreement forms. 
<ol>
(e)-(j) (No change.) 
<nl>(k)<ol> <nl>Compliance. Electric utilities that file new tariffs or tariff 
revisions shall comply with the 1998 amendments to this section with respect to 
the new or revised tariffs. Electric utilities affected by sec.25.223 of this 
title (relating to Unbundling of Energy Service) shall file new tariffs or 
tariff revisions in compliance with this section according to the compliance 
schedule adopted by the commission. All other electric utilities shall comply 
with this section within one year of the effective date of this section.<ol>
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805770
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 936-7308

CHAPTER 25.Substantive Rules Applicable to Electric Service Providers
The Public Utility Commission of Texas proposes new sec.25.84, Annual Reporting 
of Electric Utilities' Relationships with Their Affiliates, sec.25.271, Code of 
Conduct for Electric Utilities and Their Affiliates, sec.25.272, Corporate 
Support Service Agreements Between Electric Utilities and Their Affiliates, 
sec.25.273, Contracts Between Electric Utilities and Their Affiliates, and 
sec.25.274, Compliance Proceeding to Implement Code of Conduct for Electric 
Utilities and Their Affiliates. These sections are proposed under Project Number 
17549. Section 25.84 replaces the rule provision currently located at 
sec.23.11(c) of this title, relating to General Reports, and requires that 
electric utilities' report to the commission annually on relationships with 
their affiliates. Section 25.271 establishes broad safeguards to govern the 
interaction between regulated electric utilities and their affiliates. Section 
25.272 establishes the requirements for the implementation of corporate support 
service agreements between regulated utilities and their affiliates. Section 
25.273 establishes the fair, competitive bidding process that utilities may use 
to obtain products and services from an affiliate or other third party, and 
establishes requirements for any contracts with affiliates that may result from 
this competitive bidding process. Section 25.274 establishes the requirements 
for the compliance proceedings that will be necessary for the implementation of 
these new rules relating to affiliate activities. 
In Project Number 14400, the commission's rulemaking to address integrated 
resource planning (completed in 1996), the commission indicated that it would 
address at a later date the issues of energy services unbundling and utilities' 
relationships with their affiliates. This rulemaking addresses affiliate 
activities, and the issue of energy services unbundling is being addressed in 
Project Number 19205. 
Based on its extensive experience in regulating the electric power industry and 
in implementing the pro-competitive policies adopted by the U.S. Congress, the 
Texas Legislature, and the Federal Energy Regulatory Commission, the commission 
finds that there is a strong likelihood that a utility will favor its affiliates 
where those affiliates are providing services in competition with other, non-
affiliated entities. The commission concludes that this would not be in the 
public interest. Further, based on recent experience conducting periodic 
electric utility rate reviews and on other regulators' recent experiences with 
the motor carrier, telephone, and natural gas industries, the commission finds 
that there is a strong incentive for regulated utilities or their holding 
companies to subsidize their competitive activities with revenues or intangible 
benefits derived from their regulated monopoly businesses. The commission 
concludes that this is not in the public interest. 
Finally, the commission finds that current regulations governing the relations 
between and among units/divisions of an electric utility (or an electric utility 
holding company) are not adequate to prevent or discourage anticompetitive 
behavior. The commission concludes that articulating new rules which reflect the 
current state of competition in the electric power industry will provide 
regulatory certainty, facilitate more efficient competition to the benefit of 
customers, and fairly balance the equities among competing service providers. 
Based on its experience in regulating the electric power and local telephone 
industries, the commission has found that structural solutions are generally to 
be preferred over regulatory solutions in fostering competition. An example of a 
structural solution would be to completely prohibit a utility or its affiliate 
from engaging in activities which are or can be performed by unregulated 
entities. However, the commission is aware that efficient competition is 
fostered by encouraging the participation of many qualified participants, 
including unregulated affiliates. Consequently, these rules attempt to balance 
these potentially conflicting interests. 
In the natural gas industry, which has become significantly competitive at the 
wholesale level, such a balanced solution has been highly effective in fostering 
healthy competition. Providing market participants with real-time knowledge of 
utility-to-affiliate interactions, for example, has allowed the natural gas 
market to police itself, rather than require extensive regulatory involvement. 
In both natural gas and electricity, the delivery system remains a natural 
monopoly but the production (power generation) and merchant (marketing) 
functions are now competitive rather than natural monopolies. Within these 
markets, the playing field will be leveled, competition will be fostered, and 
customers will benefit from early, clear articulation of policies and processes 
governing the relationships between utilities' and affiliates' regulated and 
competitive functions. The benefit of such policies has been demonstrated in 
natural gas restructuring and in the commission's own two years of experience 
with the competitive wholesale electric power market. 
In proposing these rules relating to affiliate activities, therefore, the 
commission has three objectives: fostering fair competition for all participants 
in the market place, preventing cross- subsidization of competitive activities 
by monopoly rate payers, and preventing anticompetitive behavior and utilities' 
circumvention of their regulatory obligations. As a result of the commission's 
establishing the rules governing the relationships between regulated utilities 
and their competitive affiliates, participants in the market place will benefit 
from full knowledge of "the rules of the road" in the current regulatory 
environment. If the Texas Legislature removes existing legal barriers to entry 
by new entrants into competitive activities, those functions would be governed 
by this code of conduct as well. 
The commission requests that interested parties address the following issues in 
their comments on the proposed rules. The questions are grouped into twelve 
topics: application of the rules to cooperatives, application of the rules to 
affiliates that are also regulated utilities, separation of the utility from its 
affiliates, limitations on affiliate transactions, definition of corporate 
support services, migration of employees, use by an affiliate of a utility's 
name and logo, customer requests for information about products or services 
offered by affiliates, transfers of assets that take place before versus after 
the promulgation of these rules, regulation of transactions related to "exempt 
telecommunications carriers," the competitive bidding process, and review and 
approval of service agreements and contracts. This grouping provides a framework 
for discourse on these topics, and interested parties should organize their 
comments according to these categories. The commission also seeks any additional 
comments on the proposed rule that interested parties believe are appropriate. 
Furthermore, the commission will seek comment at a later date on the format of 
the annual reports required in proposed sec.25.84.
First, the commission seeks comment on the application of the proposed rules. 
Are certain exemptions or modifications to these rules appropriate for electric 
cooperatives? If so, what exemptions or modifications would allow the commission 
to meet its stated objectives? How might customers of electric cooperatives be 
affected by exemptions or modifications of these rules? 
Second, the commission requests comment on how affiliates that are also 
regulated utilities, under the jurisdiction of this commission or another 
regulatory body, might be affected by the proposed rules. Are certain exemptions 
or modifications of these rules appropriate for affiliates that are also 
regulated utilities? If so, what exemptions or modifications would allow the 
commission to meet its stated objectives? 
Third, the commission requests comment on the provisions requiring separation of 
the utility from its affiliates. The commission notes that there is a clear 
trade-off between the degree of structural separation between utilities and 
their affiliates versus the amount of regulatory oversight that is required by 
the commission to ensure that its three stated objectives are met; in other 
words, the greater the separation, the less regulatory oversight required. To 
the extent that interested parties make arguments against structural separation 
due to potentially lost economies of scale and scope, such parties should 
provide an analysis showing how any alleged losses of economies of scale and 
scope compare to the increased costs to both the commission and the utility for 
the greater regulatory oversight required to balance the degree of separation 
between the utility and its affiliates. 
Fourth, the commission seeks comment on the proposal to limit transactions 
between utilities and their affiliates to the following three possibilities: 
corporate support services, products and services offered by the utility through 
tariffs, or products and services purchased by the utility as a result of 
competitive bidding. Should the commission allow any other affiliate 
transactions beyond those entered into through one of these three methods? 
Fifth, the commission solicits comment on the definition of corporate support 
services. Is the definition appropriate and sufficiently detailed? 
Sixth, the commission requests comment on the provisions relating to migration 
of employees between the regulated utility and its affiliates. The provision 
prohibiting temporary assignment of employees includes an exception for 
restoration in the event of a "major service interruption." Is it necessary to 
define what constitutes a "major service interruption?" In addition, how and 
when should utilities inform the commission that this exception has been 
invoked? The proposed transfer fee formula includes a fee of 10% of ending 
salary for the first year of experience, with an additional 0.5% of ending 
salary for each year of employment with the regulated utility. Would a different 
transfer fee formula be more appropriate? How can the commission ensure that 
there is a balance between allowing fair compensation to the utility, without 
unduly impeding professional growth opportunities for the utility's employees? 
Should this provision be applied under extraordinary circumstances, such as a 
major corporate restructuring involving a mass transfer of employees from the 
utility to a new affiliate? Should certain classes of employees be exempted from 
the transfer fee provision, such as clerical employees or those employees 
engaged in the provision of corporate support services? Or, in the alternative, 
should the fee apply only to employees whose total annual compensation is above 
a specified floor, such as $30,000? 
Seventh, the commission seeks comment on the provision requiring use of a 
disclaimer when an affiliate uses the utility's name or logo. Would an outright 
prohibition on the use of the utility's name or logo provide for more efficient 
implementation of these rules? To the extent that interested parties argue for 
allowing use of the regulated utility's name and logo by its affiliates, with or 
without a disclaimer, they should address how the commission can ensure that the 
utility is fairly compensated for use of the trade name and logo. For example, 
should utilities be entitled to receive royalty payments? Furthermore, is the 
disclaimer compromise the best possible means to inform consumers that there is 
a corporate relationship between the regulated and unregulated entities, while 
simultaneously informing consumers that the two entities have different 
regulatory obligations and oversight by the commission? 
Eighth, the commission requests comment on the provision requiring utilities to 
give customers a current list of all affiliated and non-affiliated providers 
when a customer requests information about products or services offered by 
affiliates and their competitors. The commission believes that customers should 
be able to rely on such lists as being reasonably accurate, but that a utility 
should not be held liable for any inaccuracy in the list or lack of service 
provider viability if such is not the fault of the utility. The commission 
requests comment on what additional safeguards could be put in place to address 
this issue. 
Ninth, the commission requests comment on the issue of how to address transfers 
of assets other than generation and transmission assets (from the utility to an 
affiliate) that take place before these rules are in effect. The proposed rules 
require that such asset transfers be subject to the competitive bidding 
requirements of sec.25.273. However, some utilities may already have made mass 
transfers of assets to their affiliates prior to these rules taking effect, 
which could afford the affiliate a competitive advantage not available to other 
entities, including those firms that are affiliated with a utility that 
transfers assets after the rules are adopted. How should the commission address 
this potential disparity in competitive advantage? 
Tenth, the commission requests comment as to whether these proposed rules are 
sufficient to achieve the commission's goal of regulating the transactions 
between utilities subject to the provisions of the Public Utility Holding 
Company Act of 1935 (PUHCA) and their affiliated "exempt telecommunications 
companies" (ETCs) pursuant to the federal Telecommunications Act of 1996 
sec.103, as codified at 15 U.S.C.A sec.79z-5c. The commission has proposed rules 
relating specifically to affiliate transactions between PUHCA-jurisdictional 
utilities and their affiliated ETCs in Project Number 17508. Are separate rules 
for these specific affiliate transactions required? If not, are there any 
changes that need to be made to the rules proposed herein to properly regulate 
transactions between utilities and their affiliated ETCs? 
Eleventh, the commission seeks comment on the competitive bidding process set 
forth in proposed sec.25.273. The commission desires to provide sufficient 
guidance for what constitutes a "fair, competitive bidding process" without 
being overly prescriptive. How might these requirements be streamlined so as to 
provide greater flexibility for utilities to procure products and services in 
the event that such products and services are competitively available?
What types of current services being obtained by a utility from an affiliate 
would fall under this rule? Should the commission establish a threshold annual 
dollar amount under which purchases by a utility from an affiliate, other than 
for corporate support services, would not be subject to the competitive bidding 
process? If so, what would be an appropriate threshold amount? 
Finally, the commission requests comment on the provisions relating to the 
commission's review and approval of service agreements and contracts. 
Specifically, proposed sec.25.272 and sec.25.273 state that corporate support 
service agreements and contracts are "subject to commission review and approval 
for compliance with PURA requirements and commission rules." Should the 
commission require approval of these service agreements and contracts prior to 
their implementation by the utility? What procedural requirements for review and 
approval of these documents should be instituted by the commission? How should 
existing service agreements and contracts be treated by the commission?
Suzanne L. Bertin, assistant director, Office of Policy Development, has 
determined that for the first five-year period the sections are in effect there 
will be no fiscal implications for state or local government as a result of the 
enforcing or administering the sections. 
Ms. Bertin also has determined that for each year of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
these sections will be improved regulatory oversight of electric utilities and 
enhanced competition in the provision of energy-related and telecommunications-
related services.
It is anticipated that there will be economic costs incurred by persons who are 
required to comply with the new sections as proposed. The costs incurred are 
likely to vary from utility to utility, and are difficult to ascertain. The 
benefits accruing from implementation of these rules, however, are expected to 
outweigh these costs. 
For each year of the first five years the sections are in effect, there will be 
no effect on small businesses as a result of enforcing the proposed sections. 
Ms. Bertin has further determined that for the first five years the proposed 
sections are in effect there may be a favorable impact on the opportunities for 
employment in the geographic areas of Texas affected by implementing the 
requirements of the rules, but the magnitude of such an impact cannot be 
ascertained.
Comments on the proposed rule (16 copies) may be submitted to Filing Clerk, 
Public Utility Commission of Texas, 1701 N. Congress Avenue, P.O. Box 13326, 
Austin, Texas, 78701-3326, within 31 days after publication. Reply comments may 
be submitted within 45 days after publication. All comments should refer to 
Project Number 17549. The commission invites specific comments regarding the 
costs associated with, and benefits that will be gained by, implementation of 
the sections. The commission will consider the costs and benefits in deciding 
whether to adopt the sections. 

SUBCHAPTER D.Records, Reports, and Required Information
16 TAC sec.25.84
The commission staff will conduct a public hearing on this rulemaking under 
Government Code sec.2001.029 at the commission's offices on June 25, 1998, at 
9:00 a.m. 
Section 25.84 is proposed under the Public Utility Regulatory Act, Texas 
Utilities Code Annotated (Vernon 1998) (PURA) sec.sec.11.002(a), 14.001, 14.002, 
14.003, 14.151, 14.154, and 15 U.S.C.A. sec.79z-5c. Section 11.002(a) requires 
establishment of a comprehensive and adequate regulatory system by the Public 
Utility Commission of Texas to ensure just and reasonable rates, operations, and 
services. Section 14.001 grants the commission the general power to regulate and 
supervise the business of each utility within its jurisdiction.
Section 14.002 provides the commission with the authority to make and enforce 
rules reasonably required in the exercise of its powers and jurisdiction.
Section 14.003 grants the commission the authority to require submission of 
information by the utility regarding its affiliate activities. Section 14.151 
grants the commission authority to prescribe the manner of accounting for all 
business transacted by the utility. Section 14.154 grants the commission limited 
authority over the utility's affiliates, with respect to their transactions with 
the utility. Finally, 15 U.S.C.A. sec.79z-5c grants the commission authority to 
regulate the transactions between PUHCA- jurisdictional utilities and their 
affiliated ETCs. 
Cross Reference to Statutes: PURA sec.sec.11.002(a), 14.001, 14.002, 14.003, 
14.151, 14.154, 15 U.S.C.A. sec.79z-5c. 

sec.25.84. Annual Reporting of Electric Utilities' Relationships with 
Affiliates.
(a) Purpose. This section establishes annual reporting requirements for 
activities between utilities and their affiliates, as allowed under sec.25.271 
of this title (relating to Code of Conduct for Electric Utilities and Their 
Affiliates). 
(b) Application. This section applies to all electric utilities operating in the 
State of Texas as defined in the Public Utility Regulatory Act (PURA) sec.31.002 
(1), and also to affiliates as defined in PURA sec.11.003 (2) to the extent 
specified herein. 
(c) Definitions. Any terms defined in sec.25.271 of this title have the same 
meanings herein. 
(d) Annual Report of Affiliate Activities. A "Report of Affiliate Activities" 
shall be filed annually with the commission. Using forms approved and provided 
by the commission, a utility shall report activities among itself and its 
affiliates in accordance with the requirements of sec.25.271 of this title. The 
report shall be filed by June 1, and shall encompass the time period from 
January 1 through December 31 of the immediately preceding year.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 23, 1998.
TRD-9805690
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 936-7308

SUBCHAPTER K.Relationships with Affiliates
16 TAC sec.sec.25.271-25.274
Section 25.271 is proposed under the Public Utility Regulatory Act, Texas 
Utilities Code Annotated (Vernon 1998) (PURA) sec.sec.11.002(a), 14.001, 14.002, 
14.003, 14.151, 14.154, 31.001(c), 32.101(c), 35.003(b), 35.034, 35.035, 36.003, 
36.058, 38.021, 38.022, 55.006, 51.001 and 52.001 as well as 15 U.S.C.A. 
sec.79z-5c and Texas Revised Civil Statutes Annotated article 717p (Vernon 
Supplement 1998). Section 11.002(a) requires establishment of a comprehensive 
and adequate regulatory system by the Public Utility Commission of Texas to 
ensure just and reasonable rates, operations, and services. Section 14.001 
grants the commission the general power to regulate and supervise the business 
of each utility within its jurisdiction. Section 14.002 provides the commission 
with the authority to make and enforce rules reasonably required in the exercise 
of its powers and jurisdiction. Section 14.003 grants the commission the 
authority to require submission of information by the utility regarding its 
affiliate activities. Section 14.151 grants the commission authority to 
prescribe the manner of accounting for all business transacted by the utility. 
Section 14.154 grants the commission limited authority over the utility's 
affiliates, with respect to their transactions with the utility. Section 
31.001(c) requires that the commission formulate and apply rules, policies, and 
principles to protect the public interest in a more competitive electric market 
place. Section 32.101(c) requires that customer proprietary information be 
treated as highly sensitive trade secrets. Section 35.003(b) prohibits electric 
utilities from granting undue preference to a person in connection with the 
purchase or sale of energy or other services. Section 35.034 grants the 
commission authority to approve transfers of certain assets between utilities 
and affiliates. Section 35.035 governs the valuation of assets transferred by a 
utility to or from an affiliate. Section 36.003 requires the commission to 
ensure that a utility's rates are just and reasonable, sufficient, equitable, 
and consistent in application to each class of consumer, and not unreasonably 
preferential, prejudicial, or discriminatory. Section 36.058 sets forth the 
circumstances under which the commission may allow payments by a utility to an 
affiliate. Section 38.021 requires that utilities not grant an unreasonable 
preference to or impose an unreasonable disadvantage on different persons in the 
same classification. Sections 38.022 and 55.006 require that utilities not 
discriminate against competitors or engage in practices that restrict or impair 
competition in electric and telecommunications markets, respectively. Sections 
51.001 and 52.001 require that the commission implement innovative new rules, 
policies, and principles to protect the public interest in telecommunications 
markets and provide equal opportunity to telecommunications competitors. 15 
U.S.C.A. sec.79z-5c grants the commission authority to regulate the transactions 
between PUHCA-jurisdictional utilities and their affiliated ETCs. Finally, Texas 
Revised Civil Statutes Annotated article 717p (Vernon Supplement 1998) grants 
Texas river authorities and their affiliates certain rights and privileges that 
differ from those of other electric utilities in the state. 
Cross Reference to Statutes: PURA sec.sec.11.002(a), 14.001, 14.002, 14.003, 
14.151, 14.154, 31.001(c), 32.101(c), 35.003(b), 35.034, 35.035, 36.003, 36.058, 
38.021, 38.022, 55.006, 51.001, and 52.001, 15 U.S.C.A. sec.79z-5c, and Texas 
Revised Civil Statutes Annotated article 717p (Vernon Supplement 1998). 

sec.25.271. Code of Conduct for Electric Utilities and Their Affiliates. 
(a) Purpose. The provisions of this section establish broad safeguards to govern 
the interaction between regulated utilities and their affiliates. In 
promulgating these affiliate rules, the commission has three objectives: 
fostering fair competition for all participants in the market place, preventing 
cross-subsidization of competitive activities by monopoly rate payers, and 
preventing anticompetitive behavior and utilities' circumvention of their 
regulatory obligations. 
(b) Application. This section applies to all electric utilities operating in the 
State of Texas as defined in the Public Utility Regulatory Act (PURA) sec.31.002 
(1), and also to affiliates as defined in PURA sec.11.003 (2) to the extent 
specified herein. River authorities are exempted from subsection (d) of this 
section pursuant to Texas Revised Civil Statutes Annotated article 717p (Vernon 
Supplement 1998). 
(c) Definitions. The following words and terms when used in this section shall 
have the following meaning unless the context clearly indicates otherwise: 
(1) Affiliate rules - The body of rules in Chapter 25, Subchapter K, relating to 
Relationships with Affiliates, inclusive of sec.sec.25.271 of this title, 25.272 
of this title (relating to Corporate Support Service Agreements Between Electric 
Utilities and Their Affiliates), 25.273 of this title (relating to Contracts 
Between Electric Utilities and Their Affiliates) and 25.274 of this title 
(relating to Compliance Proceedings to Implement Code of Conduct for Electric 
Utilities and Their Affiliates). 
(2) Antitrust laws - Federal and state antitrust laws including the following: 
(A) Federal antitrust laws - Sherman Act, 15 United States Code sec.sec.1-7; 
Clayton Act, 15 United States Code sec.sec.12-27; and a portion of the Federal 
Trade Commission Act, 15 United States Code sec.45.
(B) Texas antitrust laws - Texas Free Enterprise and Antitrust Act of 1983, 
Texas Business & Commerce Code sec.sec.15.01-15.52. 
(3) Arm's length transaction - The standard of conduct under which unrelated 
parties, each acting in its own best interest, would carry out a particular 
transaction. Applied to related parties, in testing whether a transaction is at 
"arm's length," it must be ascertained whether the transaction could have been 
made on the same terms to a disinterested third party in a bargained 
transaction. 
(4) Corporate support services - Those services, generally administrative in 
nature, that relate to the operation of companies in any corporate family, 
regardless of whether a company in the corporate family is involved in the 
provision of energy, energy- related products or services, telecommunications, 
or telecommunications-related products or services. Examples of services meeting 
this definition include, but are not limited to, payroll, shareholder services, 
insurance, financial reporting, financial planning and analysis, corporate 
accounting, corporate security, human resources (compensation, benefits, 
employment policies), employee records, pension management, and 
telecommunications and information systems only to the extent they are not used 
in the provision of electricity, energy-related products or services or the 
provision of retail or wholesale telecommunications products or services. 
Examples of services not meeting this definition include, but are not limited 
to, regulatory affairs, lobbying, legal services, employee recruiting, 
engineering, purchasing of electric transmission, system operations, marketing, 
and telecommunications and information systems used in the provision of 
electricity or energy-related products or services or the provision of retail or 
wholesale telecommunications products or services. 
(5) Proprietary customer information - Any information compiled by an electric 
utility on a customer in the normal course of providing electric service which 
makes possible the identification of any individual customer by matching such 
information with the customer's name, address, account number, type or 
classification of service, historical electricity usage, expected patterns of 
use, types of facilities used in providing service, individual contract terms 
and conditions, price, current charges, billing records, or any other 
information that the customer has expressly requested not be disclosed. 
Information relating to customers that is aggregated, redacted, or organized in 
such a way as to make it impossible to identify the customer to whom the 
information relates does not constitute proprietary customer information.
(6) Service agreements - Contracts between a utility and an affiliate for the 
provision of corporate support services. 
(7) Temporary, intermittent, or rotational assignments - Non-permanent 
assignments that have a duration of less than one year, that begin and end in 
intervals, or that are cyclical in nature. 
(d) Structural and transactional safeguards. 
(1) Separate and independent entities. A utility shall be a corporate entity 
separate from its affiliates, operating independently.
(2) Separate officers, directors, and employees. A utility shall not jointly 
employ officers, directors, and employees with an affiliate. The exception is 
that a parent company officer or director may serve on the board of the utility 
or on the board of an affiliate providing services or products related to energy 
or telecommunications, but not on both the board of the utility and of an 
affiliate providing services or products related to energy or 
telecommunications. 
(3) Books and records. A utility shall maintain books, records, and accounts 
separate from those of its affiliates, subject to review by the commission, as 
follows: 
(A) In accordance with generally accepted accounting principles and consistent 
with state and federal guidelines, a utility shall record all transactions with 
its affiliates, whether direct or indirect. 
(B) A utility shall prepare financial statements that are not consolidated with 
those of its affiliates. 
(C) A utility and its affiliates shall maintain sufficient records to allow for 
an audit of the transactions between the utility and its affiliates. At any 
time, the commission may, at its discretion, require a utility to initiate, at 
the utility's expense, an audit performed by an independent third party. 
(4) No credit support by a utility. A utility shall not allow an affiliate to 
obtain credit under any arrangement that would permit a creditor, upon default, 
to have recourse to the utility's assets. The financial arrangements of a 
utility's affiliates are subject to the following restrictions:
(A) Any indebtedness incurred by an affiliate will be without recourse to the 
utility; 
(B) A utility shall not enter into any agreements under terms of which the 
utility is obligated to commit funds in order to maintain the financial 
viability of an affiliate; 
(C) A utility shall not make any investment in an affiliate under circumstances 
in which the utility would be liable for the debts and/or liabilities of the 
affiliate incurred as a result of acts or omissions of an affiliate; 
(D) A utility shall not issue any security for the purpose of financing the 
acquisition, ownership, or operation of an affiliate; 
(E) A utility shall not assume any obligation or liability as guarantor, 
endorser, surety, or otherwise in respect of any security of an affiliate; 
(F) A utility shall not pledge, mortgage or otherwise use as collateral any 
assets of the utility for the benefit of an affiliate; 
(G) This subsection does not affect a utility's obligations under other law or 
regulations, such as the obligations of a public utility holding company under 
sec.23.18(c)(2) of this title (relating to Foreign Utility Company Ownership by 
Exempt Holding Companies). 
(5) Arm's length transactions. Transactions between a utility and its affiliates 
shall be at arm's length. With the exception of transactions relating to 
corporate support services, transactions between a utility and its affiliates 
for products and services shall be made only in accordance with tariffs or 
through a fair, competitive bidding process.
(A) Tariffs. Tariffs shall meet the requirements delineated in sec.23.24 of this 
title (relating to Form and Filing of Tariffs). Except as provided for in 
subparagraph (C) of this paragraph, any sales of a product or service by a 
utility to its affiliate shall be governed by a tariff on file with the 
commission, making the same products and services available to any third party 
entity on the same terms and conditions. 
(B) Competitive bidding. 
(i) Purchase of products or services by a utility from its affiliate. Except as 
provided for in subparagraph (C) of this paragraph, a utility may not enter into 
a transaction to purchase a product or service from an affiliate unless the 
transaction is the result of a fair, competitive bidding process formalized in a 
contract subject to the provisions of sec.25.273 of this title (relating to 
Contracts Between Electric Utilities and Their Affiliates). 
(ii) Transfers of assets other than generation or transmission facilities. For 
purposes of this subparagraph, assets are defined as those that are in rate 
base, previously were in rate base, or are capital assets of the utility. Any 
transfer of assets from a utility to its affiliates, other than generation or 
transmission facilities, must be the result of a fair, competitive bidding 
process formalized in a contract subject to the provisions of sec.25.273 of this 
title. 
(C) Corporate support services. A utility may engage in transactions directly 
related to the provision of corporate support services with its affiliates, in 
accordance with the requirements relating to service agreements set forth in 
sec.25.272 of this title (relating to Corporate Support Service Agreements 
Between Utilities and Their Affiliates). As a general principle, such provision 
of corporate support services shall not allow or provide a means for the 
transfer of confidential information from the utility to the affiliate, create 
the opportunity for preferential treatment or unfair competitive advantage, 
create opportunities for cross-subsidization of affiliates, or otherwise provide 
any means to circumvent these affiliate rules. 
(D) Transfer of generation or transmission assets. The transfer of generation or 
transmission assets from a utility to an affiliate will be reviewed by the 
commission pursuant to the provisions of PURA sec.sec.14.101, 35.034, and 35.035 
and any rule implementing those sections. 
(6) Employee migration. 
(A) Tracking migration of employees. A utility shall track and document all 
employee movement between the utility and its affiliates. Such information shall 
be made available to the commission on an annual basis in the context of the 
utility's filing pursuant to sec.25.84 of this title (relating to Annual 
Reporting of Electric Utilities' Relationships with Affiliates). The tracking 
information shall include the following: an identification code for the 
migrating employee, the respective titles held while employed at each entity, 
the effective dates of the migration, and amount of the transfer fee paid, if 
applicable. Movement of an employee from a utility to an affiliate or vice versa 
shall be accomplished through the employee's termination of employment with one 
company and acceptance of employment with the other. 
(B) Employee rotation. Temporary, intermittent, or rotational assignments of 
utility employees to affiliates are prohibited. The exception to this provision 
is that employees may be temporarily assigned to an affiliated or non-affiliated 
utility to assist in restoring power in the event of a major service 
interruption. 
(C) Transfer fee. A utility shall be entitled to a one-time payment by its 
affiliate for the costs that the utility has invested in development of an 
employee who changes employment from the utility to the utility's affiliate. 
Such fees shall be recorded in a separate account for future consideration by 
the commission. The fees shall be calculated using the following formula: 
transfer fee = final salary x ((years of service with utility x 0.5%) + 10%). 
This subparagraph should not be construed as to interfere with the conditions of 
employment resulting from a collective bargaining agreement recognized under 
federal law. 
(7) Use of property and equipment. A utility shall not own property in common 
with its affiliate unless prior approval is obtained from the commission. A 
utility's office space and office equipment shall be physically separate from 
that of its affiliates, where physical separation is accomplished by having 
office space and equipment in either separate buildings or in secure, 
controlled-access areas within a building. A utility shall not share computer 
systems and information systems with an affiliate, nor shall a utility allow an 
affiliate access to its computer and information systems. The exception to this 
provision is that computer systems and information systems may be shared only to 
the extent necessary for the provision of corporate support services; however, 
the utility shall ensure that the proper cost allocation mechanisms, security 
access, and other safeguards are in place to ensure full compliance with these 
affiliate rules. 
(e) Safeguards relating to provision of products and services.
(1) Products and services available on a non-discriminatory basis. If a utility 
makes a product or service available to an affiliate, it shall make the same 
product or service available to all non-affiliates on a nondiscriminatory basis. 
A utility shall process all requests for a product or service from affiliated 
and non-affiliated entities on a non-discriminatory basis. If a utility's tariff 
allows for discretion in its application, the utility shall apply that provision 
in the same manner to its affiliates and non-affiliates, as well as to their 
respective customers. If a utility's tariff allows no discretion in its 
application, the utility shall strictly apply that provision. Utilities are 
prohibited from using customer-specific contracts to circumvent these 
requirements. 
(2) Discounts, rebates, or fee waivers. If a utility offers its affiliate a 
discount, rebate, or fee waiver for any product or service, it shall make the 
same available on a non-discriminatory basis to all non-affiliates. A pricing 
benefit made available by the utility through an open, competitive bidding 
process will be considered to satisfy this requirement. Specifically, no less 
than 24 hours prior to a utility's provision to its affiliate of a discount, 
rebate, or fee waiver, the utility shall post a conspicuously-placed notice on 
its Internet site or public electronic bulletin board for at least 30 
consecutive calendar days providing the following information: the name of the 
affiliate involved in the transaction; the rate charged; the normal rate; the 
period for which the pricing benefit applies; the quantities and the delivery 
points involved in the transaction; any conditions or requirements applicable to 
the pricing benefit, along with documentation of any cost differential 
underlying the pricing benefit, and the procedures by which non-affiliates may 
obtain the same benefit. 
(3) Tying arrangements prohibited. A utility shall not condition or tie the 
provision of any product, service, pricing benefit, or waiver of associated 
terms or conditions, to the purchase of any good or service from its affiliate. 
Nor may the utility give the appearance of engaging in such a tying arrangement. 
(f) Information safeguards. 
(1) Proprietary customer information. A utility shall not release proprietary 
customer information to an affiliate or any other person, other than the 
customer, without prior affirmative written consent by the customer. The 
customer shall be advised in writing that, to the extent that the customer 
permits the release of such information, the information shall be made available 
to all affiliates and non- affiliates on a strictly nondiscriminatory basis. 
(2) Nondiscriminatory availability of aggregate customer proprietary 
information. A utility shall make aggregate proprietary customer information, 
including but not limited to information about a utility's energy purchases, 
sales, or operations or about a utility's energy-related goods or services, 
available to its affiliate only if the utility makes such information available 
to all non-affiliates under the same terms and conditions and at the same price 
as it is made available to any of its affiliates. In addition, no later than 24 
hours prior to a utility's provision to its affiliate of aggregate proprietary 
customer information, the utility shall post a conspicuously-placed notice on 
its Internet site or other public electronic bulletin board for at least 30 
consecutive calendar days providing the following information: the name of the 
affiliate to which the information will be provided; the rate charged for the 
information; a meaningful description of the information provided; and the 
procedures by which non-affiliates may obtain the same information under the 
same terms and conditions. 
(3) Information shared for corporate support services. A utility may exchange 
non- customer related proprietary information on an exclusive basis with its 
affiliates, provided the utility follows all commission-adopted pricing and 
reporting guidelines for such transactions and it is necessary to exchange this 
information in the provision of corporate support services pursuant to 
subsection (d)(5)(C) of this section. The affiliate's use of such non-customer-
related proprietary information is limited to use in conjunction with corporate 
support services as defined in this rule and is not permitted for any other use. 
(4) Other limitations on information disclosure. Nothing in this rule is 
intended to alter the specific limitations on disclosure of confidential 
information in the Texas Utilities Code, the Texas Government Code, Chapter 552, 
and the commission's substantive and procedural rules.
(g) Safeguards relating to joint marketing and advertising.
(1) Utility name or logo. A utility shall not allow the use of its name or logo 
by an affiliate in any written or auditory information, through radio or 
television, Internet-based, or other electronic format accessible to the public, 
unless the affiliate includes a disclaimer with its use of the utility name or 
logo. Such disclaimer shall be located at the first instance of the name or logo 
in the material distributed, must be written in a bold and conspicuous manner or 
clearly audible, as appropriate for the communication medium, and shall state 
the following: "{Affiliate name} is not the same company as {utility name}, and 
is not regulated by the Public Utility Commission of Texas. Customers of 
{utility name} do not have to buy products or services from {affiliate name} to 
continue to receive service from the regulated company, {utility name}. If you 
have questions about your rights as a consumer, please contact the Public 
Utility Commission of Texas by calling toll-free, 1-888-PUC-TIPS. Or, if you are 
in Austin, please call 936- 7120." This disclaimer applies only to the 
affiliate's use of the utility's name or logo within the State of Texas. 
(2) Joint business development, joint marketing prohibited.
(A) Unless otherwise provided by these rules, a utility shall not: 
(i) provide or acquire leads on behalf of its affiliates;
(ii) solicit business, or acquire information on behalf of its affiliates; or 
(iii) give the appearance of speaking or acting on behalf of any of its 
affiliates. 
(B) A utility shall not engage in joint marketing or advertising of its products 
or services with those of an affiliate, and shall not act or appear to act on 
behalf of an affiliate in any communications and contacts with any existing or 
potential customers. Such joint marketing and communication includes, but is not 
limited to, the following activities: 
(i) joint sales calls; 
(ii) joint proposals, either as a request for proposal or a response to a 
request for proposal; 
(iii) joint advertising, sales, communications, or correspondence, except that a 
utility may allow an affiliate access to customer bill advertising inserts so 
long as access to such inserts is made available on the same terms and 
conditions to non-affiliates offering similar services as the utility affiliate 
that uses bill inserts; 
(iv) joint presentations at trade shows, conferences, or other marketing- type 
events within the State of Texas; and 
(v) providing links from a utility's Internet web site to an affiliate's 
Internet web site. 
(3) Consumer requests for specific affiliate information. If a consumer requests 
information from a utility about any of its affiliates, the utility shall refer 
the consumer to the affiliate for more information only if the consumer request 
specifically mentions the affiliate's name. If a consumer does not specifically 
mention the affiliate's name, the utility shall follow the procedures set forth 
in paragraph (4) of this subsection. Under this paragraph, the only information 
that a utility may provide to the consumer is the affiliate's address and 
telephone number. The utility shall not transfer the customer directly to the 
affiliate's customer service office via telephone or provide any other 
electronic link whereby the customer could contact the affiliate through the 
utility. When providing the consumer information about the affiliate, the 
utility shall not promote its affiliate or its affiliate's products or services. 
(4) Consumer requests for general information about products or services offered 
by affiliates and their competitors. If a consumer requests general information 
from a utility about products or services provided by its affiliate or its 
affiliate's competitors, the utility shall provide to the consumer a current 
list of all affiliated and non-affiliated providers of these products or 
services, and shall not promote its affiliate or its affiliate's products or 
services. The utility shall be responsible for maintaining this service provider 
list. All service providers shall be arranged on the list in a random manner, 
using a uniform typeface. Any non-affiliated providers shall be responsible for 
ensuring that current information regarding their name and contact information 
is communicated to the utility maintaining the list. The utility shall post the 
current service provider list on its Internet site or other public electronic 
bulletin board on an ongoing basis and in a conspicuous manner, and shall file a 
current version of the list with the commission on a quarterly basis. In the 
event that the number of providers exceeds 100, the utility may direct the 
consumer to a telephone directory instead of providing a list of suppliers. 
Unless otherwise provided for in these rules, a utility shall not offer or 
provide customers advice or assistance with respect to its affiliates or other 
service providers. 
(h) Remedies and enforcement. 
(1) Enforcement by the commission. In addition to other methods that may be 
available, the commission may enforce the provisions of this rule by: 
(A) Entering a cease and desist order or other comparable order directing the 
utility to discontinue or to correct violations; 
(B) Pursuing administrative penalties under PURA, Chapter 15, Subchapter B. 
(2) No immunity from antitrust enforcement. Nothing in these affiliate rules 
shall confer immunity from state or federal antitrust laws. Sanctions imposed by 
the commission for violations of this rule do not affect or preempt antitrust 
liability, but rather are in addition to any antitrust liability that may apply 
to the anticompetitive activity. Therefore, antitrust remedies also may be 
sought in federal or state court to cure anticompetitive activities by utilities 
and their affiliates. 
(3) No immunity from civil relief. Nothing in these affiliate rules shall 
preclude any form of civil relief that may be available under federal or state 
law, including, but not limited to, filing a complaint with the commission. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 23, 1998.
TRD-9805691
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 936-7308

SUBCHAPTER I.Transmission and Distribution
16 TAC sec.25.223
The Public Utility Commission of Texas proposes new sec.25.223, relating to 
Unbundling of Energy Service. This section is proposed under Project Number 
19205. The new section is intended to aid in the regulation of retail electric 
service provided by jurisdictional electric utilities and to facilitate the 
provision of competitive energy services. 
In Project Number 14400, the commission's rulemaking to address integrated 
resource planning (completed in 1996), the commission indicated that it would 
address at a later date the issues of distribution unbundling and utilities' 
relationships with their affiliates. This proceeding addresses the unbundling of 
energy service. This proceeding includes an amendment to sec.23.24, relating to 
Form and Filing of Tariffs, which is separately published but which requires 
coordination of comments as explained more fully below. The unbundling of costs 
(cost separation and the form of electric bills) is being addressed in Project 
Number 16536 and affiliate activities are being addressed in Project Number 
17549. 
The commission determined in its consideration of integrated resource planning 
that unbundling distribution functions would facilitate further competition in 
the existing retail energy-service markets, and concluded that there is no 
longer a reason to maintain strict regulatory control over those markets. The 
provision of energy efficiency, for example, can probably be opened to greater 
competition. As used in this proposed rule, energy service includes energy 
efficiency, installation and operation of energy-conserving equipment, technical 
and engineering services, and the management of energy-related risks. These are 
services that are available on a competitive basis in many areas. By requiring 
resource solicitations (competitive bidding) and reducing barriers to entry in 
the energy-service market (contracts for demand-side resources), the commission 
has introduced competitive forces to electric utility resource acquisition in 
the wholesale electricity market. The new regulations adopted in 1996 
established a distribution functional unbundling requirement for generating 
utilities, and the commission requested that the commission staff initiate a 
separate proceeding to define the details of distribution functional unbundling 
and establish a timetable for its implementation. (21 TexReg 6794, July 19, 
1996.) 
Unbundling of energy service advances the process of deregulating energy-service 
markets. The proposed new section requires the unbundling of energy service, and 
permits new service providers to offer energy services directly to customers. 
The commission recognizes that energy- service markets can flourish if 
regulations clearly separate competitive or potentially-competitive energy 
services from the sale of electricity that remains monopolistic. It is important 
to note that this rule does not afford consumers an opportunity to choose a 
provider of electricity. Further, although the definition of what is a monopoly 
electric service may change in the future, the current proposal is not dependent 
on future decisions regarding the structure of the electric industry. 
The commission's proposed regulations arise from the statutory requirement that 
the commission address anticompetitive conduct by electric utilities. One 
potential concern that the commission has identified is the use of revenues from 
one sector of electric operations to subsidize activities in competitive 
markets. The separation of energy services from other distribution activities 
may be necessary to eliminate cross-subsidies. Another concern that the 
commission has identified is that electric utilities may use customer 
information acquired in providing electric service to prepare proposals in 
competitive energy-service markets. Access to information acquired in regulated 
markets provides electric utilities with special knowledge regarding customer 
energy usage patterns, appliances, buildings, and payment histories. These data 
are not generally available to competitors in the energy service industry, or 
are only available at significant expense. The unbundling of energy service from 
other distribution activities may be necessary to eliminate the preferential 
flow of information from one sector to another. Where aggregated information may 
be useful to all participants in the energy-service market, such information can 
be made available on a comparable or equal basis to all market participants. 
The commission previously published for comment proposed new sec.25.221, 
relating to Electric Cost Separation under Project Number 16536. (23 TexReg 
2652, March 13, 1998.) The Electric Cost Separation rule proposal refers to 
electric service as consisting of six types of service: generation service, 
transmission service, distribution service, metering and billing service, 
customer service, and energy service. The unbundling of energy service proposed 
here would require utilities to separate retail electric sales (monopoly) from 
energy service (competitive). Retail electric sales includes distribution 
service, metering and billing service, and customer service, as those terms are 
defined here. Energy service, in contrast, includes activities that are not 
essential to the retail sale of electricity, including such activities as 
appliance repair and warranty, on-site generation, risk management, natural gas 
and propane services, and the efficiency-related activities cited above, to name 
but a few. 
The current proposal includes a set of definitions, and several of these 
definitions are identical to those previously published for comment in the 
Electric Cost Separation rule proposal under Project Number 16536. Interested 
persons should note that the definitions of customer service and distribution 
service have been modified in this proposal. In considering the definitions in 
the new sec.25.223, relating to Unbundling of Energy Service, the commission 
will consider any comments filed under Project Number 16536 that relate to a 
term that is defined in both proposals. Therefore, it is not necessary that you 
repeat comments here. You may, however, provide additional comments if you 
believe comments are necessary in the context of this proposal. 
Several of the definitions in the current proposal are identical to those 
published for comment in sec.25.271 of this title, (relating to Code of Conduct 
for Electric Utilities and Their Affiliates), under Project Number 17549. 
Comments are specifically requested on certain terms; however, it is not 
otherwise necessary that you repeat comments if you filed comments on the 
definitions in Project Number 17549. You may, however, provide additional 
comments if you believe comments are necessary in the context of this proposal. 
The commission requests that interested parties particularly address the 
following questions in their comments. These questions are grouped into eight 
categories: the application of the proposed regulations; the provision of energy 
service in areas where competition may not arise; the unbundling of energy 
services; the unbundling of electric rates and services to increase the 
viability of the energy-service market; competition in metering and billing 
service; competition in distribution services; publicly-accessible information 
and protection of competitively-sensitive information; and the cost of complying 
with, and the benefits to be gained by, the proposed regulations. This grouping 
provides a framework for discourse on these topics, and interested parties 
should organize their comments using the topics listed above. The commission 
also seeks any other comments on the proposed rules. 
First, the commission is interested in receiving comments on the application of 
the proposed regulations. Is an exemption for small utilities appropriate? If 
so, what exemptions would allow the commission to meet its goals? Would an 
exemption for a small utility deny choices or information to the customers of 
that utility? 
Second, energy service, as defined here, includes a number of activities that 
are related to the provision of electric service, including demand-side 
management activities. Some energy services could be offered in a competitive 
market by companies that are not utilities. Some services may not be readily 
available on a competitive basis throughout the State. The proposed regulations 
are intended to foster the provision of retail energy service through 
competition, where that is possible, but permit utilities to continue to provide 
energy services that are not readily available in a competitive market. Will the 
proposed regulations ensure continuity in the provision of energy services? If 
not, how might the commission identify energy services that cannot be provided 
on a competitive basis? What delivery mechanism is appropriate for energy 
services that cannot be competitively provided? How should the commission 
address service variations within a utility service area, in particular, 
instances where a service is competitively available in an urban setting but not 
competitively available in a rural setting? 
Third, it has been suggested that it may not be necessary to prohibit electric 
utilities from providing energy service; rather, that it may be sufficient to 
require a functional separation of energy service from other distribution 
activities. Should the commission allow regulated utilities to provide a full 
range of energy services? There is a clear trade-off between the degree of 
functional separation and the amount of regulatory oversight that is required by 
the commission. To the extent that interested parties state that energy services 
ought to be provided by regulated utilities to avoid losing economies of scale 
and scope, such parties should provide an analysis showing how alleged losses of 
economies of scale and scope compare to the increased costs to both the 
commission and the utility for the greater regulatory oversight. 
Fourth, it may be necessary to take additional actions to develop the energy-
service market because some services depend upon the provision of new or 
unbundled electric rate and service options. For example, the commission is 
considering a requirement that would unbundle "greenness" from other generating 
resource attributes, and allow customers to choose this new service. Increased 
customer choice for "green pricing" may increase business opportunities for 
persons offering renewable energy technologies. The unbundling of other electric 
rates and services may enhance business opportunities for persons who provide 
products and services directly to customers. For example, businesses providing 
load-control devices and energy- efficient appliances may benefit from access to 
time-of-use rates; small-scale, on-site generation providers may benefit from 
standby tariffs; and customers might assume more responsibility for energy 
management if tariffs rewarded efficient behavior at the margin. In other words, 
some energy-service options are uneconomic unless the customer is offered a menu 
of electric service options. Regulatory policy regarding electric rates and 
services affects customer choices, and therefore may affect the viability of new 
products and services in the energy-service market. What attributes of electric 
service ought to be unbundled immediately to facilitate the development of a 
competitive energy service market? 
Fifth, the commission is investigating the competitive provision of electric 
metering and billing service. Metering may not be a natural monopoly, and 
competitive metering service and billing service may enhance customer choice in 
the energy-service market. The risks and rewards associated with innovations in 
metering and billing may be most compatible with a competitive model. Should the 
commission allow competition in metering and billing service and require 
utilities to provide metering and billing choices to customers? If metering 
service remains a monopoly service for now, can a case be made for competitive 
billing service today? What are the advantages and disadvantages of competition 
in billing service, and what would be the impact on a competitive energy service 
market? 
Sixth, the commission is investigating the potential for competitive provision 
of certain distribution services, including service drops, line extensions, and 
underground service. Should limited forms of competition be introduced to lower 
the cost of distribution service and increase the options available to 
customers? Are there other actions which the commission should take to ensure 
that economic alternatives to distribution service are not foreclosed through 
monopoly- investment decision making? 
Seventh, the commission has identified information that may be immediately 
useful to competitors in energy-service markets. The commission also believes 
there exists information, such as corporate records, that is necessary for the 
provision of electric service by an electric utility that need not be disclosed 
to the public or to any potential competitor. Under the rule proposal, 
information directly related to energy service, compiled by a utility during the 
normal course of providing electric service, and not explicitly included in the 
definition of competitively-sensitive information, proprietary customer 
information, trade secrets, or corporate-support-service information would be 
accessible to the public. If the commission's primary goal in this regard is to 
protect customer privacy, are the proposed information definitions appropriate? 
What types of information should be labeled as competitively-sensitive 
information and protected from disclosure? What types of information should be 
labeled as accessible utility information? What specific changes (additions or 
deletions) to these definitions are appropriate to balance the interests of the 
public and that of utilities? Is the process for acquiring accessible utility 
information reasonable; that is, does the process provide an appropriate balance 
between the costs and benefits for utilities and competitors? 
Finally, the commission requests that electric utilities that could be affected 
by the proposed regulations provide an estimate of the cost of compliance with 
the proposed regulations with the utility's initial comments. A utility's cost 
estimates should indicate its cost of revising its tariffs and its cost of 
unbundling energy service. Interested persons may reply to each utility's cost 
estimates. In addition, the commission invites specific comments regarding the 
costs associated with, and benefits that will be gained by, implementation of 
the new regulations. The commission will consider the costs and benefits in 
deciding whether to adopt the new regulations. 
Nat Treadway, policy analyst, Office of Policy Development, has determined that 
for the first five years that the proposed section is in effect there will be no 
fiscal implications for state and local government as a result of enforcing or 
administering the sections. 
Mr. Treadway also has determined that for the first five years that the proposed 
section is in effect the public benefit anticipated as a result of enforcing the 
section includes increased competition in the provision of energy service, 
enhanced customer awareness of the availability, price, and terms and conditions 
of electric service, and improved regulatory oversight of retail electric 
service. 
The proposed new section relating to unbundling energy service is likely to 
increase the costs to utilities of complying with the commission's rules, but 
the benefits described above are expected to outweigh the costs. The costs of 
complying with the proposed regulations are difficult to estimate and are likely 
to vary from utility to utility. Utilities that have already created affiliated 
energy service companies may incur no significant costs with respect to 
compliance with aspects of the new regulations. Utilities that provide many 
energy services on an integrated basis with distribution services may incur 
significant costs. A rough estimate of the annual cost for utilities that must 
substantially reorganize operations is from $50,000 to $2.5 million, depending 
on the size of the utility. To put these figures in context, the cost of service 
for the largest electric utility in the state is about $5.6 billion, while the 
revenue of a small utility is measured in millions of dollars. For each year of 
the first five years the proposed sections are in effect, there will be no 
effect on small businesses as a result of enforcing the proposed section. The 
new section relating to unbundling energy service may increase the opportunities 
for small businesses to provide services directly to customers, but the 
magnitude of this benefit is uncertain. 
It is anticipated that the economic impact of the rules on the persons that are 
required to comply with them will be favorable, but it is impossible to estimate 
the magnitude of this benefit. These rules should improve utility services by 
permitting a more focused application of the state's resources to the regulation 
of electric utilities, by deregulating certain energy services formerly provided 
by electric utilities, and by bringing better pricing information and a wider 
array of services to customers. 
Mr. Treadway has further determined that for the first five years the proposed 
new section is in effect there will be a favorable effect on the opportunities 
for employment in the geographic areas of Texas affected by implementing the 
requirements of the rules, but it is impossible to estimate the magnitude of the 
benefit. 
Comments on the proposed rule (16 copies) may be submitted to Filing Clerk, 
Public Utility Commission of Texas, 1701 N. Congress Avenue, P.O. Box 13326, 
Austin, Texas, 78711-3326, within 31 days after publication. Reply comments may 
be submitted within 45 days after publication. All comments should refer to 
Project Number 19205: Unbundling of Energy Service. These submissions should 
include any comments on the proposed amendments to sec.23.24, relating to Form 
and Filing of Tariffs. 
The commission staff will conduct a public hearing on this rulemaking under 
Government Code sec.2001.029 at the commission's offices on Wednesday, July 1, 
1998, at 9:00 a.m. in the commissioners' hearing room, seventh floor of the 
William B. Travis Building, 1701 N. Congress Avenue, Austin, Texas, 78701. 
Interested persons may make oral comments concerning the proposed regulations at 
that time. 
This section is proposed under the Public Utility Regulatory Act, Texas 
Utilities Code Annotated sec.sec.14.002, 31.001(c), 32.101, 34.003, 35.003(b), 
36.001, 36.003, 38.001, 38.002, 38.003, 38.021, 38.022, 38.051, and 38.052 
(Vernon 1998) (PURA). Section 14.002 provides the Public Utility Commission of 
Texas with the authority to make and enforce rules reasonably required in the 
exercise of its powers and jurisdiction. Section 31.001(c) requires that the 
commission formulate and apply rules, policies, and principles to protect the 
public interest in a more competitive electric marketplace. Section 32.101 
requires an electric utility to file tariffs with each regulatory authority 
showing each rate that is in effect for a utility service, product, or 
commodity. Section 34.003 requires that the commission adopt an integrated 
resource planning process. Section 35.003(b) prohibits electric utilities from 
granting undue preference to a person in connection with the purchase or sale of 
electric energy or other utility service. Section 36.001 authorizes the 
regulator to establish the rates of an electric utility, and to adopt rules for 
determining the classification of customers and the applicability of rates. 
Section 36.003 directs the regulatory authority to ensure that each rate is just 
and reasonable. Section 38.001 requires an electric utility to furnish service, 
instrumentalities, and facilities that are safe, adequate, efficient, and 
reasonable. Sections 38.002 and 38.003 provide the commission with authority to 
adopt reasonable standards and classifications with respect to electric 
services. Section 38.021 addresses unreasonable preference or prejudice, and 
prohibits the utility from granting unreasonable preference or advantage to a 
person in a classification. Section 38.022 prohibits the utility from 
discriminating against a person who sells or leases equipment or performs 
services in competition with the electric utility, and prohibits the utility 
from engaging in a practice that tends to restrict or impair competition. 
Sections 38.051 and 38.052 authorize the regulator to inspect meters, and permit 
customers to request the testing of meters. 
Cross Index to Statutes: Public Utility Regulatory Act sec.sec.14.002, 
31.001(c), 32.101, 34.003, 35.003(b), 36.001, 36.003, 38.001, 38.002, 38.003, 
38.021, 38.022, 38.051, and 38.052. 

sec.25.223.Unbundling of Energy Service. 
(a) Purpose. The purpose of this section is to increase customer choice in 
energy service. Electric utilities are prohibited from providing energy service 
unless the commission finds that the energy service is not a competitively-
available service. The section also sets forth the terms and conditions for 
public access to non-proprietary utility information. 
(b) Application. This section applies to all electric utilities that provide 
retail electric service in Texas. 
(c) Definitions. The following words and terms when used in this section shall 
have the following meanings unless the context clearly indicates otherwise: 
(1) Accessible utility information - Information directly related to energy 
service compiled by an affected utility during the normal course of providing 
electric service. This includes, but is not limited to, information used to 
prepare electric tariffs, to provide electric service to customers, or to 
market, sell, or demonstrate any electric or energy-related service or product. 
Accessible utility information does not include: 
(A) information relating to corporate support services; 
(B) proprietary customer information; 
(C) trade secrets; or 
(D) competitively-sensitive information. 
(2) Affected utilities - refers to all utilities to which this section applies. 
(3) Competitively-available service - A service that may be obtained from two or 
more providers on reasonable terms and conditions such that no one provider may 
increase price without a reduction in sales or total revenues. 
(4) Competitively-sensitive information - Any information compiled or retained 
by an affected utility that is not disclosed to the public or to affiliates 
because disclosure might expose the utility to an unreasonable risk of harm, 
including fuel price forecasts and wholesale power market transactions. 
Competitively-sensitive information does not include trade secrets. 
(5) Corporate support service - Those services, generally administrative in 
nature, that relate to the operation of companies in any corporate family, 
regardless of whether a company in the corporate family is involved in the 
provision of energy, energy- related products or services, telecommunications, 
or telecommunications-related products or services. Examples of services meeting 
this definition include, but are not limited to, payroll, taxes, shareholder 
services, insurance, financial reporting, financial planning and analysis, 
corporate accounting, corporate security, human resources (compensation, 
benefits, employment policies), employee records, pension management, and 
telecommunications and information systems only to the extent they are not used 
in the provision of electricity, energy-related products or services or the 
provision of retail or wholesale telecommunications products or services. 
Examples of services not meeting this definition include, but are not limited 
to, regulatory affairs, lobbying, legal services, employee recruiting, 
engineering, purchasing of electric transmission, system operations, marketing, 
and telecommunications and information systems used in the provision of 
electricity or energy-related products or services or the provision of retail or 
wholesale telecommunications products or services. 
(6) Customer service - A service that is related to the provision of electric 
service by a retail electric utility in Texas. Customer service does not include 
generation service, transmission service, distribution service, metering and 
billing service, or energy service. Customer service consists of the following 
services: 
(A) preparation and maintenance of tariffs; 
(B) explanation of the tariff options to customers and determination of the 
appropriate rate schedule for a retail customer; 
(C) administration of commission-authorized low-income programs and activities; 
(D) electrical pulse service and the communication of information relating to 
customer usage; 
(E) administration of commission-authorized energy efficiency and load 
management programs and activities; 
(F) general customer education, school programs, and community education 
activities; 
(G) safety advertising or other advertising required by the commission; 
(H) economic development and community affairs; and, 
(I) materials, accounting, and administrative support required to carry out the 
functions in subparagraphs (A) - (H) of this paragraph. 
(7) Distribution service - A service that ensures delivery of electric power 
from the transmission system to retail customers. Distribution service consists 
of the following services: 
(A) the safe delivery of electric power to retail customers, generally, but not 
exclusively, below 60 kilovolts; 
(B) the regulation and control of electricity in the distribution system; 
(C) planning, design, construction, operation, maintenance, repair, retirement, 
or replacement of distribution facilities, equipment, and protective devices; 
(D) customer communications relating to distribution facilities;
(E) distribution system voltage and power continuity; 
(F) initiation of service, including installation and activation of facilities; 
(G) monitoring of power delivery at the distribution feeder level; 
(H) line extensions; 
(I) underground service; 
(J) access to and use of rights of way and distribution facilities by telephone, 
cable, security, wireless, and other non-electric services;
(K) response to electric delivery problems, including outages, interruptions, 
and voltage variations, and restoration of service in a timely manner; and 
(L) materials, accounting, and administrative support required to carry out the 
functions in subparagraphs (A) - (K) of this paragraph. 
(8) Electric service - The service provided by retail electric utilities that 
consists of one or more of the following: generation service, transmission 
service, distribution service, metering and billing service, customer service, 
and commission-approved energy service. 
(9) Energy service - A service that is related to the provision of electric 
service by a Texas retail electric utility. Energy service does not include 
generation service, transmission service, distribution service, metering and 
billing service, or customer service. Energy service includes, but is not 
limited to:
(A) installation, sale, financing, repair, operation, or warranty of energy- 
consuming, customer-premise equipment; 
(B) energy efficiency and load management programs and activities;
(C) technical assistance relating to any customer-premises process or device 
that consumes electricity; 
(D) activities relating to customer-premises power quality and reliability 
services; 
(E) trade group, builder, and developer activities; 
(F) comprehensive or walk-through energy audits; 
(G) customer-premises power-generation equipment and related services; 
(H) building or facility design and related engineering services, or analysis 
and design of energy-related industrial processes; 
(I) hedging and risk management services; 
(J) propane, liquid propane gas, and other energy-based services;
(K) retail marketing, selling, demonstration, and merchant activities; and, 
(L) materials, accounting and administrative support required to carry out the 
functions in subparagraphs (A) - (K) of this paragraph. 
(10) Generation service - The production and purchase of electricity for retail 
customers and the production, purchase, and sale of electricity in the wholesale 
power market. 
(11) Metering and billing service - A service that ensures that electricity 
delivered to retail customers is accurately measured and billed to customers. 
Metering and billing service consists of the following services: 
(A) measurement or estimation of the electricity consumed or demanded by a 
retail electric customer during a specified period; 
(B) meter calibration and testing; 
(C) meter reading, including remote meter reading; 
(D) individual customer outage detection and usage monitoring;
(E) theft detection and prevention; 
(F) presentation of charges to customers for the actual services provided and 
the rendering of bills; 
(G) extension of credit and collection of payments from customers;
(H) disbursement of funds collected; 
(I) uncollectible accounts; 
(J) customer account data management; 
(K) response to customer inquiries and complaints in an appropriate and timely 
manner concerning generation service, transmission service, distribution 
service, or metering and billing service; and 
(L) materials, accounting, and administrative support required to carry out the 
functions in subparagraphs (A) - (K) of this paragraph. 
(12) Proprietary customer information - Any information compiled by an electric 
utility on a customer in the normal course of providing electric service which 
makes possible the identification of any individual customer by matching such 
information with the customer's name, address, account number, type or 
classification of service, historical electricity usage, expected patterns of 
use, types of facilities used in providing service, individual contract terms 
and conditions, price, current charges, billing records, or any other 
information that the customer has expressly requested not be disclosed. 
Information relating to customers that is aggregated, redacted, or organized in 
such a way as to make it impossible to identify the customer to whom the 
information relates does not constitute proprietary customer information.
(13) Transmission service - As defined in sec.23.67(b) and sec.23.70(b) of this 
title (relating to Open-access Comparable Transmission Service and Terms and 
Conditions of Open-access Comparable Transmission Service). For the purpose of 
this section, ancillary service, as defined in sec.23.67(b) of this title, is a 
component of transmission service. 
(d) Energy service unbundling. Affected utilities shall not provide energy 
service without prior commission approval after the effective date of this 
section. 
(e) Approval of energy service. 
(1) Criteria. The commission shall consider the factors set forth in this 
paragraph in reviewing energy service tariffs offered by affected utilities. 
(A) factors which favor commission approval: 
(i) the energy service addresses a well-defined market or information failure or 
the needs of a class or group of customers that is difficult to reach through 
standard marketing techniques; 
(ii) the energy service cannot reasonably be provided through a contract for 
demand-side resources or similar arrangement with energy-service providers; 
(iii) the majority of the members of a nonprofit cooperative corporation have 
expressed a preference for the provision of the energy service by the 
cooperative; and 
(iv) the cooperative addresses the preferences of members who want to choose 
other service providers; 
(B) factors which favor prohibition: 
(i) the energy service is a competitively-available service (taking into account 
geographic, demographic, and other relevant considerations); and 
(ii) an affiliate of the affected utility offers any closely-related energy 
service in the same geographic area. 
(2) Tariff required. To the extent that the commission authorizes an affected 
utility to provide energy service, the affected utility shall file tariffs 
describing each service. The tariff shall describe in detail the manner in which 
the energy service is provided to the customer and shall include a description 
of each potential interaction between utility employees and the customer. The 
affected utility may not provide any service not specifically set forth in the 
tariff. 
(3) Demand-side management. The tariff shall describe the utility's role in 
administering demand-side management programs. The tariff shall describe the 
process for providing or acquiring demand-side resources from energy service 
providers. Affected utilities may acquire demand-side resources outside the 
resource solicitation process consistent with this paragraph and the utility's 
approved integrated resource plan. 
(4) Cost of energy service. Subject to the Public Utility Regulatory Act (PURA), 
Chapter 34, Subchapter F, and PURA, Chapter 36, the commission may require an 
affected utility's customers through rates or other charges to contribute 
reasonable amounts to the funding of energy services that the utility is 
authorized to provide under this subsection. 
(f) Provision of energy services by affiliates not prohibited. This section does 
not preclude the provision of energy service by the unregulated affiliates of 
affected utilities. The transfer of assets, products and services, or employees 
from the affected utility to an affiliate shall be governed by the structural 
and transactional safeguards set forth in section sec.25.271 of this title 
(relating to Code of Conduct for Electric Utilities and Their Affiliates). 
(g) Accessible utility information. All affected utilities shall make accessible 
utility information available on the following terms:
(1) Public access. Affected utilities shall file tariffs that allow non-
discriminatory public access to accessible utility information. The tariffs 
shall describe the information, available formats, procedures for obtaining 
access, and the charges, if any, for accessing this information. Free, 
electronic access to such information is encouraged. The tariffs shall comply 
with the confidentiality and disclosure protections of this section. Individual 
customer information shall be eliminated from the data as necessary to comply 
with this section, and customer information shall be aggregated only to the 
extent necessary to protect proprietary customer information, except where a 
customer has waived in writing the protection of proprietary customer 
information. 
(2) Access plan. Affected utilities shall submit to the commission a plan 
relating to the creation and maintenance of accessible utility information. The 
plan shall indicate the utility operating unit responsible for the information, 
the access required by other operating units, the type of information to be 
maintained, and the type of information to be created and maintained in the 
future. The utility shall indicate whether any accessible utility information 
has been destroyed during the past three years. 
(3) Historic information. Information relating to the period prior to the 
effective date of this section shall include a description of the information 
and the year to which it relates. Such information shall be made available 
according to the following schedule: 
(A) Load research data, hourly load profile data, appliance and equipment 
saturation surveys, and market surveys shall be made available within 60 days of 
the effective date of this section. This subparagraph applies to the most recent 
data of each type. 
(B) All other accessible utility information shall be made available upon 
request. 
(4) New information. Accessible utility information collected subsequent to the 
effective date of this section shall be described in separate tariffs. Internet 
accessibility is encouraged to provide equal access to the other operating units 
of the affected utility, to interested persons, and to affiliates of the 
utility. 
(5) Protection of information. This section does not require a utility to 
divulge competitively-sensitive information, proprietary customer information, 
corporate support service information, or trade secrets.
(h) Affiliate conduct. Nothing in this section shall be construed as to limit 
the application of the commission's affiliate rules, as set forth in Chapter 25, 
Subchapter K of this title (relating to Relationships with Affiliates). 
(i) Compliance. Affected utilities shall make a compliance filing which sets 
forth the plan for accessible utility information, a proposal for energy service 
tariffs to be approved by the commission, revised tariffs filed pursuant to the 
revisions to sec.23.24 of this title (relating to Form and Filing of Tariffs), 
and a date for the termination of energy services not approved by the 
commission. The commission shall review and approve, or modify and approve each 
application within 180 days. Affected utilities shall make a compliance filing 
for this section according to the following schedule:
(1) Affected utilities with more than one million meters on the effective date 
of this rule and any electric utility affiliated with such utilities shall file 
within 60 days of the effective date of this section.
(2) Affected utilities with more than 100,000 meters but fewer than one million 
meters on the effective date of this rule and any electric utility affiliated 
with such utilities shall file within 150 days of the effective date of this 
section. 
(3) All other affected utilities shall file within one year of the effective 
date of this section. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on April 24, 1998.
TRD-9805771
Rhonda Dempsey
Rules Coordinator
Public Utility Commisison of Texas
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 936-7308

TITLE 22. EXAMINING BOARDS
PART XXXIII. Texas State Board of Examiners of Perfusionists
CHAPTER 761.Perfusionists
22 TAC sec.761.2
The Texas State Board of Examiners of Perfusionists (board) proposes an 
amendment to sec.761.2, concerning fees for licensure as a perfusionist. The 
amendment increases the annual fee for licensure renewal from $75 to $175. The 
increase in the licensure renewal fee is required to comply with the Licensed 
Perfusionist Act, sec.9, Texas Civil Statutes, Article 4529e, (Act), which 
requires the fees charged, in the aggregate, to produce sufficient revenue to 
cover the cost of administering the Act. 
Bobby D. Schmidt, Executive Secretary for the board, has determined that for the 
first five-year period the section will be in effect, there will be no fiscal 
implications for state government as a result of enforcing or administering the 
section as proposed. The costs and process of administering will be offset by 
revenues generated from licensing fees. There will be no fiscal implication for 
local government. 
Mr. Schmidt also has determined that for each year of the first five years the 
section is in effect, the public benefit as a result of enforcing or 
administering the section will be to require that the fees charged, in the 
aggregate, produce sufficient revenue to cover the cost of administering this 
Act. There will be no additional costs to persons who may be required to comply 
with the section as proposed and no effect on small businesses, except for the 
increase of $100 in fees for license renewal. There is no anticipated impact on 
local employment. 
Comments on the proposal may be submitted to Bobby D. Schmidt, Executive 
Secretary, Texas State Board of Examiners of Perfusionists, 1100 West 49th 
Street, Austin, Texas 78756-3183, Telephone (512) 834-6751. Comments will be 
accepted for 30 days following the date of publication of this proposal in the 
Texas Register.
The amendment is proposed under Texas Civil Statutes, Article 4529e, sec.7 which 
provides the Texas State Board of Examiners of Perfusionists with the authority 
to adopt rules concerning the regulation of perfusionists. The proposed 
amendment affects Texas Civil Statutes, Article 4529e. 

sec.761.2.The Board's Operation.
(a)-(r) (No change.) 
(s) Fees. 
(1) (No change.) 
(2) Schedule of fees for licensure as a perfusionist and a provisional licensed 
perfusionist is as follows: 
(A)-(B) (No change.) 
(C) renewal fee - <nl>$175<ol> [$75] 
(D)-(F) (No change.) 
(t) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805874
James O. Fines, III
Chairman
Texas State Board of Examiners of Perfusionists
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

PART XXXVI. Council on Sex Offender Treatment
CHAPTER 810.Council on Sex Offender Treatment
The Council on Sex Offender Treatment (council) proposes new sec.sec.810.1-
810.9, 810.31-810.34, 810.61-810.65, and 810.91-810.92, concerning the sex 
offender treatment provider registry; criminal background check security; 
standards of practice; and code of professional ethics. Specifically, the 
sections cover introduction; definitions; registry criteria; registry renewal; 
fees; application availability; documentation of experience and training; 
revocation, denial or non-renewal of registration; complaints, disciplinary 
actions, administrative hearing and judicial review; access to criminal history 
records; records; destruction of criminal history records; frequency of criminal 
background checks; introduction to standards of practice; council assertions; 
assessment and evaluation concerns; issues to be addressed in treatment; code of 
professional ethics; and code of ethics. 
House Bill (HB) 2699, 75th Legislature, 1997, transferred the administration and 
enforcement required by the council (Texas Civil Statutes, Article 4413(51), to 
the Texas Department of Health (department) effective September 1, 1997. Section 
17 of this bill transfers all funds, property, records, and employees to the 
department as of September 1, 1997. The rules proposed for repeal in 40 Texas 
Administrative Code (TAC) Chapters 510 - 513 are hereby proposed in 22 TAC 
Chapter 810. The rules are proposed in 22 TAC Chapter 810 in order to be 
regrouped with other boards administratively attached to the department and are 
renumbered under one chapter instead of four chapters. A copy of the conversion 
chart showing the repealed rules and new rules is located in the "In Addition" 
section of this issue. 
Ms. Donna Flippin, Acting Executive Director, has determined that for the first 
five-year period the sections are in effect, there will be fiscal implications 
as a result of enforcing or administering these sections as proposed. The effect 
on state government will be an anticipated increase in revenue to the state of 
approximately $15,000 per year as a result of the proposed fee increases. The 
increases will help offset the current cost to state government to administer 
and enforce the program. There will be no fiscal implications on local 
government.
Ms. Flippin has also determined that for each year of the first five years the 
sections are in effect, the public benefits anticipated as a result of enforcing 
the sections, are compliance with HB 2699, 75th Legislature, 1997, and a 
continuation of the registration of sex offender treatment providers. There are 
no anticipated economic costs to persons who are required to comply with the 
sections as proposed. There will be an additional $100 cost for new registrants 
and an additional $50 cost per year for renewal registrants. There is no 
anticipated impact on local employment. 
Comments on the proposed new sections may be submitted to Ms. Donna Flippin, 
Professional Licensing & Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-4530. Comments will 
be accepted for 30 days following the date of publication of the new sections in 
the Texas Register. A public hearing has been scheduled for 5:30 p.m., Tuesday, 
May 26, 1998, in Conference Room S-402, Texas Department of Health, located at 
the Exchange Building, 8407 Wall Street, Austin, Texas 78754.

SUBCHAPTER A.Sex Offender Treatment Provider Registry
22 TAC sec.sec.810.1-810.9
The new sections are proposed under the Act, Texas Civil Statutes, Article 
4413(51). Section 2(b) provides the council with the authority to adopt rules 
consistent with the Act and sec.8 provides the council with the authority to 
adopt rules concerning the registration requirements and procedures for sex 
offender treatment providers on the registry. 
The proposed new sections affect Texas Civil Statutes, Article 4413(51).

sec.810.1.Introduction.
(a) Purpose. The provisions of this chapter govern the procedures relating to 
the registration of individuals as sex offender treatment providers in the State 
of Texas. 
(b) Construction. These sections cover definitions, criteria for application, 
fees, continuing education, complaints and other general procedures, and 
policies of the Council on Sex Offender Treatment. 

sec.810.2.Definitions.
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
(1) Act - Texas Civil Statutes, Article 4413(51). 
(2) Board - The Texas Board of Health. 
(3) Council - The Council on Sex Offender Treatment.
(4) Department - The Texas Department of Health. 
(5) Registrant - A person who is listed in the registry.
(6) Registry - A database maintained by the council that contains the names of 
persons who have met the council's criteria in the treatment of sex offenders 
and who provide mental health or medical services for the rehabilitation of sex 
offenders. 
(7) Rehabilitation Service - A mental health treatment or medical intervention 
program designed to treat or remedy a sex offender's mental or medical problem 
that may relate or contribute to the sex offender's criminal or paraphiliac 
problem. 
(8) Sex Offender - A person who: 
(A) is convicted of committing or adjudicated to have committed a sex crime 
under the laws of a state or under federal law, including a conviction of a sex 
crime under the uniform code of military justice; 
(B) is awarded deferred adjudication for a sex crime under the laws of a state 
or under federal law; 
(C) admits to having violated the law of a state or federal law with regard to 
sexual conduct; or 
(D) experiences or evidences a paraphilia disorder as defined by the current 
version of the Diagnostic and Statistical Manual (DSM), as published by the 
American Psychiatric Association Press, including any subsequent revision of the 
manual. 

sec.810.3Registry Criteria.
The council maintains a database of registrants whose experience in the 
rehabilitation of sex offenders may vary. The council shall recognize the 
experience and training of treatment providers in either one of two categories. 
These may be "Registered Sex Offender Provider" or "Affiliate Sex Offender 
Treatment Provider." 
(1) Registered Sex Offender Treatment Provider (RSOTP). The council may waive 
any prerequisite to registration for an applicant after receiving the 
applicant's credentials and determining that the applicant holds a valid 
registration from another state that has registration requirements substantially 
equivalent to those of this state. To be eligible as a RSOTP, the applicant must 
meet all of the following criteria: 
(A) be licensed or certified to practice as a physician, psychiatrist, 
psychologist, licensed professional counselor, licensed marriage and family 
therapist, licensed master social worker-advanced clinical practitioner, or 
advanced nurse practitioner recognized as a psychiatric clinical nurse 
specialist or psychiatric mental health nurse practitioner, and who provides 
mental health or medical services for the rehabilitation of sex offenders; 
(B) satisfy the experience and training required below: 
(i) possess a minimum of 1000 hours of clinical experience in the areas of 
assessment and treatment of sex offenders, obtained within a consecutive seven-
year period, and provide two reference letters from professionals who know of 
the applicant's clinical work in sex offender treatment; or 
(ii) possess a minimum of 40 hours of documented continuing education training, 
as defined in sec.810.7 of this title (relating to Documentation of Experience 
and Training), obtained within three years prior to application date, in the 
specific area of sex offender treatment and evaluation. Of the initial 40 hours 
training required, 30 hours or 75% must be in sex offender rehabilitation 
training. Ten hours or 25% must be in victim training; 
(C) submit a complete and accurate description of their treatment program on a 
form provided by the council; 
(D) comply with the following. Persons making initial application or renewing 
their eligibility for the registry: 
(i) must not have been convicted of a felony, or of any misdemeanor involving a 
sex offense, nor have received deferred adjudication for a sex offense, unless 
sufficient evidence of rehabilitation has been established as determined by the 
council; 
(ii) must not have had licensure revoked, canceled, suspended, or placed on 
probationary status by any professional licensing body, unless sufficient 
evidence of rehabilitation has been established as determined by the council; 
(iii) must not have been determined by any professional licensing body to have 
engaged in unprofessional or unethical conduct, unless sufficient evidence of 
rehabilitation has been established as determined by the council;
(iv) must not have been determined by the council to have engaged in deceit or 
fraud in connection with the delivery of services or documentation of registry 
requirements or registry eligibility; 
(v) must submit themselves to a criminal history background check. An applicant 
may be required to submit a complete set of fingerprints with the application 
documents, or other information necessary to conduct a criminal history 
background check to be submitted to the Texas Department of Public Safety or to 
another law enforcement agency. If fingerprints are requested, the fingerprints 
must be taken by a peace officer or a person authorized by the council and must 
be placed on a form prescribed by the Texas Department of Public Safety; and 
(vi) must not have violated any rule adopted by the council;
(E) submit an application fee defined in sec.810.5 of this title (relating to 
Fees); 
(F) submit a copy of his or her professional license, as set out in subparagraph 
(A) of this paragraph, indicating the applicant is current and in good standing; 
(G) sign the application form(s) and attest to the accuracy of the application 
before a notary public; and 
(H) complete the process within 90 days of the application's receipt in the 
council office. 
(2) Affiliate Sex Offender Treatment Provider (ASOTP). To be eligible as an 
ASOTP, the applicant must meet all of the following criteria:
(A) be licensed or certified to practice as a physician, psychologist, 
psychological associate, licensed professional counselor, licensed marriage and 
family therapist, licensed master social worker, or advanced nurse practitioner 
recognized as a psychiatric clinical nurse specialist or psychiatric mental 
health nurse practitioner, who provides mental health or medical services for 
the rehabilitation of sex offenders; 
(B) satisfy the experience and training required below: 
(i) possess a minimum of 250 hours of clinical experience in the areas of 
assessment and treatment of sex offenders, provide two reference letters from 
professionals who know of the applicant's clinical work in sex offender 
treatment;
(ii) be supervised by an RSOTP at least monthly until RSOTP status is reached; 
and 
(iii) possess a minimum of 40 hours of documented continuing education training, 
as defined in sec.810.7 of this title, obtained within three years prior to 
application date, in the specific area of sex offender treatment and evaluation. 
Of the initial 40 hours training required, 30 hours or 75% must be in sex 
offender rehabilitation training. Ten hours or 25% must be in victim training; 
(C) submit a complete and accurate description of their treatment program on a 
form provided by the council; 
(D) comply with the following. Persons making initial application or renewing 
their eligibility for the registry: 
(i) must not have been convicted of a felony, or of any misdemeanor involving a 
sex offense, nor have received deferred adjudication for a sex offense, unless 
sufficient evidence of rehabilitation has been established as determined by the 
council; 
(ii) must not have had licensure revoked, canceled, suspended, or placed on 
probationary status by any professional licensing body, unless sufficient 
evidence of rehabilitation has been established as determined by the council; 
(iii) must not have been determined by any professional licensing body to have 
engaged in unprofessional or unethical conduct, unless sufficient evidence of 
rehabilitation has been established as determined by the council;
(iv) must not have been determined by the council to have engaged in deceit or 
fraud in connection with the delivery of services or documentation of registry 
requirements of registry eligibility; 
(v) must submit themselves to a criminal history background check. An applicant 
may be required to submit a complete set of fingerprints with the application 
documents, or other information necessary to conduct a criminal history 
background check to be submitted to the Texas Department of Public Safety or to 
another law enforcement agency. If fingerprints are requested, the fingerprints 
must be taken by a peace officer or a person authorized by the council and must 
be placed on a form prescribed by the Texas Department of Public Safety; and 
(vi) must not have violated any rule adopted by the council;
(E) submit an application fee defined in sec.810.5 of this title; 
(F) submit a copy of his or her professional as set out in subparagraph (A) of 
this paragraph, indicating the applicant is current and in good standing; 
(G) sign the application form(s) and attest to the accuracy of the application 
in the presence of a notary public; and 
(H) complete the process within 90 days of the application's receipt in the 
council office. 
(3) Supervision. All ASOTP's providing any sex offender treatment must be 
supervised. Supervision will include the following. 
(A) An ASOTP providing any sex offender treatment is required to be under the 
supervision of an RSOTP and must provide annual documentation of that 
supervision to the council during the renewal period. 
(B) The ASOTP must receive face to face supervision at least one hour per month, 
or if providing more than 20 hours of direct clinical sex offender treatment per 
month, the ASOTP must receive one hour of supervision per every 20 hours of sex 
offender treatment provided. 
(C) The supervising RSOTP must submit to the council at the time of renewal the 
names of the ASOTP's they have supervised during the year on a form provided by 
the council. 
(4) Registration Certificates. Upon successful completion of the application or 
renewal process, registrants will receive an official certificate from the 
council. This certificate must be displayed at all locations where sex offender 
treatment is provided. Duplicate certificates may be obtained for this purpose. 
The address and telephone number of the council must also be displayed at all 
locations where sex offender treatment for the purpose of directing complaints 
against the registrant to the council. 
(5) Application processing. The council shall comply with the following 
procedures in processing applications for a license.
(A) The following times shall apply from a completed application receipt and 
acceptance date for filing or until the date a written notice is issued stating 
the application is deficient and additional specific information is required. A 
written notice of application approval may be sent instead of the notice of 
acceptance of a complete application. The times are as follows:
(i) letter of acceptance of application for registry renewal - 30 days; and 
(ii) letter of initial application deficiency - 30 days. 
(B) The following times shall apply from the receipt of the last item necessary 
to complete the application until the date of issuance of written notice 
approving or denying the application. The times for denial include notification 
of the proposed decision and of the opportunity, if required, to show compliance 
with the law and of the opportunity for a formal hearing. The times are as 
follows: 
(i) approval of application- 42 days; and 
(ii) letter of denial of license or registration - 90 days.
(6) Refund processing. The council shall comply with the following procedures in 
processing refunds of fees paid to the council. In the event an application is 
not processed in the times stated in paragraph (5)(A) of this section. 
(A) The applicant has the right to request reimbursement of all fees paid in 
that particular application process. Application for reimbursement shall be made 
to the executive director. If the executive director does not agree that the 
time has been violated or finds that good cause existed for exceeding the time, 
the request will be denied. 
(B) Good cause for exceeding the time is considered to exist if the number of 
applications for registration or renewal exceeds by 15% or more, the 
applications processed in the same calendar quarter of the preceding year; 
another public or private entity relied upon by the council in the application 
process caused the delay; or any other condition exists giving the council good 
cause for exceeding the time. 
(C) If the executive director denies a request for reimbursement under 
subparagraph (A) of this paragraph the applicant may appeal to the council for a 
timely resolution of any dispute arising from a violation of the times. The 
applicant shall give written notice to the council at the address of the council 
that he or she requests full reimbursement of all fees paid because his or her 
application was not processed within the applicable time. The executive director 
shall submit a written report of the facts related to the processing of the 
application and of any good cause for exceeding the applicable time. The council 
shall provide written notice of the decision to the applicant and the executive 
director. The council shall decide an appeal in favor of the applicant, if the 
applicable time was exceeded and good cause was not established. If the council 
decides the appeal in favor of the applicant, full reimbursement of all fees 
paid in that particular application process shall be made. 
(D) The times for contested cases related to the denial of registration or 
renewal are not included with the times listed in paragraphs (5)(A) and (5)(B) 
of this subsection. The time for conducting a contested case hearing runs from 
the date the council receives a written hearing request until the council's 
decision is final and appealable. A hearing may be completed within three to 
nine months, but may be shorter or longer depending on the particular 
circumstances of the hearing, the workload of the department and the scheduling 
of council meetings. 

sec.810.4. Registry Renewal.
In order to maintain eligibility for the registry, all renewal applicants must 
comply with the following. 
(1) All renewal applicants must submit every year a minimum of 12 hours of 
continuing education documentation in sex offender treatment of which three 
hours may be in sexual assault victim related training, beginning September 
1999. 
(2) All renewal applicants must submit renewal forms provided by the council and 
renewal fees defined in sec.810.5 of this title (relating to Fees). 
(3) All registration certificates expire September 30, no matter the date of 
initial registration. 
(4) All renewal applications must be postmarked by September 1 or a late fee may 
be assessed. 
(5) Continuing education activities shall be instructor-directed activities such 
as conferences, symposia, seminars and workshops and must be accepted or 
approved for continuing education credits by the licensing agencies regulating 
professionals listed in sec.810.3 of this title (relating to Registry Criteria). 
(6) No home or self-directed study courses will be considered for continuing 
education hours. 
(7) All renewal applicants may count a maximum of four hours per renewal period 
for the presentation of continuing education training, lectures, or courses in 
the specific area of sex offender treatment and evaluation.
(8) No hours may be carried over from one renewal period to another renewal 
period. 

sec.810.5.Fees.
The council has established the following registration fees. 
(1) All applicants must submit a non-refundable application fee of $200 and meet 
the following requirements for consideration and inclusion in the registry: 
(A) return the completed, signed and notarized application form provided by the 
council; 
(B) submit the registration fee in the form of a check or money order; and 
(C) submit, within 90 calendar days, any documentation required to complete the 
application if requested by the council, or a new application and registration 
fee must be submitted. 
(2) Additional fees will be charged for Federal Bureau of Investigations and 
Texas Department of Public Safety criminal background investigation. Fees shall 
be determined by those agencies conducting the investigation.
(3) Renewal forms and information will be mailed to each registrant at least 60 
days prior to registration expiration and sent to the registrant's last address 
of record with the council. 
(4) To renew, an RSOTP or an ASOTP must submit an annual renewal fee of $100 and 
meet the following requirements. 
(A) A person who is otherwise eligible to renew a registration may renew an 
unexpired registration by paying the required registration fee to the council on 
or before the expiration date of the registration. 
(B) If a registration has been expired for 90 days or less, the late renewal fee 
is $150. 
(C) If a registration has been expired for longer than 90 days but less than one 
year, the reinstatement fee is $200. 

sec.810.6. Application Availability.
Applications shall be made available upon receipt of a written or verbal request 
to the council.

sec.810.7.Documentation of Experience and Training.
In determining the acceptability of the treatment provider's experience and/or 
training, the council will require documentation of experience and/or tjraining 
regarding the quality, scope, and nature of the applicant's work in sex offender 
treatment and rehabilitation. This will include two reference letters from 
professionals who can attest to the applicant's work in sex offender treatment. 
The council recognizes continuing education activities that are instructor-
directed activities such as conferences, symposia, seminars and workshops and 
must be accepted or approved for continuing education credits by the licensing 
agencies regulating professionals listed in sec.810.3 of this title (relating to 
Registry Criteria). 

sec.810.8.Revocation, Denial or Non-Renewal of Registration. 
The council shall have the right to revoke a registration, refuse to accept a 
registration, and/or refuse to renew a registration upon proof that the 
treatment provider has: 
(1) been convicted of any felony or a misdemeanor involving a sexual offense, or 
has ever received deferred adjudication for a sexual offense, unless sufficient 
evidence of rehabilitation has been established as determined by the council; 
(2) had licensure revoked, canceled, suspended or placed on probationary status 
by any professional licensing body, unless sufficient evidence of rehabilitation 
has been established as determined by the council;
(3) been determined by any professional licensing body to have engaged in 
unprofessional or unethical conduct, unless sufficient evidence of 
rehabilitation has been established as determined by the council;
(4) been determined by the council to have engaged in deceit or fraud in 
connection with the delivery of services, supervision, or documentation of 
registry requirements or registry eligibility; 
(5) violated the Act or any rule adopted by the council;
(6) been prohibited from renewal by the Education Code, sec.57.491 (relating to 
Loan Default Ground for Non-renewal of Professional or Occupational License); or 
(7) been prohibited from renewal by a court order or attorney general's order 
issued pursuant to the Family Code, Chapter 232 (relating to Suspension of 
License for Failure to Pay Child Support). 

sec.810.9.Complaints, Disciplinary Actions, Administrative Hearing and Judicial 
Review.
(a) A person wishing to report an alleged violation of the Act or this chapter 
by a registrant or other person shall notify the executive director. The initial 
notification may be in writing, by fax, or by personal visit to the council 
office. 
(b) The executive director will review the complaint for violations of the Act 
or any rule adopted by the council. 
(c) If it is determined that a violation of the Act or these sections may have 
occurred, the executive director will: 
(1) refer complaint to registrant's primary licensing agency within 60 days; 
(2) notify the registrant or other person in writing that a complaint has been 
filed; and 
(3) notify the complainant in writing of receipt of the complaint. 
(d) The council is authorized to revoke, suspend or refuse to renew a 
registration, place on probation a person whose registration has been suspended, 
or reprimand a registrant for a violation of the Act, or a rule of the council. 
(e) If the suspension is probated, the council is authorized by sec.13C(a)(1)-
(3) of the Act to impose certain requirements and limitations on a person. 
(f) If any professional license of the registrant is revoked or suspended, the 
council shall propose revocation of registration. 
(g) The council shall keep information about each complaint filed with the 
council. The information shall include: 
(1) the date the complaint is received; 
(2) the name of the complainant; 
(3) the subject matter of the complaint; 
(4) a record of all persons contacted in relation to the complaint; 
(5) a summary of the results of the review or investigation of the complaint; 
and 
(6) for a complaint for which the council took no action, an explanation of the 
reason the complaint was closed without action. 
(h) Formal hearing. 
(1) The formal hearing shall be conducted according to the provisions of the 
Administrative Procedure Act and this chapter. The parties to a hearing shall be 
the applicant or registrant and the executive director. The formal hearing shall 
be held in Travis County, Texas unless otherwise determined by the 
Administrative Law Judge (ALJ) or upon agreement of the parties. 
(2) Prior to institution of formal proceedings to revoke or suspend a 
registrant, the executive director shall give written notice to the registrant 
by certified mail, return receipt requested, of the facts or conduct alleged to 
warrant revocation or suspension, and the person shall be given the opportunity, 
as described in the notice, to show compliance with all requirements of the Act 
and this chapter. 
(3) To initiate formal hearing procedures, the executive director shall give the 
registrant written notice of the opportunity for hearing. The notice shall state 
the basis for the proposed action. Within 10 days after receipt of the notice, 
the registrant must give written notice to the executive director that he or she 
either waives the hearing or wants the hearing. Receipt of the notice is deemed 
to occur on the 10th day after the notice is mailed to the registrant's last 
reported address unless another date of receipt is reflected on a U.S. Postal 
Service return receipt. 
(A) If the registrant fails to request a hearing, the registrant is deemed to 
have waived the hearing, and a default order may be entered.
(B) If the registrant requests a hearing within 10 days after receiving the 
notice of opportunity for hearing, the executive director shall initiate formal 
hearing procedures in accordance with this section. 
(i) Final action. 
(1) If the council suspends a registration, the suspension remains in effect for 
the period of suspension ordered, or until the executive director or the council 
determines that the reasons for suspension no longer exist. The registrant whose 
registration has been suspended is responsible for securing and providing to the 
executive director such evidence, as may be required by the council, that the 
reasons for the suspension no longer exist. The executive director or the 
council shall investigate prior to making a determination. 
(2) During the time of suspension, the former registrant shall return all 
registration certificates to the council. 
(3) If a suspension overlaps a renewal period, the former registrant shall 
comply with the normal renewal procedures in these sections. The council may not 
renew the certificate until the executive director or the council determines 
that the reasons for suspension have been removed.
(4) A person whose application is denied or whose registration certificate is 
revoked is ineligible to apply for registration under this Act for one year from 
the date of the denial or revocation. 
(5) Upon revocation or non-renewal, the former registrant shall return all 
certificates issued to the registrant by the council. 
(j) Appeal of a decision. A person may appeal a final decision of the council to 
exclude or remove the person from the registry by filing a petition for judicial 
review in the manner provided by the Government Code, Chapter 268, Article 1, 
sec.2001.176. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805883
Collier M. Cole, Ph.D.
Chairperson
Council on Sex Offender Treatment
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

SUBCHAPTER B.Criminal Background Check Security
22 TAC sec.sec.810.31-810.34
The new sections are proposed under the Act, Texas Civil Statutes, Article 
4413(51). Section 2(b) provides the council with the authority to adopt rules 
consistent with the Act and sec.8 provides the council with the authority to 
adopt rules concerning the registration requirements and procedures for sex 
offender treatment providers on the registry. 
The proposed new sections affect Texas Civil Statutes, Article 4413(51).

sec.810.31.Access to Criminal History Records.
The council is authorized to obtain information about the conviction or deferred 
adjudication that relates to an applicant of the registry and maintained by the 
Texas Department of Public Safety or the Federal Bureau of Investigation. The 
council may obtain a criminal history record from any law enforcement agency. 
The criminal history record information received under this section is for the 
exclusive use of the council and is privileged and confidential. The criminal 
history record information may not be released or otherwise disclosed to any 
person or agency except on court order or with the consent of the applicant. 

sec.810.32.Records.
All other records of the council that are not made confidential by other law are 
open to inspection by the public during regular office hours. The contents of 
the criminal background check on each registrant are not public records and are 
confidential under lock and key security. Unless expressed in writing by the 
chairperson of the council, the executive director and the executive director's 
designee are the only staff authorized to have daily access to the criminal 
history records. These records will be maintained in separate files and not in 
the registrant files. 

sec.810.33. Destruction of Criminal History Records.
The council will destroy adjudication information relating to a person after the 
council makes a decision on the eligibility of the applicant unless the 
information was the basis for a proposed revocation, suspension or refusal to 
renew a person's registration. The council will shred the information provided 
by the Texas Department of Public Safety, the Federal Bureau of Investigation or 
any other law enforcement agency, and the submitted applicant's finger print 
card. 

sec.810.34.Frequency of Criminal Background Check. 
The council will conduct a criminal background check on every new applicant, 
randomly at the time of renewal, and as necessary on all others. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805882
Collier M. Cole, Ph.D.
Chairperson
Council on Sex Offender Treatment
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

SUBCHAPTER C.Standards of Practice
22 TAC sec.sec.810.61-810.64
The new sections are proposed under the Act, Texas Civil Statutes, Article 
4413(51). Section 2(b) provides the council with the authority to adopt rules 
consistent with the Act and sec.8 provides the council with the authority to 
adopt rules concerning the registration requirements and procedures for sex 
offender treatment providers on the registry. 
The proposed new sections affect Texas Civil Statutes, Article 4413(51).

sec.810.61.Introduction to Standards of Practice. 
(a) The Council on Sex Offender Treatment (council) is dedicated to the 
prevention of sexual assault through effective treatment and management of sex 
offenders. The council identifies treatment providers who have the appropriate 
training and experience in the treatment of sex offenders, sponsors training 
seminars and conferences, and disseminates information about sex offender 
treatment. The council publishes a registry of sex offender treatment providers 
which contains the names of persons who have satisfactorily completed council 
requirements for inclusion. 
(b) Sexual deviance is a learned or acquired behavioral disorder but may also be 
influenced by biological factors. Treatment is focused on recognizing, changing 
and managing deviant behavior and the attitudes that promote it. Sexual deviance 
is not considered to be a disease that can be cured. The focus of contemporary 
treatment is on techniques designed to assist sex offenders in maintaining 
control throughout their lifetime. Therefore, treatment should include simple, 
practical techniques that can be used during and after formal therapy. 
(c) Sex offender evaluation and treatment requires an approach unfamiliar to 
most mental health professionals. Treatment providers often exercise substantial 
control over the lives of their clients because of the concern for community 
protection. For this and other reasons, standards of practice specific to the 
treatment of sex offenders are necessary. 
(d) This document was developed by the council to delineate appropriate 
evaluation and treatment procedures and policies. These standards were largely 
adapted from a publication of the Association for the Treatment of Sexual 
Abusers (ATSA) entitled, Ethical Standards and Principles for the Management of 
Sexual Abusers, Revised 1997 . They are not intended to supplant the standards 
of the treatment provider's licensing/certifying board, but are intended to 
supplement them. These standards delineate professional expectations for the 
treatment of sex offenders. 

sec.810.62.Council Assertions.
(a) Registrants shall: 
(1) be committed to community protection and safety; 
(2) not discriminate against clients with regard to race, religion, gender 
preference, or disability; 
(3) treat clients with dignity and respect, regardless of the nature of their 
crimes or conduct; 
(4) be knowledgeable of legal statutes and scientific data relevant to this area 
of specialized practice; 
(5) perform professional duties with the highest level of integrity, maintaining 
confidentiality within the scope of statutory responsibilities;
(6) insure that the client fully understands the scope and limits of 
confidentiality in the context of his or her particular situation;
(7) refrain from using professional relationships to further their personal, 
religious, political, or economic interest other than accepting customary 
professional fees; 
(8) not engage in sexual relationships with clients (sex between a mental health 
services provider and a client is a second degree felony in Texas); 
(9) fully inform clients in advance of fees for services;
(10) refrain from knowingly providing treatment services to a client who is in 
treatment with another professional without initial consultation with the 
current registrant; 
(11) make appropriate referrals when the registrant is not qualified or is 
otherwise unable to offer services to a client; 
(12) insure that colleagues are qualified by training and experience before 
making a referral to them; 
(13) when withdrawing services, minimize possible adverse effects on the client 
and the community by continuing treatment until the client has been admitted 
elsewhere; 
(14) take into account the legal/civil rights of the clients, including the 
right to refuse treatment; 
(15) make no claims regarding the efficacy of treatment that exceed what can be 
reasonable expected and supported by empirical literature;
(16) avoid drawing conclusions or rendering opinions that exceed the present 
level of knowledge in the field or the expertise of the evaluator; 
(17) attempt to resolve with the clinician and/or report to the appropriate 
licensing or regulatory authority unethical, incompetent, and dishonorable 
treatment or evaluation practices; and 
(18) display the address and telephone number of the council in all sites where 
sex offender treatment services are provided for the purpose of directing 
complaints to the council. 
(b) Registrants assert that: 
(1) community safety takes precedence over any conflicting consideration, and 
ultimately, is in the best interests of the offender and society; 
(2) inappropriate or unethical treatment damages the credibility of all 
treatment and presents an unnecessary risk to the community;
(3) registrants shall have no history of criminal or sexually deviant acts; 
(4) criminal investigation, prosecution, and court orders for treatment may be 
components of effective intervention; 
(5) where practical, registrants should actively involve community supervision 
officers, child protective services workers, and victim therapists in case 
management; 
(6) a voluntary client accepted for treatment should be held to the same 
standards of compliance as are mandated sex offenders;
(7) it is imprudent to release an untreated sex offender without providing 
offense-specific evaluation and treatment or specialized supervision; 
(8) without external pressure many sex offenders will not follow through in 
treatment. Internal motivation improves the prognosis, but is not a guarantee of 
success;
(9) comprehensive assessment of the sex offender must precede treatment and 
includes issues addressed in sec.810.63 of this title (relating to Assessment 
and Evaluation Concerns); 
(10) sex offenders require comprehensive, long term, offense-specific treatment. 
Currently, cognitive-behavioral approaches that utilize sex offender peer groups 
may be the most effective and best evaluated methods of treatment. Self-help 
groups, drug intervention, or time limited treatment should be used only as 
adjuncts to more comprehensive treatment. For some sex offenders, incarceration 
without treatment may increase the risk of recidivism; 
(11) a written individualized treatment plan that identifies the issues, 
intervention strategies, and goals of treatment shall be prepared for each sex 
offender. Treatment plans should be reassessed periodically;
(12) the treatment plan may include behavioral contracts which outline specific 
expectations of the sex offender, his/her family, and the sex offender's support 
systems. These contracts should include provisions to avert high risk 
situations. These contracts should be reassessed periodically;
(13) progress, or lack thereof, should be clearly documented in treatment 
records. Specific achievements, failed assignments and rule violations should be 
recorded. This information should be provided to the appropriate supervising 
officer in the justice system; 
(14) progress in treatment must be based on specific, measurable objectives, 
observable changes, and demonstrated ability to apply changes in relevant 
situations. For most sex offenders, progress requires changes in the sex 
offender's behavior, attitudes, social and sexual functioning, cognitive 
processes, and arousal patterns. These changes should demonstrate increased 
understanding by the offender of his own deviant behavior, sensitization to the 
effects on a victim, and ability to seek and apply help; 
(15) when a sex offender has made the changes required in treatment, there 
should be a gradual and commensurate decline of intervention, support, and 
supervision following an offense-specific treatment program. Ongoing support to 
maintain changes made in treatment is necessary and aftercare and monitoring are 
desirable; 
(16) there will be instances when the registrant should refuse to treat a sex 
offender because essential ancillary resources do not exist to provide the 
necessary levels of intervention or safeguards; 
(17) the registrant has an ethical obligation to refer the client to a more 
comprehensive treatment program and/or to the judicial system, when the 
registrant determines that a sex offender is not making the changes necessary to 
reduce his/her risk to the community; 
(18) failure on the part of clients to abide by their treatment plans and/or 
contracts should result in referral back to the supervising officer in the 
justice system; 
(19) a registrant may decide to decline further involvement with a client who 
refuses to address any critical aspect of treatment; 
(20) registrants need to immediately notify the appropriate authority when a 
client drops out of court-ordered treatment; 
(21) most sex offenders enter the criminal justice system with varying degrees 
of denial regarding their behavior. Overcoming denial is a gradual process 
achieved in treatment. The existence of some degree of denial should not 
preclude an offender entering treatment, although the degree of denial should be 
a factor in identifying the most appropriate form and location of treatment; 
(22) sex offender treatment is unlikely to be effective unless the sex offender 
admits his/her behavior. Community based treatment may not be appropriate for 
sex offenders who continue to demonstrate complete denial after a trial period 
of treatment; 
(23) registrants should not rely exclusively on self report by the sex offender 
to assess progress or compliance with treatment requirements and/or probation or 
parole orders. Registrants should rely on multiple sources of information 
regarding the sex offender's behavior and when possible utilize physiological 
methods such as polygraphy, phallometric, and other research based physiological 
measurements; 
(24) physiological measures should not replace other forms of monitoring but may 
improve accuracy when combined with active surveillance, collateral 
verifications, and self-report. Phallometric assessment in Texas must be 
conducted by an order and under the supervision of a physician. Polygraph 
examinations should only be conducted by licensed examiners that meet the 
"Recommended Guidelines for the Clinical Polygraph Examinations of Sex 
Offenders" as developed by the Joint Polygraph Committee on Offender Testing 
(JPCOT);
(25) polygraphy can be effective in encouraging disclosure of prior events and 
adherence to rules. This procedure should never be the only method used to 
determine factual information; 
(26) phallometric methods cannot be used to prove an individual did or did not, 
or will or will not commit a sexual offense. However, they can be useful in 
identifying sexual preferences and changes in preferences over time; 
(27) informed, voluntary consent should always be obtained prior to engaging 
clients in aversive conditioning; 
(28) if phallometric assessment or aversive therapies are used with persons 15 
years of age or younger, consent for such assessment and therapy should be 
obtained from the juvenile sex offender and the sex offender's parents, and the 
procedures should be reviewed by a multi-disciplinary professional or 
institutional advisory group. This is intended to insure that individuals not 
intimately involved in the treatment of the patient have input regarding the 
appropriateness of such methods consistent with the developmental level of the 
child; 
(29) individuals under age thirteen should not undergo phallometric assessment 
or aversive therapies except in rare cases which must be approved by a multi-
disciplinary advisory group; 
(30) in cases of intellectually handicapped sex offenders who are unable to give 
consent, an interdisciplinary review and parental consent are the ways to obtain 
permission to proceed with treatment; 
(31) removal of an intrafamilial sex offender against children from a residence 
in which children reside (instead of the children) is the preferred option; 
(32) treatment referrals should be offered to the non-offending spouse and 
children in cases where a parent has been removed and to the family where a 
juvenile sex offender has been removed; 
(33) if the sex offender has a history of sexual arousal to or reported 
fantasies of sexual contact with children, he or she should be restricted from 
having access to children. Supervised visits may be considered if: 
(A) it is determined that sufficient safeguards exist; 
(B) the sex offender has demonstrated control over his or her deviant arousal; 
(C) it does not impede the sex offender's progress in treatment; and 
(D) court mandated conditions do not prohibit such contact;
(34) there is evidence to support family participation in the treatment of sex 
offender. Where feasible and appropriate, spouses and other family members 
should be included. Victims or vulnerable children should be excluded until such 
time as joint therapy is determined to be appropriate;
(35) the registrant should make every effort to collaborate with the victim's 
therapist in making decisions regarding communication, visits and reunification. 
Registrants should be supportive of the victim's wishes regarding contact with 
the offender. Contact should be arranged in a manner that places child/victim 
safety first. When assessing child safety, both psychological and physical well-
being should be considered. The registrant shall insure that custodial parents 
or guardians of the children have been consulted prior to authorizing contact 
and that contact is in accordance with Court directives; and 
(36) if reunification is deemed appropriate, the process should be closely 
supervised. There must be provisions for monitoring behavior and reporting rule 
violations. Victim comfort and safety should be assessed on a continuing basis. 
The registrant should recognize that supervision during visits with children is 
critical for those whose crimes are against children, or who have demonstrated 
the potential to abuse children. Caution should be taken when selecting and 
preparing visitation supervisors. 

sec.810.63.Assessment and Evaluation Concerns.
(a) The evaluation focuses on both the risks and needs of the sex offender, as 
well as identifying factors from social and sexual history which may contribute 
to sexual deviance. Evaluations provide the basis for the development of 
comprehensive treatment plans and should provide recommendations regarding the 
intensity of intervention, specific treatment protocol needed, amenability to 
treatment, as well as the identified risk the sex offender presents to the 
community. There is no known set of personality characteristics that can 
differentiate the sex offender from the non-sex offender. Psychological profiles 
cannot be used to prove or disprove an individual's propensity to act in a 
sexually deviant manner. 
(b) The following standards were largely adapted from a publication of the 
Association for the Treatment of Sexual Abusers entitled, Ethical Standards and 
Principles for the Management of Sexual Abusers, Revised 1997. Evaluations shall 
precede treatment. In preparing evaluations of sex offenders, registrants are 
expected to: 
(1) be fair and impartial, providing objective and accurate data; 
(2) respond only to referral questions that fall within the evaluator's 
expertise and present level of knowledge; 
(3) be respectful of the client's right to be informed of the reasons for the 
evaluation and the interpretation of data, as well as the basis for 
recommendations and conclusions; 
(4) be aware of the client's legal status; 
(5) be mindful of the limitations of client's self-report and make all possible 
efforts to verify the information provided by the client;
(6) use evaluative procedures and techniques sufficient to respond to the 
presenting issues, as well as to provide appropriate substantiation for the 
resulting conclusions and recommendations; 
(7) acknowledge if an evaluation consisted of only a review of data, with no 
client contact, and clarify the impact that limited information has on the 
reliability and validity of the resulting report; 
(8) provide informed consent, releases and/or limit of confidentiality documents 
in written form and employ verbal explanations for non-readers; 
(9) if the client is a juvenile or incapable of giving consent for any other 
reason, obtain consent for testing, evaluation and information exchange from the 
appropriate guardian. Assent from the individual being evaluated should be 
obtained whenever possible; 
(10) thoroughly review written documentation and collateral interviews. This 
involves gathering and reviewing information from all available and relevant 
sources, including: 
(A) criminal investigation records; 
(B) child protection service investigations; 
(C) previous evaluations and treatment progress reports; 
(D) mental health records and assessments; 
(E) medical records; 
(F) correctional system reports; 
(G) probations/parole reports; 
(H) offense statements from sex offender; and 
(I) offense statements from victim; 
(11) whenever possible, interview the client's significant other and/or family 
of origin; 
(12) cautiously interpret evaluation conducted without collateral information; 
(13) list and acknowledge in a written report evaluation procedure summaries, 
conclusions, recommendations, and all collateral reports and interviews; 
(14) re-interviews of victims should not be used for the purpose of gathering 
information during the sex offender's evaluation; and 
(15) keep the sex offender and victim interview and evaluation processes 
separate. If that is not possible, the evaluator must be extremely vigilant to 
avoid bias. 
(c) The evaluation procedures may include: 
(1) clinical review; 
(2) paper/pencil testing; 
(3) intellectual assessment; and 
(4) physiological assessments. 
(d) Information gathered in the evaluation process includes, but is not limited 
to: 
(1) intellectual and cognitive functioning; 
(2) mental status; 
(3) medical history of head injuries, physical abnormalities, enuresis, 
encopresis, current use of medication, allergies, accidents, operations, and 
major medical illnesses; 
(4) self-destructive behaviors, self mutilation and suicide attempts; 
(5) psychopathology and personality characteristics;
(6) family history; 
(7) history of victimization; physical, emotional and/or sexual; 
(8) education and occupation history; 
(9) criminal history, both sexual and non-sexual; 
(10) history of violence and aggression including use of weapons; 
(11) interpersonal relationships, both past and current;
(12) cognitive distortions; 
(13) social competence; 
(14) impulse control; 
(15) substance abuse; 
(16) denial, minimization and inability to accept responsibility;
(17) sexual behavior, including sexual development, adolescent sexuality and 
experimentation, dating history, intimate sexual contacts, gender identity 
issues, adult sexual practices, masturbatory practices, sexual dysfunction, 
fantasy content, and sexual functioning; and 
(18) sexually deviant behavior, including description of offense behaviors, 
number of victims, gender and age of victims, frequency and duration of abusive 
sexual contact, victim selection, access, and grooming behaviors, use of 
threats, coercion or bribes to maintain victim silence, degree of force used 
before, during and/or after offense, and sexual arousal patterns. 
(e) Registrants will subscribe to the following tenets regarding client 
assessment.
(1) The comprehensive assessment of the client's sexually deviant behavior is 
specific to the evaluation of the sex offender. 
(2) It is important to be sensitive to the individual's cognitive functioning, 
including reading and writing capabilities, prior to arranging the battery of 
testing instruments. 
(3) If a client cannot read at the level necessary to comprehend the test 
questions, arrangements for using a standardized approved auditory (taped or 
read) version of the test instrument should be made. 
(4) The clinical interview must incorporate sufficient discussion necessary to 
augment, clarify and explore the information obtained from the review of 
collateral materials (and interviews), as well as the other components of the 
evaluation (testing results, etc.). 
(5) It is important to note the degree of similarity or disparity between the 
abuser and the victim's statements. 
(6) The client's explanations for false allegations should be documented. 
(7) Assessment of treatment needs should identify strengths and weaknesses in 
the individual's socio-sexual functioning for the purpose of directing treatment 
efforts to the appropriate areas. 
(8) Both community safety and the degree to which a sex offender is capable and 
willing to manage risk should be considered when generating recommendations. 
(9) A thorough evaluation should be completed prior to a sex offender being 
accepted into a community based treatment program. 
(A) If a significant amount of time has lapsed between the completions of the 
evaluation and when the individual applies for acceptance into a treatment 
program, an evaluation update is required. 
(B) The intent of the update should not be to duplicate the original evaluation, 
but to gather current data upon which the original treatment plan can either be 
confirmed or amended. 
(10) A sex offender treatment provider should never recommend an inadequate 
treatment program or level of risk management because existing resources limit 
or preclude adequate or appropriate services. 

sec.810.64.Issues To Be Addressed In Treatment. 
(a) During the decade preceding 1995, the field of sex offender evaluation and 
treatment has undergone many changes. Research and clinical reports have begun 
to demonstrate that a number of treatment methods may be effective in reducing 
some forms of sexual deviance. 
(b) Although existing data are inadequate to determine which type of treatment 
is the most effective for which type of sex offender, the following treatment 
methods generally are accepted as those most important to the effective 
treatment of sexual deviancy. 
(1) Arousal Control. Control of deviant arousal, fantasies, and urges is a 
priority with most sex offenders. Fantasy and sexual arousal to fantasy are 
precursors to deviant sexual behavior. It should be assumed that most offenders 
have gained sexual pleasure from their specific form of deviance. Arousal 
control methods do not eliminate but only help control arousal. It is therefore 
necessary that clients learn to apply these techniques in everyday situations, 
without reliance on a special apparatus. Arousal control may require periodic 
"booster" sessions for the remainder of the client's life. Effective arousal 
control must also include methods to control spontaneous deviant fantasies and 
to minimize contact with stimulating objects or persons. Arousal control should 
proceed from the most effective methods for reducing arousal to less effective 
methods. To document changes in arousal control, physiological measurement is 
essential. Multiple measures over time are required to determine change 
reliability. 
(2) Cognitive Therapy. Cognitive distortions are thoughts and attitudes that 
allow offenders to justify, rationalize, and minimize the impact of their 
deviant behavior. Cognitive distortions allow the offender to overcome 
prohibitions and progress from fantasy to behavior. These distorted thoughts 
provide the sex offender with an excuse to engage in deviant sexual behavior, 
and serve to reduce guilt and responsibility. Cognitive therapy strives to 
identify, assess, and modify cognition's that promote sexual deviance. Cognitive 
therapy is considered a vital component of treatment. 
(3) Relapse Prevention. Current knowledge of deviant sexual behavior suggests 
that there is a series of behaviors, emotions, and cognition's that is 
identifiable and which precede deviant sexual behavior in a predictable manner. 
The ability to accurately identify these maladaptive behaviors is a primary goal 
for every offender in treatment. Autobiographies, offense reports, interviews 
and cognitive-behavioral chains are used to identify antecedents to offending. 
The ability to intervene can be enhanced by training primary partners and other 
support persons to recognize maladaptive behaviors and to encourage application 
of proper coping behaviors. 
(4) Victim Empathy. Although there is no clear evidence to suggest that all sex 
offenders can gain true empathy for victims of abuse, a universal goal of 
treatment is to learn to understand and value others. Highlighting the 
consequences of victimization helps sensitize the offender to the harm he or she 
has done. The use of analogous experiences has been shown to be effective 
especially with adolescents. 
(5) Biomedical Approaches. Intervention with psychopharmacological agents is 
useful in select cases. Antiandrogens such as depo-provera act by reducing 
testosterone and may be helpful in controlling arousal and libido when these 
factors are undermining progress in therapy or increasing the risk of re-
offending before significant progress can be made in the cognitive aspects of 
therapy. Antidepressants and medications targeting obsessive compulsive symptoms 
are also useful in some individuals where those symptoms play a role in the 
overall psychodynamic picture. Likely candidates are those who are predatory, 
violent, have had prior treatment failures, and report an inability to control 
deviant sexual arousal. Use of these agents should never be the only method of 
treatment. 
(6) Increasing Social Competence. Sex offenders often have deficits in basic 
social and interpersonal skills. They may lack the ability to develop and 
sustain reciprocal friendships. Many sex offenders are poor problem-solvers, 
lack assertiveness, and do not adequately manage anger or stress. One goal of 
treatment is to improve the offender's ability to deal effectively with social 
situations and develop meaningful relationships with others. 
(7) Improving Primary Relationships. Failure to develop and maintain a 
reciprocal, living sexual relationship with an adult partner may lead one to 
seek out alternative sexual outlets. Identifying specific sexual dysfunctions, 
sex therapy, and training in dating skills and erotic techniques may be 
necessary to develop a functional lifestyle. Failure to involve the current 
partners in therapy often leads to the same stresses and failure in the 
relationship that precipitated the sexual deviancy. 
(8) Couples/Family Therapy. To facilitate transition of the sex offender's 
partner into therapy a variety of treatment modalities are recommended. 
Individual therapy, non-offending spouses groups, and/or parents of victims 
groups prepare the partner for the issues and methods involved in sex offender 
treatment. Marital therapy or couples group therapy focused on sexual offending 
is essential in cases where a sex offender is to return home. If an offender is 
to eventually to live in a home where victims or children reside, a 
predetermined integration sequence should be followed which addresses role and 
boundary issues. This should include close supervision and a variety of 
safeguards for the protection of children. 
(9) Support Systems. Involvement of close friends and family in therapy provides 
the offender with a milieu in which support is available. Part of the transition 
to follow-up is a reduction in group and individual therapy. To compensate for 
this loss of support and surveillance, the support system should assist the 
offender in avoiding and coping with antecedents to sexual deviance. The support 
system should include individuals from the offender's daily life (i.e., family, 
friends, co-workers, church members, and extended family). 
(10) Comorbid Diagnosis. In some sex offenders there are sufficient signs and 
symptoms to merit an additional diagnosis by DSM IV criteria. These diagnoses 
can be anywhere in the entire spectrum of psychiatric disease. The most common 
are alcohol abuse, substance abuse and affective disorders. Treating an alcohol 
or substance problem should not be assumed to make sex offender treatment 
unnecessary. Occasionally, the delusions and hallucinations of schizophrenia 
will be associated with the individual committing sexual offenses. The comorbid 
diagnoses should be treated with the appropriate therapies concomitantly with 
the treatment for sex offending behavior except in the case of schizophrenia 
where the antipsychotic therapy would obviously take precedence. 
(11) Follow-up Treatment. A therapeutic regime that includes follow-up 
significantly increases the likelihood that gains made during treatment will be 
maintained. In order for new habits and skills to be reinforced and to monitor 
compliance with treatment contracts, follow-up treatment should involve periodic 
"booster" sessions to reinforce and assess maintenance of positive gains made 
during treatment. This can be facilitated by involving the support group, and 
using polygraphy and phallometric assessment. Input from support group members, 
polygraph examinations, and phallometric assessments may serve to deter future 
offenses or alert therapists to problems. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805881
Collier M. Cole, Ph.D.
Chairperson
Council on Sex Offender Treatment
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

SUBCHAPTER D.Code of Professional Ethics
22 TAC sec.sec.810.91-810.92
The new sections are proposed under the Act, Texas Civil Statutes, Article 
4413(51). Section 2(b) provides the council with the authority to adopt rules 
consistent with the Act and sec.8 provides the council with the authority to 
adopt rules concerning the registration requirements and procedures for sex 
offender treatment providers on the registry. 
The proposed new sections affect Texas Civil Statutes, Article 4413(51).

sec.810.91.Code of Professional Ethics.
Registrants are trained in dealing with the assessment and treatment of sex 
offenders. These registrants constitute a professional discipline which has a 
membership committed to establishing and maintaining the highest level of 
professional standards related to the assessment and treatment of sex offenders. 
As such, they are conscious of their special skills and aware of their 
professional boundaries. They perform their professional duties with the highest 
level of integrity and appropriate confidentiality, within the scope of their 
statutory responsibilities. They will not hesitate to seek assistance from other 
professional disciplines when circumstances dictate. They are committed to 
protect the public against and will not hesitate to expose unethical, 
incompetent, or dishonorable practices. In order to maintain the highest 
standard of service and consumer protection, they commit themselves to the 
following principles designed to earn the greatest level of public confidence.

sec.810.92 Code of Ethics.
(a) Professional Conduct. 
(1) Each registrant will provide professional service to anyone, regardless of 
race, religion, sex, political affiliation, social or economic status, or choice 
of life style. A registrant will not allow personal feelings related to a 
client's alleged or actual crimes or behavior to interfere with professional 
judgment and objectivity. When a registrant cannot offer service to a client for 
any reason, he or she will make a proper referral. Registrants are encouraged to 
devote a portion of their time to work for which there is little or no financial 
return. 
(2) Each registrant will refrain from using his or her professional 
relationship, related to the assessment or treatment of a client, to further 
personal, religious, political or economic interests, other than customary 
professional fees. 
(3) The proper conduct of each registrant is a personal matter to the same 
degree as it is with any other individual, except when such conduct compromises 
the fulfillment of professional responsibilities or reduces the public trust in 
this specialty area. Consequently, registrants are sensitive to predominant 
community standards and the potential impact that either conformity to, or 
deviation from these standards can have on the perception of their own 
performance, as well as that of their colleagues.
(4) Each registrant has an obligation to engage in continuing education and 
professional growth including active participation in meetings and affairs or 
relevant professional affiliations. 
(5) Each registrant will refrain from diagnosing, treating or advising on 
problems outside the recognized boundaries of his/her competence.
(b) Client Relationships.
(1) Each registrant, offers dignified and reasonable support to a client, and 
does not exaggerate the efficacy of his or her service. 
(2) When engaged in private practice, each registrant recognizes the importance 
pertaining to financial matters with clientele. Arrangements for payments are to 
be settled at the beginning of an assessment or a therapeutic relationship. 
(3) Each registrant will avoid dual relationships with clientele. These may 
impair professional judgment or pose a risk of exploiting the client. Examples 
of dual relationships include, but are not limited to, the following: treatment 
of family members, close friends, employees, supervisors, or supervisees. 
(4) Sexual harassment or intimacy with clients is unethical. Sexual behavior 
between a registrant and a client constitutes a felony offense in Texas. 
(5) A registrant shall not withdraw services to clients in a precipitous manner. 
Each member shall give careful consideration to all factors in the situation and 
take care to minimize possible adverse effects on the client. 
(6) Each registrant who anticipates termination or disruption of service to 
clients shall notify the clients promptly and provide for transfer, referral, or 
continuation of service in keeping with the client's needs and preferences. 
(7) Each registrant who serves the clients of a colleague during a temporary 
absence or emergency will serve those clients with the same consideration of 
that afforded any client. 
(8) In their professional role, registrants will avoid any action which will 
violate or diminish the legal and civil rights of clients or others who may be 
affected by their actions. 
(c) Confidentiality. 
(1) Registrants will keep records on each client, storing them in such a way as 
to ensure their safety and confidentiality in accordance with the highest 
professional and legal standards. 
(2) Each registrant is responsible for informing clients of the limits of 
confidentiality. Clients should be informed of any circumstances which may 
trigger an exception to the agreed upon confidentiality. 
(3) Registrants in criminal justice settings, or elsewhere, should inform all 
parties with whom they are working of the level of confidentiality which 
applies. They should clarify any circumstances which would constitute exceptions 
to confidentiality, in advance of the service being rendered. Each registrant 
should make clear to the client any "conflict of interests" or dual-client 
relationships which affect his/her current relationship with a client. 
(4) Written permission and informed consent shall be granted by the client 
before any data may be divulged to other parties. 
(5) When responding to an inquiry for information and when a written release by 
the client is obtained, written and oral reports should present data germane to 
the purpose of the inquiry. Every effort should be made to avoid undue invasion 
of privacy for the client or other related person. 
(6) As noted above, information is not communicated to others without the 
consent of the client unless the following circumstances occur. 
(A) There exists a clear and immediate danger to the person from the client. 
(B) There is an obligation to comply with specific statutes requiring reports of 
suspected abuse to authorities. Each registrant is responsible for becoming 
fully aware of all statutes which pertain to the conduct of his or her 
professional practice. 
(d) Assessments. 
(1) Registrants make every effort possible to promote the client's non-offending 
behavior while at the same time, acting in the best interest of the client, so 
long as others are not placed at identifiable risk. They guard against the 
misuse of assessment data. They respect their client's rights to know the 
results, the interpretations made, and the basis for the conclusions and 
recommendations drawn from such assessments. They endeavor to ensure that the 
assessment and reports they provide are used appropriately by others as well. 
Reports are written in such a way to communicate clearly to the recipient of the 
report. 
(2) Unless the client agrees to an exception in advance, each registrant 
respects the right of the client to have a complete explanation, in language 
which the client is able to understand, of the nature and purpose of the 
methodologies, and any foreseeable (side) effects of the assessment.
(3) Each registrant will obtain voluntary informed consent, in written form, 
from a client prior to conducting a physiological assessment or engaging in 
treatment. In cases where a question exists regarding the appropriateness of 
administering a test to a particular client, the registrant shall seek expert 
guidance from a competent medical and/or psychological authority prior to 
testing. 
(4) In court-ordered evaluations, the client should be informed of his rights as 
a client, including his rights of confidentiality.
(5) The responsible use of assessment measures is of paramount concern and a 
serious responsibility of each registrant. Assessments regarding a person's 
degree of sexual dangerousness, suitability for treatment, or other forensic 
referral questions shall not be determined solely on the basis of a phallometric 
assessment. Rather, such data must be properly integrated within a comprehensive 
assessment, the components of which are determined by a person who has specific 
training and expertise in making such assessments.
(6) An assessment should not be used to confirm or deny whether an event or 
crime has taken place. 
(7) In reporting assessment results, registrants indicate any reservations that 
might exist regarding validity or reliability because of the circumstances of 
the assessment or the absence of comparative norms for the person being tested. 
Each registrant endeavors to ensure that assessment results and interpretations 
are not misunderstood or misused by others. Proper qualifications will be made 
with regard to prediction and "generalizability of data" issues, in order to not 
mislead the consumer of the report. 
(8) Since it is not within the professional competence of registrants to offer 
conclusions on matters of law, unless they are trained to do so, they should 
resist pressure to offer such conclusions (e.g., while it would be appropriate 
to address an issue regarding the probability of a client committing certain 
criminal acts within a certain period of time, it would be inappropriate to 
state that "an individual is too dangerous to be released"). 
(9) Each registrant should be very cautious in offering predictions of criminal 
behavior for use in imprisoning or releasing individuals. If a registrant 
decided that it is appropriate, on the basis of a thorough evaluation in a given 
case, to offer a prediction of criminal behavior, he or she should specify 
clearly: 
(A) the acts being predicted; 
(B) the estimated probability that these acts will occur during a given period 
of time; and 
(C) the facts and data on which these predictive judgments are based. 
(10) Each registrant should be thoroughly familiar with the assessment or 
treatment procedures and data used by another registrant before providing any 
public comment or testimony pertaining to the validity, reliability, or accuracy 
of such information. 
(11) Each registrant will safeguard sexual arousal assessment testing and 
treatment materials. Each registrant will recognize the sensitivity of this 
material and use it only for the purpose for which it is intended in a 
controlled phallometric laboratory assessment. Registrants will not make such 
materials available to persons who lack proper training and credentials, or who 
would misinterpret or improperly use such stimulus materials. 
(e) Professional Relationships. 
(1) Each registrant will refrain from knowingly offering services to a client 
who is in treatment with another professional without initially consulting with 
the professionals involved. 
(2) Each registrant will act with proper regard for the needs, special 
competencies, and perspectives of not only colleagues who treat sex offenders 
but other professionals as well. 
(3) Each registrant is encouraged to affiliate with professional groups, 
clinics, or agencies operating in the assessment and treatment of sex offenders. 
Similarly, interdisciplinary contact and cooperation is encouraged.
(f) Research and Publications. 
(1) Each registrant is obligated to protect the welfare of his or her research 
subjects. Provisions of the "human subjects experimental policy" shall prevail 
as specified by the United States Department of Health, Education and Welfare 
guidelines. 
(2) Each registrant will carefully evaluate the ethical implications of possible 
research and has full responsibility to ensure that ethical practices are 
enforced in conducting such research. 
(3) The practice of informed consent prevails. The research participant shall 
have full freedom to decline to participate in or withdraw from the research at 
any time without any prejudicial consequences. 
(4) The research subject shall be protected from physical and mental discomfort, 
harm, and danger that may result from research procedures to the greatest degree 
possible. 
(5) Publication credit is assigned to those who have contributed to a 
publication in proportion to their contribution, and in accordance with 
customary publication practices. 
(g) Public Information and Advertising. All professional presentations to the 
public will be governed by the following standards on public information and 
advertising. 
(1) General Principles: The practice of assessment and treatment of the sex 
offender exists for the public welfare. Therefore, it is appropriate for 
registrants to inform the public of the availability of services. However, much 
needs to be done to educate the public as to the services available from 
qualified persons who engage in the assessment and treatment of sex offenders. 
Therefore, registrants have a responsibility to the public to engage in 
appropriate informational activities and avoid misrepresentation or misleading 
statements in keeping with the following general principles and specific 
regulations: selection of a registrant by a prospective client should be made on 
an informed basis. Advice and recommendations of third parties, such as 
community corrections officers, attorneys, physicians, other professionals, 
relatives or friends, as well as responses to restrained publicity, may be 
helpful. Advertisements and public communications, whether in directories, 
announcement cards, newspapers or on radio or television, should be formulated 
to convey accurate information which is necessary to make an appropriate 
selection. Self-praising and testimonials should be avoided. Information that 
may be helpful in some situations would include the following: 
(A) office information such as name, including a group name and names of 
professional associates, address, telephone number, credit card acceptability, 
languages spoken and written, and office hours; 
(B) earned degrees, state licensure and/or other certification, professional 
certification or affiliation; 
(C) description of practice, including the statement that a practice is limited 
to the assessment or treatment of sex offenders (if appropriate); and 
(D) professional fee information. 
(2) The proper motivation for community publicity by members who are engaged in 
the assessment and treatment of sex offenders lies in the need to inform the 
public of the availability of competent professionals. The public benefit 
derived from advertising depends upon the usefulness and accuracy of the 
information provided to the community to which it is directed.
(3) The regulation of public statements by registrants is rooted in the public 
interest. Public statements through which a registrant seeks business by use of 
extravagant or brash statements or appeals to fears could mislead or harm the 
lay person. Furthermore, public communications that would produce unrealistic 
expectations in particular cases and would bring about a lack of confidence in 
the profession, would be harmful to the community. The therapist-client 
relationship is personal and unique and should not be established as the result 
of pressures, deception or exploitation of the vulnerability of clients. 
(4) The name under which a registrant conducts his or her practice may be a 
factor in the selection process. Use of a name or credentials which could 
mislead referral sources or lay persons is improper. Likewise, a registrant 
should not hold oneself out as being a partner or associate of any agency or 
firm if he is, in fact, not acting in that capacity (e.g., a person engaged in 
private practice who is also employed at a state hospital should make it clear 
to a prospective client in private practice that he is not acting on behalf of a 
state hospital). 
(5) In order to avoid the possibility of misleading persons with whom he or she 
deals, a registrant should be scrupulous in the representation of his or her 
professional background, training and status. Each registrant must indicate, if 
it is accurate, any limitations in his or her practice (e.g., an ASOTP should 
specify that he/she must operate under the supervision of a RSOTP). 
(6) Registrants shall not represent their affiliation with any organization or 
agency in a manner which falsely implies sponsorship or certification by that 
organization. 
(7) Registrants shall not knowingly make a representation about his or her 
ability, background, or experience, or about that of a partner or associate, or 
about a fee or any other aspect of a proposed professional engagement that is 
false, fraudulent, misleading, or deceptive. A false, fraudulent, misleading, or 
deceptive statement or claim is defined as a statement or claim which: 
(A) contains a material misrepresentation of fact; 
(B) omits any material or statement of fact which is necessary to make the 
statement, in light of all circumstances, not misleading; or 
(C) is intended or likely to create an unjustified expectation concerning the 
registrant, or services. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805880
Collier M. Cole, Ph.D.
Chairperson
Council on Sex Offender Treatment
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 90.Regulatory Flexibility
The Texas Natural Resource Conservation Commission (TNRCC or commission) 
proposes new sec.sec.90.1, 90.2, 90.10, 90.12, 90.14, 90.16, 90.18, and 90.20, 
concerning Regulatory Flexibility. 
EXPLANATION OF PROPOSED RULES Senate Bill (SB) 1591, 75th Legislature, 1997, 
provides the commission with the authority to exempt an applicant from a 
requirement of a statute or commission rule related to the control or abatement 
of pollution if the applicant applies an alternative method or standard that is 
at least as protective of the environment and is not inconsistent with federal 
law. This provides for the use of innovative methods of compliance that could 
potentially result in greater environmental performance. SB 1591 further directs 
the commission to specify by rule the procedure for obtaining an exemption, 
which must include public notice and public participation provisions. The 
purpose of this rulemaking is to comply with the requirements of SB 1591 by 
establishing Regulatory Flexibility Order application requirements and 
provisions for public notice/public participation. 
Section 90.1, concerning Purpose, states the purpose of the new chapter, which 
is to provide regulatory flexibility to an applicant who proposes an alternative 
method or alternative standard to control or abate pollution. This section 
clearly identifies the objective of the proposed chapter and the authority under 
which the commission is proposing the new chapter. 
Section 90.2, concerning Applicability and Eligibility, establishes that the 
proposed chapter applies to anyone subject to an environmental statute or 
commission rule. This section also establishes that persons referred to the 
attorney general and who incur a judgment, and persons convicted of an 
environmental crime are ineligible for three years. The program is a voluntary 
program meant for those persons who have demonstrated a willingness to comply 
with environmental requirements. The eligibility requirements were therefore 
written to allow persons with a less than perfect compliance history to remain 
eligible, while specifically excluding persons who are guilty of major or 
willful infractions. 
Section 90.10, concerning Application for a Regulatory Flexibility Order, 
specifies the procedures for applying for a Regulatory Flexibility Order, 
establishes minimum requirements for the application, and establishes a $250 
application fee. Minimum requirements were developed to ensure consistency in 
applications received by the commission, to ensure consistency in the review of 
those applications, and to minimize the amount of time spent requesting 
additional information from the applicant. 
Section 90.12, concerning Additional Fees; Cost Recovery, establishes conditions 
under which additional fees may be assessed for regulatory flexibility 
applications. Additional fees may be assessed in two situations: first, if the 
application requires an amendment or modification to an existing permit, the 
executive director may require the applicant to pay a fee equal to the 
application fee for such permit amendment or modification; and second, if the 
executive director determines that the application is significant and complex, 
he may require the applicant to enter into a cost recovery agreement in order 
for the commission to recover all costs associated with the review and approval 
of the application. This provision provides for consistent assessment of fees 
associated with permit amendments and modifications. In addition, it allows the 
commission to recover costs associated with the review and approval of 
applications, particularly those that require extensive staff time and 
commission resources. Section 90.14, concerning Commission Action on 
Application, establishes that the commission will act on the application 
consistent with its procedural rules found in 30 TAC sec.50.17. In addition, 
this section establishes that the commission will consider, during review of the 
application, the applicant's compliance history and efforts made to achieve 
local community participation and support. This provision was included to 
clearly indicate how the application will be processed and to ensure that 
potential applicants understand that their compliance history and efforts to 
involve the local community will be a factor in consideration of the proposal. 
Compliance history is important because it gives an indication of the 
applicant's ability or willingness to comply with a Regulatory Flexibility 
Order. Local community participation is important because it identifies the 
preferences of the community relative to the proposal, exposes issues of 
importance to those in the locality, and provides the applicant with the 
information needed to address any potential community concerns prior to entering 
the application process. 
Section 90.16, concerning Public Notice, Comment, and Hearing, establishes 
public notice and participation requirements. Public notice is divided into 
three segments: the first provides that applicants must comply with public 
notice requirements associated with the statute or commission rule for which 
they are seeking an exemption; the second establishes public notice requirements 
if the statute or commission rule for which an applicant is requesting an 
exemption does not require public notice; and the third allows for the use of 
alternative public notice provided the alternative is reasonably likely to 
provide greater public notice and opportunity for participation. In addition, 
this section establishes minimum requirements for public notice. The public 
notice provision was divided into three segments because it is meant to provide 
for the greatest or most effective means of public notice. In addition, in light 
of the fact that the proposed rule is meant to provide flexibility, the 
alternative notice provision is meant to allow for the use of an alternative, 
provided that the alternative is likely to be more effective. 
Section 90.18, concerning Amendment/Renewal, establishes the procedures for 
amending or renewing a Regulatory Flexibility Order. This section specifies that 
an application for amendment or renewal may be filed in the same manner as a new 
application. In addition, this section provides that if an application for 
renewal is submitted at least 180 days prior to the expiration date of the 
current Regulatory Flexibility Order, the applicant can continue to operate 
under the existing order until such time as a decision is made on the renewal 
application. This provision clarifies the procedures for amending or renewing a 
Regulatory Flexibility Order, and in the event a Regulatory Flexibility Order 
expires, provides that the applicant can continue to operate under that order 
provided the renewal application is submitted within the specified time frame. 
This minimizes the chance of the applicant being penalized because the 
commission does not act on the renewal application prior to expiration of the 
order. 
Section 90.20, concerning Termination, details termination procedures by the 
recipient and the executive director. This section provides that if the 
Regulatory Flexibility Order is terminated by the recipient, then the recipient 
must be in compliance with all existing statutes or commission rules at the time 
of termination. Termination language was included to allow the recipient to 
terminate the order in the event the alternative does not result in an 
environmental or economic benefit. The recipient is required to immediately be 
in full compliance with existing statutes or commission rules because it could 
operate under the Regulatory Flexibility Order until such time as it is able to 
operate in full compliance with existing statutes or commission rules. 
The commission may terminate the order if it finds the recipient is not in 
compliance with the order or if the alternative is not or ceases to be at least 
as protective of the environment or public health, or becomes inconsistent with 
federal requirements. This section provides that the commission may grant a 
reasonable grace period to allow the recipient to come into full compliance with 
all existing statutes or commission rules. Otherwise, the recipient would be in 
immediate noncompliance upon termination. 
FISCAL NOTE Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five-year period the sections as proposed are in 
effect, there will be fiscal implications as a result of administration or 
enforcement of the sections. The effect on state government will be an increase 
in costs associated with the review and approval of applications for regulatory 
flexibility orders. This increase will be similar to a modest increase in the 
level of permit modification or amendment activity agency-wide.
The actual costs of processing the applications will depend on both the number 
and type of projects for which application is made, and the opportunity to make 
such application is voluntary. No estimates of the actual costs of processing 
applications under these proposed sections has been made; however, the total 
cost impact is not anticipated to be significant on an agency-wide basis. These 
sections also provide for the recovery of costs through nominal application fees 
and specific cost recovery provisions for more complex projects. Although total 
costs are not anticipated to be significant on an agency-wide basis, these costs 
will be potentially offset by the provision for recovery of costs from 
applicants. There are no costs imposed on units of local government. A unit of 
local government operating regulated facilities that would be eligible to 
participate as a party to a regulatory flexibility order would be affected in 
the same manner as any other facility owner or operator. The costs of 
participation imposed under these sections are the costs of preparation of an 
application meeting the requirements proposed under these sections and the 
payment of any fees for the recovery of processing costs. 
PUBLIC BENEFIT Mr. Minick has also determined that for each year of the first 
five years the sections as proposed are in effect, the public benefit 
anticipated as a result of enforcement of and compliance with the sections will 
be more cost-effective compliance with existing statutory and regulatory 
requirements for the protection of environmental quality and human health and 
safety. The proposed sections have an effect on eligible owners or operators on 
a strictly voluntary basis and no required economic costs are imposed on any 
person, including small businesses, complying with the sections as proposed. 
Owners or operators electing to seek an order for regulatory flexibility under 
these sections will realize costs attributable to the preparation of an 
application and justification that the proposal is consistent with the proposed 
requirements and statutory provisions. In addition, costs will be imposed as a 
result of payment of an application fee for all applicants and the payment of 
specific recoverable costs for some applicants. The proposed $250 application 
fee is not anticipated to represent a significant economic cost to most 
applicants. The number of total applications that may be anticipated is not 
known; however, it is not expected that a significant number of applicants will 
meet the requirements of a complex application that calls for the imposition of 
an agreement for recovery of costs. In no instance are the potential costs to an 
applicant anticipated to exceed the actual economic benefits that should accrue 
as a result of operating a facility under the flexible permitting authority 
conveyed by an order issued under these rules. 
REGULATORY IMPACT ANALYSIS The commission has reviewed the proposed rulemaking 
in light of the regulatory analysis requirements of Texas Government Code (the 
Code), sec.2001.0225, and has determined that the rulemaking is not subject to 
sec.2001.0225 because it does not meet the definition of a "major environmental 
rule" as defined in the Code, and it does not meet any of the four applicability 
requirements listed in sec.2001.0225(a). 
The goal of this proposal is to provide flexibility from existing statutes and 
commission rules, provided the proposed alternative is at least as protective as 
the statute or commission rule it replaces. This proposal does not create or 
impose any additional burdens on the regulated community. 
This proposal will not adversely affect in a material way the economy, a sector 
of the economy, productivity, competition, jobs, the environment, or the public 
health and safety. On the contrary, this proposal is expected to have a positive 
affect on the economy and the environment. 
This proposal will not exceed any state or federal requirement or a requirement 
of a delegation agreement or contract between the state and an agency or 
representative of the federal government. 
Regulatory Flexibility Orders (RFOs) issued under this proposal may create 
additional requirements for applicants, such as reporting or record keeping, 
beyond those already contained in the TNRCC's rules. However, since the program 
is voluntary, no additional requirements will be imposed on the regulated 
community at large. RFOs may be surrendered at any time, without penalty, 
provided all existing requirements are met. 
TAKINGS IMPACT STATEMENT The commission has prepared a takings impact assessment 
for these proposed rules under Texas Government Code, sec.2007.043. The 
following is a summary of that assessment. The specific purpose of the rules is 
to implement the commission's authority under Texas Water Code, sec.5.123, to 
provide regulatory flexibility to an applicant who proposes an alternative 
method or standard to control or abate pollution. The rules will substantially 
advance this specific purpose by establishing application and public 
notice/public participation procedures as required by Senate Bill 1591, 75th 
Legislature, 1997 (the legislation authorizing and requiring the commission to 
develop a regulatory flexibility program). Promulgation and enforcement of these 
rules will not affect private real property which is the subject of the rules 
because the Regulatory Flexibility Program is strictly voluntary, and therefore 
does not impose any burden. Applicants should be fully aware of any additional 
burdens as a result of program participation, and have the opportunity to 
withdraw at any time. 
COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has reviewed the 
proposed rulemaking and found that the proposal is a rulemaking identified in 
Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11, relating to 
Actions and Rules Subject to the Coastal Management Program (CMP), and will 
affect an action/authorization identified in Coastal Coordination Act 
Implementation Rules, 31 TAC sec.505.11, and will, therefore, require that 
applicable goals and policies of the CMP be considered during the rulemaking 
process. 
The commission has prepared a consistency determination for the proposed rules 
under 31 TAC sec.505.22 and has found the proposed rulemaking is consistent with 
the applicable CMP goals and policies. The following is a summary of that 
determination. CMP goals applicable to the proposed rule include: 1) protecting, 
preserving, restoring, and enhancing the diversity, quality, quantity, 
functions, and values of coastal natural resource areas (CNRAs); 2) ensuring 
sound management of all coastal resources by allowing for compatible economic 
development and multiple human uses of the coastal zone; 3) balancing the 
benefits from economic development and multiple human uses of the coastal zone, 
the benefits from protecting, preserving, restoring, and enhancing CNRAs, the 
benefits from minimizing loss of human life and property, and the benefits from 
public access to and enjoyment of the coastal zone; 4) coordinating agency and 
subdivision decision-making affecting CNRAs by establishing clear, objective 
policies for the management of CNRAs; 5) making agency and subdivision decision-
making affecting CNRAs efficient by identifying and addressing duplication and 
conflicts among local, state, and federal regulatory and other programs for the 
management of CNRAs; and 6) making coastal management processes visible, 
coherent, accessible, and accountable to the people of Texas by providing for 
public participation in the ongoing development and implementation of the Texas 
CMP. 
CMP policies applicable to the proposed rules include the policies in the 
following policy categories: Category 3-Discharges of Wastewater and Disposal of 
Waste from Oil and Gas Exploration and Production Activities; Category 4-
Construction and Operation of Solid Waste Treatment, Storage, and Disposal 
Facilities; Category 6-Discharge of Municipal and Industrial Wastewater to 
Coastal Waters; Category 7-Nonpoint-source Water Pollution; Category 8-
Development in Critical Areas; Category 10-Dredging and Dredged Material 
Disposal and Placement; Category 13-Development Within Coastal Barrier Resource 
System Units and Otherwise Protected Areas on Coastal Barriers; Category 17-
Emission of Air Pollutants; Category 18-Appropriations of Water; Category 19-
Levee and Flood Control Projects; Category 20-Policy for Major Actions; and 
Category 21-Administrative Policies. 
Promulgation and enforcement of these rules will not violate any standards 
identified in the applicable CMP goals and policies because the proposed rules 
are by definition consistent with the goals and policies of the CMP because any 
alternative must be shown to be consistent with federal law and to be at least 
as protective of human health and the environment as the rule for which an 
alternative is requested; and procedures are established for public notice, 
comment, and hearing. 
The commission seeks public comment on the consistency of the proposed rules. 
PUBLIC HEARING A public hearing on the proposal will be held June 2, 1998, at 
2:00 p.m. in Room 2210 of TNRCC Building F, located at 12100 Park 35 Circle, 
Austin. The hearing is structured for the receipt of oral or written comments by 
interested persons. Individuals may present oral statements when called upon in 
order of registration. Open discussion will not occur during the hearing; 
however, an agency staff member will be available to discuss the proposal 30 
minutes prior to the hearing and answer questions before and after the hearing. 
SUBMITTAL OF COMMENTS Comments may be submitted to Lisa Martin, TNRCC Office of 
Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-
3087, or faxed to (512) 239-4808. Comments must be received by 5:00 p.m., June 
8, 1998, and should reference Rule Log Number 97166-090-AD. For further 
information, please contact Sherman Krause, Office of Pollution Prevention and 
Recycling, (512) 239-4746, or Jim Dodds, Office of Policy and Regulatory 
Development, (512) 239-1119.
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearings should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 

SUBCHAPTER A.Purpose, Applicability, and Eligibility
30 TAC sec.90.1, sec.90.2
STATUTORY AUTHORITY The new sections are proposed under Texas Water Code, 
sec.5.123, which authorizes the commission to exempt an applicant from a 
requirement of a statute or commission rule regarding the control or abatement 
of pollution if the applicant proposes to control or abate pollution by an 
alternative method or by applying an alternative standard that is at least as 
protective of the environment and the public health and is not inconsistent with 
federal law. Texas Water Code, sec.5.123, requires the commission to adopt rules 
specifying the procedure for obtaining an exemption and requires that the rules 
provide for public notice and public participation. 
The proposed new sections implement Texas Water Code, sec.5.123.

sec.90.1. Purpose.
The purpose of this chapter is to implement the commission's authority under 
Texas Water Code, sec.5.123, to provide regulatory flexibility to an applicant 
who proposes an alternative method or alternative standard to control or abate 
pollution. 

sec.90.2.Applicability and Eligibility.
(a) This chapter applies to any statute or commission rule regarding the control 
or abatement of pollution, except that it does not apply to requirements for 
storing, handling, processing, or disposing of low-level radioactive materials. 
(b) Any person subject to any statute or commission rule regarding the control 
or abatement of pollution may be eligible to receive a Regulatory Flexibility 
Order, except that: 
(1) a person who has been referred to the Texas or United States Attorney 
General, and has incurred a judgment, is ineligible for a period of three years 
from the date the judgment was final; 
(2) a person who has been convicted of an environmental crime in this state or 
any other state is ineligible for a period of three years from the date of the 
conviction. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805741
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: August 26, 1998
For further information, please call: (512) 239-1966

SUBCHAPTER B.General Provisions
30 TAC sec.sec.91.10, 90.12, 90.14, 90.16, 90.18, 90.20
STATUTORY AUTHORITY The new sections are proposed under Texas Water Code, 
sec.5.123, which authorizes the commission to exempt an applicant from a 
requirement of a statute or commission rule regarding the control or abatement 
of pollution if the applicant proposes to control or abate pollution by an 
alternative method or by applying an alternative standard that is at least as 
protective of the environment and the public health and is not inconsistent with 
federal law. Texas Water Code, sec.5.123, requires the commission to adopt rules 
specifying the procedure for obtaining an exemption and requires that the rules 
provide for public notice and public participation. 
The proposed new sections implement Texas Water Code, sec.5.123. 

sec.90.10.Application for a Regulatory Flexibility Order.
(a) An application for a Regulatory Flexibility Order (RFO) must be submitted to 
the executive director. 
(b) The application must, at a minimum, include: 
(1) a narrative summary of the proposal, including the specific statutes or 
commission rules for which an exemption is being sought; 
(2) a detailed explanation, including a demonstration as appropriate, that the 
proposed alternative is: 
(A) at least as protective of the environment and the public health as the 
method or standard prescribed by the statute or commission rule that would 
otherwise apply; and 
(B) not inconsistent with federal law, including any requirement for a federally 
approved or authorized program; 
(3) an implementation schedule which includes proposed monitoring and reporting 
of environmental performance and compliance under the RFO; 
(4) an identification, if applicable, of any proposed transfers of pollutants 
between media; 
(5) a description of efforts made or proposed to involve the local community and 
to achieve local community support; 
(6) an application fee of $250; and 
(7) any other information requested from the applicant by the executive director 
during the application review period. 
(c) The application must be signed by the applicant or its duly authorized agent 
and must certify that all information is true, accurate, and complete. 
(d) The applicant shall submit an original and two copies of the signed 
application to the executive director for review, and shall send one additional 
copy to the TNRCC regional office for the region in which the facility is 
located. 

sec.90.12.Additional Fees; Cost Recovery.
(a) If the executive director determines that a Regulatory Flexibility Order 
(RFO) would constitute an amendment or modification to one or more existing 
permits, the executive director may require the applicant to pay a fee equal to 
the application fee for such permit amendment or modification.
(b) The executive director may determine that the application for an RFO 
constitutes a significant and complex application for which the recovery of all 
reasonable costs for review and approval by the commission is appropriate. Upon 
notice to the applicant of such finding, the applicant shall execute a cost 
recovery agreement in a form approved by the executive director. 
(c) Final consideration of an application by the commission is contingent on the 
applicant's agreement to pay the reasonable costs of review, as determined by 
the executive director. 
(d) If an application is withdrawn prior to the commission's consideration of 
the application, the executive director may void the cost recovery agreement and 
retain the initial application fee. 
(e) The executive director shall determine the commission's costs to administer 
this chapter, establish rates to recover those costs, and publish the rates in 
the Texas Register. The rates established under this section shall not exceed 
the rates established by the commission under Health and Safety Code, 
sec.361.613 or Chapter 333 of this title (relating to Voluntary Cleanup 
Programs).

sec.90.14. Commission Action on Application. 
(a) Commission action on an application under this Part shall be consistent with 
the procedures set forth in sec.50.17 of this title (relating to Commission 
Actions). 
(b) The commission may consider in its decision, among other factors, the 
applicant's compliance history and efforts made to involve the local community 
and achieve local community support. 

sec.90.16.Public Notice, Comment, and Hearing.
(a) The applicant shall comply with all public notice, comment, and hearing 
requirements associated with the statute or commission rule for which the 
applicant is seeking an exemption, except as provided in subsection (b) or (c) 
of this section. 
(b) If the statute or commission rule for which an applicant is seeking 
flexibility does not require public notice, or an opportunity for comment or 
hearing, the following requirements shall apply. 
(1) The applicant shall publish notice at least once in the newspaper of largest 
general circulation in the county in which the facility is located or proposed 
to be located. The notice shall be published within 30 days after submittal of 
the application. Notice under this section shall not be smaller than that 
normally used in the newspaper's classified advertising section. 
(2) The commission shall accept public comment consistent with Chapter 55 of 
this title (relating to Request for Contested Case Hearings; Public Comment). 
(3) The public comment period shall end 30 days after the last publication of 
the notice of application. 
(c) Alternative public notice. 
(1) An applicant may request to provide public notice and an opportunity for 
comment or hearing in an alternative manner to the requirements of subsection 
(a) or (b) of this section. 
(2) The executive director, in his sole discretion, may authorize alternative 
public notice and participation opportunities if he determines that the 
alternative is reasonably likely to provide greater public notice and 
opportunity for participation than subsection (a) or (b) of this section. 
(d) Notice under this section shall, at a minimum, include:
(1) a brief description of the proposal and of the business conducted at the 
facility or activity described in the application; 
(2) the name and address of the applicant and, if different, the location of the 
facility for which regulatory flexibility is sought; 
(3) the name and address of the commission; 
(4) the name, address, and telephone number of a commission contact person from 
whom interested persons may obtain further information;
(5) a brief description of the public comment procedures, and the time and place 
of any public meeting or public hearing; and 
(6) the date by which comments or requests for hearing must be received by the 
commission. 

sec.90.18.Amendment/Renewal. 
(a) An application for amendment or renewal of a Regulatory Flexibility Order 
(RFO) may be filed in the same manner as an original application under this 
subchapter. 
(b) If renewal procedures have been initiated at least 180 days prior to the RFO 
expiration date, the existing RFO will remain in effect, and will not expire 
until commission action on the application for renewal is final. 

sec.90.20.Termination. 
(a) By the recipient. 
(1) A recipient of a Regulatory Flexibility Order (RFO) may terminate the RFO at 
any time by sending a notice of termination to the executive director by 
certified mail. 
(2) The recipient must be in compliance with all existing statutes or commission 
rules at the time of termination. 
(b) By the commission. 
(1) An RFO may be terminated by the commission at any time it determines that 
this subchapter or the terms of the RFO have been violated, or that the RFO no 
longer conforms to sec.90.10(b)(2) of this title (relating to Application for a 
Regulatory Flexibility Order). 
(2) The commission shall notify the recipient of the RFO, in writing, of the 
decision to terminate the RFO. 
(3) The commission may specify an appropriate and reasonable transition period 
to allow the recipient to come into full compliance with all existing agency 
requirements, including time to apply for any necessary agency permits or other 
authorizations.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805742
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: August 26, 1998
For further information, please call: (512) 239-1966

CHAPTER 113.Control of Air Pollution From Toxic Materials
SUBCHAPTER D.Designated Facilities and Pollutants
30 TAC sec.sec.113.2060, 113.2061, 113.2067, 113.2069
The Texas Natural Resource Conservation Commission (commission) proposes new 
Subchapter D, concerning Designated Facilities and Pollutants, and new 
sec.sec.113.2060, 113.2061, 113.2067, and 113.2069, concerning Municipal Solid 
Waste (MSW) Landfills. The commission also proposes to add emission standards 
for non-methane organic compounds (NMOC) and control plan requirements to the 
Texas Air Control Board Plan for the Control of Sulfuric Acid Mist, Total 
Reduced Sulfur, and Fluoride Emissions from Existing Facilities. This plan would 
also be renamed to the Texas State Plan for the Control of Designated Facilities 
and Pollutants. The proposed new sections and state plan revisions are based on 
emission guidelines published by the United States Environmental Protection 
Agency (EPA) on March 12, 1996, 7 and amended on ______ under the authority of 
sec.111(d) of the Federal Clean Air Act (FCAA). A copy of the emission 
guidelines is available either through EPA or through the commission. The EPA 
went through litigation with the National Solid Wastes Management Association 
after adoption of the MSW landfill rules. A litigation agreement was reached in 
November 1997 and signed during the week of March 16, 1998. The amendment date 
that resulted from that litigation will be incorporated into this proposal once 
the amendments have been published by EPA. Title 40 Code of Federal Regulations 
(CFR) Part 60, sec.60.23(a) requires that within nine months after notice of the 
availability of a final emission guideline document is published for a 
designated facility, as defined in 40 CFR Part 60, sec.60.21(b), each state must 
adopt and submit to the EPA a plan for the control of the designated pollutant 
to which the emission guideline document applies. The executive director 
requested and received a one-year extension to this requirement, until December 
31, 1997, in order to fully address concerns regarding the regulation by this 
rule of closed landfills. On December 9, 1997, EPA also extended the deadline 
for Texas to submit a rule under sec.111(d) until July 31, 1998.
EXPLANATION OF PROPOSED RULES Proposed new sec.113.2060, concerning Definitions, 
defines terms used in the new subchapter that are either previously undefined or 
are used differently by the federal rule that is the basis for the proposed 
rule. Definitions for the terms "construction" and "modification" were taken 
from 40 CFR Part 60, sec.60.2, concerning Definitions. Definitions for the terms 
"reconstruction" and "fixed capital cost," were taken from 40 CFR Part 60, 
sec.60.15, concerning Reconstruction. The definition for the term "existing 
municipal solid waste landfill" was taken from 40 CFR Part 60, sec.60.33(c), 
concerning Emission Guidelines for Municipal Solid Waste Landfills with 
additional clarifications. The definitions for "modification," "reconstruction" 
and "existing municipal solid waste landfill" were augmented with language from 
40 CFR Part 60, sec.60.32(c), concerning Designated Facilities, to make the 
definitions specific to this proposed rule. 
The definition of "existing municipal solid waste landfill" was further modified 
with regard to the closed landfills that will be affected by the proposed rules. 
The EPA defined existing municipal solid waste landfill as any that has accepted 
waste at any time since November 8, 1987. The commission has determined that MSW 
landfills which closed prior to October 9, 1993 did so because those facilities 
were economically unable to comply with 40 CFR Part 258 (popularly known as the 
"Subtitle D" requirements). Requiring these facilities to comply with new 
standards more than four years after they closed for economic reasons would be 
unreasonable. MSW landfills that were closed prior to October 9, 1993, have been 
excluded from this rule requirements in accordance with 40 CFR sec.60.24(f), 
which allows the state rule to be less stringent for a particular designated 
class of facilities provided that the state can show that factors exist specific 
to the class of facilities that make application of a less stringent standard 
significantly more reasonable. Proposed new sec.113.2061, concerning Standards 
for Air Emissions, provides the air quality standards for existing MSW 
landfills. Proposed sec.113.2061(a) requires that owners or operators of an 
existing MSW landfill comply with the provisions of the New Source Performance 
Standard for MSW landfills. This is consistent with federal requirements (40 CFR 
Part 60, sec.60.24(c)), which specify that the emission standards be no less 
stringent than the corresponding emission guidelines. The emission guidelines 
require existing landfills with a design capacity greater than or equal to 2.5 
million (M) megagrams (Mg) (approximately 2.75 M tons) or 2.5 M cubic meters to 
annually calculate estimated non-methane organic compound (NMOC) emissions from 
the landfill. When the estimated annual NMOC emission rate reaches 50 Mg per 
year, the landfill owner or operator must install a gas collection system and 
route the gas to a control device, for example a flare, an energy recovery 
device such as a gas turbine or internal combustion engine), or a gas recovery 
system. Once the gas collection system is operating, the owner or operator must 
monitor the landfill surface quarterly for organic compound leaks. 
Proposed sec.113.2061(b) provides that gas collection and control systems that 
were approved by the commission for installation at a landfill in compliance 
with 30 TAC sec.sec.115.152-115.159, concerning Municipal Solid Waste Landfills, 
are in compliance with the proposed design standards with no further review. 
This provision is included to prevent landfill owners/operators in the 
Dallas/Fort Worth and El Paso ozone nonattainment areas from being subjected to 
the requirements of two different state rules. The commission seeks comment on 
other provisions which may be necessary to coordinate the transition from 
regulation under 30 TAC sec.sec.115.152-115.159 to regulation under the proposed 
rule. 
Proposed new sec.113.2067, concerning Exemptions, provides the criteria by which 
operators of an MSW landfill or class of landfills may apply for an exemption to 
the proposed rule on a case-by-case basis. These criteria are consistent with 
the federal regulations (40 CFR Part 60, sec.60.24(f)), which list the criteria 
under which exemptions will be considered by the EPA. The commission seeks 
comment on what landfills or classes of landfills might be candidates for 
exemptions under this proposed section. 
Proposed new sec.113.2069, concerning Compliance Schedule, provides the schedule 
for the initial reports that are required by the rule. Owners and operators of 
all affected landfills must file an initial design capacity report within 90 
days of the date that the commission publishes notification in the Texas 
Register that EPA has approved this rule. By the same date, owners and operators 
of those affected landfills with a design capacity greater than or equal to 2.5 
M Mg or 2.5 M cubic meters must file an initial NMOC emission rate report. All 
other compliance times are specified in the referenced federal rule relative to 
the filing deadline for these two reports. 
FISCAL NOTE Stephen Minick, Strategic Planning and Appropriations Division, has 
determined that for the first five-year period the proposed rules are in effect, 
there will be fiscal cost implications for state and local governments. Affected 
landfill owners and/or operators would have to spend approximately $10,000 to 
$12,000 per acre to implement the requirements of the proposed rules. Any cost 
beyond the five-year period would be limited to ongoing operation and 
maintenance of the gas collection and control systems. The cost effectiveness of 
these rules is estimated at $1,100 per ton of NMOC reduced. Based on EPA's 
estimate, the annual cost of waste acceptance may increase by $2.50 to $5.00 per 
year per household. However, landfills that elect to use energy recovery systems 
may be able to significantly offset the cost of implementing the proposed rules. 
EPA also estimates that 5% of the total number of landfills nationwide would be 
required to implement controls. 
PUBLIC BENEFIT Mr. Minick also has determined that for each year of the first 
five years the proposed rules are in effect, the public benefit anticipated as a 
result of enforcement of and compliance with the proposed rules will be 
satisfaction of a federal requirement as well as methane and NMOC emission 
reductions which are beneficial for attaining the ozone standard in ozone 
nonattainment areas, controlling odor nuisance, and reducing the danger of fire 
or explosion hazards. There are no fiscal implications for persons or small 
businesses affected by the proposed rules. 
REGULATORY IMPACT ANALYSIS The commission has reviewed the proposed sections as 
required by regulatory analysis provisions of Texas Government Code (the Code), 
sec.2001.0225, and has determined that the rulemaking is not subject to 
sec.2001.0225. While this action is a major environmental rule which will cause 
estimated expenditures of up to $12,000 per acre for affected landfills it does 
not meet any of the applicability requirements of sec.2001.0225(a). This 
proposal does not exceed standards or requirements set by either federal or 
state law and is being proposed under requirements of sec.111(d) of the FCAA. 
TAKINGS IMPACT ASSESSMENT The commission has prepared a Takings Impact 
Assessment for these rules pursuant to Texas Government Code Annotated, 
sec.2007.043. The following is a summary of that assessment. The specific 
purpose of the rules is to control air contaminants from MSW landfills. The 
rules will substantially advance this specific purpose by requiring some MSW 
landfills to install gas collection and control systems and monitor surface 
emissions. Promulgation and enforcement of these rules could burden private real 
property which is the subject of the rules. 
These rules fulfill a requirement of federal law and are proposed to prevent 
public nuisances and do not require a full takings evaluation. 
COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW The commission has determined that 
the proposed rulemaking relates to an action or actions subject to the Texas 
Coastal Management Program (CMP) in accordance with the Coastal Coordination Act 
of 1991, as amended (Texas Natural Resources Code sec.33.201 et. seq.), and the 
commission's rules at 30 TAC Chapter 281, Subchapter B, Consistency with the 
Texas Coastal Management Program. As required by 31 TAC sec.505.11(b)(2) and 30 
TAC sec.281.45(a)(3) relating to actions and rules subject to the CMP, 
commission rules governing air pollutant emissions must be consistent with the 
applicable goals and policies of the CMP. The commission has reviewed this 
proposed action for consistency with the CMP goals and policies in accordance 
with the regulations of the Coastal Coordination Council. For the proposed 
action in 30 TAC sec.sec.113.2060, 113.2061, 113.2067, and 113.2069, the 
commission has determined that the rules are consistent with the applicable CMP 
goals and policies. The purpose of 30 TAC sec.sec.113.2060, 113.2061, 113.2067, 
and 113.2069 is to control air contaminants from MSW landfills.
The sections are in compliance with the regulations adopted under Title 40, Code 
of Federal Regulations adopted under the Clean Air Act, 42 United States Code 
Annotated, sec.7401, et. seq. to protect and enhance air quality in the coastal 
area so as to protect coastal natural resource areas (CNRAs) and promote the 
public health, safety and welfare. Interested persons may submit comments on the 
consistency of the proposed rule with the CMP during the public comment period. 
PUBLIC HEARINGS Public hearings on this proposal will be held in Irving on May 
29, 1998 at 2:00 p.m. at the City of Irving Central Library Auditorium, 801 West 
Irving Boulevard; in Austin on June 1, 1998 at 2:00 p.m. at the Texas Natural 
Resource Conservation Commission, Building F, Room 5108, 12100 Park 35 Circle; 
and in Houston on June 4, 1998 at 7:00 p.m. at the City of Houston Pollution 
Control Building Auditorium. Individuals may present oral statements when called 
upon in order of registration. Open discussion will not occur during the 
hearings; however, a staff member will be available to discuss the proposal one 
hour prior to each hearing and will answer questions before and after the 
hearings. 
SUBMITTAL OF COMMENTS Written comments may be mailed to Heather Evans, Office of 
Policy and Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-
3087 or faxed to (512) 239-4808. All comments should reference Rule Log Number 
96135-113-AI. Comments must be received by 5:00 p.m., June 8, 1998. For further 
information or questions concerning this proposal, contact David C. Schanbacher 
of the Office of Air Quality, (512) 239-1228, Susan Janek of the Office of Waste 
Management, (512) 239-6784, or Beecher Cameron of the Office of Policy and 
Regulatory Development, (512) 239-1495. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearings should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 
STATUTORY AUTHORITY The new subchapter and sections are proposed under the Texas 
Clean Air Act (TCAA), Texas Health and Safety Code, sec.382.011, which provides 
the commission authority to control the quality of the state's air; sec.382.012, 
which gives the commission authority to develop a comprehensive plan for control 
of the state's air; and sec.382.017, which provides the commission with the 
authority to adopt rules consistent with the policy and purposes of the TCAA and 
to specify control methods when required by federal law. 
The proposed new subchapter and sections implement the FCAA, sec.111(d) and TCAA 
sec.sec.382.011, 382.012, and 382.017.

sec.113.2060. Definitions.
Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules of 
the Texas Natural Resource Conservation Commission (commission), the terms used 
in this division have the meanings commonly ascribed to them in the field of air 
pollution control. In addition to the terms which are defined in the TCAA, and 
in sec.101.1 of this title (relating to Definitions), the following words and 
terms, when used in this division shall have the following meanings, unless the 
context clearly indicates otherwise. 
(1) Construction - Fabrication, erection, or installation of an affected 
municipal solid waste landfill (MSWLF). 
(2) Existing municipal solid waste landfill - An MSWLF meeting the following 
conditions: 
(A) The MSWLF has accepted waste at any time since October 9, 1993, or has 
additional design capacity available for future waste deposition, regardless of 
whether that MSWLF is currently open or closed; and 
(B) Construction, reconstruction, or modification of the MSWLF was commenced 
before May 30, 1991 (i.e., the MSWLF is not subject to the requirements of 40 
Code of Federal Regulations (CFR) Part 60, Subpart WWW).
(3) Fixed capital cost - The capital needed to provide all the depreciable 
components. 
(4) Modification - Any physical change in, or change in the method of operation 
of, an existing MSWLF which increases the amount of any air pollutant (to which 
a standard applies) emitted into the atmosphere by that MSWLF or which results 
in the emission of any air pollutant (to which a standard applies) into the 
atmosphere not previously emitted. For MSWLFs, the only physical or operational 
change that results in increased landfill emissions is an increase in the 
landfill design capacity. Design capacity of a landfill is increased only with 
the addition of new disposal areas. New disposal areas can result by increasing 
the depth of refuse deposition, increasing refuse compaction, or by constructing 
additional disposal cells. Physical or operational changes made to an existing 
MSWLF solely to comply with this subchapter are not considered a modification 
and would not subject an existing MSWLF to the requirements of 40 CFR Part 60, 
Subpart WWW. 
(5) Reconstruction - The replacement of components of an existing MSWLF to such 
an extent that the fixed capital cost of the new components exceeds 50% of the 
fixed capital cost that would be required to construct a comparable entirely new 
MSWLF, and it is technologically and economically feasible to meet the 
applicable standards set forth in this division. Physical or operational changes 
made to an existing MSWLF solely to comply with this subchapter are not 
considered reconstruction and would not subject an existing MSWLF to the 
requirements of 40 CFR Part 60, Subpart WWW. 

sec.113.2061.Standards for Air Emissions.
(a) An owner or operator of an existing municipal solid waste landfill (MSWLF) 
shall comply with all provisions specified in 40 Code of Federal Regulations 
(CFR) Part 60, sec.sec.60.751 through 60.759 as promulgated on March 12, 1996, 
and amended on ______.  For purposes of this rule, the term "Administrator" 
wherever it appears in 40 CFR Part 60, sec.sec.60.751 through 60.759 shall refer 
to the commission.
(b) Gas collection and control systems approved by the commission and installed 
at an MSWLF in compliance with sec.115.152 of this title (relating to Control 
Requirements) satisfy the gas collection and control system design requirements 
of this section. 

sec.113.2067.Exemptions.
A municipal solid waste landfill (MSWLF) may apply for less stringent emission 
standards or longer compliance schedules than those otherwise required by this 
division, provided that the owner or operator demonstrates to the executive 
director the following: 
(1) unreasonable cost of control resulting from MSWLF age, location, or basic 
MSWLF design; 
(2) physical impossibility of installing necessary control equipment; or 
(3) other factors specific to the MSWLF that make application of a less 
stringent standard or final compliance time significantly more reasonable.

sec.113. 2069.Compliance Schedule.
(a) An owner or operator subject to the requirements of this undesignated head 
shall submit the initial design capacity report in accordance with 40 Code of 
Federal Regulations (CFR) Part 60, sec.60.757(a)(2) to the executive director 
within 90 days from the date the commission publishes notification in the Texas 
Register that the United States Environmental Protection Agency (EPA) has 
approved this rule.
(b) An owner or operator of a municipal solid waste landfill with a design 
capacity equal to or greater than 2.5 million megagrams or 2.5 million cubic 
meters and subject to the requirements of this division shall also submit the 
initial non-methane organic compound emission rate report in accordance with 40 
CFR sec.60.757(b)(2) to the executive director within 90 days from the date the 
commission publishes notification in the Texas Register that EPA has approved 
this rule.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805854
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: July 29, 1998
For further information, please call: (512) 239-1970

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART III. Texas Youth Commission
CHAPTER 85.Admission and Placement
SUBCHAPTER B.Placement Planning
37 TAC sec.sec.85.21, 85.23, 85.25
The Texas Youth Commission (TYC) proposes an amendment to sec.sec.85.21, 85.23, 
and 85.25, concerning the program assignment system, classification, and minimum 
length of stay. These amendments will reinstate the classification of Violator 
of Conduct Indicating a Need for Supervision (CINS) Probation. The amendments to 
sec.85.21 and sec.85.25 will clarify that violators of CINS probation will be 
assigned no minimum length of stay. The amendment to sec.85.23, adds seven (7) 
Penal Code offenses to the TYC type B violent offender classification. The 
effect of the amendment is an extended length of stay for youth classified as 
type B violent offenders.
Terry Graham, Assistant Deputy Executive Director for Finance, has determined 
that for the first five-year period the section is in effect there will be 
fiscal implications for state government as a result of enforcing or 
administering the section. The estimated additional cost to the state is based 
on an increased average daily population in TYC institutional programs late in 
the biennium. This increase is expected to be reflected in future Criminal 
Justice Policy Council projections. The additional costs are expected to total: 
$232,505 in FY 1999; $963,235 in FY 2000 and FY 2001; and $996,450 in FY 2002 
and FY 2003. There will be no fiscal implications for local government as a 
result of enforcing or administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be greater public protection. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the section as proposed. No private real property rights are 
affected by adoption of this rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The amendment is proposed under the Human Resources Code, sec.61.075 
determination of treatment, which provides the Texas Youth Commission with the 
authority to order the child's confinement under conditions it believes best 
designed for the child's welfare and the interests of the public.
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.85.21.Program Assignment System.
(a) Purpose. The purpose of this rule is to establish an objective, equitable 
system of program assignment for each youth in TYC care. Based on each youth's 
offense(s), and risk level, TYC has predetermined the most appropriate level of 
restriction and minimum length of stay requirement for public protection and for 
promotion of rehabilitation. Youth in coeducational facilities have equal access 
to agency programs and activities. 
(b) Applicability. 
(1) For specifics regarding classification, see (GAP) sec.85.23 of this title 
(relating to Classification). 
(2) For specifics regarding minimum length of stay, see (GAP) sec.85.25 of this 
title (relating to Minimum Length of Stay). 
(3) For specifics regarding restriction levels, see (GAP) sec.85.27 of this 
title (relating to Program Restriction Levels). 
(4) For specifics regarding completion of program and movement to another 
program, and for specifics on movement of sentenced offender options, see (GAP) 
sec.85.29 of this title (relating to Program Completion and Movement). 
(c) Placement System Factors. The program placement system shall incorporate the 
following factors. 
(1) Classification shall be determined by the classifying offense and a finding 
regarding extenuating circumstances. 
(2) The minimum length of stay shall be designated by the classification. 
(3) Risk shall be assessed and used as a guideline in designating restriction 
level. 
(4) Placements shall be made according to restriction and needs. 
(A) Initial placements will always be to residential programs, except for some 
youth classified as violators of CINS probation. 
(B) A youth's assessed service needs will be considered in the selection of a 
placement within the required level of restriction. 
(d) System Description. The determining factors result in the following 
placement and length of stay determinations for all TYC youth on initial 
commitment, for youth recommitted for the commission of a felony or high risk 
offense, and for youth found at an administrative level I hearing to have 
committed a felony or high risk offense. 
(1) A sentenced offender shall be sentenced by the court and, regardless of risk 
level, assigned to a program of high restriction with a fenced perimeter. 
(2) A type A violent offender shall be assigned a minimum length of stay of 24 
months, and with any risk level, assigned to a program of high restriction with 
a fenced perimeter. 
(3) A type B violent offender shall be assigned a minimum length of stay of 12 
months, and with any risk level, assigned to a program of high restriction. 
(4) A chronic serious offender, controlled substances dealer, or firearms 
offender classified on or after January 1, 1996, shall be assigned a minimum 
length of stay of twelve months and with any risk level, assigned to a program 
of high restriction. The minimum length of stay for these youth classified 
before January 1, 1996, is nine months. 
(5) A general offender classified: 
(A) on or after January 1, 1996, shall be assigned a minimum length of stay of 
nine months, and with a: 
(i) high risk level, assigned to a program of high restriction;
(ii) low or medium risk level, assigned to a program of medium restriction. 
(B) before January 1, 1996, shall be assigned a minimum length of stay of six 
months, and with a: 
(i) high risk level, assigned to a program of high restriction;
(ii) low or medium risk level, assigned to a program of medium restriction. 
<nl>(6)<ol> <nl>A Violator of Conduct Indicating a Need for Supervision (CINS) 
Probation shall be assigned no minimum length of stay. <ol>
(e) Program Placement Responsibility. The centralized placement unit shall be 
responsible for all specific program placement selections/assignments.
(f) Waivers and Exceptions. Waivers and exceptions may be granted under special 
circumstances. 
(1) A restriction level designation, except that of sentenced offender or type A 
violent offender, may be waived by the director of centralized placement unit or 
designee when a youth is qualified. A designated restriction may be waived in 
order to provide specialized treatment not available in the designated 
restriction when it is determined that a youth is physically/mentally 
handicapped, has a special medical condition, or is emotionally disturbed, if 
such condition would prevent the youth from functioning in the designated 
restriction level. 
(2) Any placement designation except those of sentenced offenders and type A 
violent offenders may be waived by the director of the centralized placement 
unit or designee when population is at or above established capacity. 
(3) For waiver of classification, see (GAP) sec.85.23 of this title (relating to 
Classification). 
(4) For movement for population control see (GAP) sec.85.29 of this title 
(relating to Program Completion and Movement). 
(g) Parent Notification. Parents/guardians shall be notified of all placements.

sec.85.23.Classification.
(a) Purpose. The purpose of this rule is to establish a system for classifying 
each youth admitted to TYC which can be consistently applied and ensures 
consistent management of each youth. 
(b) Explanation of Terms Used. 
(1) Classification - the designation assigned each youth based on the youth's 
offense history, the classifying offense, and a finding regarding extenuating 
circumstances incident to the classifying offense. A youth who commits an 
offense while in TYC custody may be administratively reclassified through a 
Level I hearing. 
(2) Classifying Offense - the offense on which classification is based. It is 
the most serious of the relevant offenses documented in the youth's record. 
Relevant offenses are: 
(A) on commitment, the committing offense and any offense(s) for which the youth 
was on probation at the time of the committing offense; or 
(B) following a level I hearing, the offense(s) found at the hearing. 
(3) Committing Offense - the most serious of the offenses found at the youth's 
most recent judicial proceeding. 
(4) Most Serious Offense - the offense having the most severe consequences 
attached. The most serious offense is determined according to the following 
hierarchy, with each subsequent factor being considered only if two or more 
relevant offenses yield the same result under the preceding factor. If two or 
more offenses yield the same results through all steps of the hierarchy, 
determination of the most serious offense is left to the discretion of the staff 
assigning classification. The most serious offense is: 
(A) an offense which carries determinate sentence; 
(B) the offense for which the designated minimum length of stay will produce the 
longest time in the physical custody of TYC; 
(C) the offense which requires the highest level of restriction in placement; 
(D) the offense which carries the most severe criminal penalty; and 
(E) the most recently adjudicated offense. 
(5) Federal Offenses - youth who have committed federal offenses and are sent to 
TYC by Federal courts. If a committing and/or classifying offense is a violation 
of a federal statute, the offense will be treated as a violation of a state 
statute which prohibits the same conduct as the relevant federal statute. 
Federal violations will be identified by the code number assigned to the 
corresponding substantive state statute preceded by an "F". 
(c) Classification assignment is based on the policy in effect at the time a 
youth is classified or is reclassified as appropriate. Classification of youth 
currently classified shall not change when the criteria for classification 
changes. 
(d) Classifications. 
(1) Sentenced Offender. A sentenced offender is a youth committed to TYC 
pursuant to section 54.04(d)(3) or 54.05(f) Family Code for offenses committed: 
(A) prior to January 1, 1996, for: 
(i) murder, 19.02, all 
(ii) capital murder, 19.03, all 
(iii) aggravated kidnapping, 20.04, all 
(iv) aggravated sexual assault, 22.021, all 
(v) deadly assault on a law enforcement officer, corrections officer, or court 
participant, 22.03, <nl> all <ol> 
(vi) criminal attempt, 15.01, only if the offense attempted was Capital Murder 
(Sec.19.03) 
(B) on or after January 1, 1996, for an offense listed in subsection (d)(1)(A) 
of this section or: 
(i) sexual assault, 22.011, all 
(ii) aggravated assault, 22.02, all 
(iii) aggravated robbery, 29.03, all 
(iv) injury to a child, elderly individual, or disabled individual, 22.04, 
first, second or third degree felony only 
(v) deadly conduct, 22.05, felony only 
(vi) aggravated or first degree controlled substances felony subchapter D, 
Chapter 481 Health and Safety Code aggravated or first degree felony only 
(vii) criminal solicitation, 15.03, all 
(viii) indecency with a child, 21.11, second degree felony only 
(ix) criminal solicitation of a minor, 15.031, all 
(x) criminal attempt, 15.01, only if offense attempted was a murder (sec. 
19.02), indecency with a child (sec. 21.11(a)(1)), aggravated kidnapping (sec. 
20.04), sexual assault 22.011(a)(2) upon a child only, aggravated sexual assault 
(sec. 22.021), aggravated robbery (sec. 29.03), or repeat conviction under 
Health and Safety Code 481.134(c), (d), (e), or (f). 
(xi) habitual felony conduct, as defined in Juvenile Justice Code, 51.031 
(C) on or after September 1, 1997, for an offense listed in subsection (d)(1)(A) 
or (d)(1)(B) of this section or: arson, 28.02, first degree felony only 
(2) Type A - Violent Offender. A type A violent offender is a youth whose 
classifying offense is the commission, attempted commission, conspiracy to 
commit, solicitation, solicitation of a minor to commit, or engaging in 
organized criminal activity to commit one of the offenses listed in this 
paragraph and who has not been sentenced to commitment in TYC. TYC adopts the 
Texas Penal Code definition (Title 5) for each offense in its entirety except 
where TYC policy limits the applicability to the specific subsections or under 
the conditions named. 
(A) murder, 19.02, all 
(B) capital murder, 19.03, all 
(C) sexual assault, 22.011, all 
(D) aggravated sexual assault, 22.021, all 
(3) Type B - Violent Offender. A type B violent offender is a youth whose 
classifying offense is the commission, attempted commission, conspiracy to 
commit, solicitation, solicitation of a minor to commit, or engaging in 
organized criminal activity to commit one of the offenses listed in this 
paragraph and who has not been sentenced to commitment in TYC. TYC adopts the 
Texas Penal Code definition for each offense listed in (A-<nl> U <ol> [O]) of 
this subsection in its entirety except where TYC policy limits the applicability 
to specific subsections or under the conditions named. 
(A) manslaughter, 19.04, all 
<nl>(B)<ol> <nl>criminally negligent homicide, 19.05, all <ol> 
<nl>(C)<ol> <nl> unlawful restraint, 20.02, felony only <ol>
<nl>(D)<ol> [(B)] kidnapping, 20.03, all 
<nl>(E)<ol> [(C)] aggravated kidnapping, 20.04, all 
<nl>(F)<ol> <nl> assault, 22.01, felony only <ol>
<nl>(G)<ol> [(D)] indecency with a child, 21.11, <nl> all <ol> [second degree 
felony only] 
<nl>(H)<ol> [(E)] sexual assault, 22.011, all(only for youth classified before 
July 1, 1996) 
<nl>(I)<ol> [(F)] aggravated assault, 22.02, all 
<nl>(J)<ol> [(G)] aggravated sexual assault, 22.021, all (only for youth 
classified before July 1, 1996) 
<nl>(K)<ol> [(H)] injury to child, elderly or disabled individual, 22.04, <nl> 
all <ol> [first, second or third degree felony only] 
<nl>(L)<ol> <nl> abandoning or endangering a child, 22.041, all<ol> 
<nl>(M)<ol> [(I)] deadly conduct, 22.05, felony only 
<nl>(N)<ol> <nl>terroristic threat, 22.07, felony only <ol> 
<nl>(O)<ol> <nl> aiding suicide, 22.08, felony only<ol>
<nl>(P)<ol> [(K)] tampering with a consumer product, 22.09, <nl> all <ol> [first 
or second degree felony only <nl>(Q)<ol> [(L)] arson, 28.02, all 
<nl>(R)<ol> <nl> robbery, 29.02, all <ol>
<nl>(S)<ol> [(M)] aggravated robbery, 29.03, all 
<nl>(T)<ol> [(N)] burglary, 30.02, only with intent to commit any other type A 
or type B violent offense 
<nl>(U)<ol> <nl> intoxication assault, 49.07, all <ol>
<nl>(V)<ol> [(O)] intoxication manslaughter, 49.08, all 
<nl>(W)<ol> [(P)] intentionally participating with six or more persons in 
conduct at a TYC facility that endangers persons or property and substantially 
obstructs the performance of facility operations.
<nl>(X)<ol> [(Q)] intentionally, knowingly, or recklessly causing bodily injury 
to a: 
(i) TYC employee; 
(ii) contract program employee; 
(iii) volunteer; or 
(iv) person who is providing contract services at a contract program or TYC 
operated facility. 
(4) Chronic Serious Offender. A chronic serious offender is a youth whose 
classifying offense is a felony and who has been found to have committed at 
least one felony in each of at least three separate and distinct due process 
hearings, where the second felony was committed after the disposition of the 
first felony and the third felony was committed after the disposition of the 
second felony. 
(5) Controlled Substances Dealer. A controlled substances dealer is a youth 
whose classifying offense is any felony grade offense defined as a manufacture 
or delivery offense under the Texas Controlled Substances Act, Chapter 481, 
Health and Safety Code. 
(6) Firearms Offender. A firearms offender is a youth whose classifying offense 
involved a finding by the court or TYC hearings examiner that the youth 
possessed a firearm during the offense. Classifying offenses for this 
classification are not limited to offenses specified in Chapter 46 of the Texas 
Penal Code. 
(7) Violator of CINS Probation. [(Commitments were allowed prior to January 1, 
1996).] A violator of CINS probation is a youth who: 
(A) is committed for violating terms of probation by an act which would not be 
punishable by imprisonment or confinement in jail if committed by an adult; and 
(B) was on probation at the time of the probation revocation for no act more 
serious than Conduct Indicating a Need for Supervision (CINS) as defined in the 
Texas Family Code, Title 3. 
(8) General Offender. A general offender is a youth who is not eligible for any 
other classification. 
(e) Extenuating Circumstances. 
(1) A designated classification except sentenced offender may be waived and a 
less restrictive classification assigned by a TYC hearings examiner at a TYC 
Level I due process hearing when the hearings examiner finds extenuating 
circumstances. 
(2) Extenuating circumstances incident to a violent offense are those facts 
which indicate that the youth is not a significant danger to the physical or 
emotional well-being of another. Examples of such facts include, but are not 
limited to: 
(A) the youth was an indirect or passive participant in a violent act; 
(B) the youth set fire to an abandoned vehicle; 
(C) the youth engaged in consensual sexual intercourse with someone who was 
capable of appraising the nature of that act and of resisting it. 
(3) Extenuating circumstances incident to offenses other than violent offenses 
are those facts which explain a youth's conduct but do not constitute a legally-
recognized defense to the conduct. Examples of such facts include, but are not 
limited to acts in which: 
(A) the only property involved in the offense was of minimal value and was 
returned undamaged to its owner; 
(B) the only bodily injury intended or inflicted by the youth consisted of brief 
or minor discomfort; 
(C) the youth's conduct was an impulsive response to perceived provocation and 
posed no threat to persons or property; 
(D) the youth was persuaded to participate in the offense by a parent or other 
authority figure. 
(4) When extenuating circumstances incident to the classifying offense are 
found, the designated classification may be waived.

sec.85.25.Minimum Length of Stay.
(a) Purpose. The purpose of this rule is to establish by policy, a minimum 
period of time a youth will spend in residential placements (high or medium 
restriction) having reduced access to the public and which is based on the most 
serious offense the youth committed. The maximum period of time a youth may 
spend in residential placement is the total time until he/she reaches age 21. 
Release from residential placement anytime prior to age 21 is based on the 
youth's successful completion of release criteria, one of which is the minimum 
length of time set by the agency. 
(b) Applicability. 
(1) Except where specifically named, requirements herein do not apply to 
sentenced offenders. See (GAP) sec.85.37 of this title (relating to Sentenced 
Offender Disposition) for additional information. The Texas Youth Commission 
(TYC) complies with orders of the committing court regarding sentences for youth 
sentenced to commitment to TYC. 
(2) A disciplinary assigned length of stay of up to six months may be assigned 
in accordance with (GAP) sec.95.11 of this title (relating to Disciplinary 
Transfer/Assigned Minimum Length of Stay Consequences).
(c) Explanation of Terms Used. 
(1) Minimum length of stay (MLS) - the factor in the placement and movement 
system which is the predetermined minimum period of time a youth will be 
assigned to live in a residential placement. TYC has established two types of 
minimum lengths of stay requirements for TYC youth, classification MLS and 
assigned disciplinary MLS. This rule primarily addresses classification MLS. 
(2) Minimum period of confinement - the period of time established by law that a 
youth sentenced to commitment in TYC for offenses occurring on or after January 
1, 1996, shall be confined in a TYC residential placement. The minimum period of 
confinement is the earliest of: 
(A) completion of the sentence, or 
(B) 10 years for youth sentenced for capital murder; three years for youth 
sentenced for an aggravated controlled substance felony or a felony of the first 
degree; two years for a felony of the second degree; and one year for a felony 
of the third degree. 
(3) Classification MLS - a minimum length of stay directly associated with each 
classification established on initial commitment, for youth recommitted for the 
commission of a felony or high-risk offense, and for youth found at an 
administrative level I hearing to have committed a felony or high-risk offense. 
Classification minimum lengths of stay of youth classified before January 1, 
1996, may include creditable time for events occurring prior to commitment. 
(4) Assigned disciplinary MLS - the minimum length of stay assigned to a youth 
as a disciplinary consequence for behavior which may occur anytime a youth is in 
a residential setting. 
(d) Minimum Length of Stay. 
(1) Sentenced offenders shall serve the time assessed by the juvenile court, 
until the earliest of: 
(A) release approved by the committing court; 
(B) completion of the sentence; or 
(C) completion of the minimum period of confinement (for youth committed for 
acts occurring on or after January 1, 1996 only). 
(2) Type A violent offenders must complete a minimum of 24 months. 
(3) Type B violent offenders must complete a minimum length of stay of 12 
months. 
(4) Chronic serious offenders, controlled substances dealers, and firearms 
offenders must complete a minimum length of stay of 12 months if classified on 
or after January 1, 1996 or nine months if classified before that date. 
(5) General offenders must complete a minimum length of stay of nine months if 
classified on or after January 1, 1996, or six months if classified before that 
date. 
<nl>(6)<ol> <nl>A Violator of Conduct Indicating a Need for Supervision (CINS) 
Probation has no minimum length of stay.<ol>
(e) Creditable Time.
(1) On initial classification, the minimum length of stay shall be counted from 
the first day a youth reaches any TYC operated or assigned facility. 
(2) On recommitment, the minimum length of stay shall be counted from the first 
day a youth reaches any TYC operated or assigned facility, and any incomplete 
MLS at the time of recommitment is eliminated; unless: 
(A) a youth is recommitted for the same conduct following an appeal of the 
original commitment, in which case the youth shall be given credit toward 
completion of the new MLS for any time spent in TYC custody as a result of the 
original commitment; or 
(B) a youth is recommitted for the same conduct for which a level I or II 
hearing has already been held, in which case the youth shall be given credit 
toward completion of the new MLS for the time already served as a result of that 
level I or II hearing. 
(3) On TYC reclassification, if previous classification MLS: 
(A) has been completed, the new classification minimum length of stay shall be 
counted from the date of the most recent due process hearing.
(B) has not yet been completed, the new classification minimum length of stay 
shall be counted from the completion of the previous MLS. 
(4) After the count begins, all time spent in program, on furlough or in 
detention or jail (except as a disposition in a criminal case) will be counted 
toward meeting a minimum length of stay requirement.
(5) Time spent as an escapee from a TYC placement or time spent in jail or a 
court ordered placement in an adult correctional residential program as 
disposition in a criminal case shall not be counted toward meeting the minimum 
length of stay requirement. 
(f) Creditable Time for Sentenced Offenders. 
(1) On initial classification, the minimum period of confinement shall be 
counted from the first day a youth reaches any TYC operated or assigned 
facility. Only time spent in a TYC assigned facility shall be credited toward 
completion of minimum period of confinement. 
(2) Sentenced offenders will be credited with days, as assessed by the court, 
detained in connection with the classifying offense. Time will be credited at 
the end of the total sentence. 
(g) Restrictions. 
(1) All minimum lengths of stay will run consecutively except when a youth is 
recommitted. 
(2) Classification MLSs must be completed before any assigned disciplinary MLS 
begins. 
(3) Youth may be eligible for transition to medium restriction to complete the 
minimum length of stay requirement in accordance with (GAP) sec.85.29 of this 
title (relating to Program Completion and Movement). 
(h) Waivers and Reductions. 
(1) The classification minimum length of stay requirement may be reduced by the 
deputy executive director in extenuating circumstances when it is documented 
that the minimum length of stay is not justified because of the nature of the 
youth's classifying offense and offense history. 
(2) The disciplinary assigned MLS may be reduced in accordance with (GAP) 
sec.95.11 of this title (relating to Disciplinary Transfer/Assigned Minimum 
Length of Stay Consequences). 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805829
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-6244

CHAPTER 95.Youth Discipline
SUBCHAPTER A.Disciplinary Practices
37 TAC sec.95.9
The Texas Youth Commission(TYC) proposes an amendment to sec.95.9, concerning, 
parole revocation consequence. The amendment will reinstate the classification 
of Violator of Conduct Indicating a Need for Supervision(CINS) Probation. 
Terry Graham, Assistant Deputy Executive Director for Finance, has determined 
that for the first five-year period the section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be greater protection for the public. There will be no effect on 
small businesses. There is no anticipated economic cost to persons who are 
required to comply with the section as proposed. No private real property rights 
are affected by adoption of this rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Coordinator, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, 
Texas 78765. 
The amendment is proposed under the Human Resources Code, sec.61.075 
determination of treatment, which provides the Texas Youth Commission with the 
authority to order the child's confinement under conditions it believes best 
designed to the child's welfare and the interests of the public. 
The proposed rule implements the Human Resource Code, sec.61.034. 

sec.95.9.Parole Revocation Consequence. 
(a) Purpose. The purpose of this rule is to provide for the revocation of parole 
status as a disciplinary consequence for behavior that presents an unacceptable 
risk to the safety of persons and property. Parole revocation is considered a 
major consequence. 
(b) Applicability. 
(1) The due process necessary to effect this rule is found in (GAP) sec.95.51 of 
this title (relating to Level I Hearing Procedure).
(2) Additional procedures and restrictions are applied prior to any movement of 
a sentenced offender youth. See (GAP) sec.85.29 of this title (relating to 
Program Completion and Movement). Also see (GAP) sec.85.37 of this title 
(relating to Sentenced Offender Disposition). 
(c) Explanation of Terms Used. A high risk offense - is any major rule violation 
which may result in a classification other than general offender or violator of 
CINS probation. 
(d) Criteria and Disposition. 
(1) Parole will be revoked if it is found at a level I hearing that a youth has: 
(A) committed a high risk offense; 
(B) committed a felony; or 
(C) committed any major rule violation and has previously been classified for a 
high-risk offense. 
(2) Parole of a general offender <nl> or a violator of CINS probation <ol> is 
revoked if it is found at a level I hearing that the <nl> youth <ol> [general 
offender] has committed a major rule violation; and 
(A) the violation was committed, in whole or in part, within 90 days of 
imposition of a less severe disciplinary consequence; or 
(B) <nl> the youth <ol> is a threat to the safety of persons or property. 
(3) If extenuating circumstances are found incident to a high risk offense, 
parole is revoked, but the high risk classification may be waived pursuant to 
(GAP) sec.85.23 of this title (relating to Classification).
(4) If extenuating circumstances are found incident to any violation other than 
a high risk offense, parole is not revoked. See extenuating circumstances 
discussed in (GAP) sec.85.23 of this title (relating to Classification).
(5) If criteria for revocation are not established at a level I hearing, the 
youth's parole is not revoked, but lesser disciplinary consequences may be 
imposed for any rule violation(s) proved at the hearing.
(e) Restrictions. 
(1) A level I hearing is required in order to revoke a youth's parole status. 
(2) Unless otherwise requested in writing by local authorities, a level I 
hearing may be held even if TYC staff receive information that criminal or 
delinquent proceedings against the youth are planned or anticipated by local 
authorities. 
(3) If a youth is on parole from another state and is being supervised by Texas 
Youth Commission (TYC) under agreement with the other state, a parole revocation 
hearing is held by TYC and the youth returned to the sending state, coordinated 
by the interstate compact administrator and general counsel. 
(4) If a TYC parolee commits an offense in another state, the return of such 
youth is coordinated by the interstate compact administrator and the general 
counsel. A parole revocation hearing is coordinated by and held at the request 
of the assigned parole officer. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805828
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-6244

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART I. Texas Department of Human Services
CHAPTER 12. Special Nutrition Programs
SUBCHAPTER A. Child and Adult Care Food Program
40 TAC sec.12.14
The Texas Department of Human Services (DHS) proposes an amendment to sec.12.14, 
concerning meal requirements, in its Special Nutrition Programs chapter. The 
purpose of the proposal is to establish that meals served to eligible program 
participants during field trips are eligible for reimbursement provided that all 
Child and Adult Care Food Program requirements are met, and the field trip 
complies with the applicable standards for such activities as established by the 
licensing/approval authority for the child or adult care facility. 
Eric M. Bost, commissioner, has determined that for the first five- year period 
the proposed section will be in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the section. 
Mr. Bost also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be to ensure that child and adult care providers are able to 
include a nutritious meal service as an element of field trips taken to enhance 
their child and adult care services. There will be no effect on small businesses 
because the rule formalizes current policies related to claiming reimbursement 
for meals served during field trips. There is no anticipated economic cost to 
persons who are required to comply with the proposed section.
Questions about the content of the proposal may be directed to Keith N. 
Churchill at (512) 467-5837 in DHS's Special Nutrition Programs. Written 
comments on the proposal may be submitted to Supervisor, Rules and Handbooks 
Unit-254, Texas Department of Human Services E-205, P.O. Box 149030, Austin, 
Texas 78714-9030, within 30 days of publication in the Texas Register. 
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.14. Meal Requirements. 
(a)-(c) (No change.) 
<nl>(d)<ol> Meals served to eligible program participants during field trips are 
eligible for reimbursement provided that all Child and Adult Care Food Program 
requirements are met, and the field trip complies with the applicable standards 
for such activities as established by the licensing/approval authority for the 
child or adult care facility.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805743
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: July 15, 1998
For further information, please call: (512) 438-3765

CHAPTER 52. Emergency Response Services
The Texas Department of Human Services (DHS) proposes amendments to 
sec.sec.52.301, 52.401, 52.402, and 52.503, concerning provider staff 
requirements, initiation and referral for services, service delivery, and 
documentation errors, in its Emergency Response Services chapter. The purpose of 
the amendments is to clarify how provider agencies must comply with 
contract/program service control and fiscal monitoring requirements.
Eric M. Bost, commissioner, has determined that for the first five-year period 
the proposed sections will be in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the 
sections. 
Mr. Bost also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to ensure that quality services are provided to clients and 
to ensure accurate billing for services. There will be no effect on small 
businesses because most of the changes are already program requirements. There 
is no anticipated economic cost to persons who are required to comply with the 
proposed sections. 
Questions about the content of the proposal may be directed to Frances Barraza 
at (512) 438-3216 in DHS's Community Care Section. Written comments on the 
proposal may be submitted to Supervisor, Rules and Handbooks Unit-170, Texas 
Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, 
within 30 days of publication in the Texas Register. 

SUBCHAPTER C. Provider Agency Staff Requirements
40 TAC sec.52.301
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 
The amendment implements sec.sec.22.001-22.030 and 32.001-32.042 of the Human 
Resources Code. 

sec.52.301. Provider Staff Requirements. 
(a)-(f) (No change.) 
(g) The provider agency must give each responder (other than emergency medical 
service, sheriff, fire, or police department personnel) <nl> on or before the 
date services are initiated or the responder is replaced, <ol>written procedures 
that explain the <nl>responder's role and responsibilities. <ol>[service. The 
procedures must identify the responder's roles and responsibilities in 
delivering services.] A copy of the procedures must be <nl>signed by the 
responder and <ol>[given to the responder to sign, and a copy must be] kept in 
the provider agency's files. [The responder must receive the written procedures 
on or before the services are initiated.] 
(h) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805788
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: July 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER D. Service Delivery Requirements
40 TAC sec.52.401, sec.52.402
The amendments are proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 
The amendments implement sec.sec.22.001-22.030 and 32.001-32.042 of the Human 
Resources Code. 

sec.52.401. Initiation of and Referral for Services.
(a) The provider agency must begin services within 14 days from the <nl>service 
effective <ol>date on the approval for Community Care for Aged and Disabled 
(CCAD) services - referral response form <nl> (for CCAD clients) or notification 
of Community-Based Alternatives (CBA) Services form (for CBA clients) <ol>unless 
the referral is verbal. For verbal referrals, the provider agency must begin 
services on the date verbally negotiated with the caseworker. 
(b) If the client is not in the home during the first 14 days from the 
<nl>service effective <ol>date on the approval for CCAD services - referral 
response form <nl>or notification of Community-Based Alternatives services 
form<ol>, the provider agency begins services as soon as possible after the 
client returns home. 
(c) If services <nl>cannot be initiated within 14 days or <ol>[do not begin] on 
the date verbally negotiated<nl> with the caseworker<ol>, the coordinator 
telephones the caseworker on or before the day services were scheduled to begin 
and explains why services were not begun. <nl>Notification must be followed up 
in writing on the Texas Department of Human Services' (DHS's) case information 
form within seven days after the verbal notification. The provider agency must 
document the reason for the delay and the date services are scheduled to 
begin.<ol> 
(d) (No change.) 
<nl>(e)<ol> The provider agency must:
<nl>(1)<ol> secure two responders for each client on or before the date services 
begin unless the provider agency is able to document that the client has no 
available responders and that only one source is available that can respond to 
emergencies. A current list of responders must be kept by the provider agency at 
all times; 
<nl>(2)<ol> notify the caseworker on DHS's case information form of the reason 
only one responder is available, if the provider agency is unable to secure two 
responders; 
<nl>(3)<ol> obtain approval from the caseworker's supervisor if public service 
personnel are to be designated as a client's sole responder. Approval must be 
obtained on DHS's case information form; and 
<nl>(4)<ol> secure a replacement responder when a client's responder is no 
longer able to participate. A client that has only one responder must not be 
without a responder for more than 24 hours from the provider agency's awareness 
that the client's responder is no longer able to participate. The provider 
agency must replace the second responder within seven days from awareness that 
the client's responder is no longer able to participate. The provider agency 
must record the date the provider agency became aware of the responder quitting 
and the date this responder was replaced. 
[(e) The provider agency must secure two responders for each client on or before 
the date services begin, unless the provider agency is able to document that the 
client has no available responders and that only one resource is available that 
can respond to emergencies.]
(f) To initiate services, the provider agency must conduct a home visit. During 
the home visit, the installer: 
(1) installs and makes an initial test of the emergency response equipment; 
(2) explains to the client how to use the equipment;<nl> and<ol> 
(3) provides a written copy and explanation to the client of the complaint 
procedures<nl>. <ol>[; and] 
[(4) has the client sign a statement that allows the responder to enter the 
client's home, by force if necessary, in an emergency. The installer may not 
install the equipment if the client refuses to sign the home entry release 
statement. In this case, the installer must inform the coordinator. The 
coordinator contacts the caseworker within two DHS workdays of the home visit 
and explains the client's refusal to sign the required release statement.] 
(g) (No change.) 
(h) The provider agency must notify the caseworker <nl>in writing <ol>of the 
status of all referrals within 21 days from the referral date<nl>, if services 
are initiated on time<ol>. <nl>If services are not initiated on time, the 
provider agency must meet the timeframes specified in subsection (c) of this 
section.<ol>
(i)-(j) (No change.) 

sec.52.402. Service Delivery.
(a) The provider agency must respond to all alarm calls <nl> within one minute 
of the alarm, <ol>24 hours a day, seven days a week. <nl> The provider agency 
must record time in seconds. <ol>[Failure to respond may result in contract 
termination.] 
(b) The monitor documents alarm calls as they are received and resolved. The 
documentation includes: 
(1)-(2) (No change.) 
<nl>(3)<ol> the time the alarm call was returned to determine if an emergency 
existed; 
<nl>(4)<ol> [(3)] the name of the contacted responder(s); <nl>and<ol> 
<nl>(5)<ol> [(4)] a brief description of the incident and a statement of how the 
incident was resolved<nl>. <ol>[; and] 
[(5) the date the caseworker was notified.] 
(c) The provider agency must <nl>verbally <ol>notify the caseworker of any 
<nl>client emergency alarm calls <ol>[client emergency that it responds to] by 
the <nl>end of the Texas Department of Human Services' (DHS's) <ol>[DHS] workday 
following the incident. Notification must be followed up in writing <nl>on DHS's 
case information form <ol>within seven days after the occurrence. 
(d) The provider agency must conduct a monthly systems check for each client or 
make a minimum of three attempts to reach the client on three different days 
during the month. The provider agency must document monthly systems checks 
and/or attempts to contact the client if the client was not home or not 
available. <nl>The attempts to contact the client must be documented on DHS's 
case information form and the form must be sent to the caseworker. <ol> 
(e)-(f) (No change.) 
<nl>(g)<ol> The provider agency must visit the client's home to check equipment 
that has registered five or more "low battery" signals within a 72-hour period. 
The visit must be conducted within five days of the fifth "low battery" signal. 
<nl>(h)<ol> [(g)] The provider agency must respond to all complaints in a 
reasonable and prompt manner. The provider agency must investigate and respond 
in writing to all written complaints received from DHS staff within 14 days of 
receipt. The provider agency must date stamp all written complaints and maintain 
accessible and available records of the complaint and its resolution. 
<nl>(i)<ol> [(h)] If the client's condition changes significantly, the provider 
agency must report it to the caseworker within seven days of awareness. 
<nl>(j)<ol> [(i)] If the coordinator, provider agency address, or telephone 
number changes, the provider agency must notify the regional contract manager in 
writing. 
<nl>(k)<ol> [(j)] The provider agency must ensure that service is not 
interrupted because of a change. 
<nl>(l)<ol> [(k)] The provider agency must test the equipment when the equipment 
is removed from the client's home, unless a monthly systems check has been 
conducted during the same calendar month or the provider agency is unable to 
test the equipment because: 
(1) the client's telephone was disconnected; 
(2) the client damaged his home unit; [or]
(3) the equipment was picked up at a location other than the client's home<nl>; 
or <ol>[.] 
<nl>(4)<ol> the client moved without allowing the agency to remove the home 
unit. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805789
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: July 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER E. Claims
40 TAC sec.52.503
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 32, which provides the department with the authority to administer public 
and medical assistance programs and under Texas Government Code sec.531.021, 
which provides the Health and Human Services Commission with the authority to 
administer federal medical assistance funds. 
The amendment implements sec.sec.22.001-22.030 and 32.001-32.042 of the Human 
Resources Code. 

sec.52.503. Documentation Errors. 
In the absence of acceptable secondary documentation, financial errors include, 
but are not limited to, the following. 
(1) The provider agency bills the department and fails to <nl> follow procedures 
specified in sec.52.402(d) of this title (relating to Service Delivery) 
<ol>[conduct a monthly systems check according to department rules]. The 
department applies the error to the unit of service claim for the month(s) 
during which the monthly systems check is not conducted according to department 
rules. 
(2) The provider agency bills the department for the month in which the home 
unit is removed from the client's home but fails to <nl> follow procedures 
specified in sec.52.402(l) of this title.<ol>[test the home unit at the time it 
is removed, or fails to document the reason(s) why the home unit cannot be 
tested.] The department applies the error to the unit of service claimed for the 
month during which the home unit is removed from the client's home. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805790
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: July 1, 1998
For further information, please call: (512) 438-3765

CHAPTER 69. Contracted Services
SUBCHAPTER L. Contract Administration
40 TAC sec.69.202, sec.69.208
The Texas Department of Human Services (DHS) proposes amendments to sec.69.202, 
concerning procurement, and sec.69.208, concerning methods for auditing 
contracts, in its Contracted Services chapter. The purpose of the amendments is 
to comply with a recommendation issued by the Governor's Advisory Task Force on 
Faith-Based Community Service Groups that legal provisions guaranteeing 
religious liberty be enacted to assure faith-based, would-be service providers 
that their distinct religious character and beliefs would not be surrendered or 
secularized when providing services for the state. 
Eric M. Bost, commissioner, has determined that for the first five-year period 
the sections are in effect there will be no fiscal implications for state or 
local government as a result of enforcing or administering the sections. Mr. 
Bost also has determined that for each year of the first five years the sections 
are in effect the public benefit anticipated as a result of enforcing the 
sections will be to encourage more faith-based providers to contract with DHS. 
The proposed sections will have no adverse economic effect on small businesses. 
The faith-based organizations at which DHS is directing these amendments do not 
generally qualify as small businesses; they are not formed for the purpose of 
making a profit. Further, by encouraging faith-based organizations to become 
service providers, DHS is not discouraging small business providers from 
providing services. 
Questions about the content of this proposal may be directed to Peggy Roll at 
(512) 438-3812 in DHS's Legal Services division. Written comments on the 
proposal may be submitted to Supervisor, Rules and Handbooks Unit-260, Texas 
Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, 
within 30 days of publication in the Texas Register.
The amendments are proposed under the Human Resources Code, Title 2, Chapter 22, 
which authorizes the department to administer public assistance programs. 
The amendments implement the Human Resources Code, sec.sec.22.001-22.033. 

sec.69.202. Procurement.
(a) Extent of Competition. 
(1) (No change.) 
(2) Service requirements should not unduly restrict competition by eliminating 
or limiting potential contractors' participation. DHS acts affirmatively to 
ensure that small and historically underutilized businesses (HUBs) have an equal 
opportunity to compete for and/or to be selected for the award of contracts and 
subcontracts. <nl>DHS also acts affirmatively to ensure that charitable and 
religious organizations have an equal opportunity to contract with DHS. 
Religious organizations that contract with DHS shall retain their independence 
from the state, including their control over the definition, development, 
practice, and expression of religious beliefs. Furthermore, DHS shall not 
require religious organizations to alter their form of internal governance or 
remove religious art, icons, scripture, or other symbols.<ol>
(b) (No change.) 

sec.69.208. Methods for Auditing Contracts. 
(a)-(b) (No change.) 
<nl>(c)<ol> If the contractor segregates the funds received through DHS into 
separate accounts, then only the financial assistance provided with these funds 
and accounted for by the contractor shall be the subject of audit; however, the 
audit may include an assessment of the internal controls used by the contractor. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805744
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: August 1, 1998
For further information, please call: (512) 438-3765

PART II. Texas Rehabilitation Commission
CHAPTER 101. General Rules
The Texas Rehabilitation Commission proposes amendments to sec.sec.101.1, 101.2, 
101.8, 101.9, 101.10, 101.13 and the repeal of sec.101.6 and sec.101.7, 
concerning general rules. In accordance with the Appropriations Act, sec.167, 
the Commission has reviewed these sections and has determined that they should 
be readopted with changes. 
The sections are being amended and repealed in order to conform to the language 
of the Rehabilitation Act Amendments of 1994. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be conformance with the language of the Rehabilitation Act 
Amendments of 1994. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 

40 TAC sec.sec.101.1, 101.2, 101.8, 101.9, 101.10, 101.13
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 

sec.101.1. Definitions. 
Words and terms are used as defined in the Rehabilitation Act of 1973, as 
amended, and implemented by 34 Code of Federal Regulations and the Human 
Resources Code, Title 7, unless the context clearly indicates another meaning. 
Words and terms defined in such federal and state laws and regulations are 
applicable to this part. 
<nl>(1)<ol> Applicant-An individual who applies to the Texas Rehabilitation 
Commission for vocational rehabilitation services, extended rehabilitation 
services, or independent living services. 
<nl>(2)<ol> Board-Board of the Texas Rehabilitation Commission appointed under 
the provision of the Human Resources Code, Title 7. 
<nl>(3)<ol> Client-An individual who is determined eligible by the Texas 
Rehabilitation Commission for vocational rehabilitation services or <nl>other 
commission<ol> [extended rehabilitation] services. 
<nl>(4)<ol> Commission-The Texas Rehabilitation Commission.
<nl>(5)<ol> Counselor-An employee of the commission who is <nl>trained to 
provide vocational guidance and counseling and meets the<ol> designated in <nl>a 
functional<ol> [his] job description as a counselor. 
<nl>(6)<ol> Sheltered workshop-An occupation-oriented facility operated by a 
not-for-profit agency, public or private, which, except for its staff, employs 
only <nl>individuals with mental or physical disabilities <ol> [mentally or 
physically handicapped persons]. 
<nl>(7)<ol> State plan-The plan for vocational rehabilitation services submitted 
by this <nl>commission<ol> [state] in compliance with the Rehabilitation Act of 
1973, as amended, Title I. 

sec.101.2. Declaration of Purpose and Policy.
(a) The commission is the principal authority in the state on matters relating 
to rehabilitation of <nl>individuals with disabilities <ol> [handicapped and 
disabled individuals], except for those matters relating to individuals whose 
[handicap or] disabilities are of a visual nature. All other state agencies 
engaged in rehabilitation activities and related services to individuals whose 
[handicaps or] disabilities are not of a visual nature shall coordinate those 
activities and services with the commission. 
(b) It is the policy of the State of Texas to provide rehabilitation and related 
services to eligible [handicapped] individuals <nl> with disabilities<ol> so 
that they may prepare for and engage in a gainful occupation or achieve maximum 
personal independence for the individual. 
(c)-(d) (No change.) 
(e) Any person who believes that he <nl>or she<ol> is eligible for 
rehabilitation services may contact any commission office or employee for 
assistance. 

sec.101.8. [Facilities and] Services for Groups of <nl>Individuals With 
Disabilities<ol> [Handicapped Individuals
The commission provides for [facilities and] services which may be expected to 
contribute substantially to the rehabilitation of a group of individuals, but 
which are not related directly to the individualized rehabilitation program of 
any one [handicapped] individual <nl>with a disability <ol>. The commission 
establishes in writing and maintains policies for the provision of such 
[facilities and] services.

sec.101.9. Standards for Facilities <nl>and Providers of Services<ol> . 
(a) Facilities <nl>and providers of services<ol> used by the commission in 
providing vocational rehabilitation services are required to satisfy the 
following minimum standards. 
[(1) The organizational and administrative structure of the facility shall 
contribute effectively to the achievement of its goals.] 
<nl>(1)<ol> [(2)] <nl>Staff providing services<ol> [The staff of the facility] 
shall be competent, professionally ethical, and qualified for positions held. 
Qualifications of staff shall meet all requirements established by recognized 
professional groups and/or state certification regulations. [The governing body 
shall develop minimum qualifications for all staff positions not covered by 
licensure or certification requirements.] The facility <nl>or provider<ol> shall 
assure that all staff meet minimum qualifications; staff credentials supporting 
those qualifications shall be on file at the time of hire; and staff credentials 
shall be made available to [the survey committee for inspection] <nl> any 
commission monitors<ol> . 
<nl>(2)<ol> The facility shall include among the staff, or shall obtain the 
services of, individuals able to communicate in the native language of 
applicants and clients who have limited English speaking ability; and ensure 
that appropriate modes of communication are used for all applicants and clients. 
<nl>(3)<ol> Providers of vocational rehabilitation services shall take 
affirmative action to employ and advance in employment qualified individuals 
with disabilities. 
[(3) The program of services offered shall be planned and operated in relation 
to present and future needs of its clientele. These services shall be of such a 
quality and so applied that they constitute an effective program which achieves 
the objectives or rehabilitation for the individual client. It is essential that 
case-staffing be an integral part of any service.] 
(4) The facility shall provide for such fiscal control and fund accounting 
<nl>as<ol> [and] may be necessary to assure proper disbursement [of] and 
accounting <nl>of<ol> [for] funds provided by the commission <nl>and in 
accordance to program policy<ol> . 
(5)-(6) (No change.) 
<nl>(7)<ol> Any facility in which services are provided must be: 
<nl>(A)<ol> such that the safety and health of the staff and clients are 
protected; 
<nl>(B)<ol> accessible to individuals receiving services and must comply with 
the requirements of the Architectural Barriers Act of 1968, the Uniform 
Accessibility Standards and the Americans with Disabilities Act of 1990 and 
Section 504 of the Rehabilitation Act. 
[(7) The facility shall endeavor to gain community understanding, approval, and 
continued support of its goals, services, and needs through a consciously 
structured community public relations program designed to sharpen and enhance 
public understanding of the agency's purposes and achievements.] 
[(8) The physical plant of the facility and its environment shall be such that 
the safety and health of the staff and clients are protected.] 
(b) The commission does not operate, license, certify, or register facilities 
<nl>or providers<ol> under the Human Resource Code, sec.48.036, but does assure 
that <nl>services provided<ol> [facility programs] comply with standards set by 
the commission. 
(c) Any additional standards the commission publishes for facilities <nl>and 
providers<ol> will be made available to the public.
<nl>(d)<ol> All services provided to clients of the commission are monitored by 
the agency.

sec.101.10. Confidentiality.
(a) Client records. 
(1)-(2) (No change.) 
(3) Information is not to be disclosed directly or indirectly, other than in the 
administration of the rehabilitation programs, unless the consent of the client 
has been obtained in writing, in compliance with a court order, or in accordance 
with a federal or state law or regulation. <nl>Information containing 
identifiable personal information may not be shared with advisory or other 
bodies that do not have official responsibilities for administration of the 
program.<ol> 
(4)-(5) (No change.) 
(b) (No change.) 

sec.101.13. <nl>Comparable<ol> [Similar] <nl> Services and<ol> Benefits.
In providing rehabilitation services, the commission considers any <nl> 
comparable <ol> [similar] <nl>services and<ol> benefit available to a client 
under any other program. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805858
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

40 TAC sec.101.6, sec.101.7
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Rehabilitation Commission or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 
sec.101.6. Construction of Rehabilitation Facilities.
sec.101.7. Establishment of Rehabilitation Facilities.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805859
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 103. Vocational Rehabilitation Services Program
The Texas Rehabilitation Commission proposes amendments to sec.sec.103.1, 103.4, 
103.9, 103.11-103.13, 103.15-103.17, 103.19, 103.21, 103.31, 103.32, 103.41, 
103.42, 103.44, and 103.51-103.55, concerning vocational rehabilitation services 
program. In accordance with the Appropriations Act, sec.167, the Commission has 
reviewed these sections and has determined that they should be readopted with 
changes. 
Sections 103.1, 103.4, 103.9, 103.13, 103.15-103.17, 103.19, 103.21, 103.31, 
103.32, 103.41, 103.42, 103.44, and 103.51-103.55 are being amended to make the 
rules consistent with Federal Regulations. 
Section 103.11 and sec.103.12 are being amended in order to conform to the 
language of the Rehabilitation Act Amendments of 1994. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be conformance with the language of the Rehabilitation Act 
Amendments of 1994 and rule consistency with Federal Regulations. There will be 
no effect on small businesses. There is no anticipated economic cost to persons 
who are required to comply with the sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 

SUBCHAPTER A. Provision of Vocational Rehabilitation Services
40 TAC sec.sec.103.1, 103.4, 103.9, 103.11-103.13, 103.15-103.17, 103.19
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.103.1. Basic Criteria. 
The Vocational Rehabilitation Services Program is a joint state-federal funded 
program. The commission cooperates with the federal government in carrying out 
the rehabilitation of <nl>individuals with disabilities<ol> [the handicapped] 
under state and federal law and to this end adopts such methods of 
administration as are found by the federal government to be necessary and not 
contrary to existing state laws for the proper and efficient operation of such 
rehabilitation program. The commission complies with such requirements as may be 
necessary to obtain federal funds in the maximum amount and most advantageous 
proportion authorized. 

sec.103.4. <nl>Preliminary and Comprehensive Assessment <ol> [Evaluation of 
Rehabilitation Potential].
(a) Preliminary <nl>assessment<ol> [diagnostic study]. To determine whether an 
individual is eligible for vocational rehabilitation services, the commission 
conducts a preliminary <nl>assessment<ol> [diagnostic study] sufficient to 
determine: 
(1) whether the individual has a physical or mental <nl> impairment<ol>; 
[disability] 
<nl>(2)<ol> <nl>whether the physical of mental impairment <ol> [which for such 
individual] constitutes or results in a substantial <nl>impediment<ol> 
[handicap] to employment <nl> for the individual<ol>; [and] 
<nl>(3)<ol> [(2)] whether <nl>the individual can benefit in terms of achieving 
an employment outcome, after receiving <ol>vocational rehabilitation services 
[can reasonably be expected to benefit the individual in terms of employability, 
or whether an extended evaluation of rehabilitation potential is necessary to 
make such a determination.] <nl>; and<ol> 
<nl>(4)<ol> whether the individual requires VR services to prepare for, enter 
into, engage in, or retain gainful employment consistent with the individuals 
strengths, resources, priorities, concerns, abilities, capabilities and informed 
choice. 
(b) <nl>Comprehensive assessment<ol> [Thorough diagnostic study]. <nl>The 
commission, as appropriate in each case, shall conduct a comprehensive 
assessment of the unique strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and needs, including the need for supported employment 
services, of an eligible individual, in the most integrated sitting possible, 
consistent with the informed choice of the individual. The comprehensive 
assessment is limited to information that is necessary to identify the 
rehabilitation needs of the individual and develop the IWRP and may, to the 
extent needed, include:<ol> 
(1) [The commission provides, as appropriate in each case, a thorough diagnostic 
study to determine the nature and scope of services needed by the individual. 
This study consists of] <nl>an analysis<ol> [a comprehensive evaluation] of 
pertinent medical, psychological, vocational, educational, and other related 
factors which bear on the individual's <nl> impediment<ol> [handicap] to 
employment and rehabilitation needs. Additional examinations are authorized 
after services are initiated when conditions arise that jeopardize the 
individual's written rehabilitation program<nl>;<ol> [.] 
(2) <nl>an analysis of the individual's personality, career interest, 
interpersonal skills, intelligence and related functional capacities, <ol> 
educational achievement <nl>work experience, vocational aptitudes, personal and 
social adjustments, and employment opportunities; <ol> [and psychological 
functioning of the applicant is a significant area that is investigated in the 
evaluation of an individual's vocational potential. When observed problems of 
the applicant indicate, an educational achievement test is administered.] 
<nl>(3)<ol> an appraisal of the individual's patterns of work behavior and 
services needed to acquire occupational skills and to develop work attitudes, 
work habits, work tolerance, and social and behavioral patterns suitable for 
successful job performance; and 
<nl>(4)<ol> an assessment, through provision of rehabilitation technology 
services, of the individual's capacities to perform in a work environment, 
including in an integrated setting, to the maximum extent feasible and 
consistent with the individual's informed choice.
(c) <nl>Existing information. The commission shall use, to the maximum extent 
possible and appropriate and in accordance with confidentiality requirements, 
existing information, including information that is provided by the individual, 
the family of the individual, and education agencies.<ol> [Application forms. 
Applicants for vocational rehabilitation services must sign prescribed 
application and release of information forms prior to receiving services]. 

sec.103.9. Maintenance. 
[(a)] The commission may pay maintenance to a client. Maintenance is a cash 
payment to an applicant or client made during any stage of the rehabilitation 
process to cover basic living expenses, such as food, shelter, clothing, and 
other subsistence expenses <nl>that are in excess of the normal expenses of the 
client, and are<ol> necessary to derive the full benefit of other vocational 
rehabilitation services. 
[(b) The client, or, as appropriate, the parent, guardian, or other 
representative, must sign a prescribed agreement form prior to, or simultaneous 
with, the completion of the maintenance requisition.]

sec.103.11. Interpreter Services for the Deaf. 
(a) The commission may provide interpreter services for [deaf] clients <nl>who 
are deaf<ol> when such services will assist in the attainment of the 
rehabilitation objective. 
(b) The commission may provide telecommunications, sensory, and other 
technological aids and devices to facilitate training, employability, and job 
opportunities for [the] <nl>persons with severe disabilities <ol> [severely 
disabled], particularly [deaf] persons <nl> who are deaf<ol> and individuals 
with profound hearing or speech impairments.

sec.103.12. <nl>Job <ol>Placement [in Suitable Employment]. 
(a) The principal objective [of the] <nl>is a competitive employment outcome<ol> 
[commission is suitable employment ] for each client <nl>which is consistent 
with the individual's strengths, resources, priorities, concerns, abilities, 
capabilities, interests, and informed choice<ol>. 
(b) <nl>Gainful<ol> [Suitable] employment <nl> outcomes<ol> includes entering or 
retaining employment [consistent with the client's capacities and abilities] in 
the competitive labor market; the practice of a profession; self-employment; 
homemaking; farm or family work; sheltered employment; homebound employment; or 
other gainful work. 

sec.103.13. Postemployment Services.
(a) The commission may provide postemployment services to clients who have been 
determined rehabilitated in order to maintain or strengthen the client's 
<nl>employment<ol> [employability]. 
(b) Postemployment services are <nl>those services which are necessary for the 
individual to maintain, regain or advance in an employment outcome which is 
consistent with the individual's strengths, resources, priorities, concerns, 
abilities, capabilities, interests, and informed choice<ol> [intended to 
overcome regressive, emergent, or latent problems after the case is closed and 
to supplement the substantial service which justified the closing as 
rehabilitated]. 

sec.103.15. Extended Evaluation [to Determine Rehabilitation Potential]. 
(a) <nl>Extended evaluation is used only to determine whether an applicant with 
a severe disability is capable of achieving an employment outcome.<ol> [The 
commission provides vocational rehabilitation services under extended evaluation 
to determine rehabilitation potential based upon:
[(1) the presence of a physical or mental disability which for the individual 
constitutes or results in a substantial handicap to employment; and] 
[(2) an inability to make a determination that vocational rehabilitation 
services might benefit the individual in terms of employability unless there is 
an extended evaluation to determine rehabilitation potential.] 
(b) The commission <nl>provides only those<ol> [may provide] vocational 
rehabilitation services necessary <nl>to determine the nature and scope of 
services required to achieve a gainful employment outcome <ol>[for the 
determination of rehabilitation potential, including those provided within a 
thorough diagnostic study,] for a total period not in excess of 18 months. 
<nl>Services are provided in the most integrated setting possible, consistent 
with the informed choice of the individual.<ol>
(c) The commission may terminate <nl>extended evaluation services <ol>at any 
time prior to the expiration of the 18-month [extended evaluation] period [the 
extended evaluation for the determination of rehabilitation potential] when: 
(1) <nl>there is sufficient evidence to conclude that the individual can achieve 
an employment outcome; or <ol>[the individual is found eligible for vocational 
rehabilitation services upon a determination of a reasonable assurance that he 
can be expected to benefit in terms of employability from vocational 
rehabilitation services; or] 
(2) the individual is found ineligible for any additional vocational 
rehabilitation services on the basis of clear <nl>and convincing <ol> evidence 
that <nl>the individual<ol>[he] cannot be expected to benefit in terms of <nl>an 
employment outcome <ol>[employability] from vocational rehabilitation 
services<nl>;<ol>[.]
<nl>(3)<ol> the individual is unavailable for services. 

sec.103.16. Individualized Written Rehabilitation Program. 
(a) The commission initiates and continuously develops an individualized written 
rehabilitation program for each individual eligible for vocational 
rehabilitation services[,] and for each individual being provided such services 
<nl>in<ol> [under an] extended evaluation [to determine vocational 
rehabilitation potential].
(b) The <nl>counselor and client or, as appropriate, the client's parent, 
guardian, or other representative<ol> [commission] <nl>use information obtained 
during the assessment process to determine vocational rehabilitation needs, long 
term vocational goal, intermediate rehabilitation objectives, and the nature and 
scope of vocational rehabilitation services to be included in the IWRP.<ol> 
[provides vocational rehabilitation services in accordance with the written 
program.] 
<nl>(c)<ol> The counselor and the client or, as appropriate, <nl> the 
client's<ol> [his] parent, guardian, or other representative develop jointly the 
individualized written rehabilitation program, <nl>which is consistent with the 
individual's unique strengths, priorities, concerns, abilities, capabilities, 
career interests, and informed choice.<ol> [and a] <nl>A<ol> copy of such 
program and any amendments thereto are provided to the client or, as 
appropriate, <nl>the client's <ol>[his] parent, guardian, or other 
representative. 
<nl>(d)<ol> The counselor considers the individualized education program of a 
student with a disability who is receiving special education services in the 
development of the IWRP. 
<nl>(e)<ol> [(c)] The counselor shall advise the client of <nl>the client's<ol> 
[his] rights and the means by which <nl>the client<ol> [he] may express and seek 
remedy for [his] dissatisfaction with the program, including the opportunity for 
an administrative review of commission action and a fair hearing in accordance 
with the Administrative Procedure and Texas Register Act, sec.13 and sec.14.
<nl>(f)<ol> [(d)] The counselor reviews the individualized written 
rehabilitation program as often as necessary, but at least on an annual basis, 
at which time each client, or as appropriate, <nl> the client's<ol> [his] 
parent, guardian, or other representative, are afforded an opportunity to review 
such program and, if necessary, jointly redevelop its terms. 
<nl>(g)<ol> [(e)] Where an individual is determined ineligible for vocational 
rehabilitation services after extended evaluation, the commission conducts a 
periodic review at least annually of the ineligibility decision in which the 
individual is afforded a clear opportunity for full consultation in the 
reconsideration of such decision. A periodic review is not required when the 
individual has refused services, has refused a periodic review, is no longer 
present in the state, <nl>the individual's<ol> [his] whereabouts unknown, or 
<nl>the<ol> [his] medical condition is rapidly progressive or terminal. 
<nl>(h)<ol> [(f)] The individualized written rehabilitation program is a joint 
commitment which generally must be signed by both the counselor and the 
individual. 
<nl>(i)<ol> [(g)] The commission may provide <nl> only those<ol> [other] goods 
and services which can reasonably be expected to benefit <nl>an individual with 
a disability<ol> [a handicapped individual] in terms of employability. 

sec.103.17. Cooperative Programs Utilizing Third-Party Funds. 
When the <nl>commission enters into a third-party cooperative arrangement for 
providing or administering vocational rehabilitation services with another state 
agency or a local public agency that is furnishing part or all of the non-
federal share, the state plan will assure that:<ol> 
<nl>(1)<ol> the services provided by the cooperating agency are not the 
customary or typical services provided by that agency but are new services that 
have a vocational rehabilitation focus or existing services that have been 
modified, adapted, expanded or reconfigured to have a vocational rehabilitation 
focus; 
<nl>(2)<ol> the services provided by the cooperating agency are only available 
to applicants for, or recipients of, services from the commission; 
<nl>(3)<ol> program expenditures and staff providing services under the 
cooperative arrangement are under the administrative supervision of the 
commission; and 
<nl>(4)<ol> <nl>all state plan requirements, including the Order of Selection, 
will apply to all services provided under the cooperative program.<ol> [state's 
share of the cost of a cooperative program for providing vocational 
rehabilitation services or for engaging in administrative activities of the 
commission is furnished in whole or in part by a state or local public agency 
other than the commission, each such cooperative program will be based on a 
written agreement which meets the requirements of federal regulations.] 

sec.103.19. Consultation <nl>Regarding the Administration of the State Plan<ol> 
[with Recipients and Providers of Vocational Rehabilitation Services].
<nl>(a)<ol> The state plan must assure that, in connection with matters of 
general policy development and implementation arising in the administration of 
the state plan, the commission seeks and takes into account the views of: 
<nl>(1)<ol> individuals who receive vocational rehabilitation services or, as 
appropriate, the individuals' representatives; 
<nl>(2)<ol> personnel working in the field of vocational rehabilitation; 
<nl>(3)<ol> providers of vocational rehabilitation services; 
<nl>(4)<ol> the CAP director; and 
<nl>(5)<ol> the State Rehabilitation Advisory Council, if the state has a 
council. 
<nl>(b)<ol> The state plan must specifically describe the manner in which the 
state unit will take into account the views regarding state policy and 
administration of the state plan that are expressed in the consumer satisfaction 
surveys conducted by the State Rehabilitation Advisory Council under 34 CFR 
sec.361.17(h)(3) or by the state agency if it is an independent commission in 
accordance with the requirements of 34 CFR sec.361.16(a)(1). 
[(a) A consumer advisory committee will be appointed to make recommendations for 
consideration by the commission concerning any matter the committee believes to 
be pertinent to the interest of persons with disabilities.] 
[(b) The commission shall adopt rules providing for the appointment of the 
consumer advisory committee and establishing for the committee the number of 
members, geographical representation, duties, powers, procedures, and times and 
manner of making recommendations to the board. The rules shall provide for an 
equitable representation of the major disability groups served by the 
commission.] 
[(c) The consumer advisory committee shall meet as provided by the rules of the 
commission and on call of the commissioner.]
[(d) The members of the consumer advisory committee are entitled to compensatory 
per diem authorized by the General Appropriations Act for each day engaged in 
the performance of their duties as directed by the commission and to 
reimbursement for actual and necessary expenses incurred in attending the 
official meetings of the consumer advisory committee.] 
[(e) A member of the consumer advisory committee who is disabled and who, 
because of the disability, requires special aids or travel attendants is 
entitled to reimbursement for the cost of the special aids or travel 
attendants.] 
[(f) To be eligible for appointment to the consumer advisory committee, a person 
must have demonstrated an active and constructive interest in the rehabilitation 
of handicapped people.] 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805860
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

SUBCHAPTER B. Client Participation
40 TAC sec.103.21
The amendment is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 

sec.103.21. Basic Living Requirements (BLR).
(a) (No change.) 
(b) All services are subject to required client participation except for the 
following: 
(1) services paid for, or reimbursed by, a source other than the commission; 
(2) counseling, guidance, and referral<nl> provided by TRC staff<ol>; 
(3) placement services; 
(4) <nl>assessment<ol> [diagnostic] services, including diagnostic maintenance 
and transportation, in any status; 
(5) interpreter services; and/or 
(6) <nl>translator<ol> [halfway house] services. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805861
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

SUBCHAPTER C. <nl>Comparable<ol> [Similar] Benefits
40 TAC sec.103.31, sec.103.32
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.103.31. <nl>Comparable Services and<ol> [Basic Consideration for Similar] 
Benefits. 
<nl>If comparable services or benefits exist under any other program and are 
available to the eligible individual at the time needed to achieve the 
rehabilitation objective in the individual's IWRP, the commission shall use 
those comparable services or benefits to meet, in whole or in part, the cost of 
vocational rehabilitation services.<ol> [The commission fully considers any 
similar benefits available to the client under any other program or law to meet, 
in whole or in part, the cost of any vocational rehabilitation services provided 
to the client]. 

sec.103.32. <nl>Availability of Comparable Services and Benefits<ol> [Delay 
Caused By and Adequacy of Similar Benefits
The commission <nl>determines whether comparable services or benefits are<ol> 
[considers similar benefits] available under any other program or law to the 
client to meet, in whole or in part, the cost of <nl> any VR services. The 
Commission shall use all available comparable services or benefits to meet, in 
whole or in part, the cost of vocational rehabilitation services. The commission 
will not make this determination in cases where: <ol> 
<nl>(1)<ol> the determination of the availability of comparable services and 
benefits under any other program would delay the provision of vocational 
rehabilitation services to any individual who is determined to be at extreme 
medical risk, based on medical evidence provided by an appropriate qualified 
medical professional; or 
<nl>(2)<ol> <nl>an immediate job placement would be lost due to a delay in the 
provision of comparable services and benefits. <ol> [physical and mental 
restoration services and maintenance provided to the client, except where such 
consideration would significantly delay the provision of services to the client 
or interfere with achieving the client's rehabilitation objective.] 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805862
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

SUBCHAPTER D. Eligibility, Ineligibility, and Certification
40 TAC sec.sec.103.41, 103.42, 103.44
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal.

sec.103.41. Basic Requirements for Eligibility.
[(a)] The commission bases eligibility for vocational rehabilitation services on 
the following requirements only:
(1) the <nl>individual must have<ol> [presence of] a physical or mental 
<nl>impairment;<ol>
<nl>(2)<ol> <nl>the individual must have a physical or mental impairment 
which<ol> [disability which for the individual] constitutes or results in a 
substantial <nl>impediment<ol> [handicap] to employment <nl>for the 
individual<ol>; [and]
<nl>(3)<ol> [(2)]<nl> the individual must be capable of achieving an employment 
outcome, after receiving VR services; and<ol> [a reasonable expectation that 
vocational rehabilitation services may benefit the individual in terms of 
employability.] 
(4) the individual must require VR services to prepare for, enter, engage in, or 
retain gainful employment consistent with the applicant's strengths, resources, 
priorities, concerns, abilities, capabilities and informed choice.
[(b) The term "employability' means a determination that the provision of 
vocational rehabilitation services is likely to enable an individual to enter or 
retain employment consistent with his capabilities and abilities in the 
competitive labor market; the practice of a profession; self-employment; 
homemaking; farm or family work (including work for which payment is in kind 
rather than in cash); sheltered employment; homebound employment; or other 
gainful work.] 

sec.103.42. Factors Disregarded in Determining Eligibility.
The commission determines eligibility of applicants without regard to: 
(1) sex, race, age, creed, [religion,] color, [ or] national origin; 
(2)-(4) (No change.)

sec.103.44. <nl>Determination<ol> [Certification] of Ineligibility.
[(a)] When an applicant is determined ineligible for vocational rehabilitation 
services[,] <nl>or an individual receiving services under an IWRP is no longer 
eligible for services, the commission shall:<ol>
(1) make the determination only after providing an opportunity for full 
consultation with the individual or, as appropriate, the individual's 
representative;
(2) inform the individual in writing, supplemented as necessary by other 
appropriate modes of communication consistent with the informed choice of the 
individual, of the ineligibility determination, including the reasons for that 
determination and the means by which the individual may express and seek remedy 
for any dissatisfaction, including the procedures for review of a determination 
by the rehabilitation counselor or coordinator;
(3) provide the individual with a description of services available from a 
client assistance program established under 34 CFR Part 370 and information on 
how to contact that program; and
<nl>(4)<ol> <nl>review within 12 months and annually thereafter, if requested by 
the individual or, if appropriate, by the individual's representative any 
ineligibility determination that is based on a finding that the individual is 
incapable of achieving an employment outcome. This review need not be conducted 
in situations where the individual has refused it, the individual is no longer 
present in the state, the individual's whereabouts are unknown, or the 
individual's medical condition is rapidly progressive. <ol> [or the counselor 
shall prepare a signed and dated certification to this effect. Such 
certification of ineligibility is prepared only after consultation with the 
applicant, or, as appropriate, his parent, guardian, or other representative, or 
after affording a clear opportunity for such consultation.
[(b) When an applicant is determined ineligible for vocational rehabilitation 
services, the counselor shall notify the applicant in writing of the 
determination of ineligibility and shall inform the applicant of the commission 
procedures for administrative review and fair hearing in accordance with the 
Administrative Procedure and Texas Register Act, sec.13 and sec.14.] 
[(c) When the applicant is determined ineligible for vocational rehabilitation 
services based upon clear evidence that the applicant cannot achieve a 
vocational rehabilitation goal, such determination of ineligibility is reviewed 
not later than 12 months after it is made.] 
[(d) When the counselor is unable to make a determination that vocational 
rehabilitation services will benefit the applicant in terms of employability 
unless there is an extended evaluation to determine rehabilitation potential, he 
shall, prior to or simultaneous with the acceptance of an applicant as a client, 
make a signed and dated certification of such inability to make a 
determination.]
[(e) If, after extended evaluation, the individual is determined to be 
ineligible for vocational rehabilitation services, the counselor shall take 
action of consultation and notice as described in subsection (a) and subsection 
(b) of this section.] 
[(f) The requirements for consultation, notice, and review in cases of 
ineligibility do not apply where the applicant, client, or representative 
refuses consultation after a fair opportunity; the individual is no longer 
present in the state or his whereabouts is unknown; or his medical condition is 
rapidly progressive or terminal.] 
[(g) The commission periodically reviews the effectiveness of the criteria 
employed with respect to those individuals who have applied for vocational 
rehabilitation services and have been found to be ineligible for such services.] 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805863
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: May 9, 1998
For further information, please call: (512) 424-4050

SUBCHAPTER E. Methods of Administration of Vocational Rehabilitation
40 TAC sec.sec.103.51-103.55
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 

sec.103.51. Statewide Studies and Program Evaluation.
(a) The commission conducts continuing statewide studies of the needs of 
[handicapped] individuals <nl>with disabilities<ol> within the state[, the 
state's need for rehabilitation facilities,] and the methods by which these 
needs may be most effectively met. 
(b) Such studies are directed toward: 
(1) <nl>assessment of the rehabilitation needs of individuals with severe 
disabilities who reside in the state<ol> [determining the relative needs for 
vocational rehabilitation services on the part of different segments of the 
handicapped population, particularly the need for expansion of services to the 
most severely handicapped]; 
(2) <nl>review of the effectiveness of outreach procedures used to identify and 
serve individuals with disabilities who are minorities and individuals with 
disabilities who are unserved and underserved by the vocational rehabilitation 
system; and <ol> [determining the means and methods by which vocational 
rehabilitation services, particularly to the most severely handicapped, will be 
provided, expanded, and improved, after full consideration and study of a broad 
variety of means and methods;] 
<nl>(3)<ol> reviewing of a broad variety of methods to provide, expand, and 
improve vocational rehabilitation services to individuals with the most severe 
disabilities, including individuals receiving supported employment services; 
<nl>(4)<ol> [(3)] ensuring the orderly and effective development of vocational 
rehabilitation services [and rehabilitation facilities]; and 
<nl>(5)<ol> [(4)] reviewing the efficacy of the criteria employed by the 
commission in making ineligibility decisions with respect to applicants for 
vocational rehabilitation services. Reports of such studies are available to the 
public for review. 

sec.103.52. Annual Evaluation. 
(a) The commission conducts an annual comprehensive evaluation of the 
effectiveness of the state's vocational rehabilitation program in 
achieving<nl>:<ol> 
<nl>(1)<ol> service goals and priorities[.] <nl> established in the state plan 
and annual amendments to the state plan; and<ol> 
<nl>(2)<ol> compliance with the evaluation standards and performance indicators 
established by the Act. 
(b) The evaluation measures the adequacy of commission performance in providing 
vocational rehabilitation services, especially to <nl>those individuals with<ol> 
the most <nl>severe disabilities<ol> [severely handicapped], in the light of the 
state's vocational rehabilitation program financial resources. The evaluation 
has the following minimum objectives:
(1) (No change.) 
(2) to insure that clients are placed in gainful <nl> employment<ol> 
[activities] suitable to their capabilities<nl>, interest, and informed 
choice<ol>;
(3)-(9) (No change.)

sec.103.53. Order of Selection and Outcomes and Service Goals. 
[(a)] An order of selection established for allocation of vocational 
rehabilitation services when such services cannot be provided to all who apply 
and are eligible is as follows: 
(1) first priority to <nl>eligible individuals with the most severe 
disabilities<ol> [the severely handicapped]; 
(2) second priority to eligible <nl>individuals with other severe 
disabilities<ol> [clients not severely handicapped who can be served without 
expenditure of commission funds]; [and]
(3) third priority to [all other] eligible <nl> individuals with non-severe 
disabilities that result in permanent functional limitations;<ol> [clients not 
severely handicapped in the order in which client services were requisitioned.] 
<nl>(4)<ol> fourth priority to eligible individuals with non-severe disabilities 
that do not result in permanent functional limitations. 
[(b) General outcomes and service goals to be achieved in each priority category 
are:] 
[(1) first priority will contain 60% severely handicapped in the active caseload 
with statuses of 10-24;] 
[(2) second priority eligible clients not severely handicapped served without 
expenditure of commission funds will comprise 10% of the active caseload with 
statuses of 10-24;] 
[(3) third priority eligible clients not severely handicapped in the order of 
date client services were requisitioned will comprise 30% of the active caseload 
with statuses of 10-24.] 

sec.103.54. Periodic Reevaluation of Extended Employment [in Rehabilitation 
Facilities].
<nl>(a)<ol> The commission reviews and reevaluates annually, or more often if 
required, the status of <nl>each individual determined by the state unit to have 
achieved an employment outcome in an extended employment setting in a community 
rehabilitation program or other employment setting in which the individual is 
compensated in accordance with the Fair Labor Standards Act, sec.14(c). This 
review or reevaluation must include input from the individual or in an 
appropriate case, the individual's representative to determine the interests, 
priorities, and needs of the individual for employment in an integrated setting 
in the labor market.<ol> 
<nl>(b)<ol> The commission makes maximum effort, including the identification of 
vocational rehabilitation services, reasonable accommodations, and other support 
services, to enable the eligible individual to benefit from training in, or to 
be placed in employment in, an integrated setting. 
<nl>(c)<ol> <nl>The commission provides services designed to promote movement 
from extended employment to integrated employment, including supported 
employment, independent living, and community participation.<ol> [clients or 
former clients who have been placed by the commission in extended employment in 
rehabilitation facilities (including workshops) to determine the feasibility of 
their employment, or training for employment, in the competitive labor market. 
The commission makes a maximum effort to place such individuals in competitive 
employment, or training for such employment, whenever feasible.] 

sec.103.55. Individuals Determined to be Rehabilitated.
(a) The commission determines a client to be rehabilitated when <nl>the 
following requirements are met<ol> [such client]:
<nl>(1)<ol> the provision of services under the individual's IWRP has 
contributed to the achievement of the employment outcome; 
<nl>(2)<ol> [(1)] <nl>the employment outcome is consistent with the individual's 
strengths, resources, priorities, concerns, abilities, capabilities, interests, 
and informed choice<ol> [is provided appropriate vocational rehabilitation 
services in accordance with the individualized written rehabilitation program]; 
and 
<nl>(3)<ol> the employment outcome is in the most integrated setting possible, 
consistent with the individual's informed choice; 
<nl>(4)<ol> [(2)] <nl>the individual has maintained the employment outcome for a 
period of at least 90 days; and<ol> [is determined to have achieved a suitable 
employment objective which has been maintained for a period of time not less 
than 60 days.] 
<nl>(5)<ol> the individual and the rehabilitation counselor consider the 
employment outcome to be satisfactory and agree that the individual is 
performing well on the job. 
(b) After a client has been determined to be rehabilitated, the commission 
<nl>may provide<ol> [provides] postemployment services as required to maintain 
<nl>or regain<ol> suitable employment.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805864
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 105. Extended Rehabilitation Services Program
The Texas Rehabilitation Commission proposes amendments to sec.sec.105.1, 105.3-
105.5 and the repeal of sec.105.6, concerning extended rehabilitation services 
program. In accordance with the Appropriations Act, sec.167, the Commission has 
reviewed these sections and has determined that they should be readopted with 
changes. 
The sections are being amended and repealed in order to conform to the language 
of the Rehabilitation Act Amendments of 1994. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be conformance with the language of the Rehabilitation Act 
Amendments of 1994. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 

40 TAC sec.sec.105.1, 105.3-105.5
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.105.1. Purpose. 
(a) The purpose of the Extended Rehabilitation Services Program is to provide 
<nl>an array of employment support<ol> [rehabilitation] services to [severely 
handicapped] individuals <nl>with severe disabilities<ol> who, <nl>require 
intensive on-going support in order to be employed<ol> [on entering the program, 
are not capable of entering the competitive labor market but who may achieve 
maximum personal independence through the provisions of rehabilitation 
services]. 
(b) The state funded Extended Rehabilitation Services Program differs from the 
joint state/federal funded Vocational Rehabilitation Services Program in that an 
objective of the Extended Rehabilitation Services Program is to <nl>provide the 
job supports necessary to<ol> achieve<nl> gainful employment and<ol> maximum 
personal independence for [severely handicapped] individuals <nl>with severe 
disabilities<ol>. 

sec.105.3. Basic Requirements for Eligibility. 
<nl>To be eligible for Extended Rehabilitation Services, the applicant must have 
a severe physical or mental disability that is an impediment to employment 
without on-going support. The disability and the following criteria listed in 
paragraphs (1)-(4) of this section must be determined for ERS services. There 
must be a reasonable expectation that ERS services will result in the individual 
being able to sustain employment with on-going support. The individual with a 
severe disability must be:<ol> 
<nl>(1)<ol> capable of achieving an employment outcome; 
<nl>(2)<ol> of legal working age, for the type of employment, at the time of the 
IWRP; 
<nl>(3)<ol> a legal resident of Texas; and 
<nl>(4)<ol> able to sustain wage earnings of not less than 15% of minimum wage. 
[(a) An individual meets the basic requirement for eligibility if he is a 
severely handicapped individual and meets the criteria of sec.105.1(a) of this 
title (relating to Purpose).]
[(b) Basic living requirements may be considered as a requirement for 
eligibility.] 

sec.105.4. Ineligibility. 
An individual becomes ineligible for extended rehabilitation services when the 
provision of such programmed services would be ineffective in achieving their 
purpose of personal independence. When an individual becomes capable of entering 
the competitive labor market, the individual may either continue in the Extended 
Rehabilitation Services Program until closure in competitive employment 
<nl>or<ol>[;] be referred to the Vocational Rehabilitation Program for 
services[; or be provided services as a client of both programs, as appears in 
the best interests of the individual]. <nl>An applicant may be determined 
ineligible due to any of the following reasons listed in paragraphs (1)-(5) of 
this section:<ol> 
<nl>(1)<ol> failure to cooperate; 
<nl>(2)<ol> refused services; 
<nl>(3)<ol> transferred to another agency or TRC program; 
<nl>(4)<ol> failure to achieve 15% of minimum wage during the 18-month 
evaluation period; or 
<nl>(5)<ol> other reasons. 

sec.105.5. Services Provided. 
<nl>(a)<ol> Extended Rehabilitation Services include Employment Support Services 
and External Support Services. Employment Support Services help a client develop 
and maintain skills necessary to enter the labor market, are usually provided at 
the job site, and may not exceed $3,600 per year per client. Employment Support 
Services may include: 
<nl>(1)<ol> individual assessment; 
<nl>(2)<ol> on-the-job training in work and work related skills required to 
perform the job; and 
<nl>(3)<ol> on-going support and monitoring of the client's performance on the 
job. 
<nl>(b)<ol> External Support Services help individuals acquire, retain, and 
improve self-help, socialization, and adaptive skills necessary to maintain 
employment; are usually provided away from the job site; and may not exceed 
$3,600 per year per client. External Support Services may include the following: 
<nl>(1)<ol> money management; 
<nl>(2)<ol> mobility training; and 
<nl>(3)<ol> self-care and personal hygiene training.
[(a) The provision of extended rehabilitation services includes:] 
[(1) group living arrangements for room, board, clothing, evening and nighttime 
supervision, recreational activities, and transportation to and from work;] 
[(2) employment in sheltered workshops; and]
[(3) assistance in obtaining employment in the open or customary labor market 
within the client's capabilities.]
[(b) In providing extended rehabilitation services, the commission considers 
similar benefits from other programs or sources available to the client.] 
[(c) Services may be provided by contract with a public or private agency.] 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805865
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

40 TAC sec.105.6
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas 
Rehabilitation Commission or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 
sec.105.6. Client Contributions. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805866
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 107. Independent Living Services Program
40 TAC sec.sec.107.1, 107.2, 107.5
The Texas Rehabilitation Commission proposes amendments to sec.sec.107.1, 107.2, 
and 107.5, concerning independent living services program. In accordance with 
the Appropriations Act, sec.167, the Commission has reviewed these sections and 
has determined that they should be readopted with changes. 
Section 107.1 and sec.107.2 are being amended in order to conform to the 
language of the Rehabilitation Act Amendments of 1994. 
Section 107.5 is being amended to give a more detailed explanation of the 
availability of independent living services. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be conformance with the language of the Rehabilitation Act 
Amendments of 1994 and a more detailed explanation of the availability of 
independent living services. There will be no effect on small businesses. There 
is no anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.107.1. Purpose.
(a) The purpose of the Independent Living Services Program is to provide 
rehabilitation services to <nl>individuals with severe or catastrophic 
disabilities<ol> [the severely or catastrophically disabled,] in order that such 
persons may achieve a greater level of self-care and independent living. 
(b) The Independent Living Services Program is a [state funded program, but may 
be either state funded or a] joint state-federal program. [In the event that 
federal funds are available at a future date, all] <nl>All<ol> federal laws and 
regulations required by the acceptance of these funds by the state are 
applicable to these rules. 

sec.107.2. Basic Requirements for Eligibility. 
An individual meets the basic requirements for eligibility if he is <nl> a 
person with a severe<ol> [severely] or <nl>catastrophic<ol> [catastrophically] 
<nl>disability<ol> [disabled] under current published commission regulations and 
there is: 
(1)-(3) (No change.) 

sec.107.5. Availability of Services. 
Independent living services <nl>are provided on a first come first served basis. 
When the Commissioner deems necessary, expenditures of IL funds may be 
authorized for persons outside the stated service areas <ol>[may not be 
available to all applicants or on a statewide basis]. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805867
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 111. Medicaid Waiver Program for People <nl>Who Are<ol> [with] <nl>Deaf-
Blind<ol> [Deaf-Blindness] <nl> with<ol> [and] Multiple Disabilities
40 TAC sec.sec.111.1-111.4
The Texas Rehabilitation Commission proposes amendments to sec.sec.111.1-111.4, 
concerning Medicaid waiver program for people who are deaf-blind with multiple 
disabilities. In accordance with the Appropriations Act, sec.167, the Commission 
has reviewed these sections and has determined that they should be readopted 
with changes. 
The sections are being amended in order to conform to the language of the 
Rehabilitation Act Amendments of 1994. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be conformance with the language of the Rehabilitation Act 
Amendments of 1994. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 

sec.111.1. Purpose. 
The purpose of the Medicaid Waiver Program for People [with] <nl> who are Deaf-
Blind with<ol> [Deaf-Blindness and] Multiple Disabilities is to provide 
residential support to people who are deaf-blind with multiple disabilities by 
helping them attain self-sufficiency and independent living. The Texas 
Rehabilitation Commission also operates a parent training and summer outdoor 
training program which are not Medicaid programs. 

sec.111.2. Programs. 
Programs to serve people who are deaf-blind with multiple disabilities include 
the following: 
(1) (No change.) 
(2) a program of [parental] counseling for the [parents] <nl>families<ol> of 
<nl>individuals who are<ol> deaf-blind [individuals]; and 
(3) a summer outdoor training program for <nl>individuals who are<ol> deaf-blind 
[individuals]. 

sec.111.3. Introduction. 
Enrollment and provider payments for home and community-based services for 
people [with] <nl>who are deaf-blind<ol> [deaf-blindness and] <nl>with<ol> 
multiple disabilities are contingent upon approval by the Health Care Financing 
Administration. 

sec.111.4. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> A person [with] <nl>who is deaf-blind
<ol> [deaf-blindness and] <nl>with<ol> multiple disabilities must [have]: 
(A) [the presence of a deaf-blind multiple disability that] <nl>be deaf and 
legally blind and have another disability; these disabilities must constitute or 
result<ol> [constitutes or results] in a substantial impediment to the 
individual's ability to function independently in the family and community; and
(B) <nl>have<ol> a reasonable expectation that services will benefit the 
individual by improving his ability to function independently in the family and 
community; and 
(C) [the individual must] not be eligible for vocational rehabilitation (VR) 
services through the Texas Commission for the Blind (i.e., level of severity 
must be such that VR services will not result in employment) <nl> or TRC<ol>. 
<nl>(2)<ol> Deaf-blind--Any individual who: 
(A) has a central visual acuity of 20/200 or less in the better eye with 
corrective lenses, or a field defect such that the peripheral diameter of visual 
field sub-tends an angular distance no greater than 20 degrees, or a progressive 
visual loss having a prognosis leading to one or both of these conditions; and 
(B) has a chronic hearing impairment so severe that most speech cannot be 
understood with optimum amplification, or a progressive hearing loss having a 
prognosis leading to this condition. (An exception to this definition may be 
made for an individual with significant auditory and visual impairment with a 
poor prognosis, or for an individual whose ability to use hearing and/or vision 
is so limited, as a result of protracted inadequate use of either or both of 
these senses, that the individual functions as a deaf-blind person.)
<nl>(3)<ol> Participant--A person who receives home and community based support 
through the Medicaid Waiver Program for Persons with Deaf-Blindness and Multiple 
Disabilities (DB-MD). 
<nl>(4)<ol> Waiver program--A Medicaid program that provides home and community-
based services to persons with related conditions as an alternative to 
institutional care in accordance with waiver provisions of the Social Security 
Act, sec.1915(c) (42 United States Code sec.1396n).
<nl>(5)<ol> Waiver program services--Services provided under waiver provisions 
of the Social Security Act, sec.1915(c) (42 United States Code sec.1396n). 
<nl>(6)<ol> With multiple disabilities--In addition to deafness and blindness, 
the individual has one or more <nl>disabilities <ol> [other disabling 
conditions] which results in impairment to independent functioning. The 
combination of impairments must result in the same level of care criteria 
established by the State of Texas to certify individuals eligible for ICF-MR/RC 
VIII Services under the Title XIX State Plan. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805868
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 113. Comprehensive Rehabilitation Services
40 TAC sec.sec.113.1, 113.2, 113.4, 113.5
The Texas Rehabilitation Commission proposes amendments to sec.sec.113.1, 113.2, 
113.4, and 113.5, concerning comprehensive rehabilitation services. In 
accordance with the Appropriations Act, sec.167, the Commission has reviewed 
these sections and has determined that they should be readopted with changes. 
The sections are being amended to more closely align the language of these rules 
with the current Rehabilitation Services Manual. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be more closely aligned language to the current Rehabilitation 
Services Manual. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 
The amendments are proposed under the Texas Human Resources Code, Title 7, 
Chapter 111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, 
sec.167, which provides the Texas Rehabilitation Commission with the authority 
to promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.113.1. Purpose. 
(a) The purpose of this program is to provide payment for an initial period of 
comprehensive medical rehabilitation services for <nl> individuals<ol> [persons] 
with traumatic spinal cord injuries and/or traumatic brain injuries; outpatient 
services for <nl>individuals <ol> [persons] with traumatic spinal cord injuries 
and/or traumatic brain injuries; and post-acute services for persons with 
traumatic brain injury. The purpose is to enhance the quality of life of these 
individuals from the perspective of mobility, self-care, and the ability to 
function as independently as possible within the family and community. 
(b) (No change.) 

sec.113.2. Basic Requirements for Eligibility. 
Basic criteria for eligibility include: 
(1)-(2) (No change.) 
(3) individual must be at least 16 years of age <nl> by the time the IWRP is 
completed<ol>; 
(4) individual must be a citizen or immigrant alien of the United States <nl>and 
a resident of Texas for at least six months, or have a family member living in 
the state for at least six months<ol>; 
(5) individual must not currently be eligible for <nl> another<ol> [the 
Vocational Rehabilitation] <nl>Texas Rehabilitation Commission<ol> Program; 
[and] 
(6) individual must be willing to accept treatment<nl>; and<ol> [participate.] 
<nl>(7)<ol> individual must be sufficiently medically stable to actively 
participate in a program of services. 

sec.113.4. Services Provided. 
(a) (No change.) 
(b) Outpatient services. Services may include: 
(1)-(7) (No change.) 
[(8) behavioral therapy;]
<nl>(8)<ol> [(9)] clinic follow-up visits;
<nl>(9)<ol> [(10)] orthotic and prosthetic devices; 
<nl>(10)<ol> [(11)] communication devices; and 
<nl> (11)<ol> [(12)] drugs and medical supplies. 
(c) Post-acute services (residential or nonresidential--limited to individuals 
with traumatic brain injury). Services may include: 
(1)-(4) (No change.) 
[(5) biofeedback; and] 
<nl>(5)<ol> [(6)] traditional therapies.
<nl>(6)<ol> orthotic and prosthetic devices; 
<nl>(7)<ol> clinic follow-up visits; and 
<nl>(8)<ol> drugs and medical supplies.

sec.113.5. Limitations of Services. 
The following limitations apply to the Comprehensive Rehabilitation Services 
(CRS) Program. 
(1) (No change.) 
(2) Outpatient services: 
(A)-(C) (No change.) 
(D) services can be provided in any combination of those listed <nl> in this 
section<ol> [above], but the total number of hours of <nl> physical therapy, 
occupational therapy, and speech therapy<ol> [services] paid with CRS funds will 
not exceed 120 hours. 
(3) (No change.) 
(4) <nl>At the time of discharge from services, <ol>[When] prescribed[,] drugs 
and medical supplies may not exceed a 30-day supply. 
(5) If, during the <nl>course of <ol>[comprehensive medical rehabilitation 
service,] <nl>services,<ol> the individual is not making the expected progress, 
the case will be re-evaluated to determine whether continued sponsorship is 
appropriate. 
(6) If, during the course of [comprehensive medical rehabilitation] services, 
the individual becomes eligible for another of the commission's programs 
(independent living services, extended rehabilitation services, vocational 
rehabilitation, etc.), sponsorship of comprehensive medical rehabilitation 
services will be shifted to that program immediately after eligibility 
determination.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805869
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 115. Memoranda of Understanding with Other State Agencies
The Texas Rehabilitation Commission proposes the repeal of sec.115.6 and an 
amendment to sec.115.8, concerning memoranda of understanding with other state 
agencies. In accordance with the Appropriations Act, sec.167, the Commission has 
reviewed these sections and has determined that they should be readopted with 
changes. 
Section 115.8 is being amended to reflect changes in the names of various state 
agencies. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be an updated rule which reflects the changes in the names of 
various state agencies. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 

40 TAC sec.115.6
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas 
Rehabilitation Commission or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 
sec.115.6. Investigation of Abuse, Neglect, or Exploitation.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805870
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

40 TAC sec.115.8
The amendment is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code. 
No other statute, article, or code is affected by this proposal. 

sec.115.8. To Define the Role of the Texas Rehabilitation Commission for the 
Provision of Services Needed To Prepare Students Enrolled in Special Education 
to Transition from Public School to Adult Life. 
(a) The Texas Rehabilitation Commission adopts by reference a joint memorandum 
of understanding with the Texas Commission for the Blind (TCB), the Texas 
<nl>Workforce<ol> [Employment] Commission <nl> (TWC)<ol> [(TEC)], the Texas 
Department of Human Services (TDHS), the Texas Department of Mental Health and 
Mental Retardation (TDMHMR), <nl> Texas Protective and Regulatory Services 
(TPRS)<ol> and the Texas Education Agency (TEA). The purpose of the memorandum 
of understanding is to establish the respective responsibility of each agency 
for the provision of the services necessary to prepare students enrolled in 
special education for a successful transition to life outside the public school 
system. 
(b) (No change.) 
(c) Charles E. Harrison, Jr., executive assistant commissioner for financial and 
planning services, has determined that [for the first five-year period the 
proposed section will be in effect,] there will be fiscal implications for state 
and local governments as a result of enforcing or administering the section. The 
impact on the Texas Rehabilitation Commission results from the cost of providing 
individual transitional planning and services to appropriate students enrolled 
in special education. The yearly operating funds available for fiscal year 
<nl>1998<ol> [1991] are a total of <nl>$407,000.<ol> [$900,000 (staff costs are 
estimated at $500,000 and additional services at $400,000). Funds will be 
requested to implement increased statewide coverage in fiscal year 1992 and 
fiscal year 1993 ($3.6 million and $7.4 million, respectively), but such funding 
is subject to legislative approval.] 
(d) (No change.) 
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805871
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

CHAPTER 116. Advisory Committees/Councils
The Texas Rehabilitation Commission proposes an amendment to sec.116.5 and the 
repeal of sec.116.6 and sec.116.7, concerning advisory committees/councils. In 
accordance with the Appropriations Act, sec.167, the Commission has reviewed 
these sections and has determined that they should be readopted with changes.
The sections are being amended and repealed to reflect the language of TRC's 
Administrative Policy and Procedures Manual. 
Charles E. Harrison, Jr., Deputy Commissioner for Financial Services, has 
determined that for the first five-year period the sections are in effect, there 
will be no fiscal implications for state or local government. 
Mr. Harrison also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be updated regulations to reflect the language of TRC's 
Administrative Policy and Procedures Manual. There will be no effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the sections as proposed. 
Comments on the proposal may be submitted to Roger Darley, Assistant General 
Counsel, Texas Rehabilitation Commission, 4900 North Lamar Boulevard, Suite 
7300, Austin, Texas 78751. 

40 TAC sec.116.5
The amendment is proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 

sec.116.5. Community Rehabilitation Programs Advisory Committee. 
(a)-(b) (No change.) 
(c) Tasks. The committee advises the commission regarding:
<nl>(1)<ol> development and maintenance of standards for service providers in 
the areas of: 
<nl>(A)<ol> accessibility; 
<nl>(B)<ol> administration; 
<nl>(C)<ol> staff qualifications; and 
<nl>(D)<ol> service outcomes; 
<nl>(2)<ol> the process for monitoring the effectiveness of CRPs and similar 
service providers; 
<nl>(3)<ol> the training needs of CRP and other service provider personnel; and 
<nl>(4)<ol> other matters related to CRPs and other similar service providers. 
[(1) utilization of community rehabilitation programs to the maximum extent 
feasible;] 
[(2) establishing and monitoring of standards for the services provided by 
community rehabilitation programs; and] 
[(3) assessing the capacity and effectiveness of community rehabilitation 
programs.] 
(d) Reports. The committee provides recommendations to the commission [in 
periodic reports to the deputy commissioner for rehabilitation services] <nl>by 
means of the minutes of the committee's meetings<ol>.
(e) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805872
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 9, 1998
For further information, please call: (512) 424-4050

40 TAC sec.116.6, sec.116.7
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Rehabilitation Commission or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the Texas Human Resources Code, Title 7, Chapter 
111, sec.111.018 and sec.111.023, House Bill Number 1, Article IX, sec.167, 
which provides the Texas Rehabilitation Commission with the authority to 
promulgate rules consistent with Title 7, Texas Human Resources Code.
No other statute, article, or code is affected by this proposal. 
sec.116.6. Increased Client Choice Advisory Committee.
sec.116.7. Regional Consumer Advisory Committee.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805873
Charles Schiesser
Chief of Staff
Texas Rehabilitation Commission
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 424-4050

PART XVI. Council on Sex Offender
CHAPTER 510.Sex Offender Treatment Provider Registry
40 TAC sec.sec.510.1-510.9
(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 Council on Sex 
Offender or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Council on Sex Offender Treatment (council) proposes the repeal of 
sec.sec.510.1-510.9, concerning the sex offender treatment provider registry. 
Specifically, the sections cover definitions; registry criteria; registry 
renewal; fees; application availability; documentation of experience and 
training; revoke, refuse, or refuse to renew a registry listing; judicial review 
of exclusion from registry; and registry inclusion based on pre-existing status. 
House Bill (HB) 2699, 75th Legislature, 1997, transferred the administration and 
enforcement required by the council (Texas Civil Statutes, Article 4413(51)), to 
the Texas Department of Health (department) effective September 1, 1997. Section 
17 of this bill transfers all funds, property, records, and employees to the 
department as of September 1, 1997. The rules being repealed in 40 Texas 
Administrative Code (TAC) Chapter 510 are hereby proposed in 22 TAC Chapter 810, 
sec.sec.810.1-810.9. The rules are proposed in 22 TAC Chapter 810 in order to be 
regrouped with other boards administratively attached to the department and are 
renumbered under one chapter instead of four chapters. A copy of the conversion 
chart showing the repealed rules and new rules is located in the "In Addition" 
section of this issue. 
Ms. Donna Flippin, Acting Executive Director, has determined that for the first 
five-year period the sections are in effect, there will be no fiscal 
implications for state or local government as a result of the repeal. 
Ms. Flippin has also determined that for each of the first five years the 
sections are in effect, the public benefits anticipated are compliance with HB 
2699, 75th Legislature, 1997, and continuation of the registration of sex 
offender treatment providers. There are no anticipated economic costs to small 
or large businesses or to persons who will be affected by the repeal. No effect 
on local employment is anticipated. 
Comments on the proposed repeal may be submitted to Ms. Donna Flippin, 
Professional Licensing & Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-4530. Comments will 
be accepted for 30 days following the date of publication of the proposed repeal 
in the Texas Register. A public hearing has been scheduled for 5:30 p.m., 
Tuesday, May 26, 1998, in Conference Room S-402, Texas Department of Health, 
located at the Exchange Building, 8407 Wall Street, Austin, Texas 78754. 
The repeals are proposed under the Act, Texas Civil Statutes, Article 4413(51). 
Section 2(b) provides the council with the authority to adopt rules consistent 
with the Act and sec.8 provides the council with the authority to adopt rules 
concerning the registration requirements and procedures for sex offender 
treatment providers on the registry. 
The proposed repeal affects Texas Civil Statutes, Article 4413(51). 
sec.510.1.Definitions. 
sec.510.2. Registry Criteria. 
sec.510.3. Registry Renewal.
sec.510.4.Fees.
sec.510.5. Application Availability
sec.510.6.Documentation of Experience and Training
sec.510.7. Revoke, Refuse, or Refuse to Renew 
sec.510.8. Judicial Review of Exclusion from Registry
sec.510.9.Registry Inclusion Based on Pre-existing Status 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805876
Collier M. Cole, Ph.D.
Chairperson
Council of Sex Offender
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

CHAPTER 511.Criminal Background Check Security
40 TAC sec.sec.511.1-511.4
(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 Council on Sex 
Offender or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Council on Sex Offender Treatment (council) proposes the repeals of 
sec.sec.511.1-511.4, concerning the criminal background check security. 
Specifically, the sections cover access to criminal history records; destruction 
of criminal history records; records of the council; and frequency of criminal 
background checks. 
House Bill (HB) 2699, 75th Legislature, 1997, transferred the administration and 
enforcement required by the council (Texas Civil Statutes, Article 4413(51)), to 
the Texas Department of Health (department) effective September 1, 1997. Section 
17 of this bill transfers all funds, property, records, and employees to the 
department as of September 1, 1997. The rules being repealed in 40 Texas 
Administrative Code (TAC) Chapter 511 are hereby proposed in 22 TAC Chapter 810, 
sec.sec.810.31-810.34. The rules are proposed in 22 TAC Chapter 810 in order to 
be regrouped with other boards administratively attached to the department and 
are renumbered under one chapter instead of four chapters. A copy of the 
conversion chart showing the repealed rules and new rules is located in the "In 
Addition" section of this issue. 
Ms. Donna Flippin, Acting Executive Director, has determined that for the first 
five-year period the sections are in effect, there will be no fiscal 
implications for state or local government as a result of the repeal. 
Ms. Flippin has also determined that for each of the first five years the 
sections are in effect, the public benefits anticipated are compliance with HB 
2699, 75th Legislature, 1997, and continuation of the registration of sex 
offender treatment providers. There are no anticipated economic costs to small 
or large businesses or to persons who will be affected by the repeal. No effect 
on local employment is anticipated.
Comments on the proposed repeal may be submitted to Ms. Donna Flippin, 
Professional Licensing & Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-4530. Comments will 
be accepted for 30 days following the date of publication of the proposed repeal 
in the Texas Register. A public hearing has been scheduled for 5:30 p.m., 
Tuesday, May 26, 1998, in Conference Room S-402, Texas Department of Health, 
located at the Exchange Building, 8407 Wall Street, Austin, Texas 78754. 
The repeals are proposed under the Act, Texas Civil Statutes, Article 4413(51). 
Section 2(b) provides the council with the authority to adopt rules consistent 
with the Act and sec.16(f) provides the council with the authority to adopt 
rules to collect and destroy information concerning criminal backgrounds. 
The proposed repeal affects Texas Civil Statutes, Article 4413(51). 
sec.511.1. Access to Criminal History Records. 
sec.511.2.Records.
sec.511.3.Destruction of Criminal History Records.
sec.511.4.Frequency of Criminal Background Check.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805877
Collier M. Cole, Ph.D.
Chairperson
Council of Sex Offender
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

CHAPTER 512.Standards of Practice
40 TAC sec.sec.512.1-512.3
(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 Council on Sex 
Offender or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Council on Sex Offender Treatment (council) proposes the repeals of 
sec.sec.512.1-512.3, concerning the standards of practice. Specifically, the 
sections cover the purpose of the council; council's assertions; and issues to 
be addressed in treatment. 
House Bill (HB) 2699, 75th Legislature, 1997, transferred the administration and 
enforcement required by the council (Texas Civil Statutes, Article 4413(51)), to 
the Texas Department of Health (department) effective September 1, 1997. Section 
17 of this bill transfers all funds, property, records, and employees to the 
department as of September 1, 1997. The rules being repealed in 40 Texas 
Administrative Code (TAC) Chapter 512 are hereby proposed in 22 TAC Chapter 810, 
sec.sec.810.61-810.63. The rules are proposed in 22 TAC Chapter 810 in order to 
be regrouped with other boards administratively attached to the department and 
are renumbered under one chapter instead of four chapters. A copy of the 
conversion chart showing the repealed rules and new rules is located in the "In 
Addition" section of this issue. 
Ms. Donna Flippin, Acting Executive Director, has determined that for the first 
five-year period the sections are in effect, there will be no fiscal 
implications for state or local government as a result of the repeal. 
Ms. Flippin has also determined that for each of the first five years the 
sections are in effect, the public benefits anticipated are compliance with HB 
2699, 75th Legislature, 1997, and continuation of the registration of sex 
offender treatment providers. There are no anticipated economic costs to small 
or large businesses or to persons who will be affected by the repeal. No effect 
on local employment is anticipated. 
Comments on the proposed repeal may be submitted to Ms. Donna Flippin, 
Professional Licensing & Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-4530. Comments will 
be accepted for 30 days following the date of publication of the proposed repeal 
in the Texas Register. A public hearing has been scheduled for 5:30 p.m., 
Tuesday, May 26, 1998, in Conference Room S-402, Texas Department of Health, 
located at the Exchange Building, 8407 Wall Street, Austin, Texas 78754.
The repeals are proposed under the Act, Texas Civil Statutes, Article 4413(51). 
Section 2(b) provides the council with the authority to adopt rules consistent 
with the Act. 
The proposed repeal affects Texas Civil Statutes, Article 4413(51). 
sec.512.1.Introduction.
sec.512.2.CSOT Assertions. 
sec.512.3. Issues To Be Addressed in Treatment. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805878
Collier M. Cole, Ph.D.
Chairperson
Council of Sex Offender
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

CHAPTER 513.Code of Professional Ethics
40 TAC sec.sec.513.1-513.2
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Council on Sex 
Offender or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Council on Sex Offender Treatment (council) proposes the repeals of 
sec.sec.513.1-513.2, concerning the professional code of ethics. Specifically, 
the sections require that the providers will establish and maintain the highest 
level of professional standards related to the assessment and treatment of sex 
offenders. 
House Bill (HB) 2699, 75th Legislature, 1997, transferred the administration and 
enforcement required by the council (Texas Civil Statutes, Article 4413(51)), to 
the Texas Department of Health (department) effective September 1, 1997. Section 
17 of this bill transfers all funds, property, records, and employees to the 
department as of September 1, 1997. The rules being repealed in 40 Texas 
Administrative Code (TAC) Chapter 513 are hereby proposed in 22 TAC Chapter 810, 
sec.sec.810.91-810.92. The rules are proposed in 22 TAC Chapter 810 in order to 
be regrouped with other boards administratively attached to the department and 
are renumbered under one chapter instead of four chapters. A copy of the 
conversion chart showing the repealed rules and new rules is located in the "In 
Addition" section of this issue. 
Ms. Donna Flippin, Acting Executive Director, has determined that for the first 
five-year period the sections are in effect, there will be no fiscal 
implications for state or local government as a result of the repeal. 
Ms. Flippin has also determined that for each of the first five years the 
sections are in effect, the public benefits anticipated are compliance with HB 
2699, 75th Legislature, 1997, and continuation of the registration of sex 
offender treatment providers. There are no anticipated economic costs to small 
or large businesses or to persons who will be affected by the repeal. No effect 
on local employment is anticipated. 
Comments on the proposed repeal may be submitted to Ms. Donna Flippin, 
Professional Licensing & Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3183, (512) 834-4530. Comments will 
be accepted for 30 days following the date of publication of the proposed repeal 
in the Texas Register. A public hearing has been scheduled for 5:30 p.m., 
Tuesday, May 26, 1998, in Conference Room S-402, Texas Department of Health, 
located at the Exchange Building, 8407 Wall Street, Austin, Texas 78754.
The repeals are proposed under the Act, Texas Civil Statutes, Article 4413(51). 
Section 2(b) provides the council with the authority to adopt rules consistent 
with the Act. 
The proposed repeal affects Texas Civil Statutes, Article 4413(51). 
sec.513.1.Code of Professional Ethics.
sec.513.2.Code of Ethics . 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 27, 1998.
TRD-9805879
Collier M. Cole, Ph.D.
Chairperson
Council of Sex Offender
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 458-7236

PART XIX. Texas Department of Protective and Regulatory Services
CHAPTER 710.Protection of Clients and Staff
SUBCHAPTER B.Client Abuse and Neglect in Community Mental Health and Mental 
Retardation Centers
40 TAC sec.sec.710.41-710.50
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Protective and Regulatory Services or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Protective and Regulatory Services (TDPRS) proposes the 
repeal of sec.sec.710.41-710.50, concerning purpose, application, definitions, 
client abuse and neglect defined, administrative enforcement, responsibilities 
of the office of facility investigation, appeals process, training in prevention 
of client abuse and/or neglect, references, and distribution; and proposes new 
sec.sec.710.41-710.55, concerning purpose, application, definitions, abuse, 
neglect, and exploitation of an adult defined, abuse, neglect, and exploitation 
of a child defined, responsibilities of community centers, adult protective 
services investigator, completion of investigation, center contractors and 
independent school district employees, functions of office of adult protective 
services, request for review of finding; request for appeal, confidentiality of 
investigative process and report, retention of investigative reports, 
references, and distribution, in its Protection of Clients and Staff chapter. 
The purpose of the repeals and new sections is to update the rules regarding 
investigations of abuse, neglect, and exploitation of persons served by 
community mental health and mental retardation centers. TDPRS is also changing 
the title of Subchapter B to be Abuse, Neglect, and Exploitation of Persons 
Served by Community Mental Health and Mental Retardation Centers. 
Cindy Brown, Budget and Analysis Division Director, has determined that for the 
first five-year period the proposed sections will be in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. 
Ms. Brown also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be more efficient procedures for the investigation of abuse, 
neglect, and exploitation in community mental health and mental retardation 
centers. There will be no effect on small or large businesses because the 
sections only apply to mental health and mental retardation community centers, 
which are governmental entities. There is no anticipated economic cost to 
persons who are required to comply with the proposed sections. 
Questions about the content of the proposal may be directed to Marc Mullins at 
(512) 438-5505 in TDPRS's Adult Protective Services section. Written comments on 
the proposal may be submitted to Supervisor, Rules and Handbooks Unit-212, Texas 
Department of Protective and Regulatory Services E-205, P.O. Box 149030, Austin, 
Texas 78714-9030, within 30 days of publication in the Texas Register. 
The repeals are proposed under the Human Resources Code, Title 2, Chapter 48, 
which provides the department with the right to investigate reports of abuse, 
exploitation, or neglect of an elderly or disabled person. The repeals implement 
sec.48.081(c) of the Human Resources Code, which gives TDPRS the authority to 
investigate in community mental health and mental retardation centers. 
sec.710.41.Purpose.
sec.710.42.Application. 
sec.710.43.Definitions.
sec.710.44.Client Abuse and Neglect Defined.
sec.710.45. Administrative Enforcement.
sec.710.46.Responsibilities of the Office of Facility Investigation. 
sec.710.47.Appeals Process. 
sec.710.48. Training in Prevention of Client Abuse and/or Neglect. 
sec.710.49.References. 
sec.710.50. Distribution.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805793
C. Ed Davis
Deputy Director, Legal Services
Texas Department of Protective and Regulatory Services
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 438-3765

40 TAC sec.sec.710.41-710.55
The new sections are proposed under the Human Resources Code, Title 2, Chapter 
48, which provides the department with the right to investigate reports of 
abuse, exploitation, or neglect of an elderly or disabled person. The new 
sections implement sec.48.081(c) of the Human Resources Code, which gives TDPRS 
the authority to investigate in community mental health and mental retardation 
centers. 

sec.710.41.Purpose.
The purpose of this subchapter is to define abuse, neglect, and exploitation of 
a person receiving services from a community mental health and mental 
retardation center and to describe procedures for its report and investigation.

sec.710.42.Application.
The provisions of this subchapter shall apply to adult protective services 
investigations of abuse, neglect, and exploitation of persons served by 
community centers, their agents, and contractors, including adults and children, 
unless another investigative branch of the Texas Department of Protective and 
Regulatory Services or another state agency has responsibility for the 
investigation.

sec.710.43. Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
(1) Adult - A person 18 years of age or older. 
(2) Adult Protective Services (APS) investigator - An employee of the Texas 
Department of Protective and Regulatory Services with expertise and demonstrated 
competence in conducting investigations. 
(3) Agent - An individual who is not an employee, but who is working under the 
auspices of the community center, such as a consultant, volunteer, or student. 
(4) Allegation - A report by a person believing or having knowledge that a 
person served has been or is in a state of abuse, exploitation, or neglect as 
defined in this subchapter. 
(5) Chief executive officer (CEO) - The head of any organization or entity 
associated by contract in a working alliance with a community center to provide 
community-based services. 
(6) Child - A person under 18 years of age who is not and has not been married 
and who has not had the disabilities of minority removed for general purposes. 
(7) Clinical practice - Relates to issues of potentially or allegedly unsafe 
nursing, dental, or medical practice or violations of the Nursing Practice Act, 
Licensed Vocational Nurse Title Act, Dental Practice Act, or Medical Practice 
Act. These include acts or omissions of the physician, dentist, or nurse which 
result from a lack of competence in his/her profession, impaired status, or 
failure to provide adequate medical, dental, or nursing care to a person served. 
(8) Community center - A community MHMR center established under the Texas 
Health and Safety Code, Title 7, Chapter 534, Subchapter A.
(9) Confirmed - Term used to describe an allegation which is supported by the 
preponderance of evidence. 
(10) Contractor - Any organization or entity associated by contract in a working 
alliance with a community center to provide community-based services. 
(11) Department - The Texas Department of Protective and Regulatory Services. 
(12) Employee - Any person employed by a community center for a specific job 
position or to be part of a "pool" for specific job positions; expected to work 
on a continuous basis, seasonally, or to perform work of a transitory nature or 
foreseeable end and meet certain minimum performance and time-on-job 
expectations; and paid from a budgeted position in the salary schedule and 
through a payroll process. A person receiving payment as a "vocational trainee" 
in a properly authorized vocational training program is not considered an 
employee. 
(13) Executive director - The head of a community center or a staff member 
temporarily or permanently appointed to assume the designated responsibilities 
of the executive director. 
(14) Incitement - To spur to action or instigate into activity; implies 
responsibility for initiating the actions of another. 
(15) Inconclusive - Term used to describe an allegation leading to no conclusion 
or definite result due to lack of witnesses or other relevant evidence. 
(16) Mental health service provider - Pursuant to sec.81.001 of the Texas Civil 
Practices and Remedies Code, an individual, licensed or unlicensed, who performs 
or purports to perform mental health services, including a: 
(A) licensed social worker as defined by sec.50.001, Human Resources Code; 
(B) chemical dependency counselor as defined by sec.1, Chapter 635, Acts of the 
72nd Legislature, Regular Session, 1991 (Article 4512o, Vernon's Texas Civil 
Statutes); 
(C) licensed professional counselor as defined by sec.2, Licensed Professional 
Counselor Act (Article 4512g, Vernon's Texas Civil Statutes);
(D) licensed marriage and family therapist as defined by sec.2, Licensed 
Marriage and Family Therapist Act (Article 4512c-1. Vernon's Texas Civil 
Statutes); 
(E) member of the clergy; 
(F) physician who is "practicing medicine" as defined by sec.1.03, Medical 
Practice Act (Article 4495b, Vernon's Texas Civil Statutes); 
(G) psychologist offering "psychological services" as defined by sec.2, 
Psychologists' Certification and Licensing Act (Article 4512c. Vernon's Texas 
Civil Statutes); or 
(H) registered nurse or licensed vocational nurse as defined by law. 
(17) Non-serious physical injury - Any injury determined not to be serious by 
the appropriate medical personnel who examined the person served. Examples of 
non-serious physical injuries include, but are not limited to, the following: 
superficial laceration, contusion, or abrasion. 
(18) Perpetrator - The person who has committed an act of abuse, neglect, or 
exploitation. 
(19) Perpetrator unknown - Term used to describe instances in which abuse or 
neglect is evident but positive identification of the responsible person(s) 
cannot be made, and in which self-injury has been eliminated as the cause. 
(20) Person served - Any person registered or assigned in the Client Assignment 
and Registration (CARE) system. 
(21) Preponderance of evidence - The greater weight of evidence, or evidence 
which is more credible and convincing to the mind.
(22) Prevention and Management of Aggressive Behavior (PMAB) - The Texas 
Department of Mental Health and Mental Retardation's proprietary risk management 
program which uses the least intrusive, most effective options to reduce the 
risk of injury for persons served and for staff from acts or potential acts of 
aggression. 
(23) Reporter - The person filing a report of alleged abuse, neglect, or 
exploitation. 
(24) Serious physical injury - Any injury determined to be serious by the 
appropriate medical personnel who examined the person served. Examples of 
serious physical injuries include, but are not limited to, the following: 
dislocation of any joint; internal injury; nonsuperficial contusion; concussion; 
first, second, or third degree burn; or any laceration requiring sutures. 
(25) Sexual abuse - Any sexual activity involving an employee, agent, or 
contractor and a person served. Sexual activity includes but is not limited to: 
(A) kissing with sexual intent; 
(B) hugging with sexual intent; 
(C) stroking with sexual intent; 
(D) fondling with sexual intent; 
(E) oral sex or sexual intercourse; 
(F) request or suggestion or encouragement for the performance of sex; 
(G) sexual exploitation as defined in this section; and 
(H) sexual assault as defined in sec.22.011 of the Texas Penal Code. 
(26) Sexual exploitation - A coercive, manipulative, or otherwise exploitative 
pattern, practice, or scheme of conduct, which may include sexual contact, that 
can be reasonably construed as being for the purposes of sexual arousal or 
gratification or sexual abuse of any person. The term does not include obtaining 
information about a patient's sexual history within standard accepted practice. 
(27) Unconfirmed - Term used to describe an allegation in which a preponderance 
of evidence exists to prove that abuse, neglect, or exploitation did not occur. 
(28) Unfounded - Term used to describe an allegation that is spurious or 
patently without factual basis. 
(29) Victim - A person who is reported to have been abused, neglected, or 
exploited. 

sec.710.44.Abuse, Neglect, and Exploitation of an Adult Defined.
(a) For the purposes of this subchapter, abuse, neglect, and exploitation of an 
adult are defined as follows when the alleged perpetrator is an employee, agent, 
contractor, or is unknown. 
(1) Abuse includes: 
(A) any act or failure to act performed knowingly, recklessly, or intentionally, 
including incitement to act, which caused or may have caused physical injury or 
death to a person served; 
(B) any act of inappropriate or excessive force or corporal punishment, 
regardless of whether the act results in an injury to a person served; 
(C) any use of chemical or bodily restraints not in compliance with federal and 
state laws and regulations; 
(D) sexual abuse; or 
(E) any act or use of verbal or other communication (including gestures) to: 
(i) curse, vilify, or degrade a person served; or 
(ii) threaten a person served with physical or emotional harm;
(2) Neglect means a negligent act or omission by any individual responsible for 
providing services to a person served, which caused or may have caused physical 
or emotional injury or death to a person served, or which placed a person served 
at risk of physical or emotional injury or death. Neglect includes, but is not 
limited to the failure to: 
(A) establish or carry out an appropriate individual program plan or treatment 
plan for a person served; 
(B) provide adequate nutrition, clothing, or health care to a person served in 
an in-patient or residential program; or 
(C) provide a safe environment for a person served, including the failure to 
maintain adequate numbers of appropriately trained staff. 
(3) Exploitation means the illegal or improper act or process of using a person 
served or the resources of a person served for monetary or personal benefit, 
profit, or gain. 
(b) Abuse, neglect, or exploitation does not include: 
(1) the proper use of restraints or seclusion, including prevention and 
management of aggressive behavior (PMAB), and the approved application of 
behavior modification techniques, or other actions taken in accordance with the 
written policies and procedures of the center; 
(2) actions an employee, agent, or contractor may reasonably believe to be 
immediately necessary to avoid imminent harm to self, persons served, or other 
individuals, if such actions are limited only to those actions reasonably 
believed to be necessary under the existing circumstances. Such actions do not 
include acts of unnecessary force; or 
(3) general complaints (for example, regarding rights violations, theft of 
property, the daily administrative operations, the failure to carry out 
individual program/treatment plans, or the failure to maintain adequate numbers 
of appropriately trained staff) that do not relate to a specific incident or 
allegation involving a specific person served. (Within 24 hours of receipt of 
such a complaint, the adult protective services (APS) investigator refers the 
complaint to the executive director, using the Adult Protective Services 
Referral form, who shall ensure the complaint is investigated administratively.)

sec.710.45. Abuse, Neglect, and Exploitation of a Child Defined. 
(a) For the purposes of this subchapter, abuse, neglect, and exploitation of a 
child are defined as follows when the alleged perpetrator is an employee, agent, 
contractor, or is unknown. 
(1) Abuse of a child includes the following acts or omissions:
(A) mental or emotional injury to a child that results in an observable and 
material impairment in the child's growth, development, or psychological 
functioning; 
(B) causing or permitting the child to be in a situation in which the child 
sustains a mental or emotional injury that results in an observable and material 
impairment in the child's growth, development, or psychological functioning; 
(C) physical injury that results in substantial harm to the child, or the 
genuine threat of substantial harm from physical injury to the child, including 
an injury that is at variance with the history or explanation given and 
excluding an accident or reasonable discipline by a parent, guardian, or 
managing or possessory conservator that does not expose the child to a 
substantial risk of harm; 
(D) failure to make a reasonable effort to prevent an action by another person 
that results in physical injury that results in substantial harm to the child; 
(E) sexual conduct harmful to a child's mental, emotional, or physical welfare; 
(F) failure to make a reasonable effort to prevent sexual conduct harmful to a 
child; 
(G) compelling or encouraging the child to engage in sexual conduct as defined 
by sec.43.01, Penal Code; 
(H) causing, permitting, encouraging, engaging in, or allowing the 
photographing, filming, or depicting of the child if the person knew or should 
have known that the resulting photograph, film, or depiction of the child is 
obscene as defined by sec.43.21, Penal Code, or pornographic; 
(I) the current use by a person of a controlled substance as defined by Chapter 
481, Health and Safety Code, in a manner or to the extent that the use results 
in physical, mental, or emotional injury to a child; or 
(J) causing, expressly permitting, or encouraging a child to use a controlled 
substance as defined by Chapter 481, Health and Safety Code. 
(2) Neglect of a child includes: 
(A) leaving a child in a situation where the child would be exposed to a 
substantial risk of physical or emotional harm, without arranging for necessary 
care for the child, and a demonstration of an intent not to return by a parent, 
guardian, or managing or possessory conservator of the child; 
(B) the following acts or omissions: 
(i) placing the child in or failing to remove the child from a situation that a 
reasonable person would realize requires judgment or actions beyond the child's 
level of maturity, physical condition, or mental abilities and that results in 
bodily injury or a substantial risk of immediate harm to the child; or 
(ii) the failure to seek, obtain, or follow through with medical care for the 
child, with the failure resulting in or presenting a substantial risk of death, 
disfigurement, or bodily injury or with the failure resulting in an observable 
and material impairment to the growth, development, or functioning of the child; 
or 
(iii) the failure to provide a child with food, clothing, or shelter necessary 
to sustain the life or health of the child, excluding failure caused primarily 
by financial inability unless relief services had been offered and refused; or 
(iv) placing a child in or failing to remove the child from a situation in which 
the child would be exposed to a substantial risk of sexual conduct harmful to 
the child; or 
(v) the failure by the person responsible for a child's care, custody, or 
welfare to permit the child to return to the child's home without arranging for 
the necessary care for the child after the child has been absent from the home 
for any reason, including having been in residential placement or having run 
away. 
(3) Exploitation means the illegal or improper act or process of using a person 
served or the resources of a person served for monetary or personal benefit, 
profit, or gain. 
(b) Abuse does not include: 
(1) the proper use of restraints or seclusion, including prevention and 
management of aggressive behavior (PMAB), and the approved application of 
behavior modification techniques, or other actions taken in accordance with the 
written policies and procedures of the center; 
(2) actions an employee, agent, or contractor may reasonably believe to be 
immediately necessary to avoid imminent harm to self, persons served, or other 
individuals if such actions are limited only to those actions reasonably 
believed to be necessary under the existing circumstances. Such actions do not 
include acts of unnecessary force; or 
(3) general complaints (for example, regarding rights violations, theft of 
property, the daily administrative operations, the failure to carry out 
individual program/treatment plans, or the failure to maintain adequate numbers 
of appropriately trained staff) that do not relate to a specific incident or 
allegation involving a specific person served. (Within 24 hours of receipt of 
such a complaint, the adult protective services (APS) investigator refers the 
complaint to the executive director, using the Adult Protective Services 
Referral form, who shall ensure the complaint is investigated administratively.)

sec.710.46.Responsibilities of Community Centers. 
(a) Each community center shall require that its employees, agents, and 
contractors who suspect or have knowledge of abuse, neglect, or exploitation of 
a person served make a verbal report to the Texas Department of Protective and 
Regulatory Services (TDPRS) immediately, if possible, but in no case more than 
one hour after suspicion or after learning of the incident, by calling 1-800-
647-7418, unless jurisdiction to investigate rests with another investigative 
branch of TDPRS or with another state agency. 
(b) Each community center shall require that any evidence related to an 
allegation is appropriately preserved and protected in accordance with 
instructions from TDPRS. 

sec.710.47. Adult Protective Services (APS) Investigator. 
(a) APS investigator. An APS investigator will conduct all investigations of 
abuse, neglect, and exploitation, unless another investigative branch of the 
department or another state agency has responsibility for the investigation. 
(b) Training. APS investigators will receive appropriate training in issues 
related to the efficient and effective investigation of allegations of abuse, 
neglect, and exploitation. Investigators will be oriented to issues pertaining 
to individuals with disabilities and how to communicate effectively with them in 
the community. 
(c) Notifications. Upon receiving an allegation, the person receiving the intake 
or the APS investigator will: 
(1) immediately notify the executive director of the allegation without 
revealing the identity of the reporter. Pursuant to Chapter 81 of the Texas 
Civil Practices and Remedies Code, if the allegation involves sexual 
exploitation of a person served by a mental health services provider, the name 
of the reporter shall be released to the executive director; 
(2) immediately notify the executive director as to whether the allegation will 
be reported to a law enforcement agency; 
(3) immediately, if possible, but in no case more than one hour later, report 
allegations involving serious physical injury, sexual abuse, or death of an 
adult person served to the appropriate local or state law enforcement agency. 
Allegations involving non-serious physical injury or exploitation shall be 
reported as soon as possible, but no later than three days after receiving the 
intake; and 
(4) immediately, if possible, but in no case more than one hour later, report 
all allegations of abuse or neglect of a child to the appropriate local or state 
law enforcement agency. 
(d) Responsibilities. 
(1) The APS investigator shall fully investigate alleged incidents of abuse, 
neglect, or exploitation as follows. 
(A) Investigations shall be initiated within 24 hours of receipt of a report by 
the Texas Department of Protective and Regulatory Services (TDPRS). Initiation 
is defined as an interview with the alleged victim or an individual who has 
current knowledge of the safety and welfare of the alleged victim. 
(B) Investigations shall be conducted in accordance with the following priority 
system: 
(i) Priority I reports are those in which the alleged incident occurred seven 
calendar days or less prior to the date the report was received by TDPRS. Face-
to-face contact with the alleged victim is required within 24 hours of receipt 
of the report by TDPRS. 
(ii) Priority II reports are those in which the alleged incident occurred more 
than seven but less than 90 calendar days prior to the date the report was 
received by TDPRS. Face-to-face contact with the alleged victim is required 
within two calendar days of receipt of the report by TDPRS. 
(iii) Priority III reports are those in which the alleged incident occurred 90 
calendar days or more prior to the date of the report to TDPRS. Face-to-face 
contact with the alleged victim is required within five calendar days of receipt 
of the report by TDPRS. 
(C) Allegations by an anonymous reporter will be accepted and investigated 
following the same procedures that are used when the reporter's identity is 
known. 
(D) If the allegation involves the actions of a physician, dentist, registered 
nurse, or licensed vocational nurse, the APS investigator, in coordination with 
the executive director and the medical or nursing director, as appropriate to 
the discipline involved (if such a position exists), will determine whether the 
allegation involves the clinical practice of the physician, dentist, registered 
nurse, or licensed vocational nurse. If the abuse or neglect allegation does not 
involve clinical practice, the APS investigator will pursue an investigation. If 
it is determined that the allegation involves the clinical practice of a 
physician, dentist, registered nurse, or licensed vocational nurse, and the 
community center has an established professional review process, the APS 
investigator shall refer the allegation in writing to the executive director for 
professional review. If the community center does not have an established 
professional review process, the APS investigator shall refer the allegation to 
the appropriate licensing authority. 
(E) If the allegation involves a licensed professional, other than a physician, 
dentist, or nurse, and the action is related to the professional's profession, 
then the APS investigator shall refer the allegation to the executive director 
for professional review. If the community center does not have an established 
professional review process, then the APS investigator shall refer the 
professional's action to the appropriate licensing authority. 
(2) If at any point during the course of the investigation it becomes apparent 
(via written witness statements and other evidence gathered) that the allegation 
is spurious or patently without factual basis, the investigation may be closed 
as unfounded. The reason for this determination, based on specific evidence, 
shall be included in the report. 
(3) If there is not a preponderance of evidence to indicate that an allegation 
should or should not be confirmed, due to lack of witnesses or other evidence, a 
finding of inconclusive may be made. 
(4) A designation of perpetrator unknown may be used:
(A) at the time of intake to indicate that the identity of an alleged 
perpetrator is unknown; and 
(B) at the conclusion of an investigation to describe instances in which 
positive identification of the responsible person(s) cannot be made, and in 
which self-injury has been eliminated as the cause. 

sec.710.48.Completion of Investigation.
(a) The adult protective services (APS) investigator shall complete 
investigations within established timeframes as follows: 
(1) Priority I and II investigations in residential programs shall be completed 
within 14 calendar days of receipt of the report by the Texas Department of 
Protective and Regulatory Services (TDPRS). If the 14th day falls on a weekend 
or holiday, the report shall be completed by the next business day. 
(2) Priority I and II investigations in non-residential programs shall be 
completed within 21 calendar days of receipt of the report by TDPRS. If the 21st 
day falls on a weekend or holiday, the report shall be completed by the next 
business day. 
(3) Priority III investigations in both residential and non-residential programs 
shall be completed within 21 calendar days of receipt of the report by TDPRS. If 
the 21st day falls on a weekend or holiday, the report shall be completed by the 
next business day. 
(b) Upon completion of an investigation, the APS investigator shall submit to 
the executive director, a copy of: 
(1) the investigative report, with any information that would reveal the 
identity of the reporter concealed, including: 
(A) a statement of the allegation(s); 
(B) a summary of the investigation; 
(C) an analysis of the evidence; 
(D) the investigator's finding that the allegation is confirmed, unconfirmed, 
inconclusive, or unfounded; 
(E) recommendations resulting from the investigation; 
(F) an opinion as to how the allegation(s) might be classified in accordance 
with Title 25, Part II, TAC, Chapter 404, Subchapter B, Exhibit B; and 
(G) a determination as to how the incident should be classified in accordance 
with sec.261.001, of the Texas Family Code, if the incident involves a child; 
(2) photographs relevant to the investigation, including photographs depicting 
the existence of injuries, or the non-existence of injuries, when appropriate; 
(3) all witness statements and supporting documents; and 
(4) a TDPRS "Client Abuse/Neglect Report" (AN-1-A), reflecting the finding of 
the investigation. 
(c) Pursuant to Chapter 81 of the Texas Civil Practices and Remedies Code, if 
the incident involves sexual exploitation of a person served by a mental health 
services provider, the name of the reporter shall not be concealed in the report 
provided to the executive director. 
(d) If additional time is required to complete the investigation, the APS 
investigator may request an extension by submitting a TDPRS Extension Request 
form to the regional APS program administrator. An extension from one to 14 days 
may be granted depending on the needs of the case. The executive director shall 
be notified of all extensions. 
(e) In cases of abuse, neglect, or exploitation previously reported to a law 
enforcement agency, the APS investigator shall submit a copy of investigative 
reports involving confirmed cases to the appropriate law enforcement agency. 
(f) If an allegation is confirmed and the perpetrator is a physician, dentist, 
registered nurse, or licensed vocational nurse, the APS investigator shall 
forward a copy of the completed investigative report to the State Office of 
Adult Protective Services. Such reports will then be forwarded to the licensing 
authority for the discipline under review, as required by law. 
(g) The investigator will notify the reporter in writing of the outcome of the 
investigation and the method of appealing the outcome of the investigation. 
(h) The executive director is responsible for notifying the:
(1) APS investigator in writing within 14 calendar days as to whether the 
executive director is in agreement with the finding of the investigation; 
(2) (alleged) victim and guardian, and anyone else who was previously informed 
of the allegation, of the finding of the investigation and of the method of 
appealing the finding; and 
(3) (alleged) perpetrator of the finding of the investigation.
(i) Upon request, the APS investigator will attend and participate in a 
community center grievance hearing related to an investigation the APS 
investigator conducted. 

sec.710.49. Community Center Contractors.
(a) For purposes of reporting and investigating abuse, neglect, and exploitation 
by contractors, the procedures outlined in this subchapter shall be followed. 
(1) An allegation against a contractor or an employee of a contractor shall be 
reported to the Texas Department of Protective and Regulatory Services (TDPRS) 
in accordance with sec.710.46 of this title (relating to Responsibilities of 
Community Centers). 
(2) Upon notification of an allegation, the adult protective services (APS) 
investigator shall immediately notify the contractor chief executive officer 
(CEO) and the executive director of the community center. If the contractor CEO 
is the alleged perpetrator, the APS investigator only notifies the executive 
director of the community center. 
(3) Upon completion of the investigation the APS investigator shall submit a 
copy of the investigative report and supporting documents to the contractor CEO 
and the executive director of the community center. If the contractor CEO is the 
alleged perpetrator, the APS investigator only submits a copy of the report to 
the executive director of the community center. 
(4) If there is disagreement with the finding or methodology of the 
investigation, the contractor CEO may, within 14 calendar days, request in 
writing a review of the finding, by forwarding a TDPRS Request for Review of 
Finding form, along with a copy of the investigative report, to the Director of 
Adult Protective Services, Texas Department of Protective and Regulatory 
Services, P.O. Box 149030, E-561, Austin, Texas, 78714-9030. If the contractor 
CEO is the alleged perpetrator, only the executive director of the community 
center may request a review of the finding. 
(b) Allegations in which the alleged perpetrator is an employee of an ISD and 
the ISD is a contractor of the community center shall be investigated by the APS 
investigator in accordance with the procedures outlined in this subchapter. The 
APS investigator shall notify the superintendent of the ISD, the executive 
director of the community center, and the appropriate local or state law 
enforcement agency of such allegations. 
(1) develop policy related to investigations in community centers; 
(2) monitor and evaluate for quality assurance and compliance with adult 
protective services (APS) program standards; 
(3) provide consultation and technical assistance to APS regional staff; and 
(4) coordinate with the Texas Department of Protective and Regulatory Services' 
(TDPRS's) professional development division in the development of training 
curricula. 

sec.710.51. Request for Review of Finding; Request for Appeal. 
(a) If the executive director believes the methodology used in conducting an 
investigation was flawed or disagrees with the finding of the investigation, the 
executive director may request in writing a review of the case by filing a Texas 
Department of Protective and Regulatory Services (TDPRS) Request for Review of 
Finding form within 14 calendar days after receiving the report from TDPRS. 
(1) A request related to methodology is forwarded by the executive director, 
along with a copy of the investigative report, to the regional adult protective 
services (APS) program administrator. A review will be completed within 14 
calendar days. The regional APS program administrator will notify the executive 
director in writing of the results of the review. 
(2) A request related to the finding of an investigation, or to a methodological 
concern that was unable to be resolved at the regional level, is forwarded by 
the executive director, along with a copy of the investigative report, to the 
Director of Adult Protective Services, Texas Department of Protective and 
Regulatory Services, P.O. Box 149030, E-561, Austin, Texas, 78714-9030. The 
review will be completed within 14 calendar days. 
(b) The reporter, (alleged) victim, or legal guardian of the (alleged) victim 
may request an appeal of the finding of an investigation conducted by APS within 
30 days of notification of the finding. An appeal may be requested in writing to 
the Director of Adult Protective Services, State Office, Mail Code E-561, P.O. 
Box 149030, Austin, Texas, 78714-9030, or by calling 1-888-778-4766. 
(1) The appeal shall be completed within 30 calendar days from the date of the 
request unless a review of the finding has been requested by the executive 
director or contractor chief executive officer (CEO). The appeal process will be 
postponed until the request for review has been completed, at which point it 
will be completed within 30 calendar days. 
(2) The appeal process will include an analysis of the investigative report and 
all supporting documents and records. 
(3) The reviewer makes a decision to sustain, alter, or reverse the original 
finding of the APS investigator based on the same criteria used by APS 
investigators to conduct investigations and reach conclusions, or to re-open the 
investigation. 
(4) Within 30 calendar days after the appeal process is completed, the reviewer 
shall document the appeal decision and notify the person who requested the 
appeal, and the (alleged) victim or legal guardian of the (alleged) victim, of 
the decision in writing. 
(5) A copy of the appeal decision shall be sent to the APS investigator to be 
filed with the original investigative report. 
(6) A copy of the appeal decision shall be sent to the executive director and/or 
the contractor CEO, as appropriate. 
(7) If the person who requested an appeal of the finding is not satisfied with 
the appeal decision, or wishes to file a complaint of a different nature, the 
person may contact the Ombudsman Office of the Texas Department of Protective 
and Regulatory Services by calling 1- 800-720-7777, or by writing to Ombudsman 
Office, Mail Code Y-946, P.O. Box 149030, Austin, Texas, 78714-9030. 

sec.710.52.Confidentiality of Investigative Process and Report.
(a) The reports, records, and working papers used by or developed in the 
investigative process and the resulting final report regarding abuse, neglect, 
and exploitation are confidential and may be disclosed only as provided in 
sec.sec.40.005, 48.081, and 48.101 of the Human Resources Code, sec.261.201 of 
the Texas Family Code, and other rules of this agency in the Texas 
Administrative Code. 
(b) Pursuant to Chapter 81 of the Texas Civil Practices and Remedies Code, if 
the incident involves sexual exploitation of a person served by a mental health 
services provider, a copy of the investigative report and all supporting 
documents, in which the identity of the reporter has not been concealed, shall 
be released to the executive director. 
(c) Upon request, the executive director may release a copy of the investigative 
report, with any information that might reveal the identity of the reporter and 
other persons served concealed, to the: 
(1) (alleged) victim served, legal guardian, or parent (if the (alleged) victim 
is a child); and
(2) (alleged) perpetrator. 

sec.710.53. Retention of Investigative Reports.
Investigative reports shall be retained by the Texas Department of Protective 
and Regulatory Services for five years after the investigation is closed. 
Reports may be sent to the Records Storage Center for storage three years after 
the case is closed. 

sec.710.54.References. 
Reference is made to the following statutes and rules: 
(1) Texas Family Code, Chapter 261; 
(2) Texas Penal Code, sec.22.011, sec.43.01, and sec.43.21; 
(3) Human Resources Code, Chapters 40 and 48, and sec.50.001;
(4) Texas Civil Practices and Remedies Code, Chapter 81; 
(5) Texas Health and Safety Code, Chapter 481; 
(6) Texas Health and Safety Code, Title 7, Chapter 534, Subchapter A; 
(7) 25 TAC, Chapter 404, Subchapter B; 
(8) Section 1, Chapter 635, Acts of the 72nd Legislature, Regular Session, 1991 
(Article 4512o, Texas Civil Statutes); 
(9) Section 2, Licensed Professional Counselor Act (Article 4512g, Texas Civil 
Statutes); 
(10) Section 2, Licensed Marriage and Family Therapist Act (Article 4512c-1, 
Texas Civil Statutes; 
(11) Section 1.03, Medical Practice Act (Article 4495b, Texas Civil Statutes); 
and 
(12) Section 2, Psychologists' Certification and Licensing Act (Article 4512c, 
Texas Civil Statutes). 

sec.710.55.Distribution.
(a) This subchapter shall be distributed to: 
(1) members of the Texas Board of Protective and Regulatory Services; 
(2) the Texas Department of Protective and Regulatory Services (TDPRS) 
executive, management, and program staff; 
(3) chairpersons of boards and executive directors of community centers; 
(4) interested advocacy organizations; 
(5) the Texas Board of Medical Examiners; 
(6) the Texas Board of Nurse Examiners; and 
(7) the Texas Board of Licensed Vocational Nurse Examiners.
(b) The executive director of each community center shall be responsible for 
disseminating copies of this subchapter to: 
(1) appropriate staff; 
(2) agents; 
(3) contractors; 
(4) advocacy organizations; and 
(5) any person served, employee, or other person desiring a copy. 
(c) The executive director of the community center shall be responsible for 
ensuring that copies of this subchapter are prominently displayed in center 
programs. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on April 24, 1998.
TRD-9805794
C. Ed Davis
Deputy Director, Legal Services
Texas Department of Protective and Regulatory Services
Earliest possible date of adoption: June 7, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER U.Day Care Licensing Procedures
40 TAC sec.725.2048
The Texas Department of Protective and Regulatory Services (TDPRS) proposes new 
sec.725.2048, concerning administrative penalties, in its General Licensing 
Procedures chapter. The purpose of the new section is to outline the conditions 
under which an administrative penalty will be assessed. This is a new 
enforcement tool in sec.42.078 of the Human Resources Code (Administrative 
Penalty). All other regulations in that section remain the same. 
Cindy Brown, Budget and Analysis Division Director, has determined that for the 
first five-year period the proposed section will be in effect there will be 
fiscal implications for state or local government as a result of enforcing or 
administering the section. The amount cannot be determined at this time. The 
cost to state government will depend upon the number of violations for which 
penalties are assessed, and the number of those which are appealed. The revenues 
to state government from the penalties should affect the cost.
Ms. Brown also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be in the form of increased compliance with child care regulations, 
and therefore increased protection for children in out-of-home care. There will 
not be a disproportionate adverse economic effect on small businesses. There is 
a maximum amount of fines stipulated in the statute based upon number of 
children in care. Larger businesses will be penalized more because fines will be 
assessed based upon the number of children in care. Thus the fines will have a 
greater impact on facilities that have more children in care. There is an 
anticipated economic cost to persons who are required to comply with the 
proposed section. Maximum fine amounts are stipulated in law. Estimated costs 
cannot be determined at this time. Costs to facilities and family homes would 
depend on the number of days of violations according to the schedule of 
penalties in these sections. 
Questions about the content of the proposal may be directed to Mary Panella at 
(512) 438-3246 in TDPRS's Licensing Division. Written comments on the proposal 
may be submitted to Supervisor, Rules and Handbooks Unit-230, Texas Department 
of Protective and Regulatory Services E-205, P.O. Box 149030, Austin, Texas 
78714-9030, within 30 days of publication in the Texas Register. 
The new section is proposed under the Human Resources Code, Title 2, Chapter 42, 
which authorizes the department to administer general child-placing and child 
care licensing programs and specifically sec.42.078 HRC which mandates rules for 
administrative penalties. 
The new section implements the HRC, sec.42.078. 

sec.725.2048. Administrative Penalties.
(a) Administrative penalties are fines imposed against a facility or family 
home, licensed or registered, when that facility or family home violates Chapter 
42 of the Human Resources Code (HRC) or a rule or order adopted under that 
chapter. Nonmonetary, administrative penalties or remedies including, but not 
limited to, corrective action plans, probation, and evaluation periods shall be 
imposed, when appropriate, before monetary penalties. The Texas Department of 
Protective and Regulatory Services (TDPRS) may proceed to suspension, probation 
or revocation without imposing administrative penalties in any instance in 
which, in TDPRS's opinion, the violation is serious enough to warrant such 
action. 
(1) Fines may be assessed for repeated, but less serious, violations, within a 
three- month period, of those standards identified in sec.725.4020 (d) and (e) 
of this title (relating to Judicial Review) which pose a risk to the health and 
safety of children when violated, but where the violations were not serious 
enough to warrant more severe nonmonetary sanctions. 
(2) Fines may be assessed for failure to comply with any corrective action plan 
after time limits for correction have expired.
(b) Penalty assessment shall be based on the day the facility/family home is 
notified that a repeated violation has been cited or any corrective action plan 
has not been implemented. The ending period for the fine shall be the date the 
facility notifies TDPRS the violation has been corrected, unless a subsequent 
site visit determines no proper correction has been made.
(c) When notified of the penalty, it shall be the responsibility of the 
facility/family home to notify TDPRS when the violation is corrected. If 
necessary, a site visit by TDPRS staff may be made within seven calendar days to 
confirm that the violation has been corrected. 
(d) Each day a violation continues or occurs is a separate violation for 
purposes of imposing a penalty. The penalty for a violation may be in an amount 
not to exceed the following limits, based on the number of children receiving 
care at the facility or family home at the time of the violation: See Figure for 
sec.725.2048(d) 
(e) The amount of the penalty shall be based on: 
(1) the seriousness of the violation, including the nature, circumstances, 
extent, and gravity of any prohibited acts and the hazard or potential hazard 
created to the health, safety, or economic welfare of the public; 
(2) the history of previous violations; 
(3) the amount necessary to deter future violations; and 
(4) efforts to correct the violation. 
(f) In determining the amount of the penalty, the primary consideration shall 
always be the actual or potential harm posed to children in care by the 
violation, and the number of children exposed to that actual or potential harm. 
(g) Monetary penalties shall not be assessed for violations of clerical errors 
or standards which do not clearly apprise the facility or family home of the 
action required by the standard. 
(h) Upon determination that a violation has occurred, the executive director may 
issue a recommendation on the imposition of a penalty, including a 
recommendation on the amount of the penalty. 
(i) Within 14 days after the date the recommendation is issued, the executive 
director shall give written notice of the recommendation to the person owning or 
operating the facility. The notice may be given by certified mail. The notice 
must include a brief summary of the alleged violation and a statement of the 
amount of the recommended penalty and must inform the person that the person has 
a right to a hearing on the occurrence of the violation, the amount of the 
penalty, or both the occurrence of the violation and the amount of the penalty. 
(j) Within 20 days after the date the person receives the notice, the person in 
writing may accept the determination and recommended penalty of the executive 
director, or may make a written request for a hearing on the occurrence of the 
violation, the amount of the penalty, or both the occurrence of the violation 
and the amount of the penalty. 
(k) If the person accepts the determination and recommended penalty of the 
executive director or fails to respond to the notice in a timely manner, the 
executive director shall issue an order and impose the recommend penalty. 
(l) If the person requests a hearing, the executive director shall set a hearing 
and give notice of the hearing to the person. The hearing shall be held by an 
administrative law judge of the State Office of Administrative Hearings. The 
administrative law judge shall make findings of fact and conclusions of law and 
issue a final decision finding that a violation has occurred and imposing a 
penalty or finding that no violation occurred. 
(m) The notice of the administrative law judge's order given to the person under 
Chapter 2001, Government Code, must include a statement of the right of the 
person to judicial review of the order. 
(n) Within 30 days after the date the administrative law judge's order becomes 
final as provided by sec.2001.144, Government Code, the person shall: 
(1) pay the amount of the penalty; 
(2) pay the amount of the penalty and file a petition for judicial review 
contesting the occurrence of the violation, the amount of the penalty, or both 
the occurrence of the violation and the amount of the penalty; or 
(3) without paying the amount of the penalty, file a petition for judicial 
review contesting the occurrence of the violation, the amount of the penalty, or 
both the occurrence of the violation and the amount of the penalty. 
(o) Within the 30-day period, a person who acts under subsection (n)(3) of this 
section may:
(1) stay enforcement of the penalty by: 
(A) paying the amount of the penalty to the court for placement in an escrow 
account; or 
(B) giving to the court a supersedeas bond that is approved by the court for the 
amount of the penalty and that is effective until all judicial review of the 
order is final; or 
(2) request the court to stay enforcement of the penalty by: 
(A) filing with the court a sworn affidavit of the person stating that the 
person is financially unable to pay the amount of the penalty and is financially 
unable to give the supersedeas bond; and 
(B) giving a copy of the affidavit to the executive director by certified mail. 
(p) On receipt of a copy of an affidavit under subsection (o)(2) of this 
section, the executive director may file with the county, within five days after 
the date the copy is received, a contest to the affidavit. The court shall hold 
a hearing on the facts alleged in the affidavit as soon as practicable and shall 
stay the enforcement of the penalty on finding that the alleged facts are true. 
The person who files an affidavit has the burden of proving that the person is 
financially unable to pay the amount of the penalty and to give a supersedeas 
bond. 
(q) If the person does not pay the amount of the penalty and the enforcement of 
the penalty is not stayed, the executive director may refer the matter to the 
attorney general for collection of the amount of the penalty.
(r) Judicial review of the order: 
(1) is instituted by filing a petition as provided by Subchapter G, Chapter 
2001, Government Code; and 
(2) is under the substantial evidence rule. 
(s) If the court sustains the occurrence of the violation, the court may uphold 
or reduce the amount of the penalty and order the person to pay the full or 
reduced amount of the penalty. If the court does not sustain the occurrence of 
the violation, the court shall order that no penalty is owed. 
(t) When the judgment of the court becomes final, the court shall proceed under 
this subsection. If the person paid the amount of the penalty and if that amount 
is reduced or is not upheld by the court, the court shall order that the 
appropriate amount plus accrued interest be remitted to the person. The rate of 
the interest is the rate charged on loans to depository institutions by the New 
York Federal Reserve Bank, and the interest shall be paid for the period 
beginning on the date the penalty was paid and ending on the date the penalty is 
remitted. If the person gave a supersedeas bond and if the amount of the penalty 
is reduced, the court shall order the release of the bond after the person pays 
the amount . 
(u) A penalty collected under this section shall be sent to the comptroller for 
deposit in the general revenue fund. 
(v) All proceedings under this section are subject to Chapter 2001, Government 
Code. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Filed with the Office of the Secretary of State, on April 27, 1998.
TRD-9805835
C. Ed Davis
Deputy Director, Legal Services
Texas Department of Proctective and Regulatory Services
Proposed date of adoption: August 1, 1998
For further information, please call: (512) 438-3765