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 4. AGRICULTURE
PART I. Texas Department of Agriculture
CHAPTER 3.Boll Weevil Eradication Program
SUBCHAPTER E.Creation of Eradication Zones
4 TAC sec.3.115
The Texas Department of Agriculture (the department) proposes
new sec.3.115, concerning the creation of a nonstatutory boll weevil eradication
zone. The new section is proposed to establish a new nonstatutory boll weevil
eradication zone consisting of counties not currently located in a statutory
zone created under Chapter 74, Subchapter D, sec.74.1021. New sec.3.115
proposes, upon the request of the Far West Texas Interim Advisory Committee
on Boll Weevil Eradication, the designation of the El Paso/Trans Pecos Boll
Weevil Eradication Zone, in accordance with the Texas Agriculture Code, 
sec.74.1042.
Katie Dickie Stavinoha, special assistant for producer relations, 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. 

Ms. Stavinoha 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 sections will be the ability to address cotton growers'
desires to have efficient, responsive eradication zones to facilitate boll
weevil eradication in Texas. There will be no effect on small businesses.
The anticipated economic cost to persons who will be required to comply with
the new sections, as proposed, is not determinable at this time. If the
proposed zone is designated as an eradication program and an assessment is
approved by the zone's cotton growers, those cotton growers will be assessed
annually to cover costs of an eradication program in that zone. The costs
to individual growers will depend on voter approval of an eradication program
and assessment, and the amount of the assessment established for the zone
once a program is approved. 

Comments on the proposal may be submitted to Katie Dickie Stavinoha, Special
Assistant for Producer Relations, P.O. Box 12847, Austin, Texas 78711, and
must be received no later than 30 days from the date of the publication of
this proposal in the Texas Register. 

The new section is proposed under the Texas Agriculture Code,
sec.74.1042, which provides the commissioner of agriculture with the authority,
by rule, to designate an area of the state as a proposed boll weevil eradication
zone. 

The codes affected by the proposal are the Texas Agriculture Code, Chapter
74. 

sec.3.115. El Paso/Trans-Pecos Boll
Weevil Eradication Zone.
The El Paso/Trans Pecos Boll Weevil Eradication Zone shall consist
of the following area: all of El Paso, Hudspeth, Culberson, Jeff Davis, 
Presidio,
Brewster, Pecos, Reeves, Ward, Loving, Winkler, Crane, Terrell, Crockett
and Val Verde counties. 

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
June 18, 1998.
TRD-9809767
Dolores Alvarado Hibbs

Deputy General Counsel

Texas Department of Agriculture

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 463-7541

PART II. Texas Animal Health Commission
CHAPTER 35.Brucellosis
SUBCHAPTER A.Eradication of Brucellosis in Cattle
4 TAC sec.sec.35.1-35.4, 35.6
The Texas Animal Health Commission proposes amendments to
sec.sec.35.1-35.4, and 35.6, concerning eradication of brucellosis in
cattle. 

The amendment to sec.35.1 is necessary so RB 51 vaccinated cattle are
not given leniency in interpretation of test results to insure that infection
is not overlooked. Also, some obsolete definitions are being removed to simplify
and clarify the regulations. If adopted, the proposal will provide 
understandable
definitions that minimize the possibility of mistaking brucellosis vaccine
reactions with brucellosis disease. 

The amendment to sec.35.2 is necessary to increase surveillance for brucellosis
by testing cattle at a younger age and to insure that infection is not 
misdiagnosed
as a vaccine reaction to RB51. Editorial changes are also being made to clarify
the regulations. If adopted, the revision will provide clear regulations that
will enhance case finding and ultimately reduce time needed for disease 
eradication. 
The amendment to sec.35.3 is necessary to minimize the possibility of
mistaking brucellosis vaccine reactions with brucellosis disease. Also, some
regulations are being removed because they are no longer in use. If adopted,
there will be less misdiagnosis due to confusion in test interpretation when
using RB 51 vaccine. 

The amendment to sec.35.4 is necessary to increase surveillance testing
by required cattle to be tested at younger ages. Some regulations involving
Class C States and areas are being removed because they are no longer in use.
If adopted, the public will benefit from simplified regulations and increased
surveillance which minimizes the possibility of disease spread. 

The amendment to sec.35.6 is necessary to enhance depopulation of infected
herds which should reduce the time necessary to accomplish disease eradication.
If adopted, the public will benefit from reduced disease transmission and
this should reduce time required to eradicate the disease. 

Kathryn A. Reed, General Counsel, has determined for the first five-year
period the rules are in effect, there will be no fiscal implications for state
or local government as a result of enforcing or administering the rules. 
Ms. Reed also has determined that for each year of the first five years
the rules are in effect, the public benefit anticipated as a result of enforcing
the rules will be updated regulations. There will be no effect on small 
businesses.
There is no anticipated economic cost to persons who are required to comply
with the rules as proposed. 

Comments regarding the proposed amendments may be submitted to Kathy Reed,
P.O. Box 12966, Austin, Texas 78711-2966. 

The amendments are proposed under the Texas Agriculture Code,
Chapter 161, sec.sec.161.041, 161.046, 163.061, and 163.068, which authorizes
the Commission to promulgate rules in accordance with the Texas Agriculture
Code.

No other statutes, articles, or codes are affected by the amendments. 
sec.35.1. 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> Adjacent herds--A herd of cattle or bison that
occupies a premise that lies within one mile of a "herd known to be affected." 
<nl>(2)<ol> Affected herd--Any herd in which any cattle
have been classified as a reactor or suspect and which has not completed the
requirements of the individual herd plan. 

<nl>(3)<ol> Approved brucella vaccine--A product that
is produced under license of the USDA and used in accordance with the current
guidelines of USDA for its use in cattle to enhance their resistance to 
brucellosis. 
<nl>(4)<ol> Approved personnel--Texas Animal Health
Commission inspectors and veterinarians; Federal Animal Health technicians
and veterinarians; accredited Texas veterinarians; and others who have been
approved to do those assigned duties as described in these regulations for
brucellosis control and eradication. 

<nl>(5)<ol> Auction--A public sale of cattle. 

<nl>(6)<ol> Auctioneer--A person who sells or makes
a business of selling cattle at auction. 

<nl>(7)<ol> Brucellosis (Bang's Disease contagious
abortion)--For purposes of this regulation, brucellosis is a contagious, 
infectious
disease of cattle, sheep, goats, horses, and swine caused by bacteria of the
genus brucella. 

<nl>(8)<ol> Cattle--All dairy and beef animals (genus
Bos) and bison (genus Bison). 

<nl>(9)<ol> Class "Free" area--An area of two or more
contiguous counties which has remained free from field strain brucella abortus
infection for 12 months or longer. A 12 months adjusted MCI reactor prevalence
rate not to exceed one reactor per 2,000 cattle tested (0.050%) must be 
maintained. 
<nl>(10)<ol> Class "A" area--An area of two or more
contiguous counties which has an accumulated 12 months herd infection rate
due to field strain brucella abortus that does not exceed 0.25% or 2.5 herds
per 1,000 and must maintain a 12 months adjusted MCI reactor prevalence rate
not to exceed one reactor per 1,000 cattle tested (0.100%). 

<nl>(11)<ol> Class "B" area--An area of two or more
contiguous counties which has an accumulated 12 months herd infection rate
due to field strain brucella abortus that does not exceed 1.5% or 15 herds
per 1,000. A 12 months adjusted MCI reactor prevalence rate not to exceed
three reactors per 1,000 cattle tested (0.30%) must be maintained.

[Class "C" area--An area of two or more contiguous
counties which has an accumulated 12 months herd infection rate due to field
strain brucella abortus which exceeds 1.5% or 16 herds per 1,000 and has a
12 months adjusted MCI reactor prevalence rate exceeding three reactors per
1,000 cattle tested (0.30%).] 

<nl>(12)<ol> Commission--The Texas Animal Health
Commission. 

<nl>(13)<ol> Commission firm--A person, partnership,
other legal entity, or corporation which buys and sells cattle as a third
party and who reports to the seller and to the buyer details of the 
transactions.
This includes any such person or group whether or not a fee is charged for
the service. 

<nl>(14)<ol> Commuter herd--A herd of cattle located
in two or more states that is documented as a valid ranching operation by
those states in which the herd is located and which requires movement of cattle
interstate from a farm of origin or returned interstate to a farm of origin
in the course of normal ranching operations, without change of ownership,
directly to or from another premise owned, leased, or rented by the same 
individual.
An application for "commuter herd" status must be signed by the owner and
approved by the states in which the herd is located. This status will continue
until canceled by the owner or one of the signatory states. 

<nl>(15)<ol> Dealer-- 

(A) Any person engaged in the business of buying or selling
cattle in commerce on his own account, as an employee or agent of the vendor,
the purchaser, or both, or on a commission basis. 

(B) The term shall not include a person who buys or sells
cattle as part of his own bona fide breeding, feeding, dairy, or stocker 
operations
but does include livestock markets and commission merchants. 

<nl>(16)<ol> Designated Pens--A set of pens in
a feedlot under a plan of restricted movement, approved jointly by Animal
and Plant Health Inspection Service, Veterinary Services, and the Commission
in which all cattle are classified as exposed to brucellosis. The pens may
be pre-approved, but the approval period will begin with initial arrival of
the exposed cattle. The Designation will be automatically renewed every 12
months if requirements specified in these regulations and the approved agreement
continue to be met by the feedlot. The status will continue until: 

(A) the feedlot requests deactivation; or 

(B) the Commission determines the status should be eliminated
because of the feedlot's failure to comply with the Designation Agreement
or these regulations; or 

(C) changes in Federal or State law or regulations require
elimination of or change in the status. 

<nl>(17)<ol> Epidemiologist--A veterinarian who
has received a degree in epidemiology and is employed by the commission or
USDA, APHIS, VS. 

<nl>(18)<ol> Executive director--The chief executive
officer of the Texas Animal Health Commission appointed by the commissioners
and authorized to act for the commissioners in the absence of the chairman. 
<nl>(19)<ol> Exempt Cattle (from testing requirements)--Cattle
that have been physically rendered sterile for breeding. 

<nl>(20)<ol> Exposed cattle--Cattle that are part of
an affected herd or cattle that have been in contact with reactors in marketing
channels for periods of 24 hours; and periods of less than 24 hours if the
reactor has recently aborted, calved, or has a vaginal or uterine discharge.
These cattle shall be classified as exposed regardless of any blood test 
results. 
<nl>(21)<ol> Feedlot--A confined drylot area for finish
feeding of cattle on concentrated feed with no facilities for pasturing or
grazing. All cattle in a feedlot are considered a "herd" for purposes of these
regulations. 

<nl>(22)<ol> Herd-- 

(A) All cattle under common ownership or supervision that
are on one premise; or 

(B) All cattle under common ownership or supervision on two
or more premises that are geographically separated, but on which the cattle
have been interchanged or where there has been contact among the cattle on
the different premises. Contact between cattle on the different premises will
be assumed unless the owner establishes otherwise and the results of the 
epidemiologic
investigation are consistent with the lack of contact between premises; or 
(C) All cattle on common premises, such as community pastures
or grazing association units, but owned by different persons. Other cattle
owned by the persons involved which are located on other premises are considered
to be part of this herd unless the epidemiologic investigation establishes
that cattle from the affected herd have not had the opportunity for direct
or indirect contact with cattle from that specific premises. Quarantined 
feedlots
and quarantined pastures are not considered to be herds. 

<nl>(23)<ol> High risk herd--A herd that is epidemiologically
judged by a state-federal veterinarian to have a high probability of having
or developing brucellosis. A high risk herd need not be located on the same
premise as an infected or adjacent herd. 

<nl>(24)<ol> Hold Order--A document restricting movement
of a herd, unit, or individual animal pending the determination of disease
status. 

<nl>(25)<ol> Individual herd plan--A herd disease management
and testing plan to prevent, control, and eliminate brucellosis in a herd
of cattle. 

<nl>(26)<ol> Market cattle identification--The process
of individually identifying cattle on change of ownership by backtag or eartag
issued by USDA showing their herd of origin. 

<nl>(27)<ol> Official backtag--A United States Department
of Agriculture (USDA), Animal and Plant Health Inspection Service (APHIS),
Veterinary Services (VS) approved identification backtag that conforms to
the national uniform tagging system. It uniquely identifies each individual
animal with alpha-numeric identification. The official backtag may not be
reused on another animal. 

<nl>(28)<ol> Official eartag--A Veterinary Services
approved identification eartag (metal, plastic, or other) that conforms to
the nine-character alpha-numeric National Uniform Eartagging System. It uniquely
identifies each individual animal with no duplication of the alpha-numeric
identification, regardless of the materials or colors used. The term includes
the special orange-colored eartag series used to identify calfhood vaccinates.
The official eartag may not be removed from the animal. 

<nl>(29)<ol> Official Vaccinate-- 

(A) Calfhood Vaccinate: Female cattle (dairy and beef) vaccinated
between four and 12 months of age with an approved Brucella vaccine. 

(B) Adult Vaccinate: Female cattle that have been blood tested
negative within ten days prior to vaccination and vaccinated at an age over
the ages given in subparagraph (A) of this paragraph with an approved dose
of Brucella vaccine as part of a whole herd vaccination plan. 

<nl>(30)<ol> Parturient--Visibly prepared to give
birth or within two weeks of giving birth. 

<nl>(31)<ol> Permit--A document adopted by the commission
with specified conditions relative to movement, testing and vaccinating of
cattle which is required to accompany the cattle entering, leaving or moving
within the State of Texas. 

(A) "E" permit--Premovement authorization for entry of cattle
into the state by the Texas Animal Health Commission. The "E" permit states
the conditions under which movement may be made, and restrictions and test
requirements after arrival. 

(B) "S" permit--A premovement authorization for exposed, suspect
or nontested cattle in marketing channels having restricted destination. 
(C) "B" permit (VS Form 1-27)--A premovement authorization
for movement of reactor cattle in marketing channels moving to slaughter. 
<nl>(32)<ol> Postparturient--Having already given
birth. 

<nl>(33)<ol> Premise--An area defined by the outermost
boundary of land under common ownership or control enclosed by a perimeter
fence or other boundary. A premise may consist of more than one pasture. 
<nl>(34)<ol> Priority Herd--Exposed herd from which
a reactor has been classified, infected herd, or adjacent herd. 

<nl>(35)<ol> Quarantined feedlot--A feedlot under a
plan of restricted movement, approved jointly by Animal and Plant Health 
Inspection
Service, Veterinary Services and the commission in which all cattle except
steers and spayed heifers are classified as exposed to brucellosis. 

<nl>(36)<ol> Quarantined pasture--A designated confined
area for limited grazing under a plan of restricted movement approved jointly
by Animal and Plant Health Inspection Service, Veterinary Services and the
commission. All cattle except steers and spayed heifers shall be classified
as exposed to brucellosis. All cattle permitted to a quarantined pasture must
originate from a Texas farm or ranch and move directly to a quarantined pasture
or through a Texas market to a quarantined pasture. 

<nl>(37)<ol> Reactor--Cattle classified as being infected
with brucellosis as a result of serological testing or microbiological culturing
of blood, tissue, secretions, or excretions from the animal. 

<nl>(38)<ol> Spayed Heifer--A heifer which has been
neutered by an accredited veterinarian and identified with an official eartag
and hot iron brand applied high on the left hip near the tailhead with an
open spade design not less than three inches high. The heifer shall be 
identified
on a TAHC Spaying Certificate form completed by an accredited veterinarian
or a Texas Animal Health Commission representative. 

Figure: 4 TAC sec.35.1(38) 

[Special control area--Three or more contiguous
counties whose previous 12 month accumulative herd infection rate exceeds
2.75% of the county's herd population for two consecutive quarters as reported
in the Texas Bovine Brucellosis Quarterly Report.]

[Special control county--A county that was
part of a special control area but is no longer contiguous due to removal
of another county and whose previous 12 months accumulative herd infection
rate has continued to exceed 2.75% of the county's herd population for the
preceding two consecutive quarters as reported in the Texas Bovine Brucellosis
Quarterly Report.]

<nl>(39)<ol> Suspect--Cattle classified as suspicious
of being infected with brucellosis as a result of serological testing of blood,
secretions, or excretions from the animal. 

<nl>(40)<ol> Tested herd--Herd of cattle located in
a noncertified area for which a state has records showing that the herd has
been subjected to official testing for brucellosis in accordance with the
procedures for herd tests within 12 months prior to movement and that the
herd is not known to be affected with brucellosis. 

<nl>(41)<ol> Test-Eligible Cattle in other than Priority
Herds--All cattle 18 months of age and over (as evidenced by the loss of the
first pair of temporary incisor teeth), except steers and spayed heifers. 
<nl>(42)<ol> Test-Eligible Cattle in Priority Herds--All <nl>
sexually intact<ol> [non-vaccinated] female cattle four months
of age and older<nl> and all bulls 18 months of age and older<ol>[
, and all cattle designated as test eligible in herds other than priority
herds]. 

<nl>(43)<ol> Traceback of reactors--The epidemiological
procedure in locating the premise or premises and the cattle that have been
in contact with the reactor during a specified period of time. 

sec.35.2. General Requirements.
(a) Testing of blood and semen. 

(1) (No change.) 

(2) All tests must be confirmed by a state-federal laboratory
as the basis for compliance with these regulations. <nl>Non-quarantined<ol>
[Test-eligible] cattle may be moved based upon the card test results.
All samples initially tested at other than state-federal laboratories shall
be submitted (mailed) within 48 hours of collection and confirmed at the state-
federal
laboratory. 

(3)-(6) (No change.) 

(b) Classification of cattle. Cattle shall be classified by
approved personnel by an evaluation of titer responses for all cattle to 
serological
tests, or by identification of Brucella abortus in specimens taken from these
cattle. The following serological tests may be used for the classification
of cattle. 

(1) (No change.) 

(2) Manual Complement fixation test. The manual complement
fixation test is an official test when it is conducted at the cooperative
state-federal brucellosis laboratory using recognized methods. 

(A) Interpretation of the manual CF test results. 

Figure: 4 TAC sec.35.2(b)(2)(A) 

(B) (No change.) 

(3) Rivanol test. The rivanol test is an official
test when conducted in cooperative state-federal brucellosis laboratories.
Vaccinated cattle tested under the MCI program that show complete agglutination
at dilutions of 1:25 or greater must be reported as MCI reactors for the purpose
of state or area classification. 

(A) Interpretation of rivanol test results.

Figure: 4 TAC sec.35.2(b)(3)(A) 

(B) (No change.) 

(4)-(6) (No change.) 

(7) Standard tube agglutination test (STT) or standard
plate agglutination test (SPT). The blood or semen titers of cattle and bison
tested by the STT or SPT methods are interpreted in the following ways:

Figure: 4 TAC sec.35.2(b)(7) 

(8) Particle concentration fluorescence immunoassay (PCFIA)
test. May be used to determine the brucellosis disease status of test-eligible
cattle and bison when conducted by methods approved by USDA, APHIS, VS. When
used as a supplemental test on card-positive <nl>Strain 19<ol> vaccinated <nl>
dairy<ol> cattle, a negative PCFIA result will allow them to be classified
as negative for intrastate movement only. 

(9)-(10) (No change.) 

(c) (No change.) 

(d) Requirements for a herd test. 

(1) Test eligibility. 

(A) Priority herds-

[(i)] All sexually intact [non-vaccinated]
female cattle four months of age and older and all
bulls 18 months of age and older[; and]

[(ii) All cattle designated as test-eligible in other than
priority herds.]

(B) Other than priority herds-All [non-exempt] cattle 18 months
of age and older except steers and spayed heifers.

(2)-(3) (No change.)

(e) Requirements of a market test.

(1) All [test-eligible] cattle 18 months
of age and over except steers and spayed heifers shall be tested unless
they were tested within the previous 30 days and:

(A) are accompanied by a test document approved by the commission;
and

(B) identified with official eartag; and

(C) either identified with legible individual brand, bangle
tag, chalk number, or backtag with this identification shown on a test document;
or each animal examined so that the eartag can be matched to the test document.
(2)-(6) (No change.)

(7) Cattle which show a positive reaction to the card
test shall have another blood sample collected from them by an inspector.
The inspector will conduct another card test and the CITE test or deliver
the sample to a laboratory for a PCFIA test. If negative to the CITE or PCFIA
tests<nl>, Strain 19<ol> [the officially] vaccinated <nl>dairy
<ol> cattle shall be classified negative for intrastate movement only and
marked on the hip with yellow paint. If negative to the CITE or PCFIA tests, 
<nl>
beef cattle and non-Strain 19 vaccinated dairy<ol> [the nonvaccinated
] cattle shall be classified as suspect(s) and may be permitted to return
to the premises of origin under hold order for retest or be "S"-branded and
permitted to slaughter or to a quarantined feedlot or designated pen. <nl>
In either case,<ol> the remainder of the consignment may move unrestricted.
Samples tested with the CITE test shall then be submitted to a state/federal
laboratory in a vacutainer for supplemental testing and accompanied by a 
completed
Form 91-28 which lists only the card positive cattle. 

(f) Requirements of a slaughter test. Slaughter plants operating
in Texas shall collect blood from all [test-eligible] cattle <nl>
18 months of age and over except steers and spayed heifers and <ol>[
slaughtered except] finish fed cattle under 36 months of age. All blood
samples collected at slaughter shall be submitted to a state-federal laboratory.
Identification of the cattle in relation to the sample shall be maintained
so that reactors or suspects may be traced to their herd of origin. The 
following
collection procedures shall be followed: 

(1)-(6) (No change.) 

(g)-(h) (No change.) 

(i) Movement of cattle classified as reactors, exposed or
suspects. There shall be no diversion from the permitted destination. When
moved, the cattle must be maintained separate and apart from all other classes
of livestock in pens reserved for this purpose at livestock markets or trucking
facilities. These pens must be thoroughly cleaned and disinfected before reuse. 
(1)-(2) (No change.) 

<nl>(3)<ol> <nl> Suspects. Suspects will be moved
the same as exposed cattle, except at a livestock market in a consignment
of otherwise negative cattle from a producer's herd of origin where the suspect
is card positive on the presumptive test and negative to supplemental tests,
cattle may move as follows: <ol>

<nl>(A)<ol> <nl> For beef cattle and non-Strain 19 vaccinated
dairy cattle, the owner shall either; <ol>

<nl>(i)<ol> <nl> return the suspect under hold order to
the herd of origin until: <ol>

<nl>(I)<ol> <nl> the suspect is negative to the card test,
in which case the hold order will be released; or <ol>

<nl>(II)<ol> <nl> the suspect is classified as a reactor,
in which case it must be disposed of as described in subsection (j) of this
section; or <ol>

<nl>(ii)<ol> <nl> sell the suspect to a quarantined feedlot,
designated pen, quarantined pasture, or to slaughter, identified with an "S"
brand and a 1-27 permit. <ol>

<nl>(B)<ol> <nl> For Strain 19 vaccinate beef cattle, the
owner shall either: <ol>

<nl>(i)<ol> <nl> return the suspect under hold order to
the herd of origin until: <ol>

<nl>(I)<ol> <nl> the suspect is negative to the card test,
in which case the hold order will be released; or <ol>

<nl>(II)<ol> <nl> the suspect is declared a stabilized
suspect by an epidemiologist after subsequent testing conducted in not less
than 30 days after the positive card test was conducted; or <ol>

<nl>(III)<ol> <nl> the suspect is classified as a reactor,
in which case it must be disposed of as described in subsection (j) of this
section; or <ol>

<nl>(ii)<ol> <nl> sell the suspect to a quarantined feedlot,
designated pen, quarantined pasture, or to slaughter, identified with an "S"
brand and a 1-27 permit. <ol>

[(3) Suspects. Suspects will
be moved the same as exposed cattle, except a vaccinated suspect(s) at a 
livestock
market in a consignment of otherwise negative cattle (where the suspect is
card positive on the presumptive test and negative to supplemental tests)
may move as follows: In a single consignment of cattle, which are from a 
producer's
herd of origin, the owner shall either return the vaccinated suspect(s) under
quarantine to the herd of origin until the suspect(s) is negative to the card
test, declared a stabilized suspect by an epidemiologist after subsequent
test(s) conducted in not less than 30 days, or classified as a reactor on
a subsequent test; or sell the suspect(s) to a quarantined feedlot, designated
pen, quarantined pasture, or to slaughter, identified with an "S" brand. Card
negative cattle in this consignment may move from the market unrestricted.
Consignments containing a card positive but supplemental negative nonvaccinated
suspect(s) may move from the market unrestricted.] 

(j) (No change.) 

(k) Removal of heifer calves from quarantined herds. Heifers
born in an infected herd shall be removed from the herd immediately after
they are weaned and [moved to a market, quarantined pasture, designated
pen, quarantined feedlot, or slaughter or] kept as a separate heifer
herd under quarantine<nl>, or moved to market with "S" permit to be "S" branded,
or "S" branded and permitted prior to movement to a quarantined pasture, 
designated
pen, quarantined feedlot, or slaughter<ol>. 

(l) Requirements following classification of a dairy or a
beef animal or a bison as a reactor or a suspect. 

(1)-(4) (No change.) 

(5) The plan will consist of the following. 

(A) Testing Procedures. 

(i) All [eligible cattle] <nl>sexually intact
female cattle four months of age and older and all bulls 18 months of age
and older<ol> in the herd [including all nonvaccinated heifers over
four months of age] shall be presented for testing or retesting at intervals
stated in the herd plan until the quarantine is released. 

(ii)-(v) (No change.) 

(B) (No change.) 

(6) (No change.) 

(7) Requirements for Quarantine Release. 

(A)-(B) (No change.) 

(C) On the releasing test, official vaccinates that [
react] demonstrate suspect titers on the approved supplemental test
shall be classified as suspects. After <nl>Strain 19 vaccinated<ol> suspects
are stabilized, the remainder of the herd may be released from quarantine.
These suspects shall remain under a hold order. 

(D) To obtain a quarantine release, the owner/caretaker shall
retest all [test-eligible] cattle <nl>18 months of age and over
except steers and spayed heifers<ol> in units not under quarantine. The
retest must be conducted not less than six months after the removal of the
last reactor from the quarantined unit. This retest, together with the third
negative test of the quarantined unit, may be used for herd certification
if conducted no more than 14 months following a negative herd test after the
removal of the last reactor. A designated brucellosis epidemiologist may exempt
units from these retest requirements. 

(E) (No change.) 

(m) Official vaccination requirements. 

(1) (No change.) 

(2) Calfhood vaccinated animals shall be permanently
identified. If the animal is already identified with an official eartag before
vaccination, an additional official eartag is not required. Vaccination tattoos
must be applied to the right ear. For Brucella abortus Strain 19 vaccinates,
the tattoo will include the U.S. Registered Shield and "V" which will be 
preceded
by a number indicating the quarter of the year and followed by a number 
corresponding
to the last digit of the year in which the vaccination was done. For Brucella
abortus Strain RB 51 vaccinates, the tattoo will include the U.S. Registered
Shield and "V," which will be preceded by a letter "R" and followed by a number
corresponding to the last digit of the year in which the vaccination was done.
Official vaccination (orange) eartags must be applied to the right ear <nl>
unless the animal is already identified with an official eartag<ol>. If
the cattle or bison are registered by a breed association recognized by VS,
individual animal registration tattoos or individual animal registration brands
may be used for identifying animals in place of official eartags. 

(3) Adult vaccinated cattle that have been vaccinated
over calfhood age as part of authorized whole-herd vaccination plans shall
be permanently identified as vaccinates by the following procedures: tattoo
or by hot "V" brand and by official eartag. Adult-vaccinated cattle and/or
bison in these herds must be identified by either <nl>a<ol> [an open-ended
] "V" hot brand high on the hip near the tailhead <nl>with the open
end down for RB 51, open end up for Strain 19<ol>, or by an official "AV"
(adult vaccination) tattoo in the right ear. For Brucella abortus Strain 19
vaccinated animals, the "AV" in the tattoo is to be preceded by a number 
indicating
the quarter of the year, and followed by a number corresponding to the last
digit of the year in which the vaccination was done. For brucella abortus
Strain RB 51 vaccinated animals, the "AV" in the tattoo is to be preceded
by the letter "R," and followed by a number corresponding to the last digit
of the year in which the vaccination was done. The brand or tattoo is in 
addition
to the official eartag identification. If the cattle or bison are registered
by a breed association recognized by VS, individual animal registration tattoos
or individual animal registration brands may be used for identifying animals
in place of official eartags. Official eartags, if required, will be placed
in the right ear. 

(4) Vaccination will be done by state/federal personnel
following a negative test within ten days prior to adult vaccination. [
A hold order will be placed on adult vaccinates at time of vaccination. Each
animal may be released following its negative classification.] 

(n)-(p) (No change.) 

(q) Market cattle identification. All [test-eligible
] cattle <nl>18 months of age and older except steers and spayed heifers
<ol> which are being moved from markets to slaughtering establishments shall
be identified by a USDA approved backtag placed just below the midline and
just behind the shoulder of the animal. The check-in document will identify
each backtagged animal to the consignor. 

(r)-(v) (No change.)

sec.35.3. Requirements for Certified Brucellosis
Free Herd of Cattle.
(a)-(b) (No change.) 

(c) Cattle required to be tested. 

(5) Movement of cattle into a certified brucellosis-free herd. 
(A) (No change.) 

(B) From Class "A," <nl>or<ol> "B[,]" [
or "C"] states or areas. Cattle required to be tested from herds not
under quarantine must meet all interstate and intrastate movement requirements
and must be retested negative between 60 and 120 days after being moved. Cattle
added to a certified brucellosis-free herd under this provision shall not
receive new herd status for sale purposes until they have passed a 60-120
day post-entry retest and have been included in an anniversary herd test. 
(f) (No change.)

sec.35.4. Entry, Movement, and Change of Ownership.
(a) (No change.) 

(b) Requirements for cattle entering Texas from other states. 
(1) (No change.) 

(2) Testing. All <nl>non-quarantined<ol> [test-eligible
] cattle <nl>18 months of age and over (as evidenced by the loss of
the first pair of temporary incisor teeth), except steers and spayed heifers
<ol> entering Texas: 

(A) (No change.) 

(B) shall be "S"-branded and moved directly to a quarantined
feedlot, to designated pens, or to slaughter, accompanied with an "S" permit,
or moved directly from a farm of origin to a USDA specifically approved 
livestock
market to be "S"-branded and moved directly to a quarantined feedlot, to 
designated
pens, or to slaughter accompanied with an "S" permit; <nl>or<ol> 

[(C) shall be spayed if female; or] 
<nl>(C)<ol> [(D)] rodeo bulls participating in
a recognized and organized performance group may be moved without meeting
other testing requirements provided: 

(i) the bulls have been subjected to an official negative
test for brucellosis within the previous 12 months; and 

(ii) each bull is individually identified; 

(iii) there is no change of ownership; and 

(iv) they are accompanied with an "E" permit; 

<nl>(D)<ol> [(E)] shall be tested negative one
or more times as described in this subparagraph: 

(i) cattle from a Class "A" state or area shall: 

(I) be tested negative within 30 days prior to entry; or 
(II) be moved directly from a farm of origin to a USDA specifically
approved livestock market for a negative test prior to sale; 

(ii) cattle from a class "B" state or area shall: 

(I) be tested negative within 30 days prior to entry, accompanied
with an "E" permit, and held under quarantine for a negative retest 45-120
days at a farm, ranch, or feedlot; or 

(II) be moved directly from a farm of origin to a USDA specifically
approved livestock market for a negative test and held under quarantine for
a negative retest 45-120 days after sale to a farm, ranch, or feedlot<nl>
.<ol>[;] 

[(iii) all female cattle and test-eligible
males from a Class "C" State or Area shall originate from a brucellosis 
certified
free herd when consigned for purposes other than slaughter or to quarantined
feedlot or designated pen. Females over four months of age must meet vaccination
requirements for entry.] 

(c) Change of ownership within Texas. 

(1) (No change.) 

(2) Testing. All [test-eligible] cattle <nl>
18 months of age and older except steers and spayed heifers<ol> changing
ownership within Texas shall: 

(A)-(D) (No change.) 

(d) Movement to Mexico. All [test-eligible] cattle <nl>
18 months of age and older except steers and spayed heifers<ol> must be
tested negative within 30 days prior to export to Mexico for slaughter. Steers,
spayed heifers, and feedlot finished bulls and heifers are not required to
be tested prior to export. Test results must be recorded on the Certificate
of Veterinary Inspection.

sec.35.6. Indemnity Payments to Owners of Cattle
Exposed to Brucellosis.
(a) (No change.) 

(b) Criteria for selection of herds for indemnity payment: 
[(1) at least 10% of the cattle tested on the initial
herd test must have been classified reactors; or] 

<nl>(1)<ol> [(2)] the herd must have <nl>
a professional diagnosis, supported by culture or significant serology and
compatible history<ol> [had two consecutive herd tests on which reactors
were disclosed]; or 

<nl>(2)<ol> [(3)] a herd not meeting paragraph
(1) [or (2)] of this subsection is recommended for indemnity by
the state epidemiologist; 

<nl>(3)<ol> [(4)] all selections of herds <nl>
or cattle<ol> for payment of indemnity are subject to availability of funds. 
(c) General Requirements. 

(1) The Commission, through its Executive Director, will determine
the amount and number of animals for which indemnity will be paid. The owner
of a herd selected for indemnity may be reimbursed from TAHC funds for 
depopulation
at a total rate not to exceed: 

<nl>(A)<ol> $100 per head for up to a total of 100 head
of exposed nursing males and negative exposed sexually intact females 18 months
of age and older; and 

<nl>(B)<ol> <nl> $100 per head for not more than five negative
exposed bulls 18 months of age and older; and <ol>

[(A) $100 per head for not more than 100 negative
exposed sexually intact females 18 months of age and older and not more than
five negative exposed bulls 18 months of age and older; and] 

<nl>(C)<ol> [(B)] Actual cost of spaying not
to exceed $10 per head. A spaying certificate and the proof of payment for
cost of spaying must be submitted simultaneously with the indemnity claim. 
(2) Depopulation funds shall not be paid for <nl>
weaned<ol> steers or <nl>weanded<ol> spayed heifers. 

(3) All <nl>nursing male<ol> [bull] calves
shall be castrated <nl>or "B" branded and permitted for immediate slaughter
<ol>. 

(4) (No change.) 

(5) Depopulated <nl>sexually intact<ol> cattle shall
be branded with the letter "B" high on the left hip near the tailhead and
identified with a reactor eartag within the specified time intervals according
to applicable state/federal requirements and prior to movement from the premise. 
(6) <nl>Sexually intact cattle<ol> [Cattle]
shall be moved from the premise accompanied with a VS 1-27. They shall either
be moved directly to slaughter or through an approved livestock market for
sale directly to slaughter and accompanied with a VS 1-27 from the market.
In either case the cattle shall be slaughtered within the specified time 
intervals
according to applicable state/federal regulations following identification.
Steers and spayed heifers may be retained on the premise or move without 
restrictions. 
(7) The owner of a herd approved for depopulation must
agree to complete a herd test of <nl>all cattle 18 months of age and older
except steers and spayed heifers<ol> [eligible animals] no later
than six months after repopulation with test-eligible breeding replacements. 
(8) The owner of a herd approved for depopulation must
agree to complete a herd test of <nl>all cattle 18 months of age and older
except steers and spayed heifers<ol> [eligible animals] in units
not depopulated six to 12 months after depopulation. 

(d) (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
June 22, 1998.
TRD-9809957
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

SUBCHAPTER B.Eradication of Brucellosis in Swine
4 TAC sec.35.41, sec.35.49
The Texas Animal Health Commission proposes an amendment
to sec.35.41 and new sec.35.49, concerning eradication of brucellosis
in swine. 

The amendment to sec.35.41 will expedite interstate movement of hogs
when there is no change of ownership. This will not pose any significant disease
risk for swine in Texas. New sec.35.49 requires swine semen to be from validated
swine brucellosis free herds. The new section is necessary to comply with
national program standards to maintain current status and prevent movement
restrictions on Texas swine. 

Kathryn A. Reed, General Counsel, has determined for the first five-year
period the rules are in effect, there will be no fiscal implications for state
or local government as a result of enforcing or administering the rules. 
Ms. Reed also has determined that for each year of the first five years
the rules are in effect, the public benefit anticipated as a result of enforcing
the rules will be the expedited interstate movement of hogs when there is
no change of ownership and the establishment of a new section to comply with
national program standards to maintain current status and prevent movement
restrictions on Texas swine. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the rules as proposed. 

Comments regarding the proposed amendment and new section may be submitted
to Kathy Reed, P.O. Box 12966, Austin, Texas 78711-2966. 

The amendment and new section are proposed under the Texas Agriculture
Code, Chapter 161, sec.sec.161.041, 161.046, and 165.023, which authorizes
the Commission to promulgate rules in accordance with the Texas Agriculture
Code.

No other statutes, articles, or codes are affected by the amendment and
new section.

sec.35.41. 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> Adjacent herd--A herd of swine that occupies
a premise that borders a herd known to be affected. (This includes herds 
separated
by roads or fordable streams.) 

<nl>(2)<ol> Boar--An uncastrated male swine that has
reached a stage of maturity that allows him to be used as a breeding animal.
The term also includes those uncastrated male swine that because of age or
infirmity are no longer capable of being used for breeding. 

<nl>(3)<ol> Brucellosis exposed swine--Swine that are
part of a known infected herd or that have been in contact with brucellosis
reactors in marketing channels for periods of 24 hours or longer, or for a
period of less than 24 hours if the reactor has recently aborted, farrowed,
or has a vaginal or uterine discharge. These animals are considered exposed
regardless of the blood test results. Brucellosis suspect swine are also 
considered
to be exposed. Brucellosis exposed swine must be placed under quarantine and
restricted pending slaughter or pending release by the Texas Animal Health
Commission (TAHC). 

<nl>(4)<ol> Herd-- 

(A) all swine under common ownership or supervision that are
grouped on one or more parts of any single premises (lot, farm, or ranch); 
(B) all swine under common ownership or supervision on two
or more premises that are geographically separated, but on which swine have
been interchanged or where there has been contact among them on the different
premises. Contact between swine on the different premises will be assumed
unless the owner establishes otherwise and the results of the epidemiologic
investigation are consistent with the lack of contact between premises; or 
(C) all swine on common premises, such as community pastures,
grazing association units, or waste food feeding complexes but owned by 
different
persons. Other groups of swine owned by the persons involved which are located
on other premises are considered to be part of this herd unless the 
epidemiological
investigation established that swine from the affected herd have not had the
opportunity for direct or indirect contacts with swine from that specific
premises. 

<nl>(5)<ol> Herd of origin of swine--Any herd
or premises on which swine are farrowed and raised or premises on which those
swine were maintained for a period of 60 days or more immediately before being
shipped. 

<nl>(6)<ol> Herd test--The herd test shall include
all sexually intact swine six months of age and older. All swine tested shall
be identified with an eartag, tattoo, or other permanent identification. (All
swine held for feeding purposes are exempt from herd test provided they are
maintained separate and apart from the breeding herd.) 

<nl>(7)<ol> High risk herd--A herd that is epidemiologically
judged by a state/federal veterinarian to have a high probability of having
or developing brucellosis. A high risk herd need not be located on the same
premise as an infected or adjacent herd. 

<nl>(8)<ol> Identification of reactor--Reactor swine
are to be identified by placing a red serially numbered reactor tag in the
left ear. 

<nl>(9)<ol> Infected herd--A herd of swine in which
one or more reactors has been disclosed. 

<nl>(10)<ol> Infected herd retest--A retest of an infected
herd shall include all sexually intact swine of weaning age or older. 

<nl>(11)<ol> Market swine test (MST)--Tests on sows
and boars moving in trade through livestock markets, stockyards, buying 
stations,
or to slaughter establishments and those sows and boars assembled at farms
or ranches that are being readied for immediate movement to markets, stockyards,
or a slaughter establishment or to other sales. 

<nl>(12)<ol> Sow--A female swine that has given birth
to one or more pigs or that is parturient. 

<nl>(13)<ol> Swine classification-- 

(A) Negative--An animal that is considered and judged to be
free of swine brucellosis by a state/federal veterinarian according to the
guidelines found in sec.35.42 of this title (relating to Classification
of Swine by Blood and Semen Tests). 

(B) Suspect--An animal which tests indicate may be infected
with brucellosis and classified as such by a state/federal veterinarian 
according
to the guidelines found in sec. 35.42 of this title (relating to Classification
of Swine by Blood and Semen Tests). 

(C) Reactor--An animal considered and determined to be infected
with swine brucellosis by a state/federal veterinarian based on testing and
guidelines in sec. 35.42 of this title (relating to Classification of Swine
by Blood and Semen Tests). 

<nl>(14)<ol> Swine Commuter Herd-A swine entity
with operations in two or more states and whose normal management practices
involve movement of swine interstate between operations which it controls,
without change of ownership. A swine Commuter Herd Agreement must be signed
by a representative of the swine entity and the State Chief Animal Health
Officials where swine entity is located. This Agreement will continue until
canceled by the swine entity or one of the signatory states. 

<nl>(15)<ol> Waste food feeding complex--A premise
where more than one owner raises swine and where at least one of the owners
feeds waste food to swine. 

<nl>(16)<ol> Waste food feeding operation (garbage
feeder)--A swine operation that feeds material defined as garbage in sec.55.3
of this title (relating to Feeding of Garbage). 

sec.35.49. General Requirements.
All herds that market swine semen must be validated swine brucellosis
free. 

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
June 22, 1998.
TRD-9809958
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

CHAPTER 43.Tuberculosis
SUBCHAPTER A.Cattle
4 TAC sec.43.2
The Texas Animal Health Commission proposes an amendment
to sec.43.2, concerning tuberculosis. 

The amendment is necessary to clarify the current regulations. 

Kathryn A. Reed, General Counsel, has determined for the first five-year
period the rule is in effect, there will be no fiscal implications for state
or local government as a result of enforcing or administering the rule. 

Ms. Reed also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be clearer rules governing tuberculosis testing requirements
for entry of cattle from Mexico. There will be no effect on small businesses.
There is no anticipated economic cost to persons who are required to comply
with the rule as proposed. 

Comments regarding the proposed amendment may be submitted to Kathy Reed,
P.O. Box 12966, Austin, Texas 78711-2966. 

The amendment is proposed under the Texas Agriculture Code, Chapter
161, sec.sec.161.041, 161.046, and 162.003, which authorizes the Commission
to promulgate rules in accordance with the Texas Agriculture Code.

No other statutes, articles, or codes are affected by the amendment.

sec.43.2. Interstate Movement Requirements.
(a)-(b) (No change.) 

(c) All sexually intact cattle, from any foreign country or
part thereof with no recognized comparable Tuberculosis status: 

(1) To be held for purposes other than for immediate slaughter
or feeding for slaughter in a quarantined feedlot or designated pen, <nl>
must be tested at the port of entry into Texas under the supervision of the
port veterinarian, and<ol> shall be under quarantine on the first premise
of destination in Texas pending a negative tuberculosis test no earlier than
120 days and no later than 180 days after arrival. The test will be performed
at the owner's expense<nl>.<ol>[; or] 

(2) When destined for feeding for slaughter in a quarantined
feedlot or designated pen, [sexually intact cattle] must be tested
at the port-of-entry into Texas under the supervision of the port veterinarian;
moved directly to the quarantined feedlot or designated pen only in sealed
trucks; accompanied with a VS 1-27 permit issued by TAHC or USDA personnel;
and "S" branded prior to or upon arrival at the feedlot. 

(d) Steers and spayed heifers from Mexico may enter as follows. 
<nl>(1)<ol> <nl> From states that have been determined
by the Commission, acting on the recommendation of the Bi-National Committee,
to have fully implemented the Eradication Phase of the Mexican Tuberculosis
Eradication Program (Stage II States): steers and spayed heifers must be tested
negative for tuberculosis in accordance with the Norma Official Mexicana (NOM)
within 60 days prior to entry into the United States. <ol>

<nl>(2)<ol> <nl>From states that have been determined
by the Commission, acting on the recommendation of the Bi-National Committee,
to have fully implemented the Control/Preparatory Phase of the Mexican 
Tuberculosis
Eradication Program (Stage I States): steers and spayed heifers must be tested
negative for tuberculosis prior to movement into a Stage II State. Upon entry
into the Stage II State, the animals must be quarantined and have two additional
negative tuberculosis tests. The first test in the Stage II State must be
conducted at least 60 days after the test in the Stage I State. The second
test in the Stage II State must be conducted at least 60 days after the first
test in the Stage II State, but not more than 60 days before moving to the
United States border. <ol>

<nl>(3)<ol> <nl> From states that have been determined
by the Commission, acting on the recommendation of the Bi-National Committee,
to have achieved Accredited Free status (Accredited Free States): steers and
spayed heifers may move directly into the state without testing or further
restrictions provided they are moved as a single group, and not commingled
with other cattle prior to arriving at the border. <ol>

<nl>(4)<ol> <nl> From states that are not Stage II,
Stage I, or Accredited Free (Stage 0 States): Steers and spayed heifers must
be tested negative for tuberculosis prior to movement into a Stage II State.
Upon entry into a Stage II State, the animals must be quarantined and have
two additional negative tuberculosis tests. The first test while in the Stage
II State must be conducted at least 60 days after the test in the Stage 0
State. The second test, while in the Stage II State, must be conducted at
least 90 days after the first test in the Stage II State, but no more than
60 days before moving to the United States border. <ol>

<nl>(5)<ol> <nl> From Accredited Tuberculosis Free
herds from Stage I or Stage 0 States: steers and spayed heifers that are moved
directly from the herd of origin across the border as a single group and not
commingled with other cattle prior to arriving at the border may enter as
follows: <ol>

<nl>(A)<ol> <nl> Steers and spayed heifers originating
from a Stage I State may move into a Stage II State without a tuberculosis
test and enter Texas after meeting the requirements set out in paragraph (1)
of this subsection. <ol>

<nl>(B)<ol> <nl> Steers and spayed heifers originating
from Stage 0 States may move into a Stage II State without a tuberculosis
test and enter Texas after meeting the requirements set out in paragraph (2)
of this subsection.<ol> 

[(1) From states that have been
determined by the Commission, acting on the recommendation of the Bi-National
Committee, to have fully implemented the Control/Preparatory Phase of the
Mexican Tuberculosis Eradication Program by September 1, 1995--steers and
spayed heifers that have been tested negative for tuberculosis in accordance
with the Norma Official Mexicana (NOM) within 60 days prior to entry into
the United States may enter without further restriction. States that have
not met this requirement by September 1, 1995, may not import steers and spayed
heifers into Texas.] 

[(2) From states that have been determined
by the Commission, acting on the recommendation of the Bi-National Committee,
to have fully implemented the Eradication Phase of the Mexican Tuberculosis
Eradication Program by March 1, 1997--steers and spayed heifers that have
been tested negative for tuberculosis in accordance with the Norma Official
Mexicana (NOM) within 60 days prior to entry into the United States or that
originate from herds equal to U.S. Accredited TB-free herds that are moved
directly from the herd of origin across the border as a single group and not
commingled with other cattle prior to arriving at the border may enter the
state without further restriction. States that have not met this requirement
by March 1, 1997, may not import steers and spayed heifers into Texas.] 
[(3) From states that have been determined
by the Commission, acting on the recommendation of the Bi-National Committee,
to have achieved Accredited Free status--steers and spayed heifers may move
directly into the state without testing or further restrictions provided they
are moved as a single group, and not commingled with other cattle prior to
arriving at the border.] 

[(4) Holstein and Holstein cross steers,
and Holstein and Holstein cross spayed heifers from Mexico are prohibited
from entering Texas regardless of test history.] 

[(e) Cattle entering Texas from Mexico for
the purpose of feeding and return to Mexico for slaughter under the federal
in-bond program are exempt from these requirements.] 

<nl>(e)<ol> [(f)]<nl>In addition to the entry
requirements set out in subsections (c) and (d) of this section, rodeo<ol>
[Rodeo] stock from Mexico shall be tested for tuberculosis by a
U.S. accredited veterinarian or under the supervision of a USDA/APHIS port
veterinarian within 12 months prior to their utilization as rodeo or roping
stock, and retested for tuberculosis every 12 months thereafter. 

<nl>(f)<ol> <nl> Regardless of reproductive status, test
history, or Mexican State of origin, Holstein and Holstein cross cattle are
prohibited from entering Texas. <ol>

(g) (No change.) 

<nl>(h)<ol> <nl> "M"-branding requirements are set out
in sec.41.1 of this title (relating to Tick Eradication). <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
June 22, 1998.
TRD-9809959
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

CHAPTER 51.Interstate Shows and Fairs
4 TAC sec.51.2
The Texas Animal Health Commission proposes an amendment
to sec.51.2, concerning interstate shows and fairs. 

The amendment is necessary to reflect the reduced test eligible age for
cattle entering from other states. 

Kathryn A. Reed, General Counsel, has determined for the first five-year
period the rule is in effect, there will be no fiscal implications for state
or local government as a result of enforcing or administering the rule. 

Ms. Reed also has determined that for each year of the first five years
the rule is in effect, the public benefit anticipated as a result of enforcing
the rule will be increased surveillance and reduced risk of disease exposure.
There will be no effect on small businesses. There is no anticipated economic
cost to persons who are required to comply with the rule as proposed. 

Comments regarding the proposed amendment may be submitted to Kathy Reed,
P.O. Box 12966, Austin, Texas 78711-2966. 

The amendment is proposed under the Texas Agriculture Code, Chapter
161, sec.sec.161.041, 161.046, and 163.061, which authorizes the Commission
to promulgate rules in accordance with the Texas Agriculture Code.

No other statutes, articles, or codes are affected by the amendment.

sec.51.2. General Requirements. 
(a) (No change.) 

(b) Certificate of veterinary inspection. 

(1) All nonquarantined livestock or poultry entering Texas
from any state, territory, or foreign country shall have a certificate of
veterinary inspection, except: 

(A) <nl>cattle 18 months of age and over<ol>[test-eligible
cattle] delivered directly from the farm of origin to slaughter or a
USDA specifically approved livestock market by the owner or consigned there
and accompanied by a waybill; 

(B) <nl>cattle 18 months of age and over<ol>[test-eligible
cattle] entering from other than a farm-of-origin may be moved to slaughter<nl>
, to a quarantined pen,<ol> or to a quarantined feedlot when accompanied
by an "S" permit on which each animal is individually identified. Brucellosis
test data shall be written on the "S" permit and include test date and results
of that test; 

(C) steers, spayed heifers, cattle under <nl>18 months of
age<ol> [test age], sheep, goats, and equine delivered to slaughter
or livestock market by the owner or consigned there and accompanied by a 
waybill; 
(D)-(E) (No change.) 

(F) steers, spayed heifers, and cattle under <nl>18 months
of age<ol> [test age] originating in New Mexico which are accompanied
by a New Mexico official certificate of livestock inspection along with proof
of brucellosis vaccination of heifers which are required to be vaccinated. 
(2) The certificate of veterinary inspection shall
state that: 

(A) (No change.) 

(B) the animals were subjected to tests, immunizations, and
treatment required by rule of the commission. Animals that have been vaccinated
or tested for any disease as required by the commission shall be individually
identified on the certificate of veterinary inspection except that brucellosis
vaccinated heifers under <nl>18 months of age<ol> [test age]
with tattoos and vaccination tags require only a statement by the veterinarian
that they are vaccinated and individually identified. 

(c)-(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
June 22, 1998.
TRD-9809960
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

CHAPTER 55.Swine
4 TAC sec.55.1
(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 Animal Health Commission or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Animal Health Commission proposes the repeal of
sec.55.1 and new sec.55.1 and amendments to sec.sec.55.4, 55.6, and
55.9, concerning swine. 

The amendment to sec.55.4 adds requirements for livestock markets handling
swine. The amendment is necessary to comply with national program standards
to maintain current status and prevent movement restrictions on Texas swine. 
The amendment to sec.55.6 provides that an entry permit is not necessary
for swine entering Texas from a swine commuter herd. This provision with the
amendment to sec.35.41 expedites interstate movement of hogs when there
is no change of ownership. 

The amendment to sec.55.9 changes the definition of "feral swine" to
match the definitions in the federal standards. This is necessary to assure
that Texas maintains its current status and to prevent movement restrictions
on Texas swine. 

Section 55.1 is repealed and replaced to comply with national swine brucellosis
and pseudorables programs in order to maintain current status and prevent
movement restrictions on Texas swine. The new section establishes change of
ownership requirements for swine. 

Kathryn A. Reed, General Counsel, has determined for the first five-year
period the rules are in effect there will be fiscal implications for state
or local government as a result of enforcing or administering the rules. In
accordance with sec.55.1, there will be an approximate cost of $40,000 per
year to state government. Also, there will be a one time cost of approximately
$30,000. Some of these expenses may be assumed by USDA. 

Ms. Reed also has determined that for each year of the first five years
the rules are in effect, the public benefit anticipated as a result of enforcing
the rules will be rules that are current with national program standards 
regarding
swine in Texas. There will be no effect on small businesses. There is no 
anticipated
economic cost to persons who are required to comply with the rules as proposed. 
Comments regarding the proposed repeal, new section, and amendments may
be submitted to Kathy Reed, P.O. Box 12966, Austin, Texas 78711-2966. 

The repeal is proposed under the Texas Agriculture Code, Chapter
161, sec.sec.161.041, 161.046, and 165.022, which authorizes the Commission
to promulgate rules in accordance with the Texas Agriculture Code.

No other statutes, articles, or codes are affected by the repeal.

sec. 55.1. Inspection of Feeder and Breeder Swine
Prior to Movement of Sale. 
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.

Filed with the Office of the Secretary of State, on
June 22, 1998.
TRD-9809961
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

4 TAC sec.sec.55.1, 55.4, 55.6, 55.9
The new section and amendments are proposed under the Texas
Agriculture Code, Chapter 161, sec.sec.161.041, 161.046, and 165.022,
which authorizes the Commission to promulgate rules in accordance with the
Texas Agriculture Code. 

No other statutes, articles, or codes are affected by the repeal.

sec.55.1. Testing Breeding Swine
Prior to Sale or Change of Ownership.
(a) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context clearly
indicates otherwise. 

(1) Breeding Swine-Swine that are six months of age or older
(sexually mature, intact animals) and that are used or intended to be used
for breeding. 

(2) Change of Ownership-Taking possession of breeding
swine as a result of a gift or by some other form of remuneration. 

(3) Test or Testing-Collection and examination of blood
samples taken from swine by using recognized tests for Pseudorabies and Swine
Brucellosis infection. 

(b) Testing Prior to Change of Ownership. 

(1) All breeding swine shall be tested negative for Pseudorabies
and Swine Brucellosis within 30 days prior to change of ownership in Texas
unless hot weather prevents testing at a livestock market. Swine from herds
with a current disease-free status are exempt from this test requirement. 
(2) Blood will be collected by TAHC or USDA, VS Regulatory
personnel or Texas licensed, USDA Accredited Veterinarians or their employees
and tested using tests referenced in current national disease program standards. 
(3) Breeding Swine from which blood was collected at
a livestock market may be moved from the market to a recognized slaughter
facility without receiving test results. No permit or Hold Order is required
for movement to a recognized slaughter facility. 

(4) Breeding Swine from which blood was collected at
a livestock market may be moved from the market to the premise of the buyer
under Hold Order pending results of the test and should be isolated from other
swine until test results are known. 

(5) Each animal tested shall be identified by a USDA
Veterinary Services approved identification eartag (metal, plastic, or other)
that conforms to the nine-character alpha-numeric National Uniform Eartagging
System. 

sec.55.4. Livestock Markets Handling Swine. 
(a)-(h) (No change.) 

<nl>(i)<ol> <nl> Requirements for testing of test eligible
swine not moving directly to slaughter from the market between May 1 and October
1. <ol>

<nl>(1)<ol> <nl> These swine shall be permitted from the
market to the premise of the buyer, under Hold Order, pending results of a
test for brucellosis and pseudorabies conducted at owner's expense. <ol>

<nl>(2)<ol> <nl> The required testing for swine brucellosis
and pseudorabies of all test-eligible swine that are sold for purposes other
than for slaughter will be done within 15 days following removal from the
market. Swine are exempt from post-sale testing if they originate directly
from a herd with a recognized free status for that disease or if they have
tested negative within the previous 30 days. Proof of a disease-free herd
status or negative test must be presented at time of sale. <ol>

<nl>(3)<ol> <nl> Dealers who maintain dealer records
that allow trace backs to the premise of origin are exempt from this post-sale
test requirement provided swine are moved to slaughter within 30 days following
removal from the market. <ol>

<nl>(4)<ol> <nl> Each animal(s) tested shall be identified
by a USDA Veterinary Services approved identification eartag (metal, plastic,
or other) that conforms to the nine-character alpha-numeric National Uniform
Ear tagging System and an official backtag. <ol>

<nl>(5)<ol> <nl> Pursuant to sec.55.8 of this title
(relating to Dealer Recordkeeping), the market shall maintain, official backtag
information correlating the backtag number to both the seller and the buyer
of those swine.<ol> 

<nl>(6)<ol> <nl> At the time of testing, the swine
test chart (TAHC Form 4-54S) shall be completed in its entirety. <ol>

<nl>(j)<ol> <nl> Requirements for testing of test eligible
swine at the market during October 1 and May 1. <ol>

<nl>(1)<ol> <nl> Blood samples shall be collected from
test-eligible swine that are sold for testing for swine brucellosis and 
pseudorabies.
These samples may be collected either prior to or after sale but prior to
leaving the market. <ol>

<nl>(2)<ol> <nl> If result of the blood test is unknown
prior to leaving the market, swine may be moved to the premise of the buyer
under permit and Hold Order pending result of that test. <ol>

<nl>(3)<ol> <nl> Swine that originate directly from
a herd with a recognized free status for that disease or if they were tested
negative within the previous 30 days are exempt from the testing requirement.
Proof of a disease-free status or negative test must be presented at time
of sale. <ol>

<nl>(4)<ol> <nl> Each animal(s) tested shall be identified
by a USDA Veterinary Services approved identification eartag (metal, plastic,
or other) that conforms to the nine-character alpha-numeric National Uniform
Ear tagging System and an official backtag. <ol>

<nl>(5)<ol> <nl> Pursuant to sec.55.8 of this title,
the market shall maintain, official backtag information correlating the backtag
number to both the seller and the buyer of those swine. <ol>

<nl>(6)<ol> <nl> At the time of blood sample collection,
the swine test chart (TAHC Form 4-54S) shall be completed in its entirety.
<ol>

[(i) Requirements for testing of test eligible
swine not moving directly to slaughter from the market. ] 

[(1) These swine shall be permitted from the
market to the premise of the buyer, under quarantine, pending results of a
test for brucellosis and pseudorabies conducted at owner's expense. ] 
[(2) Blood samples shall be collected
from all test-eligible swine that are sold for purposes other than for slaughter
for testing for swine brucellosis and pseudorabies within 15 days following
removal from the market. Post-sale testing may be exempt if swine originate
directly from a herd with a recognized free status for that disease or if
they were tested negative within the previous 30 days. Proof of a disease-free
status or negative test must be presented at time of sale. ] 

[(3) Dealers who maintain dealer records
that allow tracebacks to the premise of origin are exempt from this post-sale
test requirement provided swine are moved to slaughter within 30 days following
removal from the market. ] 

[(4) Each animal(s) tested shall be identified
by an official eartag and an official backtag. ] 

[(5) The market shall maintain, under
the Dealer Recordkeeping requirement found in sec.55.8 of this title (relating
to Dealer Recordkeeping), official backtag information correlating the backtag
number to both the seller and the buyer of those swine. ] 

[(6) At the time of testing, the swine
test chart shall be completed in its entirety.]

sec.55.6. Entry Requirements.
(a)-(h) (No change.) 

<nl>(i)<ol> Entry permits are not required for swine that
originate from an approved Swine Commuter Herd. 

sec.55.9. Feral Swine. 
(a) Definitions. 

(1) Feral swine--Swine that have lived <nl>all (wild) or
<ol> any <nl>(feral)<ol> part of their lives free-roaming. [Feral
swine may be reclassified as domestic swine by a negative official brucellosis
test and a negative official pseudorabies test conducted after at least 60
days' confinement separate and apart from any infected or free-roaming swine.
(2) (No change.) 

(b) (No change.) 

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 22, 1998.
TRD-9809962
Kathryn A. Reed

General Counsel

Texas Animal Health Commission 

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 719-0714

TITLE 7. BANKING AND SECURITIES
PART I. Office of Consumer Credit Commissioner
CHAPTER 1.Consumer Credit Commissioner
SUBCHAPTER A.Regulated Loan Licenses
1.General Provisions
7 TAC sec.1.12
(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 Office of Consumer Credit Commissioner or in the Texas Register office,
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Finance Commission of Texas (the commission) proposes
the repeal of sec.1.12. This repeal is necessary as the sections that are
proposed for repeal relate to allowable charges and terms of loans under Chapter
3, Texas Civil Statutes, Article 5069-3.01 et seq.
, which was repealed by the 75th Legislature. Moreover, they are being
replaced by a new set of rules for Chapter 3A, a new chapter of the 
Texas Credit Title which encompasses old Chapter
3 through 5. The new rules are being published for comment in the Texas 
Register. 

Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period of the repeal 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 repeal. 

Ms. Pettijohn also has determined that for each year of the first five-year
period the repeal as proposed will be in effect, the public benefit anticipated
as a result of the repeal is the removal of unenforceable and obsolete 
regulations
which will provide space for replacement rules. There is no anticipated cost
to persons who are required to comply with the repeal as proposed. There will
be no adverse economic effect on small businesses. 

Comments on the proposed repeal may be submitted in writing to Leslie L.
Pettijohn, Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin,
Texas 78705-4207. 

The repeal is proposed under Texas Civil Statutes, Article 5069-3A.901,
which authorizes the Finance Commission to adopt rules to enforce new Chapter
3A. The repeal will not be adopted until the proposed replacement sections
are adopted. 

The statutory provisions (as currently in effect) affected by the proposed
repeal are Texas Civil Statutes, Article 5069, Chapter 3A, Subchapters E and
F. 

sec.1.12. Allowable Charges and Terms of Loans.
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
June 16, 1998.
TRD-9809647
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

2.Application for License and Transfer of License
7 TAC sec.1.35, sec.1.42
(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 Office of the Consumer Credit Commissioner or in the Texas Register
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Finance Commission of Texas (the commission) proposes
the repeal of sec.1.35 and sec.1.42. This repeal is necessary as the sections
that are proposed for repeal relate to the issuance and display of licenses
under Chapter 3, Texas Civil Statutes, Article 5069-3.01 et seq., which was 
repealed by the 75th Legislature. Moreover, they
are being replaced by a new set of rules for Chapter 3A, a new chapter of
the Texas Credit Title which encompasses old
Chapter 3 through 5. The new rules are being published for comment in the 
Texas Register. 

Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period of the repeal 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 repeal. 

Ms. Pettijohn also has determined that for each year of the first five-year
period the repeal as proposed will be in effect, the public benefit anticipated
as a result of the repeal is the removal of unenforceable and obsolete 
regulations
which will provide space for replacement rules. These is no anticipated cost
to persons who are required to comply with the repeal as proposed. There will
be no adverse economic effect on small businesses. 

Comments on the proposed repeal may be submitted in writing to Leslie L.
Pettijohn, Consumer Credit Commissioner, 2601 North Lamar Boulevard, Austin,
Texas 78705-4207. 

The repeal is proposed under Texas Civil Statutes, Article 5069-3A.901,
which authorizes the Finance Commission to adopt rules to enforce new Chapter
3A. The repeal will not be adopted until the proposed replacement sections
are adopted. 

The statutory provisions (as currently in effect) affected by the proposed
repeal are Texas Civil Statutes, Article 5069, Chapter 3A, Subchapter D.

sec.1.35. Display of License.
sec.1.42. License Issuance.
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
June 16, 1998.
TRD-9809649
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

6.Deferment Charges
7 TAC sec.sec.1.111-1.116
(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 Office of Consumer Credit Commissioner or in the Texas Register office,
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The repeal is proposed under Texas Civil Statutes, Article
5069-3A.901, which authorizes the Finance Commission to adopt rules to enforce
new Chapter 3A. The repeal will not be adopted until the proposed replacement
sections are adopted. 

The statutory provisions (as currently in effect) affected by the proposed
repeal are Texas Civil Statutes, Article 5069, Chapter 3A, Subchapters E and
F. 

sec.1.111. Deferment Agreement.
sec.1.112. Documentation.
sec.1.113. Computation.
sec.1.114.Deferment by Lender.
sec.1.115. Restrictions.
sec.1.116. Noncompliance. 
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
June 16, 1998.
TRD-9809648
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

SUBCHAPTER D.License
7 TAC sec.sec.1.401-1.407
The Finance Commission of Texas (the commission) proposes
the adoption of new sec.sec.1.401-1.407, concerning the provisions
related to license issuance. 

Section 1.401 discusses the authorized activities of licensed lenders operating
multiple branches. 

Section 1.402 explains the requirement for displaying licenses. 

Section 1.403 describes the agency's procedure for providing delinquent
notices to licensees who have failed to pay an annual license fee. 

Section 1.404 details the effect of a license revocation upon the authority
to collect existing contracts. 

Section 1.405 prescribes the process for a new application after a former
licensee has had a license revoked. 

Section 1.406 clarifies the procedure for a licensee to surrender a license.
Section 1.407 provides the procedure for returning license certificates
upon the reissuance of a license. 

Leslie L. Pettijohn, Consumer Credit Commissioner, has determined that
for the first five-year period these rules will be in effect, there will be
no fiscal implications for state or local government as a result of 
administering
or enforcing these rules. 

Commissioner Pettijohn also has determined that for each year of the first
five- year period these rules will be in effect, the public benefit anticipated
as a result of the adoption of the new rules is the clarification and 
publication
of the licensing procedures of Chapter 3A. It is anticipated that there will
be no adverse economic effect on small businesses. 

Comments on the proposed adoption of the new sections may be submitted
in writing to Leslie L. Pettijohn, Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207. 

The new sections are 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, Article 5069-3A, Subchapter D is affected by these
proposed new sections. 

sec. 1.401. Branch Networks.
For purposes of Article 5069-3A.251(b), an authorized lender with
multiple licensed offices is authorized to make, negotiate, arrange, and collect
loans from any of its licensed locations. Any action relating to a single
account may occur at different licensed locations as long as every action
is made by a licensed branch operated by the same authorized lender. 

sec.1.402. License Display.
Licenses must be prominently displayed in a licensee's office in a
conspicuous location visible to the general public.

sec.1.403. Notice of Delinquency
in Payment of Annual Fee.
For purposes of Article 5069-3A.255, notice of delinquency in the
payment of an annual fee is given upon the mailing of the delinquency notice,
enclosed in a postpaid, properly addressed envelope, in a post office or 
official
depository under the care and custody of the United States Postal Service.
sec.1.404. Effect of Revocation,
Suspension, or Surrender of License.
Revocation, suspension, or surrender of a consumer loan license does
not affect a preexisting contract between a lender and a borrower, except
that no more than 10% interest may be charged or received by the lender 
following
the revocation, suspension, or surrender of its license. Alternatively, a
lender whose license is revoked or suspended may transfer or sell its accounts
to an authorized lender who may continue to charge or receive the contracted
rate of interest within the authority of Article 5069-3A.001 et seq.

sec.1.405. Application Process after
Suspension or Revocation.
To obtain a license after a license has been suspended or revoked,
the former licensee is required to file an application for a new license 
pursuant
to the procedures set forth in 7 TAC sec.1.31.

sec.1.406. Surrender of License.
A licensee may voluntarily surrender a license by submitting the license
certificate and a completed office closing questionnaire (Form ADM - 033). 
sec.1.407. License Reissuance.
In the event of reissuance of a license for any reason, the license
shall return to the commissioner the license certificate that was held prior
to the reissuance. 

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
June 16, 1998.
TRD-9809644
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

SUBCHAPTER E.Interest Charges in Unsecured Loans
7 TAC sec.sec.1.501, 1.502, 1.504, 1.505
The Finance Commission of Texas (the commission) proposes
the adoption of new sec.sec.1.501, 1.502, 1.504, and 1.505, concerning
the methods for calculating maximum interest charges, additional interest
for default and deferment under Subchapter E, Chapter 3A, Texas Civil Statutes,
Article 5069. Additionally, the rules prescribe appropriate procedures for
these transactions. 

Section 1.501 describes the manner for determining the maximum rate or
amount of interest by type of transaction. 

Section 1.502 details the treatment of odd periods of time, generally those
less than a full month, for calculating interest. 

Section 1.503 clarifies the procedures for assessing and collecting default
charges in connection with a Subchapter E loan. 

Section 1.504 explains the method and procedures for calculating and collecting
a deferment charge on a Subchapter E loan. 

These rules are necessary due to the repeal of the former Article 5069-3.15
and the adoption of new Article 5069-3A.001 et seq.
Generally, these procedures are well established and are commonly
used throughout the regulated industry. These rules should serve, however,
to clarify the calculations and procedures. 

Leslie L. Pettijohn, Consumer Credit Commissioner has determined that for
the first five-year period these rules will be in effect, there will be no
fiscal implications for state or local government as a result of administering
or enforcing these rules. 

Commissioner Pettijohn also has determined that for each year of the first
five-year period these rules will be in effect, the public benefit anticipated
as a result of the adoption of the new rules is the clarification to lenders
of the maximum allowable charges provided under the law, thereby assisting
lenders and borrowers in constructing transactions that comply with the law.
It is anticipated that there will be no adverse economic effect on small 
businesses. 
Comments on the proposed adoption of the new sections may be submitted
in writing to Leslie L. Pettijohn, Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207. 

The new sections are 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, Article 5069-3A, Subchapter E is affected by these
proposed new sections. 

sec.1.501. Maximum Interest Charge.
(a) Precomputed loans. An authorized lender may charge the
add-on rates authorized by Art. 5069-3A.301(a) or the alternative simple 
interest
rate authorized by Art. 5069- 3A.301(d), as calculated by the scheduled 
installment
earnings method, for precomputed loans that are either unsecured or secured
by personal property. Prepaid interest in the form of points is not permitted,
unless expressly authorized by statute (e.g. an administrative loan fee). 
(b) Interest-bearing loans. An authorized lender may charge
any rate of interest that does not exceed the maximum rate authorized by Art.
5069-3A.301(d), as calculated by the true daily earnings method or the scheduled
installment earnings method for an interest-bearing loan that is either 
unsecured
or secured by personal property. Prepaid interest in the form of points is
not permitted, unless expressly authorized by statute (e.g. an administrative
loan fee). 

(c) Method of calculation. An authorized lender making loans
under Art. 5069- 3A.301(d) may calculate the rate and amount of interest by
any method of calculation as long as the amount of interest charged does not
exceed the maximum rate or amount of interest set forth in Art.5069-3A.301(d)
calculated using the specified earnings methods of Art. 5069-3A.301.

sec.1.502. Treatment of Periods
Less Than a Full Month before the First Installment Date.
(a) To calculate periods of time less than a full month on
a precomputed loan: 

(1) any period before the first installment date that includes
a part of a month longer than 15 days may be treated as a full month for 
interest
calculation purposes; and 

(2) any period before the first installment date that
includes a part of the month that is 15 days or less may not be treated as
a full month for interest calculation purposes. The amount of interest for
the period of 15 days or less must be calculated under the true daily earnings
method. This amount may be added to the first installment or, alternatively,
it may be allocated among all of the installments. 

(b) An authorized lender may not charge more than the maximum
authorized Art. 5069-3A.301(a) or 5069-3A.301(d) effective rate in calculating
the interest charge for the additional odd first period. 

sec.1.504. Default Charges.
(a) Precomputed loans. Additional interest for default may
be charged on a precomputed loans, whether regular or irregular, or on a 
precomputed
loan contracted for on a scheduled installment earnings method, to the extent
it is authorized by Art. 5069-3A.303 or Art. 5069-3A.306. 

(b) Interest-bearing loans. No additional interest for default
may be charged on an interest-bearing loan made pursuant to Art. 3A.301, except
for a loan contracted for on a scheduled installment earnings method. 

(c) Contract required. No default charge may be assessed,
imposed, charged, or collected unless contracted for in writing by the parties. 
(d) Missed payment covered by insurance. When any payment
or partial payment in default is later paid by some form of insurance such
as credit disability insurance, unemployment insurance, or collateral protection
insurance, any prior assessment of additional interest for default must be
waived. 

(e) Pyramiding prohibited. An authorized lender seeking to
assess additional interest for default in a precomputed loan under Art. 5069-
3A.303
or Art. 5069-3A.306 must comply with the prohibition on the pyramiding of
late charges set forth in the Federal Trade Commission Credit Practices Rule
at 16 C.F.R. sec.444.4.

sec.1.505. Deferment.
(a) Definition. A deferment means the postponement of the
due date of a scheduled installment. A deferment charge prescribed by this
section may only occur in loan transactions that employ either precomputed
or the scheduled installment earnings methods of calculation. 

(b) Unilateral deferment. A deferment may be made solely by
the lender if the full amount of any installment remains in default for one
month or more after its due date. The note or similar loan agreement must
contain a provision allowing the unilateral deferment. Only one unilateral
deferment may be made during any one six-month period while the loan contract
is in effect. Any deferment documented on an account will be considered to
be unilateral in the absence of proof or documentation of a mutual or bilateral
deferment. 

(c) Bilateral or mutual deferment. A borrower and a lender
may mutually agree to defer any scheduled installment. There is no limit on
the number of bilateral deferments that can be made during the time that a
loan contract is in effect. Bilateral deferments must be agreed upon in writing. 
(d) Deferment notice. Each deferment must be noted on the
account record at the time the deferment is made. A written notice containing
the conditions of the deferment must be furnished to the borrower. The deferment
notice shall include the name of the lender, the name of the borrower, the
loan number, the date of the deferment, the installment or installments being
deferred, the deferment period, the amount of the deferment charge, the balance
on the account, and the date and amount of the next installment due. A signature
of the borrower denotes the borrower's agreement of a bilateral deferment. 
(e) Computation of deferment charge for a regular transaction.
Each deferment charge on a regular loan transaction shall be computed in 
accordance
with the method prescribed by the loan contract. If the loan contract does
not provide for a deferment charge, then no deferment charge may be assessed
or collected. A lender may employ any of the prescribed computational methods
described herein so long as the computational method employed is consistently
utilized throughout the term of the loan. 

(1) If the first installment is to be deferred, the interest
for the deferment may be no more than the difference between the refund that
would be required for prepayment in full on the first installment due date,
if it were one month from the date of the loan, and the total interest charged,
exclusive of any charge for additional days in an irregular first installment
or an administrative loan fee assessed. 

(2) If any installment subsequent to the first installment
is deferred, the deferred installment period will be determined by dividing
the remaining precomputed balance owed on the account by the regular scheduled
installment amount. The dollar amount associated with the deferred installment
period must be rounded down to the nearest whole integer. Additionally, no
deferred installment period may have a default charge assessed against the
deferred installment period. After the determination of the deferred installment
period, the additional interest for the deferment may not exceed the difference
between the refund that would be required for prepayment in full for the 
determined
deferred installment and the refund that would be required for the prepayment
in full of the next succeeding installment. The resulting difference shall
be multiplied by the number of months in the deferment period. For example,
the terms of a precomputed Art. 5069-3A.301(a) loan are as follows: Date of
loan: 09/01/1997 First payment due date: 10/01/1997 Cash Advance: $2,576.61
Finance Charge: $1,023.39 Total of Payments: $3,600.00 Term: 36 months Monthly
Installment: $100 Refunding method: Sum of the periodic balances Annual 
Percentage
Rate: 23.1935% Assume a deferment is agreed to roughly six months into the
contract, and at that time the remaining precomputed balance owed on the account
was $3,095.00 and the regular scheduled installment amount was $100.00. The
nearest whole integer for the dollar amount associated with the deferred time
period would be 30 ($3,095.00) & divide; $100 = 30.95; rounded down to
the nearest whole integer = 30). If a default charge had already been assessed
on the 30th remaining installment, the nearest whole integer would be 29.
Assuming no default charge had been assessed on the 30th remaining installment,
the additional interest charge for the deferment would be the difference between
the interest refund of the 30th and the 29th installments. This difference
would be $46.10 (Interest refund as of the 30th installment = $714.53; interest
refund as of the 29th installment = $668.43; $714.53 - $668.43 = $46.10).
A scheduled installment earnings refund method would yield a slightly different
result of $44.49. 

(3) In lieu of computational methods one and two, a lender
may take the difference between the amount of the refund of unearned interest
as if a full prepayment of the loan occurred as of the date of the deferment
and the amount of the refund of unearned interest for a full prepayment of
the loan one full month prior to the date of the deferment. The results of
the computed interest for deferment charge under this subsection should be
multiplied by the number of months in the deferred installment period. 

(f) No deferment when payment applied to account balance.
When a payment has been applied to reduce an account balance, no deferment
of any prior balance or installments may be made. This does not preclude the
collection of a deferment fee previously assessed, but not collected. 

(g) No deferment when a default charge has already been collected.
No installment may be deferred if a default charge has already been collected
on the account or if a partial payment in any amount has been credited to
any installment. If an amount equal to one whole installment has already been
credited to an account, this entry cannot be altered in order to credit part
of the installment to a deferment charge. 

(h) Accounting of payment. If a payment is submitted from
which a deferment charge is taken, the excess of the amount necessary to bring
the account current shall be applied to the remaining balance of the loan.
However, any difference that exceeds three dollars shall be returned to the
borrower upon the borrower's request. 

(i) Noncompliance. Deferment fees not assessed or collected
in accordance with the requirements of this rule are subject to refund to
the borrower. In the event deferment fees are refunded to the borrower, no
rescheduling of the loan contract is permitted. 

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
June 16, 1998.
TRD-9809645
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

SUBCHAPTER F.Alternate Charges for Consumer Loans
7 TAC sec.sec.1.601, 1.603, 1.604
The Finance Commission of Texas (the commission) proposes
the adoption of new sec.sec.1.601, 1.603, and 1.604, concerning the methods
for calculating maximum interest charges and additional interest for default
and deferment under Subchapter F, Chapter 3A, Article 5069. Additionally,
the rules prescribe appropriate procedures for these transactions. 

Section 1.601 describes the manner for determining the maximum rate or
amount of interest for this type of transaction. 

Section 1.603 clarifies the procedures for assessing and collecting default
charges in connection with a Subchapter F loan. 

Section 1.604 explains the method and procedures for calculating and collecting
a deferment charge on a Subchapter F loan. 

These rules are necessary due to the repeal of the former Article 5069-3.16
and the adoption of new Article 5069-3A.001 et seq.
Generally, these procedures are well established and are commonly
used throughout the regulated industry. These rules should serve, however,
to clarify the calculations and procedures. 

Leslie L. Pettijohn, Consumer Credit Commissioner has determined that for
the first five-year period these rules will be in effect, there will be no
fiscal implications for state or local government as a result of administering
or enforcing these rules. 

Commissioner Pettijohn also has determined that for each year of the first
five-year period these rules will be in effect, the public benefit anticipated
as a result of the adoption of the new rules is the clarification to lenders
of the maximum allowable charges provided under the law, thereby assisting
lenders and borrowers in constructing transactions that comply with the law.
It is anticipated that there will be no adverse economic effect on small 
businesses. 
Comments on the proposed adoption of the new sections may be submitted
in writing to Leslie L. Pettijohn, Consumer Credit Commissioner, 2601 North
Lamar Boulevard, Austin, Texas 78705-4207. 

The new sections are 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, Article 5069-3A, Subchapter F is affect by these
proposed new sections. 

sec.1.601. Authorized Charges. 
(a) An authorized lender may contract for, charge, or collect
on a loan made pursuant to Subchapter F: 

(1) an acquisition charge; 

(2) an installment account handling charge; 

(3) a default charge; 

(4) a deferment charge; 

(5) a processing fee for the return of a dishonored check
pursuant to Article 9022, Tex. Rev. Civ. Stat.; and 

(6) interest after maturity that does not exceed the Subchapter
A, Chapter 1D rate. 

(b) No other charges are authorized in connection with a Subchapter
F loan.

sec.1.603. Default Charges. 
The rules for default charges applicable to Subchapter E loans as set
forth in 7 TAC sec.1.504 are also applicable to loans made under Subchapter
F.

sec.1.604. Deferment Charges. 
The rules for deferment charges applicable to Subchapter E loans as
set forth in 7 TAC sec.1.505 are also applicable to loans made under Subchapter
F.

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
June 16, 1998.
TRD-9809646
Leslie L. Pettijohn

Commissioner

Office of Consumer Credit Commissioner

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 936-7640

TITLE 22. EXAMINING BOARDS
PART IX. Texas State Board of Medical Examiners
CHAPTER 163.Licensure
22 TAC sec.163.1
The Texas State Board of Medical Examiners proposes an amendment
to sec.163.1, concerning definitions. The amendment is proposed to ensure
continuity with the Medical Practice Act and to be consistent with current
terminology. The section amends paragraph (16)(G)(ii) to change the name of
American Osteopathic Association to Bureau of Osteopathic Specialists. 

Tony Cobos, general counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications to state
or local government as a result of enforcing or administering the section
as proposed. 

Mr. Cobos also has determined that for each year of the first five years
the section as proposed is in effect the public benefit anticipated as a result
of enforcing the section will be the name change of American Osteopathic 
Association
to Bureau of Osteopathic Specialists. There will be no effect on small 
businesses.
There is no anticipated economic cost to persons who are required to comply
with the section as proposed. 

Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901,
Austin, Texas 78768-2018. A public hearing will be held at a later date. 
The amendment is proposed under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State
Board of Medical Examiners with the authority to make rules, regulations and
bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of the
practice of medicine in this state, and the enforcement of this Act.

The Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.sec.3.03,
3.04, and 3.05 are affected by the proposed amendment.

sec.163.1. Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise. 

(1)-(15) (No change.) 

(16) Substantially equivalent to a Texas medical school
- A medical school or college located outside the United States or Canada
must be an institution of higher learning designed to select and educate medical
students; provide students with the opportunity to acquire a sound basic medical
education through training in basic sciences and clinical sciences; to provide
advancement of knowledge through research; to develop programs of graduate
medical education to produce practitioners, teachers, and researchers; and
to afford opportunity for postgraduate and continuing medical education. The
school must provide resources, including faculty and facilities, sufficient
to support a curriculum offered in an intellectual environment that enables
the program to meet these standards. The faculty of the school shall actively
contribute to the development and transmission of new knowledge. The medical
school shall contribute to the advancement of knowledge and to the intellectual
growth of its students and faculty through scholarly activity, including 
research.
The medical school shall include, but not be limited to, the following 
characteristics: 
(A) - (F) (No change.) 

(G) An applicant who is unable to comply with the requirements
of subparagraph (F) of this <nl>paragraph<ol> [definition] is
eligible for an unrestricted license if the applicant: 

(i) (No change.) 

(ii) is specialty board certified by a board approved by the <nl>
Bureau of Osteopathic Specialists <ol>[American Osteopathic Association
] or the American Board of Medical Specialties. 

(17)-(18) (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
June 22, 1998.
TRD-9809965
Susan K. Steeg

General Counsel

Texas Department of Health

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 305-7016

CHAPTER 183.Acupuncture
22 TAC sec.183.13
The Texas State Board of Medical Examiners proposes an amendment
to sec.183.13, concerning patient records. The section is being amended
to clarify the patient's responsibility relating to referral to a physician
or chiropractor. 

The form contained in subsection (a), paragraph (11) is being amended to
include the word whether. 

Tony Cobos, general counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications to state
or local government as a result of enforcing or administering the section
as proposed. 

Mr. Cobos also has determined that for each year of the first five years
the section as proposed is in effect the public benefit anticipated as a result
of enforcing the section will be clarification of the patient's responsibility
relating to referral to a physician or chiropractor. There will be no effect
on small businesses. There is no anticipated economic cost to persons who
are required to comply with the section as proposed. 

Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901,
Austin, Texas 78768-2018. A public hearing will be held at a later date. 
The amendment is proposed under the Medical Practice Act, Texas
Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas State
Board of Medical Examiners with the authority to make rules, regulations and
bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of the
practice of medicine in this state, and the enforcement of this Act. 

The Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.6.11
is affected by the proposed amendment.

sec.183.13.Patient Records. 
(a) Acupuncturists licensed under the Act shall keep and maintain
adequate records of all patient visits or consultations which shall, at a
minimum, include: 

(1)-(10) (No change.) 

(11) reasonable documentation that the evaluation required
by the Act, sec.6.11(b), was performed or, in the event that the licensee
is unable to determine that the evaluation took place, a written statement
signed by the patient stating that the patient has been evaluated by a physician
within the required time frame on a copy of the following form:

Figure: 22 TAC 183.1(a)(11)

(b)-(g) (No change.)

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 22, 1998.
TRD-9809966
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 305-7016

CHAPTER 193.Standing Delegation Orders
22 TAC sec.193.8
The Texas State Board of Medical Examiners proposes new sec.193.8,
concerning delegated administration of immunizations or vaccinations by a
pharmacist under written protocol. The new section is being proposed because
it has been mandated by Senate Bill 786, 75th Legislature. 

Tony Cobos, general counsel, has determined that for the first five-year
period the section is in effect there will be no fiscal implications to state
or local government as a result of enforcing or administering the section
as proposed. 

Mr. Cobos also has determined that for each year of the first five years
the section as proposed is in effect the public benefit anticipated as a result
of enforcing the section will be a regulation regarding delegated administration
of immunizations or vaccinations by a pharmacist under written protocol. There
will be no effect on small businesses. There is no anticipated economic cost
to persons who are required to comply with the section as proposed. 

Comments on the proposal may be submitted to Pat Wood, P.O. Box 2018, MC-901,
Austin, Texas 78768-2018. A public hearing will be held at a later date. 
The new is proposed under the Medical Practice Act, Texas Civil
Statutes, Article 4495b, sec.2.09(a), which provides the Texas State Board
of Medical Examiners with the authority to make rules, regulations and bylaws
not inconsistent with this Act as may be necessary for the governing of its
own proceedings, the performance of its duties, the regulation of the practice
of medicine in this state, and the enforcement of this Act.

The Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.3.061
is affected by the proposed new section.

sec.193.8.Delegated Administration
of Immunizations or Vaccinations by a Pharmacist under Written Protocol.
(a) Purpose. This section is promulgated to promote the efficient
administration and regulation of the delegation by physicians to pharmacists
of the administration of immunizations or vaccinations under written protocol
pursuant to the Medical Practice Act, sec.3.061 (related to Delegation of
Certain Functions). 

(b) Delegation. A physician licensed to practice medicine
in Texas may delegate to a properly qualified and trained pharmacist acting
under adequate supervision the administration of immunizations and vaccinations
authorized by the physician through the physician's order, standing medical
order, standing delegation order, or other order or protocol as provided for
in this section. 

(c) Delegated Administration of Immunizations and Vaccinations
under Written Protocol. Administration of Immunizations and Vaccinations does
not include the selection of drug products not prescribed by the physician
unless the drug product is named in the physician initiated protocol. 

(d) Supervision. Physician supervision shall be considered
adequate for purposes of this section if the delegating physician is in 
compliance
with this section and the physician: 

(1) is responsible for the formulation or approval of the
physician's order, standing medical order, standing delegation order, or other
order or written protocol and periodically reviews the order or protocol and
the services provided to the patient under the order or protocol on a schedule
defined in the written protocol; 

(2) has established a physician-patient relationship
with each patient under 14 years of age and referred the patient to the 
pharmacist; 
(3) is geographically located so as to be easily accessible
to the pharmacist administering the immunization or vaccination; 

(4) receives, on a schedule defined in the written protocol,
a periodic status report on the patient, including any problem or complication
encountered; and 

(5) is available through direct telecommunication for
consultation, assistance, and direction. 

(e) Written protocol. Written protocols for purposes of this
section shall mean a physician's order, standing medical order, standing 
delegation
order, or other written order. 

(1) A written protocol must contain at a minimum the following
listed in subparagraphs (A)-(F) of this paragraph: 

(A) a statement identifying the individual physician authorized
to prescribe drugs and responsible for the delegation of administration of
immunizations or vaccinations; 

(B) a statement identifying the individual pharmacist authorized
to administer immunizations or vaccinations as delegated by the physician; 
(C) a statement identifying the location(s) at which the pharmacist
may administer immunizations or vaccinations; 

(D) a statement identifying the immunizations or vaccinations
that may be administered by the pharmacist; 

(E) a statement identifying the activities the pharmacist
shall follow in the course of administering immunizations or vaccinations
including procedures to follow in the case of reactions following 
administration;
and 

(F) a statement that describes the content of, and the appropriate
mechanisms for the pharmacist to report the administration of immunizations
or vaccinations to the physician issuing the written protocol within 24 hours
of administering the immunization or vaccination. 

(2) A standard protocol may be used, or the physician
may develop an immunization or vaccination protocol for the individual patient.
If a standard protocol is used, the physician shall record, what deviations
if any, from the standard protocol are ordered for that patient. 

(f) Review and revision of protocols. 

(1) At least annually, written protocols shall be reviewed
by the physician and, if necessary, revised. 

(2) Documentation of the administration of immunizations
or vaccinations to the patient by a pharmacist shall be reviewed by the 
physician
on the schedule established in the protocol. 

(g) Construction and interpretation. This section shall not
be construed or interpreted to restrict the use of a pre-established health
care program or restrict a physician from authorizing the provision of patient
care by use of a pre-established health care program if the patient is 
institutionalized
and the care is to be delivered in a licensed hospital with an organized medical
staff that has authorized standing delegation orders, standing medical orders,
or protocols. This section may not be construed to limit, expand, or change
any provision of law concerning or relating to therapeutic drug substitution
or administration of medication, including the Texas Pharmacy Act, Article
4542a-1, Vernon's Texas Civil Statutes, sec.17(a)(5). 

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
June 22, 1998.
TRD-9809967
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 305-7016

CHAPTER 200.Integrative and Complementary Medicine
22 TAC sec.sec.200.1-200.3
The Texas State Board of Medical Examiners proposes new sec.sec.200.1-200.3,
concerning the practice of integrative and complementary medicine. The new
chapter will outline the responsibilities of the physician when providing
integrative and complementary medical treatment. 

Tony Cobos, general counsel, has determined that for the first five-year
period the sections are in effect there will be no fiscal implications to
state or local government as a result of enforcing or administering the sections
as proposed. 

Mr. Cobos also has determined that for each year of the first five years
the sections as proposed are in effect the public benefit anticipated as a
result of enforcing the sections will be outlined responsibilities of the
physician when providing integrative and complementary medical treatment.
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 Pat Wood, P.O. Box 2018, MC-901,
Austin, Texas 78768-2018. A public hearing will be held at a later date. 
The new sections are proposed under the Medical Practice Act,
Texas Civil Statutes, Article 4495b, sec.2.09(a), which provides the Texas
State Board of Medical Examiners with the authority to make rules, regulations
and bylaws not inconsistent with this Act as may be necessary for the governing
of its own proceedings, the performance of its duties, the regulation of the
practice of medicine in this state, and the enforcement of this Act.

The Medical Practice Act, Texas Civil Statutes, Article 4495b, sec.3.08
is affected by the proposed new sections.

sec.200.1. Purpose.
The purpose of this chapter is to recognize that physicians should
be allowed a reasonable and responsible degree of latitude in the kinds of
therapies they offer their patients. The Board also recognizes that patients
have a right to seek integrative or complementary therapies. 

sec.200.2. Definitions.
The following words and terms, when used in this section, shall have
the following meanings, unless the context clearly indicates otherwise. 
(1) Integrative and Complementary Medicine--Those health care
methods of diagnosis, treatment, or interventions that are not conventional
but that provide a reasonable potential for therapeutic gain in a patient's
medical condition that and are not reasonably outweighed by the risk of such
methods. 

(2) Conventional--Those health care methods of diagnosis,
treatment, or interventions for which there is support within the peer reviewed
scientific literature or generally accepted methods.

sec.200.3. Practice Guidelines for
the Provision of Integrative and Complementary Medicine.
A licensed physician shall not be found guilty of unprofessional conduct
or be found to have committed professional failure to practice medicine in
an acceptable manner solely on the basis of employing a therapy that is 
nontraditional
or departs from the prevailing medical practices, unless it can be demonstrated
that the therapy has a safety risk for the patient that is unreasonably greater
than the prevailing treatment. The Texas State Board of Medical Examiners
will use the following guidelines to determine whether a physician's conduct
violates the Medical Practice Act, sec.sec.3.08(4), 3.08(4)(E), and 3.08(18)
in regard to providing complementary and integrative medical treatment.

(1) Prior to offering advice about complementary health care
therapies, the physician shall undertake an assessment of the patient. This
assessment should follow conventional methods of diagnosis and shall be 
documented
in the patient's chart. Such assessment shall include the following listed
in subparagraphs (A)-(G) of this paragraph: 

(A) the chief symptom or complaint; 

(B) a documented medical history and physical performed by
the physician, which should also include any pertinent laboratory studies,
x-ray studies and any appropriate diagnostic modality; 

(C) all assessments and diagnosis should be clearly documented
in the patient's chart; 

(D) documentation as to whether conventional medical treatment
options have been discussed with the patient and referral input, if necessary; 
(E) documentation as to whether conventional medical options
have been tried, and if so, to what effect or a statement as to whether 
conventional
options have been refused by the patient; 

(F) if a treatment is offered which is not considered to be
conventional, documentation of informed consent for this treatment must be
included (including documentation that the risks and benefits of the use of
the treatment were discussed with the patient or guardian); 

(G) documentation as to whether the complementary health care
therapy could interfere with any other ongoing conventional treatment. 

(2) The physician may offer the patient complementary
and integrative treatment pursuant to a documented treatment plan tailored
for the individual needs of the patient by which treatment progress or success
can be evaluated with stated objectives such as pain relief and/or improved
physical and/or psychosocial function. Such a documented treatment plan shall
consider pertinent medical history and physical examination as well as the
need for further testing, consultations, referrals, or the use of other 
treatment
modalities. 

(3) The physician may use the treatment subject to documented
periodic review of the patient's care by the physician at reasonable intervals
in view of the individual circumstances of the patient in regard to progress
toward reaching treatment objectives which takes into consideration the 
treatment
prescribed, ordered or administered as well as any new information about the
etiology of the complaint. 

(4) Complete and accurate records of the care provided
including the elements addressed in paragraph (1) (A)-(G) of this section
should be kept. 

(5) If the provisions set out in paragraphs (1)-(4) of
this section are met, and if all treatment is properly documented, the board
will presume such practices are in conformity with the Medical Practice Act,
sec.3.08(18). 

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
June 22, 1998.
TRD-9809968
Bruce A. Levy, M.D., J.D.

Executive Director

Texas State Board of Medical Examiners

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 305-7016

PART XI. Board of Nurse Examiners
CHAPTER 217.Licensure and Practice
22 TAC sec.217.3, sec.217.12
The Board of Nurse Examiners proposes amendments to sec.217.3,
concerning Temporary Permit and sec.217.12, concerning Designations for
Registered Nurse/Titles Deemed Misleading. 

The proposed amendment to 217.3 will cause the elimination of the issuance
of temporary permits to practice professional nursing to graduates of approved
professional nursing programs. Initially, temporary permits were issued to
graduates of professional nursing programs to allow the applicants an 
opportunity
to practice nursing while awaiting the results of the licensure examination.
The examination, given nationally on the same dates, was only offered two
times a year at three locations in Texas. This resulted in a six to nine week
delay for the candidate to receive the results of the examination. In 1994,
the licensure examination was converted from a paper and pencil exam to a
computer adaptive test (CAT) and is now offered daily in 15 locations in Texas
and more than 200 sites nationwide. Results from the licensure examination
are received by the graduate within three weeks of testing, usually within
10 days. If successful, the graduate becomes licensed immediately. Of the
61 jurisdictions (states and territories of the US) that offer the national
examination, 33 jurisdictions no longer issue temporary permits to graduates. 
The proposed elimination of temporary permits will result in safety for
the public and accountability by graduates for more timely licensure. 
Previously,
graduates could practice for 90 days with a temporary permit; some continued
to practice following receipt of notification of failure of the examination. 
The proposed amendment to 217.12 would eliminate the language pertaining
to the temporary permit for new graduates. 

Katherine A. Thomas, MN, RN, executive director, has determined that there
will be no fiscal implications for state or local government as a result of
enforcing or administering the rule. 

Ms. Thomas, also has determined that for each year of the first five years
the rule as proposed will be in effect the public would be better protected
as those candidates who failed the examination would not be allowed to continue
to practice on the temporary permit and those candidates who are successful
would receive a license allowing them to practice professional nursing within
ten days to three weeks following testing. The initial implementation of this
rule may result in a delay in hiring licensed professional nurses. 

Written comments on the proposed amendments may be submitted to Katherine
Thomas, Board of Nurse Examiners, P.O. Box 430; Austin, Texas 78767. 

The amendments are proposed under the Nursing Practice Act, (Texas
Civil Statutes), Article 4514, sec.1, which provides the Board of Nurse
Examiners with the authority and power to make and enforce all rules and 
regulations
necessary for the performance of its duties and conducting of proceedings
before it. 

Articles 4522 and 4523 are affected by this section.

sec.217.3. Temporary Permit.
[(a) United States candidates eligible for
temporary permits.] 

[(1) New graduates of accredited nursing programs
in the United States who are applying for initial licensure in Texas will
be issued a temporary permit after they have been determined eligible.] 
[(2) The permit, which is not renewable,
is valid for 90 days from the date of eligibility or until NCLEX-RN results
are received.] 

[(3) The permit holder must work under
the direct supervision of a registered professional nurse who is working on
the same unit and is readily available to the GN for consultation and 
assistance.
The GN shall not be placed in a charge position or work in independent practice
settings.] 

[(b) Foreign candidates eligible for temporary
permits.] 

[(1) Graduates of accredited nursing programs
located outside of the United States will be issued a temporary permit if
the following conditions are met.] 

[(A) The candidate has never written the SBTPE
or NCLEX-RN;] 

[(B) has passed CGFNSE; and] 

[(C) is enrolled in a board-approved nursing
accustomation course.] 

[(2) The candidate must satisfactorily
complete the accustomation course in order to be determined eligible to take
the NCLEX-RN.] 

[(3) The permit, which is not renewable,
is valid for 60 days following successful completion of the accustomation
course or until the NCLEX-RN results are received.] 

[(4) The permit holder must work under
the direct supervision of a registered professional nurse who is working on
the same unit and is readily available to the GN for consultation and 
assistance.
The GN shall not be placed in a charge position or work in independent practice
settings.] 

<nl>(a)<ol> [(c)] Registered nurses with inactive
or delinquent licenses. A registered nurse who has not practiced nursing for
four or more years may be issued a temporary permit for the limited purpose
of completing a refresher course, extensive orientation to the practice of
professional nursing or academic course. The permit is valid for six months
and is nonrenewable. 

<nl>(b)<ol> [(d)] Registered nurses with a suspended,
revoked, or surrendered license. A registered nurse whose license has been
suspended, revoked, or surrendered through action by the board, may be issued
a temporary permit for the limited purpose of meeting any requirement(s) imposed
by the board in order for the nurse's license to be <nl>reinstated<ol>
[reissued]. The permit is valid for six months and is nonrenewable.
sec.217.12. Designations for Registered Nurse/Titles
Deemed Misleading. 
(a) (No change.) 

[(b) Candidates for the State Board Test Pool
Examination holding a valid Texas permit may use the initials GN or the title
graduate nurse.] 

<nl>(b)<ol> [(c)] A person who is eligible for
licensure by endorsement in Texas, holding a valid Texas permit, may use the
title registered nurse or RN. 

<nl>(c)<ol> [(d)] No other person, other than
designated in (a) [,] <nl>and<ol> (b) [, and (c),]
of this section, may use, where applicable, titles or abbreviations such as
staff nurse, head nurse, charge nurse, supervisor of nursing or nurses, or
any other title tending to imply to the public that the person holds a license
to practice professional nursing in Texas. 

<nl>(d)<ol> [(e)] Any person other than as permitted
by law or rule who uses any of the titles or abbreviations mentioned in this
section deemed by the board as misleading or implying that the individual
is a licensed professional nurse may be subject to potential violation or
prosecution under applicable law. 

<nl>(e)<ol> [(f)] If a registered nurse holds
herself or himself out to the public as being engaged in the practice of 
professional
nursing, or uses the term registered nurse or RN or any combination or variation
of those terms and abbreviations, alone or in combination with any other terms,
then they must practice in accordance with the <nl>Nursing<ol> [Nurse
] Practice Act and the rules and regulations relating to professional
nurse education, licensure, and practice. 

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
June 22, 1998.
TRD-9809982
Katherine A. Thomas, MN, RN

Executive Director

Board of Nurse Examiners

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 305-6811

PART XV. Texas State Board of Pharmacy
CHAPTER 283.Licensing Requirements for Pharmacists
22 TAC sec.283.6
The Texas State Board of Pharmacy proposes an amendment to
sec.283.6, concerning preceptor training requirements. The amendment, if
adopted, will change the number of hours of preceptor training from six hours
to three hours every three years. 

Gay Dodson, R.Ph., Executive Director/Secretary has determined that the
first five-year period the rule will be in effect there will be no fiscal
implications for state or local government as a result of enforcing or 
administering
the rule. 

Ms. Dodson also has determined that for each year of the first five-year
period the rule will be in effect the public benefit anticipated as a result
of enforcing the rule will be the protection of the health of the citizens
of the state of Texas through the establishment of reasonable qualifications
for preceptor pharmacists involved in the supervision of pharmacist-interns. 
There will be no effect on small businesses, as defined by sec.2006.001
of the Texas Government Code. There will be an economic effect on individual
pharmacists seeking to obtain preceptor training. The anticipated economic
cost to pharmacists who are required to comply with the rule as proposed will
depend upon the preceptor training course chosen, which may vary from $0 to
$200 every three years. 

Comments on the proposal may be submitted to Steve Morse, R.Ph., Director
of Compliance, Texas State Board of Pharmacy, 333 Guadalupe Street, Suite
3-600, Box 21, Austin, Texas, 78701-3942. 

This amendment is proposed under the Texas Pharmacy Act (Article
4542a-1, Texas Civil Statutes): Section 4 which specifies that the purpose
of the Act is to protect the public through the effective control and regulation
of the practice of pharmacy; Section 16(a) which gives the Board the authority
to adopt rules for the proper administration and enforcement of the Act; Section
17(a)(3) which gives the Board the authority to establish requirements for
practical training, including internship; Section 21(f) which requires an
applicant for licensure by examination to obtain practical experience under
conditions determined by the Board; and Section 21(g) which requires the Board
to establish standards for internship and qualifications for preceptors. 
The statutes affected by this rule: Texas Civil Statutes, Article 4542a-1.
sec.283.6. Preceptor Requirements.
(a)-(b) (No change.) 

(c) For certification as a preceptor a pharmacist must: 

(1) after September 1, 1997, have at least one year of experience
in the type of internship practice setting; 

(2) after September 1, 1998: 

(A) have completed <nl>3<ol> [6] hours of preceptor
training developed by a Texas college of pharmacy and provided by an ACPE
approved provider within the previous 3 years; 

(B) complete <nl>3<ol> [ 6 ] hours of preceptor
training developed by a Texas college of pharmacy and provided by an ACPE
approved provider every 3 years; and 

(3) meet the requirements of subsection (f) of this
section. 

(d)-(f) (No change.) 

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 19, 1998.
TRD-9809927
Gay Dodson, R. Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Proposed date of adoption: August 4, 1998

For further information, please call: (512) 305-8028

22 TAC sec.283.9
The Texas State Board of Pharmacy proposes an amendment to
sec.283.9, concerning Fee Requirements for Licensure by Examination and
Reciprocity. The amendment, if adopted, will outline a new administrative
fee required from an applicant to cover the cost of administering the Texas
Pharmacy Jurisprudence examination. As background, the Texas Board has entered
into an agreement with the National Association of Boards of Pharmacy (NABP)
for the administration of the new MultiState Pharmacy Jurisprudence Examination
(MPJE), beginning in November 1998. The MPJE, which replaces the Texas paper
and pencil Jurisprudence Examination, will be developed by NABP and administered
by the Cogent Testing Network in a computer-based format. 

Gay Dodson, R.Ph., Executive Director/Secretary, has determined that, for
the first five-year period the rule is in effect, there will be no fiscal
implications for state or local government as a result of enforcing or 
administering
the rule. 

Ms. Dodson also has determined that, for each year of the first five-year
period the rule will be in effect, the public benefit anticipated as a result
of enforcing the rule will be the ability for pharmacist applicants to take
the Texas Jurisprudence examination on a year-round basis, in any of the 57
cities located across 16 states. This new process will allow the agency to
license applicants in a shorter time period than under the previous examination
process and may increase the number of licensed pharmacists in the state of
Texas. 

There will be no effect on small businesses as defined by sec.2006.001
of the Texas Government Code. Their will be an effect on persons applying
for a pharmacist license by examination or by reciprocity. The anticipated
economic cost to persons who are required to comply with the rule as proposed
will be $85 charged to a pharmacist applicant applying to take the Texas 
Jurisprudence
Examination. This fee will be paid directly to the National Association of
Boards of Pharmacy and there will be no additional revenue received by the
Texas State Board of Pharmacy. 

Comments on the proposal may be submitted to Gay Dodson, R.Ph., Executive
Director/Secretary, Texas State Board of Pharmacy, 333 Guadalupe Street, Suite
3-600, Box 21, Austin, Texas, 78701-3942. 

The amendment is proposed under the Texas Pharmacy Act (Article
4542a-1, Texas Civil Statutes): sec.39 specifies that the board shall establish
reasonable and necessary fees so that the fees, in the aggregate, produce
sufficient revenue to cover the cost of administering this Act. 

The statutes affected by this rule: Texas civil Statutes, Article 4542a-1. 
sec.283.9. Fee Requirements for Licensure by Examination, <nl>
Score Transfer<ol> and Reciprocity. 
(a) The fees for licensure by examination, <nl>score transfer
<ol>, and reciprocity shall include one exam administration and are as follows: 
(1) Examination fee $300 [effective for the June 1995
examination. Effective for the March 1997 examination, the $300 fee includes:
] <nl>Effective November 1, 1998, the fee will be $385, which includes:
<ol> 

(A) a NAPLEX application fee of $250, which is to be paid
to NABP in accordance with NABP policy; [and] 

(B) <nl>a Texas Pharmacy Jurisprudence Examination application
fee of $85, which is to be paid to NABP in accordance with NABP policy; and
<ol> 

<nl>(C)<ol> an examination processing fee of $50, which
is to be paid to the Texas State Board of Pharmacy and includes processing
of the [NAPLEX] <nl>Texas<ol> application. [and/or administration
of the Texas Pharmacy Jurisprudence Examination.] 

(2) Reciprocity fee [$250] (includes
administration of the Texas Pharmacy Jurisprudence Examination). <nl>Effective
November 1, 1998, the fee will include:<ol> 

<nl>(A)<ol> <nl> a reciprocity fee of $250, which is to
be paid to the Texas State Board of Pharmacy; <ol>

<nl>(B)<ol> <nl> a Texas Pharmacy Jurisprudence Examination
application fee of $85, which is to be paid to NABP in accordance with NABP
policy; and <ol>

<nl>(C)<ol> <nl> a license verification fee as determined
by NABP, which is to be paid to NABP in accordance with NABP policy. <ol>

<nl>(3)<ol> <nl> Score Transfer fee Effective
November 1, 1998, the fees to transfer a score to Texas, using the NAPLEX
Score Transfer system will include: <ol>

<nl>(A)<ol> <nl> a Texas Pharmacy Jurisprudence Examination
application fee of $85, which is to be paid to NABP in accordance with NABP
policy; <ol>

<nl>(B)<ol> <nl> an examination processing fee of $50,
which is to be paid to the Texas State Board of Pharmacy and includes processing
of the Texas application; and <ol>

<nl>(C)<ol> <nl> a score transfer fee as determined by
NABP, which is to be paid to NABP in accordance with NABP policy. <ol>

(b) If an applicant fails an examination or is required to
take an examination <nl>by the Board<ol> [for reinstatement of a license
], the fees for one exam administration are as follows: 

(1) NAPLEX [and Texas Pharmacy Jurisprudence or NAPLEX
only] $300. [effective for the June 1995 examination. Effective
for the March 1997 examination], The $300 fee includes: 

(A) a NAPLEX application fee of $250, which is to be paid
to NABP in accordance with NABP policy; and 

(B) an examination processing fee of $50, which is to be paid
to the Texas State Board of Pharmacy and includes processing of the NAPLEX
application [and/or administration of the Texas Pharmacy Jurisprudence
Examination.] 

(2) Texas Pharmacy Jurisprudence Examination [
$25], $50 beginning with January 1996 examination. [and thereafter.
] <nl>Effective November 1, 1998 the fee will be $135, which includes:
<ol> 

(A) a Texas Pharmacy Jurisprudence Examination application
fee of $85, which is to be paid to NABP in accordance with NABP policy; and 
(B) an examination processing fee of $50, which is to be paid
to the Texas State Board of Pharmacy and includes processing of the Texas
Pharmacy Jurisprudence Examination application. 

(c) Rescheduling or canceling an examination appointment.
Refunds of fees are available under limited circumstances as follows. 

(1) Examination Fee - [$300.] <nl>$385.<ol> 
(A) $250 NAPLEX application fee refunds are available under
limited circumstances and in accordance with NABP policy. Rescheduling of
an examination appointment shall be in accordance with NABP policy. 

<nl>(B)<ol> <nl> $85 Texas Pharmacy Examination application
fee - refunds are available under limited circumstances and in accordance
with NABP policy. Rescheduling of an examination appointment shall be in 
accordance
with NABP policy. <ol>

[B] <nl>(C)<ol> $50 examination processing fee
written notification must be received in the board office no later than six
weeks before the scheduled examination date in order to receive a refund [
or to reschedule an examination]. 

(2) Reciprocity Fee <nl>Effective November 1, 1998,
$335.<ol> 

<nl>(A)<ol> <nl> $85 Texas Pharmacy Jurisprudence Examination
application fee refunds are available under limited circumstances and in 
accordance
with NABP policy. Rescheduling of an examination appointment shall be in 
accordance
with NABP policy. <ol>

<nl>(B)<ol> $250 <nl>Texas reciprocity fee.<ol> Written
notification must be received in the board office no later than six weeks
before the scheduled examination date in order to receive a refund [
or to reschedule an examination]. 

(3) Texas Pharmacy Jurisprudence Examination [
$50. Written notification must be received in the board office no later than
six weeks before the scheduled examination date, in order to receive a refund
or reschedule an examination.] <nl>Effective November 1, 1998, $135.
<ol> 

<nl>(A)<ol> <nl> $85 Texas Pharmacy Jurisprudence Examination
application fee refunds are available under limited circumstances and in 
accordance
with NABP policy. Rescheduling of an examination appointment shall be in 
accordance
with NABP policy. <ol>

<nl>(B)<ol> <nl> $50 examination processing fee written
notification must be received in the board office no later than six weeks
before the scheduled examination date in order to receive a refund. <ol>

(d)-(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
June 19, 1998.
TRD-9809926
Gay Dodson, R. Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Proposed date of adoption: August 4, 1998

For further information, please call: (512) 305-8028

CHAPTER 295.Pharmacissts
22 TAC sec.295.15
The Texas State Board of Pharmacy proposes new sec.295.15,
concerning the administration of immunizations or vaccinations by a pharmacist
under written protocol of a physician. The proposed new section, if adopted,
will set minimum standards: for pharmacist training; supervision by physician's
issuing written protocols; the special provisions for administration of 
immunizations
or vaccinations; drug availability, storage, transportation, and custody;
notification of appropriate physicians; recordkeeping; and confidentiality
for pharmacists engaged in the administration of immunizations and vaccinations
under written protocol. 

The rules implement recommendations of a Task Force composed of representatives
from the Board of Pharmacy, Board of Medical Examiners, Texas Department
of Health, and pharmacy, medical, and nursing associations. 

Gay Dodson, R.Ph., Executive Director/Secretary has determined that the
first five-year period the rule will be in effect there will be no fiscal
implications for state or local government as a result of enforcing or 
administering
the rule. 

Ms. Dodson also has determined that for each year of the first five-year
period the rule will be in effect the public benefit anticipated as a result
of enforcing the rule will be the protection of the health of the citizens
of the state of Texas through increased access to immunizations and vaccinations
and improved public immunization/vaccination rates. 

There will be no effect on small businesses, as defined by sec.2006.001
of the Texas Government Code. There will be an economic effect on individual
pharmacists who become certified to administer immunizations or vaccinations.
Pharmacists who become certified to administer immunizations or vaccinations
will have an anticipated cost up to $750 based on the fees charged for currently
offered certification courses. 

Comments on the proposal may be submitted to Steve Morse, R.Ph., Director
of Compliance, Texas State Board of Pharmacy, 333 Guadalupe Street, Suite
3-600, Box 21, Austin, Texas, 78701-3942. 

This new rule is proposed under the Texas Pharmacy Act (Article
4542a-1, Texas Civil Statutes): Section 4 which specifies that the purpose
of the Act is to protect the public through the effective control and regulation
of the practice of pharmacy; Section 16(a) which gives the Board the authority
to adopt rules for the proper administration and enforcement of the Act; and
Section 17(a)(5), (y), (z), and (aa) which gives the Board the authority
to regulate and establish minimum education, continuing education, and 
supervision
standards for pharmacists who administer immunizations or vaccinations. 
The statutes affected by this rule: Texas Civil Statutes, Article 4542a-1. 
sec.295.15. Administration of Immunizations
or Vaccinations by a Pharmacist under Written Protocol of a Physician.
(a) Purpose. The purpose of this section is to provide standards
for pharmacists engaged in the administration of immunizations or vaccinations
as authorized in sec.sec.17(a), (y), (z), and (aa) of the Act. 

(b) Definitions. The following words and terms, when used
in this section, shall have the following meanings, unless the context clearly
indicates otherwise. 

(1) ACPE The American Council on Pharmaceutical Education. 
(2) Act The Texas Pharmacy Act, Texas Civil Statutes,
Article 4542a-1, as amended. 

(3) Administer The direct application of a prescription
drug by injection, inhalation, ingestion, or any other means to the body of
a patient by: 

(A) a practitioner, an authorized agent under his supervision,
or other person authorized by law; or 

(B) the patient at the direction of a practitioner. 

(4) Antibody A protein in the blood that is produced
in response to stimulation by a specific antigen. Antibodies help destroy
the antigen that produced them. Antibodies against an antigen usually equate
to immunity to that antigen. 

(5) Antigen A substance "recognized" by the body as being
foreign; it results in the production of specific antibodies directed against
it. 

(6) Board The Texas State Board of Pharmacy. 

(7) Confidential record Any health-related record that
contains information that identifies an individual and that is maintained
by a pharmacy or pharmacist such as a patient medication record, prescription
drug order, or medication order. 

(8) Data communication device An electronic device that
receives electronic information from one source and transmits or routes it
to another (e.g., bridge, router, switch, or gateway). 

(9) Immunization The act of inducing antibody formation,
thus leading to immunity. 

(10) Medical Practice Act The Texas Medical Practice
Act, Texas Civil Statutes, Article 4495b, as amended. 

(11) Vaccination Administration of any antigen in order
to induce immunity; is not synonymous with immunization since vaccination
does not imply success. 

(12) Vaccine A specially prepared antigen which upon
administration to a person will result in immunity. 

(13) Written Protocol A physician's order, standing medical
order, standing delegation order, or other order or protocol as defined by
rule of the Texas State Board of Medical Examiners under the Medical Practice
Act. 

(A) A written protocol must contain at a minimum the following: 
(i) a statement identifying the individual physician authorized
to prescribe drugs and responsible for the delegation of administration of
immunizations or vaccinations; 

(ii) a statement identifying the individual pharmacist authorized
to administer immunizations or vaccinations as delegated by the physician; 
(iii) a statement identifying the location(s) (i.e., address)
at which the pharmacist may administer immunizations or vaccinations; 

(iv) a statement identifying the immunizations or vaccinations
that may be administered by the pharmacist; 

(v) a statement identifying the activities the pharmacist
shall follow in the course of administering immunizations or vaccinations
including procedures to follow in the case of reactions following 
administration;
and 

(vi) a statement that describes the content of, and the appropriate
mechanisms for the pharmacist to report the administration of immunizations
or vaccinations to the physician issuing the written protocol within the time
frames specified in this section. 

(B) A standard protocol may be used or the physician may develop
an immunization or vaccination protocol for the individual patient. If a 
standard
protocol is used, the physician shall record what deviations, if any, from
the standard protocol are ordered for the patient. 

(c) Pharmacist certification requirements. Pharmacist who
enter into a written protocol with a physician to administer immunizations
or vaccinations shall: 

(1) be certified to administer immunizations and vaccinations
by the completion of a course provided by an ACPE approved provider which: 
(A) requires documentation by the pharmacist of current certification
in the American Heart Association's Basic Cardiac Life Support for Health-Care
Providers or its equivalent; 

(B) is an evidence-based course which: 

(i) includes study material; 

(ii) includes hands-on training in techniques for administering
immunizations or vaccines; and 

(iii) requires testing with a passing score; and 

(C) meets current Center for Disease Control training guidelines
and provides a minimum of 20 hours of instruction and experiential training
in the following content areas: 

(i) standards for pediatric, adolescent, and adult immunization
practices; 

(ii) basic immunology and vaccine protection; 

(iii) vaccine-preventable diseases; 

(iv) recommended immunization schedules (pediatric/adolescent/adult); 
(v) vaccine storage and management; 

(vi) informed consent; 

(vii) techniques for vaccine administration; 

(viii) pre and post-vaccine counseling; 

(ix) immunization record management; and 

(x) adverse events: 

(I) identification and appropriate response; and 

(II) documentation and reporting; and 

(2) maintain documentation of: 

(A) completion of the initial course specified in paragraph
(1) of this subsection; 

(B) 3 hours of continuing education every 2 years beginning
January 1, 2001, which are designed to maintain competency in the disease
states, drugs, and administration of immunizations or vaccinations; and 

(C) current certification in the American Heart Association's
Basic Cardiac Life Support for Health-Care Providers or its equivalent. 

(d) Supervision. Pharmacists involved in the administration
of immunizations or vaccinations shall be under the supervision of a physician.
Physician supervision shall be considered adequate if the delegating physician: 
(1) is responsible for the formulation or approval of the
physician's order, standing medical order, standing delegation order, or other
order or protocol and periodically reviews the order or protocol and the 
services
provided to a patient under the order or protocol; 

(2) has established a physician-patient relationship
with each patient under 14 years of age and referred the patient to the 
pharmacist; 
(3) is geographically located so as to be easily accessible
to the pharmacist administering the immunization or vaccination; 

(4) receives, as appropriate, a periodic status report
on the patient, including any problem or complication encountered; and 

(5) is available through direct telecommunication for
consultation, assistance, and direction. 

(e) Special Provisions. Pharmacists involved in the administration
of immunizations or vaccinations under their license to practice pharmacy
shall meet the following restrictions and requirements. 

(1) Pharmacists may only administer immunizations or vaccinations
pursuant to a written protocol from a physician authorizing the administration. 
(2) Pharmacists may administer immunizations or vaccinations
to a patient under 14 years of age only upon a referral from a physician who
has an established physician-patient relationship with each patient. 

(3) Pharmacists may administer immunizations or vaccinations
under written protocol of a physician within a pharmacy or at any other location
specifically identified in the written protocol. Such other location may not
include where the patient resides, except for a licensed nursing home or 
hospital. 
(4) The authority of a pharmacist to administer immunizations
or vaccinations may not be delegated. 

(5) Pharmacists may administer immunizations and vaccinations
only when a licensed health- care provider authorized to administer the 
medication
is not reasonably available to administer the medication. For the purpose
of this section, "reasonably available" means those times when the licensed
health-care provider is immediately available to administer the immunization
or vaccine and is specifically tasked to do so. 

(6) Under the provisions of the National Vaccine Injury
Compensation Program (NVICP), the health-care provider under whose authority
a covered vaccine is administered (i.e., the physician issuing the written
protocol) must maintain certain information in the patient's permanent record.
In order for the physician to comply with the provisions of the NVICP, the
pharmacist shall provide the physician with the information specified in 
subsection
(g) of this section. 

(7) The pharmacist shall comply with all other state
and federal requirements regarding immunizations or vaccinations. 

(f) Drugs. 

(1) Drugs administered by a pharmacist under the provisions
of this section shall be in the legal possession of: 

(A) a pharmacy, which shall be the pharmacy responsible for
drug accountability, including the maintenance of records of administration
of the immunization or vaccination; or 

(B) a physician who shall be responsible for drug accountability,
including the maintenance of records of administration of the immunization
or vaccination. 

(2) Drugs shall be transported and stored at the
proper temperatures indicated for each drug. 

(3) Pharmacists while actively engaged in the administration
of immunizations or vaccinations under written protocol, may have in their
custody and control the drugs for immunization or vaccination that are 
identified
in the written protocol and any other dangerous drugs listed in the written
protocol to treat adverse reactions. 

(4) After administering immunizations or vaccinations
at a location other than a pharmacy, the pharmacist shall return all unused
prescription medications to the pharmacy or physician responsible for the
drugs. 

(g) Notifications. 

(1) A pharmacist engaged in the administration of immunizations
or vaccinations shall provide notification of the administration to: 

(A) the physician who issued the written protocol within 24
hours of administering the immunization or vaccination; and 

(B) the primary care physician of the patient, as provided
by the patient or patient's agent, within 14 days of administering the 
immunization
or vaccination. 

(2) The notifications required in paragraph 1 of
this subsection shall include the: 

(A) name and address of the patient; 

(B) age of the patient if under 14 years of age; 

(C) name of the patient's primary care physician as provided
by the patient or patient's agent; 

(D) name, manufacturer, and lot number of the vaccine administered; 
(E) amount administered; 

(F) date the vaccine was administered; 

(G) site of the immunization or vaccination (e.g., right arm,
left leg, right upper arm); 

(H) route of administration of the immunization or vaccination
(e.g., intramuscular, subcutaneous, by mouth); and 

(I) name, address, and title of the person administering the
immunization or vaccination. 

(h) Records. 

(1) Maintenance of records. 

(A) Every record, including notifications, required to be
made under this section shall be kept by the pharmacist administering the
immunization or vaccination and by the pharmacy when in legal possession of
the drugs administered. Such records shall be available for at least two years
from the date of such record, for inspecting and copying by the board or its
representative and to other authorized local, state, or federal law enforcement
or regulatory agencies. 

(B) Records, including notifications, may be maintained in
an alternative data retention system, such as a data processing system or
direct imaging system provided: 

(i) the records maintained in the alternative system contain
all of the information required on the manual record; and 

(ii) the data processing system is capable of producing a
hard copy of the record upon request of the board, its representative, or
other authorized local, state, or federal law enforcement or regulatory 
agencies. 
(2) Records of administration under written
protocol. 

(A) Records of administration shall be maintained by the pharmacist
administering immunizations or vaccinations. Such records shall include: 
(i) all of the administration record requirements of subparagraph
(B) of this paragraph; and 

(ii) include the name and address of the pharmacy or physician
in legal possession of the immunization or vaccination administered. 

(B) A pharmacy, when responsible for drug accountability,
shall maintain a record of administration of immunizations or vaccinations
by a pharmacist. The records shall be kept and maintained by patient name.
This record shall include: 

(i) a copy of the written protocol under which the immunization
or vaccination was administered and any patient-specific deviations from the
protocol; 

(ii) name and address of the patient; 

(iii) age of the patient if under 14 years of age; 

(iv) name of the patient's primary care physician as provided
by the patient or patient's agent; 

(v) name, manufacturer, and lot number of the vaccine administered; 
(vi) amount administered; 

(vii) date the vaccine was administered; 

(viii) site of the immunization or vaccination (e.g., right
arm, left leg, right upper arm); 

(ix) route of administration of the immunization or vaccination
(e.g., intramuscular, subcutaneous, by mouth); and 

(xi) name, address, and title of the person administering
the immunization or vaccination. 

(3) Written protocol. 

(A) A copy of the written protocol and any patient-specific
deviations from the protocol shall be maintained in accordance with paragraph
2 of this subsection. 

(B) A standard protocol may be used or the attending physician
may develop an immunization/vaccination protocol for the individual patient.
If a standard protocol is used, the physician shall record what deviations,
if any, from the standard protocol are ordered for the patient. The pharmacy
that is in possession of the vaccines administered shall maintain a copy of
any deviations from the standard protocol ordered by the physician. 

(C) Written protocols, including standard protocols, any patient-specific
deviations from a standard protocol, and any individual patient protocol,
shall be reviewed by the physician and pharmacist at least annually and revised
if necessary. Such review shall be documented in the records of the pharmacy
that is in possession of the vaccines administered. 

(i) Confidentiality. 

(1) A pharmacist shall provide adequate security
to prevent indiscriminate or unauthorized access to confidential records.
If confidential health information is not transmitted directly between a 
pharmacy
and a physician, but is transmitted through a data communication device, the
confidential health information may not be accessed or maintained by the 
operator
of the data communication device unless specifically authorized to obtain
confidential information by this subsection. 

(2) Confidential records are privileged and may be released
only to: 

(A) the patient or the patient's agent; 

(B) practitioners and other pharmacists when, in the pharmacist's
professional judgment, such release is necessary to protect the patient's
health and well-being; 

(C) other persons, the board, or other state or federal agencies
authorized by law to receive such information; 

(D) a law enforcement agency engaged in investigation of suspected
violations of the Controlled Substances Act or the Dangerous Drug Act; 

(E) a person employed by any state agency which licenses a
practitioner as defined in the Act if such person is engaged in the performance
of the person's official duties; or 

(F) an insurance carrier or other third party payer authorized
by a patient to receive such information. 

(3) This section shall not affect or alter the provisions
relating to the confidentiality of the physician-patient communication as
specified in the Medical Practice Act, sec.5.08. 

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
June 19, 1998.
TRD-9809970
Gay Dodson, R. Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Proposed date of adoption: August 4, 1998

For further information, please call: (512) 305-8028

CHAPTER 309.Generic Substitution
22 TAC sec.309.3
The Texas State Board of Pharmacy proposes an amendment to
sec.309.3, concerning prescription drug orders. This proposed amendment
replaces the proposal published in the Texas Register
on March 13, 1998, (22 TexReg 2692). That proposal has been withdrawn
by the agency. The amendment, if adopted, will establish a list of narrow
therapeutic index drugs subject to the provisions of section 40(m) of the
Texas Pharmacy Act. 

The proposed amendment incorporates the recommendations of a Task Force
composed of representatives from the Texas State Board of Pharmacy, Texas
State Board of Medical Examiners, pharmacy and medical associations, and generic
and brand name manufacturers. The amendment, as specified in the legislation,
requires a pharmacist to notify the patient and the prescribing physician
if the pharmacist refills a prescription for a narrow therapeutic index drug
with a generically equivalent product different from the product used on the
previous refill. The proposed amendment outlines the conditions under which
this substitution may occur. The amendment also establishes a list of narrow
therapeutic index drugs, which are subject to the provisions of the new section
40(m) of the Texas Pharmacy Act. Narrow therapeutic index drugs are drugs
in which small variances in the blood levels of the drug can change the 
effectiveness
or toxicity of the drug. The list contains those drugs that health-care 
practitioners
generally monitor closely through lab tests to ensure that the drug remains
at the appropriate blood level for the individual patient. The Texas State
Board of Medical Examiners has reviewed the list established by the committee
and agrees that the list of drugs in the proposed amendment is appropriate
for the purpose of section 40(m)of the Texas Pharmacy Act. 

Gay Dodson, R.Ph., Executive Director/Secretary has determined that, for
the first five-year period the rule is in effect, there will be possible fiscal
implications for the state as a result of enforcing or administering the rule.
There are no anticipated fiscal implications for local government. 

The fiscal implications for the state are based on the cost of an enforcement
action by the Texas State Board of Pharmacy. Fiscal implications for the agency
are anticipated to be minimal because the enforcement and administration of
the proposed amendment can be adequately managed with existing resources.
In fiscal year 1997, as stated in the agency's Annual Report, the agency 
resolved
1697 complaints and, of those complaints, only four complaints alleged 
violations
of the laws and rules regarding substitution of narrow therapeutic index drugs.
The agency cannot accurately project whether the adoption of the proposed
amendment, which provides for notice of a substitution, will increase the
number of complaints or the number of cases that may proceed to formal hearing. 
In addition, there may be fiscal implications to the state Medicaid program,
but the agency lacks the data necessary to analyze and identify possible costs
to the state Medicaid program. For each Medicaid prescription dispensed by
a pharmacy, the state Medicaid program pays the pharmacy a price based on
a set formula. The formula includes a cost for the drug plus a dispensing
fee. A pharmacist is prohibited from charging the state Medicaid program more
for a prescription that calls for a narrow therapeutic index drug despite
any additional time spent by the pharmacist in dispensing the prescription.
Therefore, increased costs to the Medicaid program, because of the notification
requirement in the amendment, may occur if a pharmacist refuses to substitute
a lower-priced generic prescription drug product when permitted to do so,
and instead dispenses a higher-priced brand name prescription drug product.
The agency cannot estimate this possible fiscal implication because the agency
does not have access to the pharmacies' financial information and cannot 
estimate
the number of prescriptions that may be affected by this possible scenario. 
Ms. Dodson also has determined that, for each year of the first five-year
period the rule will be in effect, the public benefit anticipated as a result
of enforcing the rule will be the establishment of a list of narrow therapeutic
index drugs subject to section 40(m) of the Texas Pharmacy Act. The notice
requirement in the proposed amendment promotes good communication between
the patient, the prescribing practitioner, and the pharmacist, particularly
with regard to medications that require frequent monitoring of performance. 
Section 2006.002 of the Texas Government Code requires that a state agency,
before adopting a rule that would have an adverse economic effect on small
businesses, shall prepare a statement of the effect of the rule on small 
businesses,
defined in section 2006.001(1). The statement must include the following:
(1) an analysis of the cost of compliance with the rule for small businesses;
and (2) a comparison of the cost of compliance for small businesses with the
cost of compliance for the largest businesses affected by the rule, using
at least one of the following standards: (A) cost for each employee; (B) cost
for each hour of labor; (C) cost for each $100 of sales. The Texas Pharmacy
Act prohibits the agency access to pharmacy financial data. This lack of access
to financial data limits the agency's ability to identify and analyze estimated
costs to licensees. The costs/fiscal implications to a small business are
dependent on the number of prescriptions filled by the licensee, the costs
of the prescription drug dispensed by the licensee, and the costs assigned
to the amount of time that the licensee must allocate to notify the prescribing
practitioner that a product has been substituted for the prescribed product.
The following factors also affect the agency's ability to estimate costs to
small businesses: the number of prescriptions filled by a pharmacy may vary
on a daily basis, the number of prescriptions that may be subject to the 
proposed
rule may vary on a daily basis, and the prescription volume for licensed 
pharmacies
vary according to size, number of pharmacists and pharmacy employees, 
demographics,
and location in the state (rural versus urban pharmacy). 

Given the limitations and variables that affect the agency's ability to
estimate the costs, the agency is unable to give an accurate assessment of
the costs. The agency does not have information with which to make a comparison
between the cost of compliance for a small business and the cost of compliance
for a large business affected by the rule based on costs per each employee,
per each hour of labor, or per $100 of sales. Because the proposed amendment
requires a pharmacist to notify a patient and a prescribing practitioner of
a substitution, the cost to small and large businesses will be the cost of
the pharmacist's time that is necessary to make this notification on these
types of prescriptions. It is estimated that the notification will require
no more than two minutes of the pharmacist's time per prescription. If the
agency uses $26.51 as the average hourly salary for a pharmacist (<nl>Drug
Topics, <ol>April 7, 1997), the costs to businesses from compliance with
the rule will be approximately 88 cents per prescription on these types of
prescriptions. The agency cannot accurately estimate the number of prescriptions
that this proposed amendment will affect nor the costs to businesses because
data is not available on the number of prescriptions written for the drugs
on the list on which a prescribing practitioner has allowed substitution and
on which a pharmacist has substituted. 

There are possible economic costs to pharmacists, who are the individuals
required to comply with the proposed amendment. Pharmacists who are also owners
of pharmacies may be affected by the various factors outlined above that effect
the costs to large and small businesses. Because the agency cannot estimate
the number of prescriptions that the proposed amendment will affect, the agency
is unable to give an accurate assessment of the fiscal implications to 
pharmacists. 
Comments on the proposal may be submitted to Gay Dodson, R.Ph., Executive
Director/Secretary, Texas State Board of Pharmacy, 333 Guadalupe Street, Suite
3-600, Box 21, Austin, Texas, 78701-3942. 

The amendment is proposed under Sections 4, 16(a), and 40(m)
of the Texas Pharmacy Act (Article 4542a-1, Texas Civil Statutes). The Board
interprets section 4 as authorizing the agency to adopt rules to protect the
public health, safety, and welfare through the effective control and regulation
of the practice of pharmacy. The Board interprets section 16(a) as authorizing
the agency to adopt rules for the proper administration and enforcement of
the Act. The Board interprets section 40(m) as directing the agency to consult
with the Board of Medical Examiners and by rule to establish a list of narrow
therapeutic index drugs. 

sec.309.3. Prescription Drug Orders. 
(a)-(c) (No change.) 

(d) Refills 

<nl>(1)<ol> <nl> Original substitution instructions. <ol>Refills
shall follow the original substitution instructions unless otherwise indicated
by the practitioner or practitioner's agent. 

<nl>(2)<ol> <nl> Narrow therapeutic index drugs. 
<ol>

<nl>(A)<ol> <nl> A prescription for a narrow therapeutic
index drug on which a physician has originally allowed generic substitution
may be refilled only by using the same drug product by the same manufacturer
that the pharmacist last dispensed under the prescription, unless otherwise
agreed to by the prescribing physician, prior to dispensing. <ol>

<nl>(B)<ol> <nl> If a pharmacist does not have the same
drug product by the same manufacturer in stock to refill the prescription,
the pharmacist may dispense a drug product that is generically equivalent
if the pharmacist notifies: <ol>

<nl>(i)<ol> <nl> the patient, at the time the prescription
is dispensed, that a substitution of the prescribed drug product has been
made; and <ol>

<nl>(ii)<ol> <nl> the prescribing practitioner of the drug
product substitution by telephone, facsimile, or mail, at the earliest 
reasonable
time, but not later than 72 hours after dispensing the prescription. <ol>

<nl>(C)<ol> <nl> For the purpose of this subsection, narrow
therapeutic index drugs shall be all oral dosage forms of the following: 
<ol>

<nl>(i)<ol> <nl> digoxin <ol>

<nl>(ii)<ol> <nl> phenytoin <ol>

<nl>(iii)<ol> <nl> warfarin sodium <ol>

<nl>(iv)<ol> <nl> theophylline <ol>

<nl>(v)<ol> <nl> levothyroxine <ol>

<nl>(vi)<ol> <nl> carbamazepine <ol>

<nl>(vii)<ol> valproic acid 

<nl>(viii)<ol> <nl> lithium <ol>

<nl>(ix)<ol> <nl> divalproex sodium <ol>

<nl>(D)<ol> <nl> The board, in consultation with the Board
of Medical Examiners, shall review the list of narrow therapeutic index drugs
subject to this subsection when deemed appropriate but at least every two
years. <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
June 19, 1998.
TRD-9809925
Gay Dodson, R. Ph.

Executive Director/Secretary

Texas State Board of Pharmacy

Proposed date of adoption: August 4, 1998

For further information, please call: (512) 305-8028

PART XXIV. Texas Board of Veterinary Medical Examiners
CHAPTER 577.General Administrative Duties
SUBCHAPTER B.Staff and Miscellaneous
22 TAC sec.577.15
The Texas Board of Veterinary Medical Examiners proposes
amendments to sec. 577.15, concerning the Fee Schedule. The amendments lower
the annual license renewal fee to $110 which is a reduction of $4.00.

The agency is adopting these amendments since the anticipated license renewal
income for fiscal year 1998 exceeded projections. 

Ron Allen, Executive Director, has determined that for the first five-year
period the amendments are in effect there will be no fiscal implications for
state or local government as a result of enforcing or administering the 
amendments.
Revenues of state government will be decreased during the first five-year
period by approximately $21,000 per year from the amount collected in fiscal
year 1998, however the growth in the number of licensees means that state
government revenues for the first five-year period will equal or exceed the
revenues collected during fiscal year 1997. Mr. Allen also has determined
that for the first five years the amendments are in effect the public benefit
anticipated as a result of enforcing the amendments will be a reduced economic
burden on licensees thus encouraging them to remain in practice. There will
be no adverse economic effects on small businesses. There is no anticipated
economic cost to persons required to comply with the amendments as proposed.
Comments on the proposal may be submitted in writing to Mr. Chris Kloeris,
Texas Board of Veterinary Medical Examiners, 333 Guadalupe, Suite 2- 330,
Austin, Texas 78701-3998, phone: (512) 305-7555, and must be received by August
14, 1998. 

The amendment is proposed under the authority of the Veterinary
Licensing Act, Texas Civil Statutes, Article 8890, sec.7(a) which states
"The Board may make, alter, or amend such rules and regulations as may be
necessary or desirable to carry into effect the provisions of this act." 
The amendment affects the Veterinary Licensing Act, Article 8890, sec.19(b)
which requires the Board to set and adjust total fees collected to ensure
that the fees are sufficient to cover the costs of administering the Veterinary
Licensing Act.

sec.577.15. FEE SCHEDULE. 
The Board shall establish fee amounts in accordance with Section 19(a),(b),
and (c) of the Veterinary Licensing Act, art. 8890. 

Figure 1: 22 TAC, Section 577.15

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
June 17, 1998.
TRD-9809660
Ron Allen

Executive Director

Texas State Board of Medical Examiners

Proposed date of adoption: October 1, 1998

For further information, please call: (512) 305-7555

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 267.Pesticide Applicators
25 TAC sec.sec.267.1-267.17
The Texas Department of Health (department) proposes new
sec.sec.267.1-267.17 concerning the licensure of governmental employed
noncommercial pesticide applicators involved in health-related pest control.
The new sections address an introduction, definitions, fees, application 
procedures,
authorized pesticide users, enforcement, applicator certification, certified
applicator recertification, expiration and renewal of licenses, records, 
inspection
of equipment, complaint investigation, administrative penalty, pesticide use
inconsistent with label directions, supervision, and processing applications.
The proposed new rules will implement House Bill 1759, 75th Texas Legislature,
1997, relating to the department's pesticide applicator certification program,
and the Texas Pesticide Control Act, Texas Agriculture Code, Chapter 76. The
proposed new rules will allow the department to set testing fees, licensing
fees, and other fees to defray the costs of administering the pesticide 
applicator
certification program. The new sections will ensure the safe application of
pesticides in health-related pest control programs. House Bill 1759 amended
Chapter 76 to authorize the governing body of a regulatory agency to set fees
as necessary to defray the costs of administering a pesticide applicator 
certification
program. 

All definitions are listed with numbers in new Texas Register format to comply 
with 1 Texas Administrative Code, sec.91.1, effective February 17, 1998. 

Elias Briseno, R.S., Director, General Sanitation Division, has determined
that for the first five-year period the new sections are in effect, there
will be fiscal implications as a result of administering or enforcing the
new sections. The new license fees are projected to generate additional revenues
of $149,046 per year for the department, which will be used to offset the
costs of administering the new rules. Only those local governments choosing
to pay the renewal license fees for their certified noncommercial pesticide
applicator employees, or choosing to pay the application fees, examination
fees, and license fees for new employees who are required to be certified
noncommercial pesticide applicators, will be impacted by the new rules. 
Mr. Briseno also has determined that for each year of the first five years
the new sections are in effect, the public benefit anticipated as a result
of enforcing or administering the new sections will be the safe application
of pesticides in health-related pest control programs. There will be no effect
on small businesses. The costs to persons required to comply with the new
sections (governmental employed noncommercial pesticide applicators involved
in health-related pest control) will be $125 per category license per year.
If employers pay for the licenses then there is no costs to these persons.
There is no anticipated impact on local employment. 

Comments on the proposed new sections may be sent to Elias Briseno, R.S.,
Director, General Sanitation Division, Texas Department of Health, 1100 West
49th Street, Austin, Texas 78756-3199, (512) 834-6635. Comments will be accepted
for 30 days following publication of these proposed new rules in the Texas 
Register. 

The new sections are proposed under the Texas Agriculture Code,
Chapter 76, which requires the department to adopt rules to ensure the safe
application of pesticides in health-related pest control programs; House Bill
1759, 75th Legislature, 1997, which amended Chapter 76; and Health and Safety
Code, sec.12.001, which provides the board with authority to adopt rules
to implement every duty imposed by law on the board, the department, and the
commissioner of health. 

The new sections affect the Health and Safety Code, Chapter 267.

sec.267.1. Introduction.
(a) Purpose. This chapter implements the Texas Pesticide Control
Act, Texas Agriculture Code, which requires the department to adopt rules
to ensure the safe application of pesticides in health-related pest control
programs. 

(b) Policy. These sections are compatible with federal and
state laws regarding pesticide applications, encourage integrated pest 
management
practices, and require continuing education. 

(c) Scope. These sections apply to employees of the United
States Government, state, county, city, mosquito control districts, or other
political subdivisions of the state who serve as noncommercial pesticide 
applicators
in the categories of vector control, rodent control, sanitation, and 
demonstration
and research.

sec.267.2. 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 Pesticide Control Act, Texas Agriculture Code,
Chapter 76. 

(2) Administrator - The department employee designated
as the administrator of licensure activities authorized by the Act. 

(3) Applicant - A person who applies for licensure under
the Act. 

(4) Commissioner - The Texas Commissioner of Health,
or his designee. 

(5) Department - Texas Department of Health. 

(6) EPA - United States Environmental Protection Agency.
(7) FAA - Federal Aviation Administration. 

(8) General-use-pesticide - Any pesticide product whose
use is not restricted or limited by the United States Environmental Protection
Agency or the Texas Department of Agriculture. 

(9) Label - The written, printed, or graphic matter on
or attached to a pesticide or device or any of its containers or wrappers.
(10) Labeling - A label or any other written, printed,
or graphic matter: 

(A) accompanying the pesticide at any time; or 

(B) to which reference is made on a label or in literature
accompanying or referring to a pesticide. 

(11) Licensed pesticide applicator - An employee
of the United States Government, state, county, city, mosquito control district,
or political subdivision of the state who is licensed by the Texas Department
of Health as a noncommercial pesticide applicator in accordance with the 
provisions
of the Texas Pesticide Laws, Texas Agriculture Code, Chapter 76, and the rules
promulgated thereunder, in the categories of: 

(A) vector control; 

(B) rodent control; 

(C) sanitation; and 

(D) demonstration and research. 

(12) Restricted-use-pesticide - Any pesticide product
classified for restricted or limited use by the Administrator of the United
States Environmental Protection Agency. 

(13) State-limited-use pesticide - Any pesticide product
classified for restricted or limited use by the Texas Commissioner of 
Agriculture.
(14) Seasonal employee - An individual hired for peak
mosquito control periods who acts under the direct supervision of a department
licensed pesticide applicator in the vector control category. 

sec.267.3. Fees.
(a) The schedule of fees is as follows: 

(1) application fee-$10; 

(2) category examination fee-$50; 

(3) category reexamination fee-$50 

(4) category license fee-$125; 

(5) category license renewal fee-$125; 

(6) late fee-$25; 

(7) license and/or identification card replacement fee-$25;
and 

(8) continuing education course review fee-$25 per course.
(b) All fees are non-refundable. 

(c) All fees shall be submitted in the form of certified checks
for guaranteed funds; money orders; or checks from state agencies, 
municipalities,
counties or other political subdivisions of the state made payable to the
department. 

sec.267.4. Application Procedures.
(a) Purpose. The purpose of this section is to establish the
requirements for an application and the procedures for licensing as a 
noncommercial
pesticide applicator. 

(b) General. 

(1) Unless otherwise indicated, an applicant must submit all
required information on official department forms. 

(2) The department must receive the application at least
45 days prior to the date the applicant wishes to take the examination(s).
(3) The fees must accompany the application form. The
department will not review an application until the applicant pays the 
application
and examination fees. 

(4) Failure to complete or correct an application within
30 days of a notice of deficiency will result in the application being denied.
(5) An application is not considered complete until the
required examination(s) have been successfully completed by the applicant.
(c) General application material. The completed application
must contain the following: 

(1) specific information regarding personal data; social security
number (used to coordinate licensing information with the Texas Department
of Agriculture and the Structural Pest Control Board of Texas); place of 
employment;
license suspensions, revocations, denials; and felony convictions; 

(2) the date of the application; 

(3) a statement that the applicant shall return to the
department any licensing certificate and identification card upon the revocation
or suspension of the certification; 

(4) a statement that the applicant understands that all
fees are nonrefundable unless the processing time is exceeded without good
cause as set out in sec.267.17 of this title (relating to Processing 
Applications);
(5) a statement that the information in the application
is truthful and that the applicant understands that providing false and 
misleading
information material to determine the applicant's qualifications may result
in the denial of the application, the denial of the license, or the revocation
of any license issued; and 

(6) an original, dated signature of the applicant.

sec.267.5. Authorized Pesticide Users. 
(a) A governmental employee involved in health-related pest
control may not apply pesticides unless the employee: 

(1) is licensed as a noncommercial pesticide applicator by
the department and authorized by the license to use the pesticides in the
license use categories covering the proposed pesticide use; 

(2) is an aerial applicator involved in health-related
pest control licensed by the department in the category in which the pesticide
application is made; or 

(3) is a seasonal employee in a mosquito control program
and who works under the direct personal supervision of a department licensed
pesticide applicator in the vector control category. The licensed pesticide
applicator shall confirm the proper equipment calibration and droplet size
is used by the seasonal employee. The licensed pesticide applicator shall
certify that the seasonal employee: 

(A) has received training in the required laws and regulations;
(B) has read and understood the label of the product being
used at that time; 

(C) is familiar with the particular equipment being used,
including the owner's manual; 

(D) is familiar with appropriate safety and clean up procedures;
and 

(E) uses the pesticide selected by the licensed pesticide
applicator; and 

(b) Seasonal employee training shall be documented in writing
and signed and dated by the licensed pesticide applicator and the seasonal
employee and maintained in the main office of the vector control program.
Seasonal employee training shall include: 

(1) the completion of at least 12 hours of technical classroom
training immediately after employment; 

(2) the completion of at least 24 hours on-the-job training
while under the personal direct supervision of the licensed pesticide 
applicator;
and 

(3) the completion of an additional six hours of technical
classroom training within five weeks after the 24 hours of on-the-job training.
(c) Licensed pesticide applicators must ensure a copy of the
label of the pesticide being used, along with soap, water and disposable towels
are in the vehicle used during applications. The vehicle's flashers must be
turned on during applications.

sec.267.6. Enforcement.
In addition to the enforcement powers of the commissioner found in
the Texas Pesticide Laws, Texas Agriculture Code, Chapter 76, Subchapter G,
and related statutory provisions, the commissioner or his authorized agent
may enter the premises of a governmental entity during normal business hours
to:

(1) examine records; 

(2) inspect any apparatus subject to the Act; 

(3) inspect pesticide packaging, labels, and labeling
information for compliance with the Act; and 

(4) to ensure compliance with this chapter.

sec.267.7.Applicator Certification.
(a) The department shall license noncommercial pesticide applicators
involved in health-related pest control in the following categories: 

(1) vector control; 

(2) rodent control; 

(3) sanitation; and 

(4) demonstration and research. 

(b) The department may enter into a memorandum of agreement
with another state or federal agency for reciprocity in the licensure of a
pesticide applicator if standards meet or exceed department standards including
annual continuing education requirements. 

(c) Demonstration and research pest control licenses may be
issued for any category listed in subsection (a)(1)-(3) of this section. 
(d) Noncommercial pesticide applicator licenses shall be issued
only to persons who have qualified in the license use categories for which
the license is requested. 

(e) The licensed pesticide applicator shall give written notice
to the department of any change of address or employment. 

(f) All testing conducted by the department under the authority
of the Texas Pesticide Law, Texas Agriculture Code, Chapter 76, and related
statutory provisions, shall be designed to cover the information necessary
to demonstrate competency to use restricted-use, state-limited-use and general-
use
pesticides in a safe and effective manner. Anyone who makes a passing score
on the general pesticide applicator examination and on the appropriate 
categorical
exam(s) will be eligible to be a licensed pesticide applicator in those 
categories
for which a passing score was received and shall be licensed as soon as all
other licensing requirements are met.

sec.267.8.Noncommercial Pesticide Applicator Recertification.
(a) Each noncommercial pesticide applicator licensed by the
department must meet the recertification requirements set out in this section.
(b) Department approved continuing education activities for
recertification include the following: 

(1) lectures; 

(2) panel discussions; 

(3) video or film presentations with live instruction;
(4) field demonstrations; or 

(5) other activities approved by the department. 

(c) Only continuing education activities approved by the department
may serve as a basis for recertification. All accredited training courses
approved by the Texas Department of Agriculture, the Structural Pest Control
Board of Texas, and the Texas Agricultural Extension Service will be accepted
by the department. 

(d) Prior accreditation shall not be required for recertification
courses conducted by Texas Agricultural Extension Service and department 
employees,
provided all other requirements for course content and records are met. 
(e) Continuing education activities shall meet the following
criteria if they are to be approved for continuing education credit: 

(1) the activity must have significant educational or practical
content to maintain appropriate levels of competency; 

(2) the activity must be conducted by a university, a
governmental agency, an association with a membership of 25 or more persons,
or a commercial education business; 

(3) the activity must have a record keeping procedure
provided by the sponsor which includes a register of who took the course and
the credit hours earned; 

(4) the activity must include procedures for verifying
participants' attendance as well as comprehension of subject matter presented.
These procedures may include, but are not limited to, examinations, post-
activity
questionnaires, field demonstrations, in-class workbooks or handout materials,
and/or question and answer periods to assure participant understanding of
the subject matter; 

(5) the activity must be at least one hour in length
of net actual instruction time. Round table discussions and more than one
speaker for the total of one hour per activity is permitted. No credit will
be given for time used to promote the sponsor or other nonrelevant activities.
Each credit shall be assigned to the general or category requirements; 

(6) the activity must address one or more of the following:
(A) label and labeling comprehension of pesticides; 

(B) safety considerations; 

(C) environmental considerations; 

(D) pest features; 

(E) integrated pest management; 

(F) pesticides; 

(G) equipment maintenance, calibration and other characteristics;
(H) application techniques; 

(I) laws and regulations; or 

(J) other presentations approved by the department; and 
(7) the conductor of the activity must certify the
activity complies with all applicable federal and state laws, including the
American with Disabilities Act (ADA) requirements for access to activities.
(f) To obtain department accreditation for a recertification
activity, the sponsor must submit: 

(1) a completed department-provided application form which
includes name, address, and phone number of the sponsor and any other 
appropriate
contact person; 

(2) a course outline including the time scheduled for
each topic to be covered, and a description of course content; 

(3) the names, addresses, and phone numbers of the instructors,
and their credentials; 

(4) the dates, times, and geographic locations of each
activity; 

(5) any additional information or material relevant to
the activity which is requested by the department; and 

(6) the application and information must be received
by the department at least 90 days in advance of the first date of the activity.
The department may waive the 90-day provision providing all other requirements
are met. 

(g) The department shall approve, reject, or request additional
information within 30 days of receipt of the application. 

(h) Each department approved continuing education activity
shall be accredited for three years from date of approval. Sponsors who wish
to continue accreditation must file for renewal 90 days prior to the end of
the three year-period on a form provided by the department, which, in addition
to the items listed in subsection f of this section, shall include: 

(1) the sponsor's name and phone number; 

(2) the name of activity and any changes in the activity;
and 

(3) any changes in the courses or the instructors and
their credentials. 

(i) Department personnel may monitor all accredited activities,
and all fees charged by the sponsor shall be waived for department personnel
who monitor the recertification activity. 

(j) Each licensed pesticide applicator must obtain at least
three continuing education units annually. A minimum of one hour must be 
obtained
in general training and a minimum of one hour must be obtained in each category
in which the applicator is licensed. One continuing education unit must be
in integrated pest management and may serve as general or category specific
continuing education. 

(k) Any person who is issued an initial license on or after
September 1 in any year and has not been licensed at any time during the 
preceding
nine months shall begin annual recertification requirements the following
year and will not be required to obtain any credits between September 1 and
December 31 of that year. If credits are obtained during that period, they
may be applied to the following year's requirements. 

(l) Documentation of continuing education activity shall include
the following: 

(1) name, address, phone number, license number, social security
number (used to coordinate licensing information with the Texas Department
of Agriculture and the Structural Pest Control Board of Texas), and signature
of the department licensed noncommercial pesticide applicator on a department
activity roster form or on a department approved activity roster form; 

(2) sponsors of accredited continuing education activities
shall: 

(A) at the conclusion of the activity distribute to those
applicators who have successfully completed the activity a certificate of
completion which shall include the name of the sponsor, the date and name
of the activity, and the credit hours earned; 

(B) maintain a roster on department provided forms or in an
approved format. A copy of the roster and a report of the continuing education
activity must be forwarded to the department withing 14 days after the 
completion
of an activity; and 

(C) each licensed pesticide applicator shall collect and keep
certificates of completion of accredited courses. These certificates of 
completion
will be used to document applicator attendance at accredited courses. The
department will conduct random audits to achieve compliance with this 
requirement.
(m) Continuing education instructors must have one of the
following credentials: 

(1) Board Certified Entomologist; 

(2) Bachelors of Science in entomology; 

(3) teaching or work experience determined by the department
to be sufficient; 

(4) licensure as a certified applicator by the department,
Texas Department of Agriculture or the Structural Pest Control Board of Texas;
(5) instructors at the Texas Agricultural Extension Service;
or 

(6) department personnel. 

(n) A licensed pesticide applicator may seek credit for a
continuing education activity that has not been submitted by the sponsor to
the department (and the department will assign the number of credits for the
activity) where: 

(1) the activity is held by an out-of-state sponsor and the
following criteria are met: 

(A) the activity contains course content equal to or exceeding
Texas standards; 

(B) the activity is sponsored by an institution of higher
education, a regional association, a national association, or the state or
federal government; 

(C) the activity content is described, including the time
allotted to each aspect of the activity, identification of sponsor, instructor's
qualifications, instructors name and address, proof of attendance, date, time,
and place of the activity; and 

(D) the information required in subparagraphs (A)-(C) of this
paragraph is submitted to the department within 30 days after completion of
the activity. 

(2) the activity is a course approved by a university,
college, or other institution of higher education for credit and is in an
area directly related to the activities of noncommercial applicators, and
the following criteria are met: 

(A) the licensed applicator provides the department with sufficient
information describing activity content including the time allotted to each
aspect of the activity, identification of sponsor, instructors name and address,
proof of attendance, date, time, and place of activity; and 

(B) the information required in subparagraph (A) of this paragraph
is submitted to the department within 30 days after completion of the activity.
(o) Failure to comply with the annual continuing education
requirements for the noncommercial pesticide applicator license issued by
the department will: 

(1) result in denial of an applicator's renewal license or
certification until the necessary credits for continuing education are 
successfully
completed; and 

(2) require the applicator to take and pass the department
examination with a score of 70% or better for general knowledge and for each
category in which the applicator seeks certification, if the applicator does
not relicense or recertify within one year after the original license expired.
(p) The department may deny, revoke, or refuse to renew accreditation
for any or all courses of a sponsor if the sponsor fails to file a timely
activity report, fails to provide or maintain the quality of activity approved
by the department, or fails to comply with any other requirements that are
a basis for accreditation or that are a part of this chapter. 

(q) A licensed pesticide applicator or sponsor may file a written
request for an extension of time for compliance with any deadline in this
chapter. Such request for extension, not to exceed 30 days, shall be granted
by the department if the applicator or sponsor files appropriate documentation
to show good cause for failure to comply timely with the requirements of this
subsection. Good cause includes, but is not limited to, extended illness,
extended medical disability, or other extraordinary hardship which is beyond
the control of the person seeking the extension.

sec.267.9. Expiration and Renewal of Licenses.
(a) A licensed pesticide applicator who fails to comply with
the annual renewal requirements will not have his or her license renewed until
a complete renewal application is received including required continuing 
education
units. 

(b) Each noncommercial pesticide applicator license expires
on the last day of February of the year following the year in which it was
issued. A complete application for renewal of a noncommercial applicator license
must be filed with the department by the last day of January of the year 
following
the year in which the license was issued. A person who fails to apply for
renewal of a license on or before the expiration date must pay, in addition
to the renewal fee, a late fee of $25. 

(c) Failure to file a timely and complete application for
renewal by the license expiration date may subject the applicator to re-test
for general pesticide and category specific knowledge. Applications of 
pesticides
by any noncommercial pesticide applicator after the expiration date of the
license and when a complete application has not been filed with the department
may subject the applicator to penalties and could result in the department's
refusal to issue a license for the rest of the licensing year. 

(d) If a complete application for renewal of a noncommercial
applicator license is not submitted within one year after the expiration of
the license, the license will be deemed to be voluntarily terminated. To reapply
for licensure as a noncommercial pesticide applicator, the applicant must
meet the requirements for a new license, including testing and any training
or continuing education needed at the time of the new application. 

(e) Pursuant to the Texas Pesticide Law, Texas Agriculture
Code, sec.76.113, and related statutory provisions, the department may determine
that additional training shall be required of current licensees and may consider
changes in technology, pesticide-related problems, or the performance of 
individual
applicators in reaching such a determination. If general retraining and/or
retesting is required for all applicators in a category, the department will
notify all licensees at least six months in advance of the license renewal
date. If individual retraining and/or retesting is required as a result of
the applicator's performance, the department will give at least 60 days notice
and set a time and place of retraining.

sec.267.10. Operating without a License.
A governmental employed noncommercial pesticide applicator involved
in health-related pest control who operates without a current, valid license
from the department is subject to administrative penalties as found in 
sec.267.14
of this chapter. 

sec.267.11. Records.
(a) Records of all pesticide uses by licensed pesticide applicators
are required under provisions of the Texas Pesticide Law, Texas Agriculture
Code, sec.76.114, and related statutory provisions and shall, at a minimum,
include the following: 

(1) the date and time of day each application was started;
(2) the name of the person or entity for whom the application
was made; 

(3) the location where the application was made (streets,
subdivisions, flight grids or addresses); 

(4) the pesticide applied, including: 

(A) product name; 

(B) EPA registration number; 

(C) rate of application; and 

(D) total volume of product applied. 

(5) the name(s) of the pest(s) for which the pesticide
was applied; 

(6) the purpose of the application (for example: to control
pests of public health importance); 

(7) wind direction and velocity and air temperature;
(8) the FAA "N" number of aerial application equipment
or the vehicle license number of ground equipment; and 

(9) the name of the applicator and his certified pesticide
applicator number or, in the case of a seasonal employee in mosquito control
programs, the name and certified pesticide applicator number whose license
the individual is working under, and the seasonal employee's name. 

(b) The record of each pesticide application shall be kept
current and maintained at the applicator's principal place of business as
designated on the applicator's application or renewal for a pesticide 
applicator's
license. The record for each application shall contain all of the information
required in subsection (a) of this section. The licensee shall make these
records available for inspection by the regulatory agency upon request. The
department may examine these records at any time during normal business hours,
or, by written request, require the licensee to submit a copy of these records.
Records must be kept by the licensee for a period of five years.

sec.267.12.Inspection of Equipment. 
All application equipment used by noncommercial applicators licensed
by the department is subject to inspection by a department inspector at any
reasonable time. Such equipment must be maintained in a condition that will
provide safe and proper application of the pesticide. If the inspector finds
that it is not, the inspector shall require the needed repairs or adjustments
be made before allowing the use of such equipment. 

sec.267.13. Complaint.
(a) Filing of complaints. 

(1) Any person may complain to the department alleging a violation
of this chapter. 

(2) A person wishing to file a complaint against a governmental
entity, licensee, seasonal employee, or another person shall notify the 
department.
The initial notification of a complaint may be in writing, by telephone, or
by personal visit to the administrative office. The mailing address is Texas
Department of Health, General Sanitation Division, Vector Control Branch,
1100 West 49th Street, Austin, Texas 78756-3199, (512) 834-6635. 

(3) Anonymous complaints will be investigated by the
department. 

(b) Investigation of complaints. 

(1) The department will conduct an initial investigation.
The department will prepare a written report. This report will be made available
to concerned parties on written request. 

(2) If the department determines that the complaint does
not come within the department's jurisdiction, the inspector shall advise
the complainant and, if possible, refer the complaint to the appropriate 
governmental
agency for handling such a complaint. 

(3) If the complaint is found to be valid, the department
will issue a notice of violation against the accused and an administrative
penalty may be proposed.

sec.267.14. Administrative Penalty.
(a) If a person violates a provision of the Texas Pesticide
Law, Texas Agriculture Code, Chapter 76, and related statutory provisions
administered by the department or a rule or order adopted by the department,
the department may assess an administrative penalty against the person as
provided by this section. 

(b) The penalty may be in any amount not to exceed $4,000
for all violations related to a single incident. 

(c) In determining the amount of the penalty, the department
shall consider: 

(1) the seriousness of the violations, including, but not
limited to, the nature, circumstances, extent, and gravity of the prohibited
acts, and the hazard or potential hazard created to the health or safety of
the public; 

(2) the economic damage to property or the environment
caused by the violation; 

(3) the history of previous violations; 

(4) the amount necessary to deter future violations;
(5) good faith efforts to correct the violations; and
(6) any other matter that justice may require. 

(d) If, after investigation, the department determines that
a violation has occurred, the department may issue a Notice of Violation stating
the basis for the conclusion that a violation occurred, and may also propose
an administrative penalty in consideration of the factors set forth in 
subsection
(c) of this section. The person to whom the notice is sent shall have the
opportunity to contest the facts stated in the notice, the amount of the 
proposed
penalty, or both. 

(e) Not later than the 20th day after the date on which the
notice is received, the person noticed may either accept the determination
of the department made under subsection (d) of this section, including the
recommended penalty; or may make a written request for an informal settlement
conference; or may make a written request for a formal hearing on the 
determination.
If no request for a settlement conference or hearing is received within the
20 days, the commissioner may enter an order finding that the violation(s)
occurred and may assess an administrative penalty. 

(f) If the person noticed with the violation accepts the determination
of the department, the commissioner shall issue an order finding the 
violation(s)
and ordering the payment of the recommended penalty. 

(g) If the person noticed requests an informal settlement
conference, the department shall schedule it as soon as practicable. Informal
settlement conferences may be in person in Austin or by telephone conference.
If an agreement is reached at an informal conference, the commissioner shall
issue an order reflecting the agreement. If no agreement is reached at an
informal settlement conference, the person noticed may request a formal hearing
at the conclusion of the conference. If no agreement is reached at the informal
settlement conference and the person noticed fails to request a formal hearing,
the commissioner may issue an order finding the violation(s) and ordering
the payment of the recommended penalty. 

(h) If the person noticed requests a hearing, the hearing
shall be held by a hearing examiner designated by the department. The hearing
examiner shall promptly issue to the commissioner a proposal for decision
as to the occurrence of the violation, including recommendation as the amount
of the proposed penalty if a penalty is warranted. Based on the recommendations
of the hearing examiner, the commissioner by order may find a violation has
occurred and may assess a penalty or may find that no violation has occurred.
All proceedings under this subsection are subject to the Administrative 
Procedure
Act and Government Code, Chapter 2001. 

(i) The department shall mail a copy of the commissioner's
order to the person. 

sec.267.15. Use Inconsistent with Label Directions.
It is a violation of this chapter for any person to use or cause to
be used a pesticide in a manner inconsistent with its label or labeling. Use
inconsistent with the label includes, but is not limited to:

(1) applications at sites, rates, concentrations, intervals,
or under conditions not specified in the labeled directions; 

(2) using application techniques or equipment prohibited
by the label; 

(3) failure to observe worker protection requirements;
and 

(4) improper storage or disposal of the pesticide or
its container. 

sec.267.16. Supervision.
A licensed pesticide applicator is not required to be physically present
at the time and place of a pesticide application to exercise direct supervision,
but a licensed pesticide applicator must always be available when and if needed.
The licensed pesticide applicator is responsible for any person working under
the licensee's direct supervision. All licensed pesticide applicators are
responsible for assuring that any person working under the licensee's direct
supervision is knowledgeable of the label requirements and rules governing
the application of the particular pesticide being used by the individual and
all requirements for seasonal employees established in sec.267.5 of this
chapter.

sec.267.17. Processing Applications. 
(a) Time periods. The department shall comply with the following
procedures in processing applications for licensure and licensure renewal.
(1) The following periods of time shall apply from the date
of receipt of an initial application or a renewal application until the date
of issuance of a written notice that the application is complete and accepted
for filing or that the application is deficient and additional specific 
information
is required. A written notice stating that the application has been approved
may be sent in lieu of the notice of acceptance of a complete application.
The time periods are as follows: 

(A) letter of acceptance of application for licensing as a
licensed pesticide applicator - 30 working days; and 

(B) letter of application deficiency or letter of application
renewal deficiency - 30 working days. 

(2) The following periods of time shall apply from
the receipt of the last item necessary to complete the initial application
or renewal application until the date of issuance of written notice approving
or denying the application. The time periods 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 time periods
are as follows: 

(A) letter of approval for examination - 30 working days;
(B) initial letter of approval for licensure - 30 working
days; 

(C) letter of denial of licensure - 30 working days; and 
(D) issuance of initial license or renewal license - 30 working
days. 

(b) Reimbursement of fees. 

(1) In the event an application is not processed in the time
periods stated in subsection (a) of this section, 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 administrator. If the 
administrator
does not agree that the time period has been violated or finds that good cause
existed for exceeding the time period, the request will be denied. 

(2) Good cause for exceeding the time period is considered
to exist if the number of applications for registration and registration renewal
exceeds by 15% or more the number of applications processed in the same calendar
quarter the preceding year; another public or private entity relied upon by
the department in the application process caused the delay; or any other 
condition
exists giving the department good cause for exceeding the time period. 

(c) Appeal. If a request for reimbursement under subsection
(b) of this section is denied by the administrator, the applicant may appeal
to the commissioner of the department for a timely resolution of any dispute
arising from a violation of the time periods. The applicant shall give written
notice to the commissioner at the address of the department that he or she
requests full reimbursement of all fees paid because his or her application
was not processed within the applicable time period. The commissioner shall
provide written notice of the commissioner's decision to the applicant and
the administrator. An appeal shall be decided in the applicant's favor if
the applicable time period was exceeded and good cause was not established.
If the appeal is decided in favor of the applicant, full reimbursement of
all fees paid in that particular application process shall be made. 

(d) Contested cases. The time periods for contested cases
related to the denial of registration or registration renewals are not included
within the time periods stated in subsection (a) 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
June 22, 1998.
TRD-9809939
Susan K. Steeg

General Counsel

Texas Department of Health

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 458-7236

PART II. Texas Department of Mental Health and Mental Retardation
CHAPTER 412.Local Authority Responsibilities
SUBCHAPTER H.Standards and Quality Assurance for Mental Retardation
Community Services and Supports
25 TAC sec.sec.412.353, 412.355-412.357, 412.359, 412.370, 412.371
The Texas Department of Mental Health and Mental Retardation
(department) proposes amendments to sec.sec.412.353, 412.355-412.357,
412.359, 412.370, and 412.371 of Chapter 412, Subchapter H, concerning standards
and quality assurance for mental retardation services and supports. 

Amendments to sec.412.370 will adopt by reference as Exhibits A-G the
books Personal Outcome Measures and Outcome Measures for Early Childhood 
Intervention Services
from The Council on Quality and Leadership in Supports for People
with Disabilities and five related forms. Personal Outcome Measures will replace 
The Council's 1993 book, Outcome Based Performance Measures, that currently is 
adopted by reference
as Exhibit A. Outcome Measures for Early Childhood
Intervention Services will be used by the assessment and external validation
teams when determined appropriate for interviews of children as part of the
Quality Assurance and Improvement System (QAIS). The amendments also will
replace references in sec.sec.412.353, 412.355-412.357, 412.359, and 412.371
to the Outcome Based Performance Measures
with references to the Personal Outcome Measures
and the Outcome Measures for Early Childhood
Intervention Services. A definition of Outcome
Measures for Early Childhood Intervention Services is added in sec.412.353.
The department will use the Personal Outcome
Measures and the Outcome Measures for Early
Childhood Intervention Services in place of the Outcome Based Performance 
Measures as the basis for QAIS. Local mental
retardation authorities (MRAs) and designated providers use QAIS to assess
the quality, efficiency, and effectiveness of their organizations and the
services and supports they provide to consumers either directly or by 
contracting
with providers. 

Donald C. Green, chief financial officer, has determined that for each
year of the first five--year period the amendments as proposed are in effect
there will be no significant fiscal impact on state and local government as
a result of enforcing the amendments. 

Barry Waller, director, Long Term Services and Supports, has determined
that for each year of the first five-year period the amendments as proposed
are in effect, the public benefit is the incorporation of the most current,
nationally recognized outcome measures into QAIS. The quality of community-based
mental retardation services and supports delivered by local mental retardation
authorities (MRAs) and designated providers is assessed using these outcome
measures. The economic cost to persons required to comply with the amendments
would include the cost of one or more copies of the Personal Outcome Measures 
and the Outcome Measures for Early Childhood Intervention Services and is not 
anticipated
to be substantial. There is no adverse economic effect on small businesses
required to comply with the amendments because, as described above, the cost
of compliance is not substantial. No local employment impact is anticipated
as a result of adopting the amendments as proposed. 

Written comments concerning the proposal may be mailed to Linda Logan,
director, Policy Development, Texas Department of Mental Health and Mental
Retardation, P.O. 12668, Austin, Texas 78711, or faxed to 512/206-4750, within
30 days of publication of these proposed amendments. 

The amendments are proposed under the Texas Health and Safety
Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation
Board with broad rulemaking authority; sec.534.057 which requires the department
to adopt rules relating to the provision of respite care; and sec.534.058
which requires the department to establish standards of care for services
provided by local authorities and their subcontractors. 

Texas Health and Safety Code, sec.sec.534.052, 534.057, and 534.058
are affected by the proposed amendments.

sec.412.353. Definitions.
The following words and terms, when used in this subchapter, have the
following meanings unless the context clearly indicates otherwise: 

(1)-(14) (No change.) 

(15) <nl>Outcome Measures for Early Childhood Intervention
Service -- The Council's copyrighted system of quality improvement and 
measurement
for all types of service and support program models and to families of children
with developmental delays and/or disabilities. Within QAIS, these outcomes
are used instead of the Personal Outcome Measures as considered appropriate
by the assessment team or external validation team when the individual being
interviewed is a child.<ol> 

<nl>(16)<ol> Personal Outcome Measures [(15)
Outcome Based Performance Measures] -- The Council's copyrighted system
of quality improvement and measurement that emphasizes responsiveness on the
part of service organizations to the individual needs of that organization's
consumers rather than traditional compliance with established standards. The
system: 

(A) focuses on outcomes for consumers and the organizational
processes that contribute to those outcomes; 

(B) is concise, focusing on those priority outcomes that people
with disabilities indicate are most important to them; and 

(C) can be used with all services and programs -- residential,
vocational, social, or residential -- and for consumers with different 
disabilities. 
<nl>(17)<ol> [(16)] Planning team
-- The consumer, the LAR, if any, and those persons chosen by the consumer
and LAR, if any, who assess the consumer's treatment, training, and 
service/support
plan needs and make recommendations to the local MRA or designated provider
for services which will enable the consumer to meet desired personal outcomes.
Team members typically could include: 

(A) family members or other persons who are actively involved
in the life of the consumer; 

(B) persons who are professionally qualified, certified, or
both, in various professions with special training and experience in the 
diagnosis,
management, needs, and treatment of consumers; 

(C) persons who are directly involved in the delivery of mental
retardation services to the consumer; and 

(D) member(s) of the local MRA's public responsibility committee
(PRC), if requested by the consumer with the ability to provide legally adequate
consent or the LAR, if any, or the PRC in instances when the consumer does
not have either the ability to provide legally adequate consent or an LAR. 
<nl>(18)<ol> [(17)] Polypharmacy --
Simultaneous use by a consumer of more than one psychoactive medication from
the same medication class, except for those periods of overlapping use when
a consumer is changing from one drug to another. 

<nl>(19)<ol> [(18)] Provider -- 

(A) Any organization or entity which contracts with a local
MRA to provide mental retardation services and supports; or 

(B) that part of a local MRA directly providing mental retardation
services and supports. 

<nl>(20)<ol> [(19)] Psychoactive medication
-- Any medication which is prescribed for the primary intent of improving
cognition, affective state, and/or behavior. 

<nl>(21)<ol> [(20)] Quality Assurance and
Improvement System (QAIS) -- The framework by which local MRAs and designated
providers measure the quality, efficiency, and effectiveness of their 
organizations
and the services and supports they provide to consumers either directly or
by contracting with providers. It is an outcome-oriented system that 
concentrates
on measuring desired results and the processes used to obtain those results,
as defined by the consumer. The system is based on The Council's <nl>Personal
Outcome Measures and, when the individual being interview is a child, the
Outcome Measures for Early Childhood Intervention Services. The system<ol>
[Outcome Based Performance Measures and] involves three stages: 
(A) self-assessment; 

(B) quality improvement plan; and 

(C) external validation. 

<nl>(22)<ol> [(21)] Respite services
-- Services which assist both consumers and their families during times of
crisis or other specific events. Designed to be of short duration, the services
may vary from one day to a maximum of 30 consecutive calendar days per episode.
Respite services may be provided either in the consumer's home or in a residence
operated or contracted for by the local MRA. 

<nl>(23)<ol> [(22)] Restraint -- The use
of physical force or a mechanical device to involuntarily restrict the free
movement of the whole or a portion of a consumer's body to control physical
activity. 

<nl>(24)<ol> [(23)] Services and supports
-- Programs and assistance for consumers with mental retardation that may
include a determination of mental retardation, planning team recommendations,
education, special training, supervision, care, treatment, rehabilitation,
residential care, and counseling, but does not include those services or 
programs
that have been explicitly delegated by law to other state agencies. 

<nl>(25)<ol> [(24)] Tardive dyskinesia
-- A possible side effect of psychoactive medication characterized by 
involuntary
and abnormal movements which are purposeless and stereotypical. 

<nl>(26)<ol> [(25)] The Council -- The
Council on Quality and Leadership in Supports for People with Disabilities,
formerly The Accreditation Council, is a diversified quality enhancement 
organization
with an international focus in the field of human services which: develops
standards of quality; develops and disseminates materials; provides training,
consultation, and technical assistance; and operates an accreditation program
for organizations which serve people with disabilities. 

<nl>(27)<ol> [(26)] Tuberculosis -- A disease
spread through airborne particles containing tubercle bacilli which become
established in the lungs and may spread throughout the body. 

sec.412.355. Self-assessment by Local MRAs and Designated
Providers.
(a) During every fiscal year, each local MRA and designated
provider will conduct a self-assessment with the subsequent development of
a quality improvement plan as described in sec.412.358 of this title (relating
to Quality Improvement Plan). These will be completed within 30 days following
the anniversary date of the initial self-assessment and submitted to the 
department's
Office of Quality Management. The self-assessment is based on The Council's <nl>
Personal Outcome Measures and, as appropriate, the Outcome Measures for Early
Childhood Intervention Services<ol> [Outcome Based Performance Measures
] which are adopted by reference as Exhibits A and B, respectively,
in sec.412.370 of this title (relating to Exhibits)<nl>. It<ol> [
and] is designed to evaluate two aspects of quality, which are: 

(1) outcomes of services that contribute to the quality of
life (outcome measures for people); and 

(2) the organizational structure and processes that support
quality services and supports (outcome measures for organizations). 

(b)-(f) (No change.) 

sec.412.356. Outcome Measures for People. 
(a) (No change.) 

(b) A stratified, random sample for the survey is developed
as described in the QAIS Implementation Manual, which is referenced as Exhibit 
<nl>
(G)<ol>[E] in sec.412.370(b) of this title (relating to Exhibits).
Technical assistance in developing the sample is available from the department's
Office of Research and Evaluation. 

(c)-(f) (No change.) 

(g) The <nl>Outcomes<ol> [Outcome Measures]
for People Results Worksheet is adopted by reference as Exhibit <nl>C<ol>
[B] and the Outcomes for People Scoring Grid is adopted by reference
as Exhibit <nl>D<ol> [C] in sec.412.370 of this title (relating
to Exhibits). 

sec.412.357. Outcome Measures for Organizations. 
(a)-(c) (No change.) 

(d) The Outcomes for Organizations Results Worksheet is adopted
by reference as Exhibit <nl>E<ol> [D] in sec.412.370 of this
title (relating to Exhibits).

sec.412.359. External Validation. 
(a)-(c) (No change.) 

(d) The membership of the external validation team is composed
as described in the QAIS Implementation Manual, which is referenced as Exhibit 
<nl>
H<ol> [E] in sec.412.370(b) of this title (relating to Exhibits). 
(e) The department's Office of Quality Management will conduct
a desk review of the annual self-assessment and quality improvement plan 
submitted
by each organization as described in sec.412.355(a) of this title (relating
to Self-assessment by Local MRAs and Designated Providers). The on-site visit
portion of the external validation component will take place in one, two,
or three year cycles, depending on the organization's accomplishment as 
reflected
in the following elements which are described in detail in the QAIS 
Implementation
Manual, which is referenced as Exhibit <nl>H<ol> [E] in sec.412.370(b)
of this title (relating to Exhibits): 

(1) a valid self-assessment; 

(2) addressing of high impact issues in the quality improvement
plan; 

(3) completion and implementation of a quality improvement
plan; and 

(4) presence of outcomes and processes in the self-assessment. 
(f) The outcomes for organizations described in Exhibit A<nl>
,which is adopted by reference in sec.412.370(a)(1) of this title (relating
to Exhibits),<ol> assess whether an organization has the necessary and 
appropriate
processes in place to support the outcomes for people. 

(g)-(h) (No change.) 

sec.412.370. Exhibits.
(a) Documents adopted by reference in this subchapter include: 
(1) Exhibit A -- The Council's <nl>Personal Outcome Measures
(1998)<ol> [Outcome Based Performance Measures -- 1993]; 

(2) Exhibit B -- <nl>Outcome Measures for Early Childhood
Intervention Services (1995)<ol>; 

<nl>(3)<ol> Exhibit C Outcomes for People Results
Worksheet; 

<nl>(4)<ol> Exhibit D [(3) Exhibit C] --
Outcomes for People Scoring Grid; [and] 

<nl>(5)<ol> Exhibit E [(4) Exhibit D] --
Outcomes for Organizations <nl>Result<ol> Worksheet. 

<nl>(6)<ol> Exhibit F -- Outcomes For Families and
Children Results Worksheet; and 

<nl>(7)<ol> Exhibit G -- Outcomes for Families and
Children Scoring Grid. 

(b) The QAIS Implementation Manual is referenced in this subchapter
as Exhibit <nl>H<ol> [E]. 

(c) Copies of the <nl>Personal Outcome Measures -- 1998 and
the Outcome Measures for Early Childhood Intervention Services<ol> [
Outcome Based Performance Measures] listed in subsection (a)(1) <nl>
and (2)<ol> of this section may be obtained by contacting The Council, 100
West Road, Suite 406, Towson, Maryland 21204. All other documents listed in
subsections (a) and (b) of this section may be obtained by contacting the
Office of Policy Development, Texas Department of Mental Health and Mental
Retardation, P.O. Box, 12668, Austin, Texas 78711-2668. 

sec.412.371. Training.
(a) Training and other learning opportunities for all stakeholders
of the local MRA or designated provider and for the members of the external
validation teams are based on The Council's <nl>Personal Outcome Measures
-- 1998, Outcome Measures for Early Childhood Intervention Services,<ol>
[Outcome Based Performance Measures] and other service quality
improvement concepts. 

(b)-(c) (No change.) This agency hereby certifies that legal
counsel has reviewed the proposal and found it to be within the agency's legal
authority to adopt.

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
June 22, 1998.
TRD-9809969
Charles Cooper

Chairman, Texas MHMR Board

Texas Department of Mental Health and Mental Retardation

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 206-4516

TITLE 28. INSURANCE
PART I. Texas Department of Insurance 
CHAPTER 11. Health Maintenance Organizations
The Texas Department of Insurance proposes amendments and new sections
to Chapter 11, concerning health maintenance organizations, by amending 
sec.sec.11.2,
11.101, 11.102, 11.105-11.109, 11.201-11.207, 11.301, 11.302, 11.501-11.507,
11.701, 11.706, 11.707, 11.801, 11.803-11.804, 11.806, 11.1001, 11.1102, 
11.1202-11.1205,
11.1301-11.1305, 11.1600, 11.1606, 11.1802-11.1805, 11.1902, and 11.2001 and
adding new sec.sec.11.303, 11.508-11.513, 11.802, 11.808, new Subchapter
J, Physicians and Providers Contracts and Arrangements, sec.sec.11.900-11.904,
11.1500, 11.1601-11.1603, 11.1605, 11.1607-11.1608, 11.1806, and new Subchapter
W, Single Service HMOs, sec.sec.11.2200-11.2205. These proposed amendments
and new sections are necessary to implement legislation enacted by the 75th
Legislature and the federal government, and to set minimum benefit standards
for single service HMOs. Specifically, Insurance Code, Article 3.51-14 (relating
to coverage for serious mental illnesses)(House Bill 1173), Article 20A.02
(relating to definitions for purposes of the HMO Act)(Senate Bill 382, Senate
Bill 385), Article 20A.03 (relating to establishment of HMOs)(Senate Bill
385), Article 20A.04 (relating to application for certificate of 
authority)(Senate
Bill 382, Senate Bill 385), Article 20A.05 (relating to issuance of certificate
of authority)(Senate Bill 382, Senate Bill 385), Article 20A.09 (relating
to evidence of coverage and charges)(House Bill 710, Senate Bill 382, Senate
Bill 385, Senate Bill 386), Article 20A.11 (relating to information to 
prospective
and current group contract holders and enrollees)(Senate Bill 385), Article
20A.11A (relating to access to certain information)(Senate Bill 385), Article
20A.11B (relating to information to enrollees and prospective enrollees; 
medicare-contracting
HMOs)(Senate Bill 385, Senate Bill 386), Article 20A.12 (relating to complaint
systems)(Senate Bill 385), Article 20A.12A (relating to review of adverse
determinations)(Senate Bill 386), Article 20A.12A (relating to filing complaints
with the Texas Department of Insurance)(Senate Bill 385), Article 20A.13 
(relating
to protection against insolvency)(Senate Bill 382, Senate Bill 385), Article
20A.14 (relating to prohibited practices)(Senate Bill 382, Senate Bill 385),
Article 20A.15 (relating to regulation of agents)(Senate Bill 385), Article
20A.15A (relating to agents for single health care service plans)(Senate Bill
385), Article 20A.17 (relating to examinations)(Senate Bill 385), Article
20A.18 (relating to management contracts and exclusive agency contracts)(Senate
Bill 385), Article 20A.18A (relating to physician and provider contracts)(Senate
Bill 385), Article 20A.19 (relating to hazardous financial condition)(Senate
Bill 385), Article 20A.20 (relating to suspension or revocation of certificate
of authority)(Senate Bill 382, Senate Bill 385), Article 20A.22 (relating
to rules and regulations)(Senate Bill 385), Article 20A.23 (relating to 
appeals)(Senate
Bill 385), Article 20A.26 (relating to statutory construction in relationship
to other laws)(Senate Bill 382, Senate Bill 385), Article 20A.28 (relating
to authority to contract)(Senate Bill 385), Article 20A.31 (relating to 
jurisdiction
for injunctions and receivership and delinquency proceedings (Senate Bill
382), Article 20A.32 (relating to fees)(Senate Bill 385), Article 20A.33 
(relating
to taxation)(Senate Bill 382), Article 20A.36 (relating to HMO solvency 
surveillance
committee)(Senate Bill 382, Senate Bill 385), Article 20A.37 (relating to
HMO quality assurance)(Senate Bill 385), Article 21.24-2 (relating to group
coverage of certain students)(House Bill 864), Article 21.52G (relating to
coverage for hospital stays following performance of a mastectomy and certain
related procedures)(House Bill 349), Article 21.53A (relating to benefits
for certain bone and joint procedures)(House Bill 2063), Article 21.53D 
(relating
to coverage for reconstructive surgery after mastectomy)(Senate Bill 217),
Article 21.53D (relating to access to certain obstetrical or gynecological
care)(Senate Bill 54), Article 21.53F (relating to coverage for childhood
immunizations)(Senate Bill 172), Article 21.53F (relating to coverage for
minimum inpatient stay in health care facility and postdelivery care following
birth of child)(House Bill 102), Article 21.53F (relating to coverage of certain
tests for detection of prostate cancer)(Senate Bill 258), Article 
21.53F(relating
to telemedicine)(House Bill 2017), Article 21.53G (relating to coverage for
supplies and services associated with treatment of diabetes (Senate Bill 163),
Article 21.53K (relating to provision of services related to immunizations
and vaccinations under managed care plans)(Senate Bill 786), Article 21.58A
(relating to health care utilization review agents)(Senate Bill 386), and
Article 21.58C (relating to standards for independent review 
organizations)(Senate
Bill 384, Senate Bill 386) and Title XIII, Public Health Services Act (42
U.S.C. Section 300E-1(1)). 

In conjunction with these proposed amendments and new sections, the department
is proposing the repeal of existing sec.sec.11.103, 11.208, 11.303, 11.304,
11.306, 11.508-11.510, 11.802 and 11.1605. Notice of the proposed repeal is
published elsewhere in this issue of the Texas Register. 

Proposed amendments to sec.11.2 add new definitions for adverse determination,
basic health care service, control, controlled HMO, controlled person, 
credentialing,
health status related factor, limited provider network, limited service HMO,
provider HMO, single service HMO, subsidiary, telemedicine, urgent care, and
voting security. The proposed amendments also amend the existing definitions
of admitted assets, agent, contract holder, copayment, credentials, dentist,
excess surplus, general hospital, HMO, out-of-area benefits, pathology services,
pharmaceutical services, pharmacist, pharmacy, premium, primary HMO, psychiatric
hospital, qualified HMO, quality improvement, reference laboratory, referral
specialists, schedule of charges, service area, special hospital, surplus,
and subscriber. In addition, proposed amendments to sec.11.2 delete some
definitions as unnecessary. Proposed sec.11.101 amends the address for obtaining
forms and sec.11.102 adds a $100.00 filing fee for name applications. The
prohibition against the use of certain words in names of HMOs to avoid 
misrepresentation
in proposed sec.11.102 formerly appeared in sec.11.103. Proposed amendments
to sec.sec.11.105-11.109 require HMOs to wait 30 days after the expiration
of a name reservation before filing a new name application, and allow the
department to process HMO name application filings in the same manner as name
applications submitted by other insurers. Proposed amendments to sec.sec.11.201-
11.203
make minor revisions for clarification. Proposed amendments to sec.11.204
clarify the requirements of an application for certificate of authority by
prohibiting deductibles on fidelity bonds, requiring that cash deposits be
held by the Texas Comptroller, and specifying that schedules of charges for
Medicaid products, monitoring plans for approved non-profit health corporations,
and arrangements for point of service contracts must be included with an 
application
for certificate of authority. Additionally, an application for a certificate
of authority must now include the physical address of the HMO's Texas office,
policies setting forth how the HMO will provide accessibility to member handbook
information to its disabled enrollees, and certification that the information
systems of the HMO have adequate capacity to service its enrollees and 
providers.
Proposed amendments to sec.11.205 require that documents necessary for the
department to conduct examinations be maintained in Texas, including executed
contracts with physicians and providers, the current physician and provider
manual, and credentialing files. Proposed amendments to sec.11.206 clarify
the procedures and instances in which hearings resulting from examinations
will take place. Finally, proposed amendments to sec.11.207 allow the department
to withdraw an application for untimely response by the applicant, thus allowing
final resolution of an application for which an HMO refuses to respond to
the department's requests for information. Proposed amendments to sec.11.301
clarify the requirements for filings subsequent to issuance of a certificate
of authority. Proposed additional filings for approval are loan agreements
and guarantees. Proposed additional filings for information are new trademarks
and service marks, or changes thereto, changes to guarantees, and a description
of the HMO's quality assurance program. Proposed amendments to sec.11.302
specify that an HMO must receive prior approval before implementing a service
area expansion, and delineate when a filing is considered to be complete.
Proposed new sec.11.303 sets forth details of on-site examinations by the
department, inlcuding the typical protocol to be used in all examinations.
Complaint investigations, while not subject to the requirements of proposed
sec.11.303, will follow the protocol unless time constraints prohibit strict
adherence to the protocol in a particular investigation. Existing sec.11.303
was promulgated when the Texas Department of Health had responsibility for
certain examinations, and is being proposed for repeal. Proposed sec.11.501
replaces the term "nongroup" with the more specific terms "conversion" and
"individual." This amendment is being proposed throughout the sections. Proposed
sec.sec.11.502 and 11.503 delete the requirement that an evidence of coverage
filed with an application for certificate of authority be approved or 
disapproved
by written order of the commissioner, because the order granting the certificate
of authority already encompasses the evidence of coverage filed with the 
application
for that certificate of authority. Proposed sec.11.503 provides that upon
30 days written notice to the HMO, the initial review period may be extended.
Amendments to sec.11.504 delete language allowing the commissioner to withdraw
approval of any form, as such authority is provided in Insurance Code Article
20A.09(l). Proposed sec.11.505 states that any change in a form number is
considered a change in the form, and requires approval as a new form. It also
requires changeable language to include ranges of variable information or
amounts, and requires all evidences of coverage to meet the readability 
standards
of Chapter 3 of the Texas Insurance Code. Proposed sec.11.506 sets out mandatory
contractual provisions. The provision regarding arbitration has been deleted
in recognition of the creation of comprehensive complaint and appeal systems
for HMOs by Insurance Code Articles 20A.12 and 20A.12A. The proposed amendment
also deletes the exemption for HMOs from the toll-free telephone number 
requirements
of Insurance Code Article 21.71. Such provision is extraneous, and is adequately
addressed in Article 21.71. The amendments add specific language regarding
copayments and deductibles for health care services, and allow HMOs to cancel
or nonrenew various coverages in certain circumstances. The copayment language
is based upon federal guidelines for copayments, 42 C.F.R. 417.104. The 
cancellation
and nonrenewal provisions are necessary to comply with the federal Health
Insurance Portability and Availability Act of 1996 (sometimes referred to
as "HIPAA") and the state enactment of HIPAA, Insurance Code Article 26.01
et seq. (House Bill 1212) and rules promulgated thereunder, 28 T.A.C. 26.1
et seq. This proposed section sets forth time frames for payment of claims
by reference to Insurance Code Articles 21.55 and 20A.09(j), adds language
regarding continuation of coverage as needed to comply with Insurance Code
Article 20A.09(k), amends eligibility requirements, and includes adoptees
or children that enrollees are seeking to adopt, as well as out-of-network
covered children under medical support order, as required by Insurance Code
Articles 26.21A, 26.84 and 3.96-2. In addition, this proposed section clarifies
coverage of newborn children, addresses emergency care services and related
screenings and evaluations, and sets forth details regarding incontestability
of certain statements made by subscribers on enrollment applications. The
coverage of newborn children clarification is necessary to ensure initial
coverage for newborns born out of the HMO's network, but allows transfer of
the newborn into a network facility when medically appropriate. The emergency
care services provision is needed to provide notice in the evidence of coverage
for an enrollee as to how to obtain emergency care services required by 
Insurance
Code Article 20A.04(16). The incontestability amendments are necessary in
order to be consistent with HIPAA and Insurance Code Article 26.01 et seq.
This section requires contractual provisions relating to termination of a
student dependent, primary care by a nonprimary physician, and designation
of an obstetrician or gynecologist as a primary care physician by a female
enrollee. The termination of a student dependent provision is necessary to
comply with Insurance Code Article 21.24-2. The provision regarding a nonprimary
care physician acting as a primary care physician brings the evidence of 
coverage
into compliance with Insurance Code Article 20A.09(c)(3)(C-F). The vision
regarding designation of an obstetrician or gynecologist as a primary care
physician allows self-referral by women to obstetricians and gynecologists
within a provider network, although such network might be limited, and sets
forth further details regarding self-referral and related administrative issues.
This provision is necessary to comply with Insurance Code Article 21.53D.
Finally, this section requires certain contractual provisions regarding the
diagnosis of Alzheimer's disease, the continuation of coverage for prescription
drugs being utilized by an enrollee even if the HMO deletes that drug from
its formulary, and inpatient care provided by non-primary care providers.
The diagnosis of Alzheimer's disease provision is required pursuant to Insurance
Code Article 3.78. The drug formulary provision addresses the concern that
enrollees may select an HMO on the basis of a specific drug appearing on its
drug formulary, only to be left without coverage for that drug upon a change
in the HMO's formulary. Such a practice is unequitable to enrollees, and is
a common source of complaints to the department. Continued coverage of a drug
which an enrollee is utilizing at the time of a change to the drug formulary
is, in part, a response to such enrollee complaints. Proposed sec.11.507
requires a provision in conversion and individual agreements that allows persons
losing coverage due to a change in marital status to be issued coverage via
sec.21.407 of this title (concerning Continuation of Coverage). Proposed
new sec.11.508 sets out basic health care services for group, individual
and conversion agreements, including state and federally mandated benefits
for diabetes, diagnostic services, home health services, inpatient and 
outpatient
services, mastectomy and breast reconstruction, mental health services, 
maternity
and newborn benefits, physician services, preventive health services, treatment
of breast cancer and related procedures, and certain transplants. Existing
sec.11.508 is proposed to be repealed. Basic health care services are defined
as those services that an enrolled population may reasonably require to be
maintained in good health, and must include, at a minimum, the benefits required
of a federally qualified HMO. The basic health care standards for federally
qualified HMOs appear at 42 U.S.C. sec.300e-1 and 42 C.F.R. sec.417.101,
and have been incorporated into this section. Also included in this section
are the benefits mandated by the Texas Legislature to be provided for diabetes,
mastectomy and breast reconstruction, inpatient maternity and post-delivery
care benefits, prostate cancer exams, pediatric and adult immunizations, and
inpatient care for breast cancer. Proposed new sec.11.509 clarifies that
group agreements are required to contain provisions for treatment of chemical
dependency, osteoporosis, serious mental illness, temporomandibular joint
dysfunction, and dental treatment under certain conditions. This new section
is derived from existing sec.11.508, which is being repealed. The language
regarding certificates and new employees has its genesis in the existing 
regulations,
but the new employees language has been revised to comply with HIPAA. The
new section adds benefits for group contracts pursuant to Insurance Code 
Articles
3.51-9 sec.2A, 21.53C, 3.51-14 , and 21.53A. Proposed new sec.11.510 clarifies
that group agreements must offer provisions for coverage of in vitro 
fertilization,
certain benefits for care and treatment of loss or impairment of speech or
hearing, and mental illness benefits in specific circumstances. These mandated
offers are included pursuant to Insurance Code Articles 3.51-6, sec.3A,
3.70-2(G), 3.51-14, 3.70-2(F) and 3.72. Proposed new sec.11.511 sets out
optional provisions that may be contained in group and non-group certificates,
including coordination of benefits, subrogation, sale of substitutes to workers'
compensation insurance, and conversion privilege. This new section is derived
from existing sec.11.509, which is being repealed. The coordination of benefits,
subrogation and sale of substitutes to workers' compensation insurance 
provisions
all have their genesis in existing sec.11.509. Cites to the appropriate
statute and regulations for the coordination of benefits provision have been
added to this proposed language. The subrogation provision has been revised
to address concerns regarding the extent to which an HMO is entitled to 
subrogation,
and in what instances attorneys' fees may be recovered by an HMO. The 
substitutes
to workers' compensation insurance provision has been reduced, as much of
the language appears in existing regulation at sec.5.6302 of this title.
The conversion privilege section has been moved from existing sec.11.506(7)
to this optional provisions section, because Insurance Code Article 20A.09(k)(B)
left the provision of conversion coverage optional to the HMO. Proposed new
sec.11.512 sets forth certain health services that an HMO may offer its
enrollees that are not required to be offered as basic health care services.
These benefits are based largely upon the supplemental benefits identified
in 42 C.F.R. sec. 417.102(d). Proposed new sec.11.513 allows the commissioner
to request additional information prior to approving or disapproving filings.
This is a verbatim restatement of existing sec.11.510, which is being proposed
for repeal. Proposed sec.11.701 is amended only for clarification of existing
language, requiring the filing of the formula or method for calculating the
schedule of charges prior to using any schedule of charges. Proposed sec.11.706
shortens the time period within which a new HMO must break even financially,
sets forth requirements for the recording and treatment of rate deficiencies,
and establishes a deficiency reserve liability. Proposed sec.11.707 clarifies
existing language. Proposed sec.11.801 deletes subsection (d) regarding
grandfathered single health care service plan HMOs as inapplicable to any
existing HMOs. Added to this section is the requirement that approved non-profit
health corporations comply with Insurance Code Article 20A.13(I) as a minimum
surplus requirement. Proposed new sec.11.802 sets forth detailed requirements
regarding statutory deposits made pursuant to Insurance Code Article 20A.13.
The new section is a clear and concise restatement of the existing sec.11.802
to comport with current procedures employed by the department. Proposed 
sec.11.803
adds language requiring custodial agreements with regard to securities held
on behalf of the HMO, and moves the commissioner's authority to require the
sale of a potentially hazardous investment from (2)(E)(vi) of this section
to (6) of this section. These requirements are to protect the solvency of
HMOs in Texas. Proposed amended sec.11.805 changes references from the Board
to the Department, and deletes (8)(B) of this section, as the term "affiliate"
is now defined at proposed sec.11.2(b)(4). Proposed sec.11.806 increases
the required tangible net worth of a sponsoring organization allowed to 
guarantee
a liability as a "covered liability." Proposed new sec.11.808 establishes
the specific requirements of a guarantee from a sponsoring organization. It
is proposed that the title of Subchapter J be changed from "Requirements of
the Texas Department of Health" to "Physician and Provider Contracts and 
Arrangements."
Since the Texas Department of Health no longer regulates HMOs, this subchapter
can be renamed to direct the HMO to the area regulating physician and provider
contracts. Proposed new sec.11.900 implements the provisions of Insurance
Code Article 20A.09(a)(3)(D-F) regarding nonprimary care physician specialists
as primary care providers, and sets forth time periods in which the HMO must
act upon an enrollee's request. Proposed new sec.11.901 sets forth required
provisions of physician and provider contracts and arrangements, including
provisions regarding hold harmless clauses, retaliation, continuity of 
treatment,
written notification of termination, posting of complaints notice, on of the
HMO, prompt payment of claims, capitation, and selection of a primary physician
or provider pursuant to Insurance Code Articles 20A.18(g), 20A.14(k), 
20A.18A(c),
20A.18A(b), 20A.18A(I), 20A.18A(f), 20A.09(j), and 20A.18A(e). This section
also requires that any consequence for failure of a physician or provider
to obtain precertification be included in the physician or provider contract.
The department has received numerous complaints regarding HMOs' denials of
payment for medically necessary services for no other reason than that pre-
certification
was not obtained. Such denials have allegedly been made with no consideration
of the reasons for failure to precertify, even where the HMO may have been
partially at fault. This provision is not intended to encourage a physician
or provider to circumvent the precertification process. Proposed new sec.11.902
regarding prompt payment of claims to physicians and providers requires an
HMO to commence an investigation and request additional documentation within
15 days of receipt of a claim, to accept or reject a claim not later than
the 40th day after the date the HMO receives all necessary documentation,
and to pay claims not later than the fifth business day after notice of 
acceptance
or rejection has been made. This section implements the provisions of Insurance
Code Article 20A.09(j). Proposed new sec.11.903 implements the requirements
of Insurance Code Articles 20A.14(i) and 20A.18A regarding physician or provider
communication with current, prospective, or former patients. Proposed new
sec.11.904, regarding provision of services related to immunizations and
vaccinations, implements Insurance Code Article 21.53K regarding written 
protocols
for immunizations or vaccinations to be administered by a pharmacist. Proposed
sec.11.1001 provides that the forms are included as referenced, but not
adopted by rule, as well as deletes form numbers for same. The forms referenced
in this section are used for administrative purposes, and allow appropriate
internal processing of various filings by HMOs. Proposed sec.11.1102 clarifies
that providers may not look beyond the HMO for payment of services, pursuant
to Insurance Code Article 20A.18A(g), and provides acceptable language that
may be included in the provider contract which complies with this statutory
prohibition. Proposed sec.11.1202 clarifies the process by which a domestic
HMO may be acquired, and brings the rules into compliance with the Texas Holding
Company Act, Insurance Code Article 21.49-1. Proposed amendments to sec.11.1203
are made primarily for consistency and clarification, and are not intended
as substantive legal or procedural changes. Proposed sec.11.204 removes
the requirement that written assurance be filed with the Department of Health,
as the Department of Health is no longer a regulatory body for HMOs. This
section also reduces from five to three fiscal years the period for which
annual financial statements of the applicant and other pertinent parties must
be filed, and clarifies that financial projections are a required filing.
Proposed sec.11.205 removes the consequences of a proposed acquisition of
a domestic HMO to its shareholders from the items to be considered by the
commissioner in approving or disapproving an acquisition request. Proposed
sec.sec.11.1300 - 11.1304 amend existing sections only for consistency
and clarification, but with no substantive changes. Proposed sec.11.1305
is being amended to reflect the dissolution of the State Board of Insurance,
by directing entities affected by a decision of the commissioner to appeal
to the district court of Travis County rather than the State Board of Insurance.
Proposed new sec.11.1500 enacts HIPAA's prohibition of discrimination based
upon health status-related factors. These amendments are necessary to maintain
a regulatory atmosphere that is not less restrictive than HIPAA, thereby 
preventing
federal preemption over regulatory authority in this realm. Proposed sec.11.1600
requires clear delineation of HMO limited provider networks and specific 
notification
to enrollees of the consequences of selecting a primary care provider when
a limited provider network exists. Numerous complaints received by the 
department
evidence the need for clarification to enrollees of the consequences of 
selecting
a primary care physician when an HMO utilizes limited provider networks. 
Proposed
new sec.11.1601 specifies certain requirements regarding enrollee identification
cards, and the time frame within which such cards must be provided. Proposed
new sec.11.1602 requires HMOs to establish procedures for providing usable
information to certain populations of enrollees who do not speak English or
who have special reading or communication needs, as mandated by Insurance
Code Article 20A.11A. Proposed new sec.11.1603 enacts the requirements of
Insurance Code Article 20A.11(c) by requiring that HMOs notify group contract
holders of substantive changes in payment arrangements for physicians and
providers, and defining what constitutes substantive change. Proposed new
sec.11.1605 addresses the appropriate copayment differentials between generic
and brand name prescription drugs, when prescription drug coverage is provided.
Proposed sec.11.1606 requires that sufficient resources are available to
enrollees within each service area. Existing portions of this section are
deleted, either to reflect the revised service area requirements or because
such portions are being proposed as new sec.11.1607. Proposed new sec.11.1607
specifies the accessibility and availability requirements to ensure that 
enrollees
have sufficient access to providers and physicians. Specific mileage radii
requirements, and procedures for exemption from such requirements, are stated.
Provision for ongoing assessment of accessibility and availability are also
included pursuant to Insurance Code Article 20A.22(b). Requirements for the
implementation of Insurance Code Article 21.53F, regarding telemedicine, are
added to this section. Proposed sec.11.1608 sets forth the requirements
of the notice required to inform enrollees of their right to designate an
obstetrician or gynecologist as a primary care physician, as required by 
Insurance
Code Article 21.53D. Proposed sec.11.1802 sets forth the admitted asset
requirements for limited service and single service managed care organizations
(MCOs). Proposed sec.11.1803 specifies the deposit requirements for limited
service and single service MCOs. Proposed sec.11.1804 specifies the requirements
for an MCO to qualify for reductions in net worth and statutory deposit 
requirements
for limited service and single service MCOs. Proposed sec.11.1805 provides
that bonds may not be subject to a deductible. Proposed new sec.11.1806
sets forth continuing documentation required of MCOs. Proposed sec.11.1902
provides detailed procedures and requirements for credentialling of an HMO's
providers, including initial credentialing and recredentialing. Proposed 
sec.11.2001
sets minimum physician/enrollee ratios and maximum appointment waiting periods,
and makes these requirements applicable to limited provider networks, pursuant
to Insurance Code Article 20A.22(b). Proposed new sec.11.2200 defines terms
relating to single service HMOs. Proposed new sec.11.2201 describes in general
the requirements for description of coverages provided by single service HMOs
to enrollees, and the contents of single service HMO evidences of coverage.
Proposed new sec.11.2202 sets forth prohibited provisions of single service
HMO evidences of coverage. Proposed new sec.11.2203 sets forth the minimum
benefits required of single service dental HMOs. Proposed sec.11.2204 sets
forth the minimum benefits required of single service vision HMOs. Proposed
sec.11.2205 sets forth prohibited practices for single service HMOs. 

The department will consider the adoption of sec.sec.11.2, 11.101,
11.102, 11.105-11.109, 11.201-11.207, 11.301, 11.302, 11.501-11.507, 11.701,
11.706, 11.707, 11.801, 11.803-11.804, 11.806, 11.1001, 11.1102, 11.1202-
11.1205,
11.1301-11.1305, 11.1600, 11.1606, 11.1802-11.1805, 11.1902, and 11.2001 and
adding new sec.sec.11.303, 11.508-11.513, 11.802, 11.808, new Subchapter
P, Physicians and Providers Contracts and Arrangements, sec.sec.11.900-11.904,
11.1500, 11.1601-11.1603, 11.1605, 11.1607-11.1608, 11.1806, and new Subchapter
W, Single Service HMOs, sec.sec.11.2200-11.2205 in a public hearing under
Docket No. 2366, scheduled for 10:00 a.m. on August 17, 1998, in Room 100
of the William P. Hobby Jr. State Office Building, 333 Guadalupe Street in
Austin, Texas. The department encourages any interested party to provide the
department with any comments prior to the hearing or at the hearing. 

Rose Ann Reeser, Associate Commissioner, Regulation and Safety, has determined
that for each year of the first five years the proposed amendments and new
sections are in effect, there will be no fiscal implications for state or
local government as a result of enforcing or administering the proposed 
amendments
and new sections. There will be no adverse effects on local employment or
the local economy. 

Ms. Reeser has determined that for each year the proposed amendments and
new sections are in effect there are several public benefits anticipated as
a result of the adoption of these proposed amendments and new sections, which
are amended to implement the statutory changes referred to herein. The statutes,
as implemented, improve continuity of effective and efficient regulation of
health maintenance organizations. Specifically, enrollees will receive enhanced
notice regarding Medicaid benefits, limited provider networks, and self-referral
for obstetric and gynecological care; disabled and non-English speaking 
enrollees
will have more accessibility to information about their coverage; and 
appropriate
accessibility to appointments and referrals will be ensured and monitored.
It is anticipated that the department will be able to more closely monitor
compensation arrangements between physicians and providers and HMOs, thereby
policing the use of prohibited financial incentives, and to better ensure
that HMOs have adequate capacity of information systems sufficient to service
their enrollee and provider populations. Additional anticipated benefits are
better readability of evidences of coverage, enhanced health care through
immunization for young children, and greater use of preventive health care
services. Adoption of these proposed amendments and new sections would ensure
coverage for children under medical support orders, make eligible for coverage
adoptees and children who enrollees are seeking to adopt, and fill gaps in
coverage for newborn children. The adoption will also ensure continuance of
coverage for enrollees who lose coverage due to change in marital status.
Enrollees will be protected from wrongful termination or cancellation of 
coverage
by adoption of the clearly delineated and limited circumstances under which
termination or cancellation may occur that are set forth in this proposal.
It is further anticipated that all enrollees will benefit from enhanced 
portability
of their coverage. Enrollees with chronic, disabling or life-threatening 
illnesses
will enjoy more specialization and continuity of care by having physician
specialists as their primary care physicians. Well-woman care will be enhanced
by self-referral for obstetric and gynecological care. Enrollees will have
more extensive coverage as basic health care benefits, including certain 
coverages
for diabetes, diagnostic services, home health services, inpatient and 
outpatient
hospital services, mastectomy and breast reconstruction, mental health services,
mother and newborn care, physician services, preventive health services, breast
cancer and related procedures, and transplants. Enrollees in group plans will
also receive coverage for chemical dependency, osteoporosis, serious mental
illness, and conditions affecting the temporomandibular joint. Other anticipated
benefits are ensured qualification of physicians and providers through a more
defined and detailed credentialing process, and added financial requirements
to ensure the sound financial condition of HMOs doing business in Texas. 
There are no economic costs associated with the adoption, enforcement,
or administration of the proposed amendments or new sections other than those
set forth in items (i)-(iii). Any other economic costs to HMOs complying with
the amended and new sections each year of the first five years the proposed
amendments will be in effect are the result of the legislative enactment of
Articles 20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B,
20A.12, 20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A,
20A.19, 20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36,
20A.37, 21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code,
and Title XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)).
In addition, certain costs have already been incurred, as HMOs have had to
comply previously with many of these or similar requirements pursuant to rules
promulgated by the Texas Department of Health. 

(i) The cost to an HMO for name reservation for the period of time during
which an HMO is initially seeking its certificate of authority to do business
in Texas will be a one time fee of $100 pursuant to proposed sec.11.102. 
(ii) The cost to an HMO for each year of the first five years the proposed
amendments and new sections are in effect for providing additional information
to its enrollees pursuant to sec.11.1600 is an estimated maximum cost of
$.10 per enrollee. The additional information will include a list of behavioral
health providers, notice regarding any restrictions based on limited provider
networks, and clear differentiation between limited provider networks and
open provider networks. The department has determined that the least expensive
method for providing and disseminating such information would be to include
it in the HMO's member handbook. Based on industry survey, the department
has estimated that the amount of additional required information would 
necessitate
the addition of approximately 10 pages per book, at one cent per page, thereby
increasing the cost of each member handbook by ten cents. There are 
approximately
3.2 million enrollees who require member handbooks, which are updated annually. 
(iii) The cost to HMOs for each of the first five years the proposed sections
are in effect for meeting the reporting requirements of proposed sec.11.186
will be approximately $75 per HMO. The information required by proposed 
sec.11.186
is already being reported to the Texas Department of Health, and the only
additional expense that will be incurred is the cost of copying such information
and supplying it to the department, at an average of $75 annually for each
HMO. There are currently 50 basic service HMOs and 20 single service HMOs
licensed to do business in Texas. 

Ms. Reeser does not anticipate any other additional costs of compliance
with the proposal. 

Ms. Reeser has determined that any possible economic costs to any HMO qualifying
as a small business under Government Code sec.2006.001 that complies with
the amended and new sections for each year of the first five years the proposed
amendments will be in effect are the result of the legislative enactment of
Articles 20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B,
20A.12, 20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A,
20A.19, 20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36,
20A.37, 21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code
and Title XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)),
and not as a result of the adoption, enforcement, or administration of the
proposed amendments and new sections except as identified in the aforementioned
items (i) - (iii). Small business HMOs will incur the same costs identified
in the aforementioned item (ii) as the largest HMO because these types of
costs are not dependent upon the size of the HMO but are rather dependent
upon the number of enrolled population per HMO. The costs identified in 
aforementioned
items (i) and (iii) will be greater for small business HMOs than for the largest
HMO because they are fixed costs, and would have to be absorbed by smaller
revenues. However, the cost impact differential of these items for HMOs 
qualifying
as small businesses and the largest HMO is less than $.001. The cost per hour
of labor would be approximately the same for small business HMOs and the largest
HMO. Therefore, it is the department's position that the adoption of these
proposed amendments and new sections will have no adverse economic effect
on small business HMOs. 

Comments on the proposal must be submitted within 30 days after publication
of the proposed section in the Texas Register
to Lynda H. Nesenholtz, Acting General Counsel and Chief Clerk, Mail Code
113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas, 78714-
9104.
Additional copies of the comment are to be submitted to Rose Ann Reeser, 
Associate
Commissioner, Regulation and Safety, Mail Code 107-2A, Texas Department of
Insurance, P.O. Box 149104, Austin, Texas, 78714-9104 and to Jose Montemayor,
Associate Commissioner, Financial Division, Mail Code 305-2A, Texas Department
of Insurance, P.O. Box 149104, Austin, Texas, 78714-9104. 

SUBCHAPTER A. General Provisions
28 TAC sec.11.2
The amendment is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.2. Definitions. 
(a) The definitions found in the Texas Health Maintenance
Organization Act sec.2, as amended, codified as the Texas Insurance Code[
,] Article 20A.02, are hereby incorporated <nl>into<ol> [in
] this chapter. 

(b) The following words and terms, when used in this chapter,
shall have the following meanings[,] unless the context clearly
indicates otherwise. 

(1) Act--The Texas Health Maintenance Organization Act, Senate
Bill 180, enacted by Acts 1975, 64th Legislature, Chapter 214, pages 514-530,
first effective December 1, 1975, as amended, codified as the Texas Insurance
Code, Chapter 20A. 

(2) Admitted assets--All assets as defined by <nl>statutory
<ol> [generally accepted] accounting principles, as permitted
and valued in accordance with sec.11.803 of this title (relating to Investments,
Loans, and Other Assets). 

<nl>(3)<ol> <nl>Adverse determination--A determination
upon utilization review that the health care services furnished or proposed
to be furnished to a patient are not medically necessary or not appropriate.
<ol> 

<nl>(4)<ol> [(3)] Affiliate--A person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the person specified. 

<nl>(5)<ol> [(4)] Agent--<nl>As<ol>
[A health maintenance organization agent as] defined in the Insurance
Code Articles 20A.15 and 20A.15A, unless the context of the rule clearly 
indicates
applicability to any agents licensed under one specific article. 

<nl>(6)<ol> [(5)] ANHC or approved nonprofit
health corporation--A nonprofit health corporation certified under Medical
Practice Act, sec.5.01(a) (Texas Civil Statutes, Article 4495b). 

<nl>(7)<ol> <nl>Basic health care service--Health
care services which an enrolled population might reasonably require to maintain
good health, including, without limitations as to time and cost, those benefits
as prescribed in sec.11.508 and sec.11.509 of this title (relating to
Mandatory Benefit Standards: Group, Individual and Conversion Agreements,
and Additional Mandatory Benefit Standards - Group Agreement Only), other
than those limitations specifically prescribed in this title.<ol> 

<nl>(8)<ol> [(6)] Code--The Texas Insurance
Code, 1951, as amended. 

<nl>(9)<ol> [(7)] Contract holder--An individual<nl>
, association, employer, trust<ol> or organization to which an individual
or group contract for health care services has been issued. 

<nl>(10)<ol> <nl>Control--As defined in the Insurance
Code Article 21.49-1.<ol> 

<nl>(11)<ol> <nl>Controlled HMO--An HMO controlled
directly or indirectly by a holding company.<ol> 

<nl>(12)<ol> <nl>Controlled person--Any person, other
than an HMO, who is controlled directly or indirectly by a holding company.
<ol> 

<nl>(13)<ol> [(8)] Copayment--<nl>A<ol>
[An additional] charge <nl>in addition to premium<ol> to an
enrollee for a service which is not fully prepaid. 

<nl>(14)<ol> Credentialing--The review
of qualifications and other relevant information pertaining to a physician,
dentist, or provider who seeks a contract with an HMO. 

<nl>(15)<ol> [(9)] Credentials--Certificates,
diplomas, licenses or other written documentation which <nl>verifies<ol>
[establishes] proof of training, education, and experience in a
field of expertise. 

<nl>(16)<ol> [(10)] Dentist--<nl>An individual
<ol> [A person] licensed to practice dentistry by the Texas State
Board of Dental Examiners. 

<nl>(17)<ol> [(11)] Excess surplus--<nl>
Surplus<ol> [The surplus] that is in excess of the minimum surplus
required by the Insurance Code[,] Article 20A.13[, excluding
from surplus those assets a health maintenance organization finds necessary
for its operations as set forth in sec.11.803(5) of this title (relating
to Investments, Loans and Other Assets)]. 

<nl>(18)<ol> [(12)] General hospital--<nl>
A licensed<ol> [An] establishment that: 

(A) offers services, facilities, and beds for use for more
than 24 hours for two or more unrelated individuals requiring diagnosis, 
treatment,
or care for illness, injury, deformity, abnormality, or pregnancy; and 

(B) regularly maintains, at a minimum, clinical laboratory
services, diagnostic X-ray services, treatment facilities including surgery
or obstetrical care or both, and other definitive medical or surgical treatment
of similar extent. 

<nl>(19)<ol> [(13)] HMO--A health
maintenance organization [which has been issued a certificate of authority
under the Act] <nl>as defined in the Insurance Code Article 20A.02(n).
<ol> 

<nl>(20)<ol> <nl>Health status related
factor--Any of the following in relation to an individual:<ol> 

<nl>(A)<ol> <nl>health status;<ol> 

<nl>(B)<ol> <nl>medical condition (including both physical
and mental illnesses);<ol> 

<nl>(C)<ol> <nl>claims experience;<ol> 

<nl>(D)<ol> <nl>receipt of health care;<ol> 

<nl>(E)<ol> <nl>medical history;<ol> 

<nl>(F)<ol> <nl>genetic information;<ol> 

<nl>(G)<ol> <nl>evidence of insurability (including conditions
arising out of acts of domestic violence, including family violence as defined
by the Insurance Code Article 21.21-5); or<ol> 

<nl>(H)<ol> <nl>disability.<ol> 

<nl>(21)<ol> <nl>Limited provider
network--A subnetwork within an HMO delivery network in which contractual
relationships exist between physicians, certain providers, independent physician
associations and/or physician groups which limit the enrollees' access to
only the physicians and providers in the subnetwork.<ol> 

<nl>(22)<ol> <nl>Limited service
HMO--An HMO which has been issued a certificate of authority to issue a limited
service health care plan as defined in the Insurance Code Article 20A.02(l).
<ol> 

<nl>(23)<ol> [(14)] Out of area benefits--<nl>
Benefits<ol> [The benefits] that the HMO covers when its <nl>
enrollees<ol> [members] are outside the geographical limits of
the HMO service area. 

<nl>(24)<ol> [(15)] Pathology services--<nl>
Services provided by a<ol> [A] <nl>licensed<ol> laboratory
which has the capability of evaluating tissue specimens for diagnoses in 
histopathology,
oral pathology, or cytology. 

<nl>(25)<ol> [(16)] Pharmaceutical services--Services,
including dispensing prescription drugs, as defined in the Pharmacy Act, Texas
Civil Statutes, Article 4542a-1, sec.5 that are ordinarily and customarily
rendered by a pharmacy or pharmacist [licensed to practice pharmacy under
the Pharmacy Act, Texas Civil Statutes, Article 4542a-1. The term does not
include mail order services]. 

<nl>(26)<ol> [(17)] Pharmacist--<nl>An
individual<ol> [A person] licensed to practice pharmacy under
the Pharmacy Act, Texas Civil Statutes, Article 4542a-1. 

<nl>(27)<ol> [(18)] Pharmacy--A facility
licensed under the Pharmacy Act, [Vernon's] Texas Civil Statutes,
Article 4542a-1, sec.29. 

<nl>(28)<ol> [(19)] Premium--The prospectively
determined rate that is paid by or on behalf of <nl>an enrollee<ol> [
a subscriber] for specified health services. 

<nl>(29)<ol> [(20)] Primary care physician
or primary care provider--A physician or provider who is responsible for 
providing
initial and primary care to patients, maintaining the continuity of patient
care, and initiating referral for care. 

<nl>(30)<ol> [(21)] Primary HMO--An HMO
that contracts directly with, and issues an evidence of coverage to, individuals
or organizations [for the primary HMO] to arrange for or provide
a <nl>basic,<ol> [health care plan] <nl>limited,<ol> or [
a] single health care service plan to enrollees on a prepaid basis. 
<nl>(31)<ol> <nl>Provider HMO--An HMO that contracts
directly with a primary HMO to provide or arrange to provide health care 
services
on behalf of the primary HMO within the primary HMO's defined service area.
<ol> 

<nl>(32)<ol> [(22)] Psychiatric hospital--A <nl>
licensed<ol> hospital which offers inpatient services, including treatment,
facilities[,] and beds for use beyond 24 hours, for the primary
purpose of providing psychiatric assessment and diagnostic services and 
psychiatric
inpatient care and treatment for mental illness. Such services must be more
intensive than room, board, personal services, and general medical and nursing
care. Although substance abuse services may be offered, a majority of beds
must be dedicated to the treatment of mental illness in adults <nl>and/or
<ol> [and] children. 

<nl>(33)<ol> [(23)] Qualified HMO--An <nl>
HMO<ol> [entity] which has been federally approved under Title
XIII of the Public Health Service Act, Public Law 93-222, as amended. 

<nl>(34)<ol> [(24)] Quality improvement--<nl>
A system to continuously examine, monitor and revise processes and systems
that support and improve administrative and clinical functions<ol> [
An approach to the continuous study and improvement within an organization
where opportunities to improve care and service are found primarily by examining
the systems and processes by which care and services are provided]. 
<nl>(35)<ol> [(25)] Reference laboratory--A <nl>
licensed<ol> laboratory that accepts specimens for testing from outside
sources <nl>and<ol> [. A reference laboratory does not have an in-house
patient population to provide services to; their business] depends on
referrals from other laboratories or entities. <nl>HMOs<ol> [Health
maintenance organizations] may contract with a reference laboratory
to provide clinical diagnostic services to their enrollees. 

<nl>(36)<ol> [(26)] Reference laboratory
specimen procurement services--The operation utilized by the reference 
laboratory
to pick up the lab specimens from the client offices or referring labs, etc.
for delivery to the reference laboratory for testing and reporting. 

<nl>(37)<ol> [(27)] Referral specialists
(other than primary care)--<nl>Physicians or providers<ol> [Specialists
] who set themselves apart from the primary care physician or primary <nl>
care<ol> [single service] provider through specialized training
and education in a health care discipline. 

[(28) Rules--All sections
under this chapter.] 

<nl>(38)<ol> [(29)] Schedule of charges-- <nl>
Specific<ol> [The specific] rates or premiums to be charged for
[a single] enrollee <nl>and dependent coverages<ol> [,
a two-member family, three-member family, etc]. 

<nl>(39)<ol> [(30)] Service area--<nl>
A geographic<ol> [The geographical] area within which direct
service benefits are available and accessible to HMO enrollees <nl>who live,
reside or work within that geographic area and which complies with sec.11.1606
of this title (relating to Organization of an HMO).<ol> 

<nl>(40)<ol> Single service HMO--An
HMO which has been issued a certificate of authority to issue a single health
care service plan as defined in the Insurance Code Article 20A.02(y). 

<nl>(41)<ol> [(31)] Special hospital-<nl>
A licensed<ol> [An] establishment that: 

(A) offers services, facilities[,] and beds for
use for more than 24 hours for two or more unrelated individuals who are 
regularly
admitted, treated[,] and discharged and who require services more
intensive than room, board, personal services, and general nursing care; 
(B) has clinical laboratory facilities, diagnostic X-ray facilities,
treatment facilities[,] or other definitive medical treatment; 
(C) has a medical staff in regular attendance; and 

(D) maintains records of the clinical work performed for each
patient. 

<nl>(42)<ol> [(33)] <nl>Statutory
<ol> surplus [Surplus]--[The admitted]<nl>Admitted
<ol> assets minus <nl>accrued<ol> uncovered liabilities. 

<nl>(43)<ol> [(32)] Subscriber--If <nl>
conversion or individual<ol> [nongroup] coverage, the <nl>individual
<ol> [person] who is the <nl>contract holder<ol> [policyholder
] and is responsible for payment of premiums to the HMO; or if group
coverage, the <nl>individual<ol> [person] who is the certificate
holder and whose employment or other <nl>membership<ol> status, except
for family dependency, is the basis for eligibility for <nl>enrollment<ol>
[membership] in the HMO. 

<nl>(44)<ol> <nl>Subsidiary--An affiliate controlled
by a specified person directly or indirectly through one or more intermediaries.
<ol> 

<nl>(45)<ol> <nl>Telemedicine--As defined in the
Insurance Code Article 21.53F.<ol> 

<nl>(46)<ol> <nl>Urgent care--Health care services
provided in a situation other than an emergency which are typically provided
in setting such as a physician or provider's office or urgent care center,
as a result of an acute injury or illness that is severe or painful enough
to lead a prudent layperson, possessing an average knowledge of medicine and
health, to believe that his or her condition, illness or injury is of such
a nature that failure to obtain treatment within a reasonable period of time
would result in serious deterioration of the condition or his or her health.
<ol> 

<nl>(47)<ol> [(34)] Utilization review--A
system for prospective or concurrent review of the medical necessity and 
appropriateness
of health care services being provided or proposed to be provided to an 
individual
within this state. Utilization review shall not include elective requests
for clarification of coverage. 

<nl>(48)<ol> <nl>Voting security--As defined in the
Insurance Code Article 21.49-1, including any security convertible into or
evidencing a right to acquire such security.<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 June
15, 1998.
TRD-9809526
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998

For further information, please call: (512) 463-6327

SUBCHAPTER B. Name <nl>Application<ol> [Reservation
] Procedure
28 TAC sec.sec.11.101-11.102, 11.105-11.109
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.101. How to Obtain Forms. 
The name <nl>application<ol> [reservation] form and all
other HMO forms may be obtained by contacting the <nl>Insurer Services Division,
<ol> [HMO Unit, Mail Code 106-3A], Texas Department of Insurance,
[333 Guadalupe Street,] P.O. Box 149104, Austin, Texas 78714-9104.
sec.11.102. Information Required. 
The name <nl>application<ol> [reservation] form [
(HMO Form #1)] may be submitted with or at any time prior to submission
of the application for certificate of authority, <nl>together with a $100.00
filing fee.<ol> 

(1) The name, address and title or relationship to the <nl>
proposed HMO<ol> [organization] of each organizer must be shown
on the [back of] <nl>name application form<ol> [HMO Form
#1], along with the same information about any affiliated organization(s). 
<nl>(2)<ol> <nl>Organizations making application
for a certificate of authority as HMOs or existing HMOs are prohibited from
using the following words in its name, contracts, and literature: insurance,
casualty, surety, or mutual.<ol> 

<nl>(3)<ol> [(2)] <nl>A proposed HMO's
<ol> [An organization's] name <nl>application form<ol> [
reservation] may be accepted by the commissioner before <nl>its<ol>
[the] basic organizational document is filed with the Office of
the Secretary of State. The same exact name must be used with both state 
agencies. 
<nl>(4)<ol> [(3)] The certificate of authority
will not be granted until the name has been accepted. 

sec.11.105. Use of the Term "HMO," <nl>Service mark,
<ol> Trademarks, <nl>d/b/a<ol> [dba]. 
(a) While in the process of planning or development, the <nl>
term<ol> [phrase] "HMO" may be used as a part of the <nl>proposed
HMO's<ol> [organization's] name as long as the developmental
status of the <nl>proposed HMO<ol> [organization] is made clear
in all dealings with employers, individuals, prospective contract holders,
news media, etc. 

(b) If a trademark, service mark or <nl>d/b/a<ol> [
dba] is to be used it must first be filed with and approved by the commissioner. 
(c) After the certificate of authority is issued, the name <nl>
as it appears on the certificate of authority<ol> [approved by the
commissioner] must be used by the HMO on all advertising and forms distributed
to the public. 

sec.11.106. Time Limits; <nl>Extension<ol> [
Renewal] Requirements. 
The following time limits and <nl>extension<ol> [renewal]
requirements have been established for names reserved for use by a proposed
HMO. 

(1) (No change.) 

(2) Before the end of this 365-day period, <nl>a proposed
HMO<ol> [an organization] which has not submitted an application
for a certificate of authority may request that the name <nl>reservation
<ol> be <nl>extended<ol> [reserved] for an additional 365-day
period by submitting the following: 

(A) <nl>letter of request for extension<ol> [another
completed name reservation form]; and 

(B) a statement explaining the current status of the <nl>
proposed HMO<ol> [organization] and the estimated date on which
an application for a certificate of authority will be filed. 

(3) <nl>Extension<ol> [Renewal] requests
may not be submitted more than <nl>30<ol> [60] days before the
end of the 365-day [reservation] period <nl>for which the name
is reserved<ol>. 

(4) If the information detailed in paragraph (2) of this
section is not received before the expiration of <nl>365 days,<ol> [
the 365-day name reservation period], the name <nl>reservation<ol>
expires, <nl>and the proposed HMO must wait 30 days before filing a new name
application form<ol> [and any request to renew the name reservation
is treated as a new name reservation request]. 

(5) If the <nl>extension<ol> [renewal]
request is received <nl>before<ol> [prior to] the expiration <nl>
of 365 days<ol> [date] and if the statement of status sufficiently
explains why the <nl>proposed HMO<ol> [organization] has not
yet filed an application for a certificate of authority, then the name <nl>
reservation<ol> may be extended [as of the previous expiration date
] for another 365-day period. 

(6) The requirements of paragraph (2) of this section
must be met <nl>every 365 days until an application for certificate of authority
is filed<ol> [each time a 365-day name application reservation period
ends]. 

sec.11.107. Effect of Filing for or Receiving Certificate
of Authority. 
Once an application for a certificate of authority has been filed,
the name <nl>application<ol> [reservation] no longer must be <nl>
extended<ol> [renewed]. If a certificate of authority is denied,
the name <nl>application<ol> [reservation] is cancelled on the
date the denial order becomes final. If a certificate of authority is granted,
the name is reserved for use by the HMO as long as the certificate of authority
is in effect. 

sec.11.108. Effect of Withdrawing Application for
Certificate of Authority. 
If an application is filed and then withdrawn or delayed at the request
of the <nl>proposed HMO<ol>[applicant], then at the time of
the withdrawal or request for a delay, the <nl>proposed HMO<ol> [
applicant] must request that the name continue to be reserved and estimate
the date upon which the application will be refiled. If a 365-day name 
application
[reservation] period expires during the withdrawal period, then
the requirements specified in sec.11.106(2) of this title (relating to Time
Limits; Extension [Renewal] Requirements) must be met in order
for the name <nl>application<ol> [reservation] to be continued.
sec.11.109. Situations in Which Name <nl>Applications
<ol> [Reservation] Will Cease. 
A name will cease to be reserved in the following situations: 

(1) <nl>when a proposed HMO<ol> [whenever an applicant
] fails to request <nl>extension<ol> [renewal] before
the end of a 365-day name <nl>application<ol> [reservation]
period; 

(2) <nl>when<ol> [whenever] an application
for a certificate of authority is denied; or 

(3) <nl>when<ol> [whenever] a certificate
of authority is revoked <nl>or cancelled<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 June
15, 1998.
TRD-9809527
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER C. Application for Certificate of Authority
28 TAC sec.sec.11.201-11.207
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.201. Filing Fee. 
The filing fee required by the [Texas] Insurance Code Article
20A.32(a), as determined by sec.7.1301 of this title (relating to Regulatory
Fees), must accompany the application. The fee is <nl>non-refundable<ol>
[not returnable].

sec.11.202. Binding, Identifying and Numbering Requirements.
(a)-(c) (No change.) 

(d) [Narrative material must be typed, double-spaced.
Both sides of a page may be used.] All pages must be clearly legible
and numbered. 

(e)-(f) (No change.) 

(g) The application is subject to the <nl>Public Information
Act, Chapter 552, Texas Government Code<ol> [Texas Open Records Act,
Texas Civil Statutes, Article 6252-17a]. 

(h) Each item in the application must be identified by a unique
number[, adequate to distinguish it from other items,] as more
fully described in sec.11.301(2) of this title (relating to Filing 
Requirements).
sec.11.203. Revisions during Review Process. 
(a) Revisions during the review of the application must be
addressed to: <nl>Insurer Services Division<ol> [HMO Unit, Mail Code
106-3A], Texas Department of Insurance, [333 Guadalupe,]
P.O. Box 149104, Austin, Texas 78714-9104. The applicant must include an 
original
and <nl>four copies<ol> [one copy] of the transmittal letter,
plus the <nl>original and four copies<ol> [number of copies]
of any revision specified in this subchapter. 

(b) [The applicant must submit an original plus four
copies of any revised page.] Each revision to the basic organizational
document, bylaws, or officers and employees bond must be accompanied by the
notarized certification of <nl>the corporate secretary or corporate president
<ol> [an officer] of the applicant that the <nl>revision<ol>
[item] submitted is true, accurate, and complete, and, if the item
is a copy, by a notarized certification that the copy is a true, accurate,
and complete copy of the original. 

(c) If a page is to be revised, the complete new page must
be submitted with the changed item or information ["redlined" or otherwise
] clearly designated on all copies except the "original" page, which
is placed in the charter file copy of the application. 

(d) If, after the <nl>department's<ol> [Texas Department
of Insurance] qualifying <nl>examinations<ol> [examination],
the <nl>department<ol> [Texas Department of Insurance] staff
notifies the applicant of the need for revisions as a result of the examination
[or review], that application does not meet the requirements of
the Act <nl>or this chapter<ol> and will have to be denied, absent corrections.
If the time required for the revisions will exceed the time limits set out
in sec.1.809 of this title (relating to HMO Certificate of Authority), the
applicant must request additional time within which to make the revisions.
The applicant must specifically set out the length of time requested, which
may not exceed 90 days. The commissioner may grant or deny the request for
an extension of time <nl>at<ol> [in] his or her discretion under
sec.1.809 of this title. Additional <nl>extensions<ol> [delays]
may be requested. The request for any additional <nl>extension<ol> [
delays] must set out the need for the additional <nl>time, in writing,
<ol> [delay] in sufficient detail for the commissioner to determine
if good cause for <nl>the extension<ol> [such delay] exists.
The commissioner may grant or deny any additional request for an extension
of time <nl>at<ol> [in] his or her discretion. 

sec.11.204. Contents. 
Contents of the application must include the following items in the
order listed: 

(1) a completed [HMO Form #1,] name <nl>
application form<ol> [reservation] along with any certificate
of reservation of corporate name issued by the secretary of state;

(2) a completed [HMO Form #2,] application for
a certificate of authority;

(3) the basic organizational documents and all amendments
thereto, [with a notarized certification bearing the original signature
of an officer of the applicant that it is a true, accurate, and complete copy
of the original, and] <nl>complete with<ol> the <nl>original<ol>
incorporation certificate with charter number and seal indicating certification
by the secretary of state [of Texas], if applicable;

(4) the bylaws, rules and regulations, or any similar
document regulating the conduct of the internal affairs of the applicant [
with a notarized certification bearing the original signature of an officer
of the applicant that it is a true , accurate, and complete copy of the original
(5) information about officers, directors, and staff:
(A) a completed officers and directors page [(HMO Form
#3)]; and

(B) biographical data forms [(HMO Form #4)] [
must be submitted] for all persons who are to be responsible for the
day-to-day conduct of the affairs of the applicant, including all members
of the board of directors, board of trustees, executive committee or other
governing body or committee, the principal officers, and controlling 
shareholders
of the applicant if a corporation, or all partners or members in the case
of partnership or association. Any relationship between the HMO and any 
affiliate
or other organization in which a shareholder with 10% or more interest also
has an interest must be clearly identified;

(6) (No change.)

(7) fidelity bond or deposit for officers and employees,
which must comply with either subparagraph (A) or (B) of this paragraph, as
appropriate.

(A) A bond must be in compliance with the [Texas]
Insurance Code[,] Article 20A.30, and must be either the original
bond or a copy of the bond [with notarized certification bearing the
original signature of an officer of the applicant that the copy is a true,
accurate, and complete copy of the original bond]. <nl>The bond shall
not contain a deductible.<ol>

(B) A cash deposit must be held <nl>by the Comptroller of
the State of Texas<ol> [under a joint control agreement, acceptable
to the commissioner,] in the same amount and subject to the same conditions
as a bond.

(8) information related to out-of-state licensure
and service of legal process for all applicants <nl>must be submitted by
using the attorney for service form<ol>.

(A) An applicant licensed as an HMO in another state must
furnish a copy of the certificate of authority from the domiciliary state's
licensing authority, and a power of attorney executed by the applicant 
appointing <nl>
an agent for service, other than the commissioner<ol> [the commissioner
and his or her successors in office, or a duly authorized deputy,] as
the attorney of such applicant in and for the state, upon whom all lawful
processes in any legal action or proceedings against the HMO on a cause of
action arising in this state may be served.

(B) All applicants must furnish a statement acknowledging
that all lawful process in any legal action or proceeding against the <nl>
HMO<ol> [health maintenance organization] on a cause of action
arising in this state is valid if served in accordance with <nl>the<ol>
[Texas] Insurance Code[,] Article 1.36.

(9) the evidence of coverage to be issued to enrollees<nl>
;<ol> [,and] any group agreement which is to be issued to employers,
unions, trustees, or other organizations as described in Subchapter F of this
chapter (relating to Evidence of Coverage);

(10) financial information, consisting of the following:
(A) (No change.) 

(B) projected financial statements for the <nl>24-month<ol>
[18-month] period from the start of operations using quarterly
balance sheet projections based on calendar quarters, quarterly cash flow
schedules reflecting capital expenditures, and monthly revenue and expense
projections, <nl>such<ol> [which] financial statements must
include the identity and credentials of the person making the projections;
and 

(C) the most recent audited financial statements of <nl>
the immediate parent company, the ultimate holding company parent, and<ol>
any sponsoring organization; 

(11) the schedule of charges as defined in sec.11.2
of this title (relating to Definitions) to be used through the first 12 months
of operation[;] <nl>including any charges for Medicaid products.
If an HMO proposes to write Medicaid and the maximum rates allowed by the
contracting state agency are proposed to be charged, then the rates published
by the contracting state agency must be included with an actuarial certification
and supporting documentation showing these rates are adequate in relation
to benefits provided. If lesser rates are to be charged, an actuarial 
certification
and supporting documentation must be included evidencing that the rates are
adequate for the benefits to be provided. If contracting state agency Medicaid
rates are not available, then the anticipated rates used in determining the
applicant's financial projections must be disclosed with an actuarial 
certification
and supporting documentation showing that the anticipated rates are reasonable
in relation to the expected benefits to be provided. If a provider HMO proposes
to contract to provide prepaid services to a primary HMO, the provider HMO
must submit an actuarial certification and supporting documentation evidencing
that anticipated prepayments to be received from the primary HMO are adequate
to pay for services to be provided to the primary HMO. All actuarial 
certifications
must meet the qualifications specified in sec.11.702 of this title (relating
to Actuarial Certification).<ol> 

(12) a description and a map of the service area, with
key and scale, which shall identify the county and counties<nl>, or portions
thereof,<ol> to be served. <nl>If the map is in color, the original and
all four copies must also be in color;<ol> 

(13) a [sample] copy of the form of any contract <nl>
or monitoring plan<ol> [executed or to be executed] between the
applicant and: 

(A) (No change.) 

(B) any physician, medical group, or association of physicians,
or any other provider, plus a [sample] copy of the <nl>form of
any<ol> subcontract between the medical group, physicians' association,
any physician, or provider, who has contracted with any physician, medical
group, association of physicians, or any other provider to provide health
care services. <nl> All contracts shall include a hold-harmless provision,
as specified in sec.11.1102 of this title (relating to Hold-Harmless Clause).
Such clause<ol> [A hold harmless provision] shall be no less
favorable to enrollees than that outlined in sec.11.1102 of this title.[
(relating to Hold-Harmless Clause). Such contracts must be in accord with
the Texas Department of Insurance rules;] 

(C) any exclusive agent or agency; [and] 

(D) any person who will perform management, marketing, administrative,
data processing services, or claims processing services. A bond or deposit
meeting the requirements of- the [Texas] Insurance Code[,
] Article 20A.18, is required for management contracts. If <nl>submitting
<ol> a bond, the original <nl>or a copy shall<ol> [must] be
submitted[, or a copy of the bond must be accompanied by notarized certification
that the copy is a true, accurate, and complete copy of the original]. <nl>
The bond shall not include a deductible<ol>; 

<nl>(E)<ol> <nl>an ANHC which agrees to arrange for or
provide health care services, other than medical care or services ancillary
to the practice of medicine, or a provider HMO which agrees to arrange for
or provide health care services on a risk-sharing or capitated risk arrangement
on behalf of a primary HMO as part of the primary HMO delivery network. A
monitoring plan as required by sec.11.1604 of this title (relating to 
Requirements
for Certain Contracts between Primary HMOs and ANHCs and Primary HMOs and
Provider HMOs) must also be submitted; and<ol> 

<nl>(F)<ol> <nl>any insurer or group hospital service
corporation to offer indemnity benefits under a point of service contract.
<ol> 

(14) a description of the quality assurance program,
including a peer review program required by the [Texas] Insurance
Code, Article 20A.05. Arrangements for sharing pertinent medical records between
physicians and/or providers contracting or subcontracting pursuant to paragraph
(13)(B) of this section with the HMO and assuring the record's confidentiality
must be explained; 

(15) insurance, <nl>guarantees,<ol> and other protection
against insolvency; 

(A) any reinsurance agreement and any other agreement described
in the [Texas] Insurance Code[,] Article 20A.05(b)(2)(C)(iii),
covering excess of loss, stop-loss, and/or catastrophes. The agreement must
provide that the commissioner and HMO will be notified no less than 60 days
prior to <nl>termination<ol> [cancellation] or reduction of
coverage by the insurer; 

(B) (No change.) 

(C) any other arrangements offering protection against insolvency<nl>
, including guarantees, as specified in sec.11.806 of this title (relating
to Liabilities), sec.11.808 of this title (relating to Guarantee from a
Sponsoring Organization), and sec.11.1804 of this title (relating to Guarantees)
<ol>; 

(16) (No change.) 

(17) the written description of health care plan terms
and conditions made available to any current or prospective group contract
holder and current or prospective enrollee of the HMO pursuant to the 
requirements
of <nl>the<ol> Insurance Code[,] Article 20A.04(13) <nl>and
sec.11.1600 of this title (relating to Information to Prospective and Current
Group Contract Holders and Enrollees)<ol>; 

(18) network configuration information, including an
explanation of the adequacy of the physician and other provider network 
configuration;
the information provided must include the names of <nl>primary care<ol>
physicians, <nl>their hospital affiliations, referral specialists,<ol>
[specialty physicians] and other providers by zip code or zip code
map and indicate whether each physician or other provider is accepting new
patients from the HMO; 

(19) a written description of the types of compensation
arrangements, such as compensation based on fee-for-service arrangements,
risk-sharing arrangements, or capitated risk arrangements, made or to be made
with physicians and providers in exchange for the provision of, or the 
arrangement
to provide health care services to enrollees, including any financial incentives
for physicians and providers; such compensation arrangements shall be 
confidential
and not subject to the open records law, Chapter 552, Government Code; [
and] 

(20) documentation demonstrating that the HMO will pay
for emergency care services performed by non-network physicians or providers
at the negotiated or usual and customary rate and that the health care plan
contains, without regard to whether the physician or provider furnishing the
services has a contractual or other arrangement with the entity to provide
items or services to <nl>enrollees<ol> [covered individuals],
the following provisions and procedures for coverage of emergency care services; 
(A) any medical screening examination or other evaluation
required by state or federal law which is necessary to determine whether an
emergency medical condition exists will be provided to [covered]
enrollees in a hospital emergency facility or comparable facility; 

(B) necessary emergency care services will be provided to
[covered] enrollees, including the treatment and stabilization
of an emergency medical condition; and 

(C) services originating in a hospital emergency facility
or comparable facility following treatment or stabilization of an emergency
medical condition will be provided to covered enrollees as approved by the
HMO, provided that the HMO is required to approve or deny coverage of post
stabilization care as requested by a treating physician or provider within
the time appropriate to the circumstances relating to the delivery of the
services and the condition of the patient, but in no case to exceed one hour
from the time of the request; the HMO must respond to inquiries from the 
treating
physician or provider in compliance with this provision in the HMO's plan. 
<nl>(21)<ol> <nl>a description of the procedures
by which:<ol> 

<nl>(A)<ol> <nl>a member handbook and materials relating
to the complaint and appeal process and the availability of the independent
review process will be provided to enrollees in any language other than English,
pursuant to the Insurance Code Article 20A.11A(a); and<ol> 

<nl>(B)<ol> <nl>access to a member handbook and materials
relating to the complaint and appeal process and the availability of the 
independent
review process will be provided to an enrollee who has a disability affecting
the enrollee's ability to communicate or to read, pursuant to the Insurance
Code Article 20A.11A(b).<ol> 

<nl>(22)<ol> <nl>notification of the physical
address in Texas of all books and records described in sec.11.205 of this
title (relating to Documents to be Available During Examinations);<ol> 
<nl>(23)<ol> <nl>certification that the applicant
has adequate capacity for information systems to service enrollees and 
providers;
and<ol> 

<nl>(24)<ol> <nl>a notarized certification bearing
the original signature of the corporate secretary or corporate president of
the applicant that the documents provided in compliance with paragraphs (3),
(4) and (7) of this section, and paragraph (13) of this section if applicable,
are true, accurate and complete copies of the original documents.<ol>

sec.11.205. Documents to be Available During Examinations.
<nl>(a)<ol> The following documents must be <nl>maintained
<ol> [available] for inspection at <nl>all times<ol> [
the time of an examination] at the <nl>HMO's office<ol> [HMO
administrative offices] <nl>located within the State of Texas:<ol>

(1) [the minutes of the HMO organizational meetings
which indicate the type and date of each meeting, and the officer or officers
who are responsible for the handling of the funds of the applicant; the minutes
of meetings of the HMO board of directors; management committee minutes;]
administrative policy manuals; physician and provider manuals; enrollee 
information;
enrollee newsletters; personnel manuals; organizational charts; contracts
with physicians and, if applicable, providers such as dentists and physician
therapists; and other items as required;

(2) the quality improvement review standards, quality
improvement committee meeting minutes, <nl>internal<ol> quality review
audits <nl>of each defined service area<ol>, quality of care assurance
program <nl>description<ol>, [medical peer review committee minutes
], and utilization review system program description, including policies
and procedures to evaluate medical necessity, criteria used, information 
sources,
the process used to review and approve the provision of medical services and
utilization review system data;

(3) the complaint policy and procedure and forms to be
used in the complaint resolution procedure [for complaints]. All
complaints shall be processed in accordance with the HMO's complaint policy
and procedure which shall be developed in accordance with the Insurance Code[
,] Chapter 20A.

(4) the accessibility monitoring data;

(5) the enrollee satisfaction surveys<nl>, results of
surveys<ol> and disenrollment <nl>and termination<ol> logs;

(6) <nl>a system for accessing<ol> medical, hospital
and health records of all enrollees and records of all physicians[, dentists
] and other providers providing service under independent contract with
an HMO shall be subject to such examination as is necessary for an ongoing
examination. The plan shall provide for adequate protection of confidentiality
of medical and health care information and shall only be disclosed in accordance
with applicable law;

(7) network configuration information, including an explanation
of the adequacy of the physician, dentist and other provider network 
configuration.
The information provided must include the names of physicians, <nl>referral
specialists<ol>[specialty physicians], and other providers by
zip code or zip code map, and indicate whether each physician or other provider
is accepting new patients from the HMO;

(8) lists of primary care and referral specialists[specialty
physicians], hospitals, laboratories, diagnostic imaging providers, radiologic
oncology providers, and, if applicable, other providers such as dentists and
physical therapists to be used by the applicant inside the service area, 
including
their certification/accreditation and trauma level status as applicable;

[(A) the list of physicians must
include current information for the following:] 

[(i) each physician's medical specialty;] 

[(ii) board certification, if any;] 

[(iii) Texas license number;] 

[(iv) federal and state permit numbers relating
to registration of controlled substances, if applicable;] 

[(v) business address;] 

[(vi) hospitals and comparable facilities at which
the physician has staff privileges; and] 

[(vii) whether or not the physician accepts new
patients from the HMO.] 

[(B) the list of hospitals and
comparable facilities must include:] 

[(i) each hospital's or facility's address;] 

[(ii) license number, unless exempt from licensure
requirements;] 

[(iii) the number of licensed beds in the facility;] 
[(iv) the hospital's and facility's current occupancy
rate;] 

[(v) indication of accreditation issued by the
Joint Commission on Accreditation of Healthcare Organizations (JCAHO) of the
American Osteopathic Association (AOA), if applicable;] 

[(vi) indication of Medicare certification (Title
XVII, Social Security Act), if applicable; and] 

[(vii) the trauma facility designation level and
expiration date; and] 

[(C) the list of laboratories,
diagnostic imaging providers, radiologic oncology providers, and, if applicable,
other providers such as dentists and physical therapists must include each
provider's address and license, accreditation, registration or certification,
if applicable, and whether or not the provider accepts new patients from the
HMO;] 

<nl>(9)<ol> <nl>current files containing copies
of executed contracts for all participating physicians and, if applicable,
other providers of care such as dentists and physical therapists that are
updated on an ongoing basis;<ol> 

<nl>(10)<ol> [(9)] <nl>current files containing
copies of executed contracts on subcontracting physicians and, if applicable,
providers such as dentists and physical therapists which contain sufficient
information to assure current licensure or other authorizations to practice
in the State of Texas;<ol> [a copy of the contract with each physician
and each provider such as dentists and physical therapists;] 

<nl>(11)<ol> [(10)] evidence that the HMO
has a mechanism for maintaining, monitoring and implementing the quality 
improvement
program, as required by sec.11.1902 of this title (relating to Quality 
Improvement
Program) including procedures for data collection, analysis and reporting
for all physicians and providers, including pharmacy or drug utilization review
format, if applicable; utilization review; denials of coverage and a complaint
system as required by this chapter; 

<nl>(12)<ol> <nl>current physician manual and current
provider manual which shall be provided to each contracting physician and
other provider. The manuals shall contain details of the requirements by which
the physicians and providers will be governed.<ol> 

<nl>(13)<ol> <nl>credentialing files as specified
in sec.11.1902(5) of this title (relating to Quality Improvement Program);
<ol> 

<nl>(14)<ol> [(11)] <nl>a copy<ol> [
an example] of all printed materials to be presented to prospective
enrollees, an enrollee handbook, [and] <nl>an<ol> evidence of
coverage and physician and provider manuals; 

<nl>(15)<ol> [(12)] the statistical reporting
system developed and maintained by the HMO which allows for compiling, 
developing,
evaluating, and reporting statistics relating to the cost of operation,[
;] the pattern of utilization of services,[;] and the accessibility
and availability of services; 

<nl>(16)<ol> [(13)] the HMO's <nl>financial
statements<ol> [annual report and statement]; 

<nl>(17)<ol> [(14)] any report submitted
by the HMO to the Texas Health Care Information Council; 

<nl>(18)<ol> [(15)] [a copy of]
all [written] complaints<nl> and complaint files<ol>; 

<nl>(19)<ol> [(16)] documentation of regular
review <nl>of complaint reports<ol> by management and the governing body[
of complaint reports]; 

<nl>(20)<ol> [(17)] the complaint and appeal
log, including documentation on each complaint received and details of action
taken on the complaint. Complaints and appeals must be categorized as follows: 
(A) plan administration (e.g., marketing, policyholder service,
billing, underwriting or similar administrative functions); 

(B) benefit denial or limitation (e.g., denial of a benefit,
refusal to refer or provide requested services). [The department will
establish broad categories of medical conditions which an HMO must include
on the complaint log;] 

(C) quality of the treating physician, dentist or provider
care (e.g., misdiagnoses or lack of courteous treatment); 

(D) enrollee services (e.g., lack of courteous treatment;
appointment time or waiting room time); 

<nl>(21)<ol> [(18)] access to appointments
(e.g., appointment time or waiting room time); 

<nl>(22)<ol> [(19)] financial records,
including ledgers, checkbooks, inventory records, evidence of expenditures,
investments and debts; and 

<nl>(23)<ol> [(20)] any other records concerning
the operation of the HMO. 

<nl>(b)<ol> <nl>The following documents may be maintained
outside the State of Texas if the HMO has received prior approval by the 
commissioner
pursuant to the Insurance Code Article 1.28:<ol> 

<nl>(1)<ol> <nl>financial records, including ledgers;
<ol> 

<nl>(2)<ol> <nl>checkbooks;<ol> 

<nl>(3)<ol> <nl>inventory records;<ol> 

<nl>(4)<ol> <nl>evidence of expenditures, investments,
and debts; and<ol> 

<nl>(5)<ol> <nl>the minutes of the HMO organizational
meetings which indicate the type and date of each meeting, and the officer
or officers who are responsible for the handling of the funds of the applicant;
the minutes of meetings of the HMO board of directors; management committee
meeting minutes;<ol> 

sec.11.206. Review of Application.
(a) The application will be processed pursuant to <nl>sec.1.809
<ol> [Chapter 1, Subchapter G] of this title (relating to <nl>
HMO Certificate of Authority<ol> [Notice and Processing Periods for
Permit Applications]). 

(b) <nl>After completion of the department's review of documents,
the department shall perform the qualifying quality of care and financial
examinations. If a hearing is held in accordance with sec.1.809 of this
title, then the qualifying examinations must occur prior to the date of the
hearing.<ol> For an applicant that is a foreign HMO, in lieu of a <nl>
financial<ol> qualifying examination, a copy of the report on the most recent
examination performed by the regulatory agency of its state of domicile may
be requested. 

<nl>(c)<ol> <nl>Following the completion of the qualifying
examinations, if a hearing is scheduled, then it will be scheduled under the
provisions of the Insurance Code Article 20A.05. The hearing may be waived,
if agreed to by the applicant and the department and if no reasonable request
for a hearing by any other person has been received.<ol>

sec.11.207. Withdrawal of Application.
(a) (No change.)

(b) <nl>The department may withdraw an application if the
department determines that the applicant has failed to respond in a timely
manner to requests made by the department for additional information or if
the application is incomplete.<ol> [Upon the department's receipt of
a request to withdraw an application pursuant to this section, the applicant's
name reservation shall be cancelled.]

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 June
15, 1998.
TRD-9809528
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER D. Regulatory Requirements for an HMO Subsequent
to Issuance of a Certificate of Authority
28 TAC sec.sec.11.301-11.303
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.301. Filing Requirements. 
Subsequent to the issuance of a certificate of authority, each <nl>
HMO<ol> [health maintenance organization (HMO)] is required to
file certain information with the commissioner, either for approval prior
to effectuation or for information only, as outlined in paragraphs (4) and
(5) of this section and in sec.11.302 of this title (relating to Service
Area Expansion Requests). These requirements include filing changes necessitated
by federal or state law or regulations. 

(1) Completeness of filings. The department shall not accept
a filing for review until the filing is complete. <nl>An application<ol>
[A request] to modify the [approved application for a]
approved application for a certificate of authority which requires the 
commissioner's
approval <nl>in accordance with the Insurance Code Articles 20A.04(b) and
20A.09(l)<ol> is considered complete when all <nl>information required
by this section, sec.11.302 of this title (relating to Service Area Expansion
Requests), and sec.sec.11.1901-11.1903 of this title (relating to Quality
of Care) that is applicable and reasonably necessary for a final determination
by the department, has been filed with the department<ol> [ necessary
supporting documentation identified in this section or in sec.11.302 of
this title (relating to Service Area Expansion Requests) has been filed]. 
(2) Identifying form numbers required. Each item required
to be filed pursuant to paragraphs (4) and (5) of this section must be 
identified
by a unique form number, adequate to distinguish it from other items. Such
identifying form numbers shall be composed of a total of no more than 40 [
12] letters, numbers, symbols, and spaces. 

(A) The identifying form number must appear in the lower left-hand
corner of the page. In the case of a multiple page document, the identifying
form number must appear on the lower left-hand corner of the first page. Page
numbers should appear on subsequent pages. 

(B) If an item is to be replaced or revised subsequent to
issuance of a certificate of authority, a new identifying form number must
be assigned. <nl>A change in address or phone number on a form will not require
a new identifying form number.<ol> A new edition date added to the original
identifying form number is an acceptable way of revising the number so that
it is identifiable from any previously approved item; e.g., if G-100 was the
originally approved number, the revision may be numbered G-100 12/79. Changing
the case of the suffix is not considered to be a change in the number, e.g.,
"ED" and "ed" or "REV" and "rev" are the same for form numbering purposes. 
(3) Attachments for filings. The filings required
in <nl>paragraphs<ol> [paragraph] (4) and (5) of this section
must be accompanied by the following: 

(A) <nl>an original and<ol> four copies of <nl>the HMO
certification and transmittal form<ol> [an HMO Form # 5 and #8]
for each new, revised, or replaced item; 

(B) [four copies of a transmittal letter including a
statement of any prior approved forms to be replaced, with any applicable
form number;] 

[(C)] <nl>an original and<ol> four copies of
such supporting documentation as considered necessary by the commissioner
for review of the filing; and 

<nl>(C)<ol> [(D)] the applicable filing fee
as required by the [Texas] Insurance Code[,] Article
20A.32, as determined by sec.7.1301 of this title (relating to Regulatory
Fees). 

(4) Filings requiring approval. Subsequent to the
issuance of a certificate of authority, each HMO shall file for approval with
the commissioner all information required by any amendment to <nl>items 
specified
in<ol> sec.11.204 of this title (relating to Contents) if such information
has not previously been filed and approved by the commissioner. In addition,
an HMO shall file with the commissioner a written request to implement or
modify the following operations or documents and receive the commissioner's
approval prior to effectuating such modifications: 

(A) the evidence of coverage and related forms, as described
in sec.11.501 of this title (relating to Forms Which Must Be Approved Prior
to Use); 

(B) a description and a map of the service area, with key
and scale, which shall identify the county or counties <nl>or portions thereof
<ol> to be served; 

(C) the form of all contracts described in sec.11.204(13)(A)[
,] <nl>and<ol> (C)[, and (D)] of this title (relating
to Contents), including any amendments to contracts described in 
<nl>sec.11.204(13)(A)
<ol> [sec.11.204(A)] and (C) of this title and prior approval
of the cancellation of any management contracts in sec.11.204(13)(D) of
this title; 

(D) any change in more than 10% of control of the HMO, as <nl>
specified<ol> [described] in <nl>the definition of "control"
in sec.11.2(b)(11)<ol> [Subchapter M] of this title [
chapter] (relating to <nl>Definitions<ol> [Acquisition of Control
or Merger of a Domestic Health Maintenance Organization]); 

(E) transactions with affiliates related to the purchase,
construction, or renovation of hospitals, medical facilities, administrative
offices, or any other property which represent more than one-half of 1.0%
of admitted assets <nl>of the HMO,<ol>[;] as well as transactions
involving the lease, operation, or maintenance of hospitals, medical facilities,
administrative offices, or any other property from or by an affiliate if the
monthly cost for such transaction exceeds one-half of 1.0% of all the monthly
expenses of the HMO or such agreement places a lien on any property owned
by the HMO; 

(F) dividends which do not meet the requirements <nl>specified
in<ol> [of] sec.11.807 of this title (relating to Dividends); 
(G) <nl>any new or revised loan agreements, or amendments
thereto, evidencing loans made by the HMO to any affiliated person or to any
medical or other health care provider, whether providing services currently,
previously, or potentially in the future; and any guarantees of any affiliated
person's or health care provider's obligations to any third party<ol> [
a notice of any intention to make a loan or to make multiple loans, or to
make any amendments thereto, to a medical group or to a corporation under
the control of the HMO. If the total amount loaned is incidental to the HMO's
operation and does not exceed an amount expected to be equal to the charges
to be paid to that medical group or corporation for contractual services to
be provided for a 30-day period immediately following, and provided that 
termination
of services may not take place during that period of time, then such notice
need not be filed]; 

(H) a copy of any <nl>proposed amendment<ol> [amendments
] to basic organizational documents[ which are proposed]. <nl>
If the approved amendment<ol> [Following approval by the commissioner
a copy of the approved amendments] must be filed with the secretary
of state, [and] an original, or a <nl>certified<ol> copy of
such <nl>document<ol> [documents with notarized certification bearing
the original signature of an officer that it is a true, accurate, and complete
copy of] <nl>with<ol> the original file <nl>mark<ol> [marked
] <nl>of<ol> [by] the secretary of state, shall be filed
with the commissioner; 

(I) a copy of any amendments to bylaws of the HMO, with a
notarized certification bearing the original signature of <nl>the corporate
secretary<ol> [an officer] of the <nl>HMO<ol> [company
] that it is a true, accurate, and complete copy of the original; 

(J) any name, <nl>or<ol> assumed name, [service mark,
or trademark] on a [reservation of name] form, [HMO
Form #1] <nl>as specified in sec.11.105 of this title (relating to
Use of the Term HMO, Trademarks, service marks d/b/a)<ol>; [and] 
(K) any agreement by which an affiliate agrees to handle an
HMO's investments <nl>pursuant to<ol> [under] sec.11.804 of
this title (relating to Investment Management by Affiliate Companies); 

(L) any material change in the <nl>HMO's<ol> [plan's
] emergency care procedures; and [.] 

<nl>(M)<ol> <nl>any original guarantees, modifications
to existing guarantees specified in sec.11.808 of this title (relating to
Guarantee From a Sponsoring Organization) and guarantees relating to Medicaid
business as specified in sec.sec.11.1801-11.1806 of this title (relating
to Solvency Standards for Managed Care Organizations Participating in Medicaid).
<ol> 

(5) Filings for information. Material filed under
this paragraph is not to be considered approved, but may be subject to review
for compliance with Texas law and consistency with other HMO documents. Each
item filed under this paragraph must be accompanied by a completed HMO <nl>
certification and transmittal form<ol> [Form #7 - Certification of
Compliance, referred to in sec.11.1001(8) of this title (relating to Forms
Adopted by Reference)] in addition to those attachments required under
paragraph (3) of this section<nl>.<ol>[,] <nl>At least<ol>
[within] 30 days <nl>prior to<ol> [of] the effective
date, an HMO must file with the commissioner, for information only, deletions[
,] and modifications to the following previously approved or filed operations
and documents: 

(A) the list of officers and directors and a biographical
data sheet for each person listed under the [Texas] Insurance Code[
,] Article <nl>20A.04(a)(3)<ol> [20A.4(a)(3)], on <nl>
the officers and directors page and biographical affidavit forms<ol> [
HMO Form #3 and #4 referred to] in sec.11.204(5)(A) and (B) of this
title (relating to Contents); 

(B) a copy of any notice of cancellation of <nl>fidelity
<ol> bonds, new <nl>fidelity<ol> bonds, or amendments <nl>thereto,<ol>
[to bonds] for officers and employees, including notarized certification
by <nl>the corporate secretary or corporate president<ol> [an officer
] that the material is true, accurate, and complete, as described in
sec.11.204(7) and (13)(D) of this title (relating to Contents); 

(C) the formula or method for calculating the schedule of
charges, as defined in <nl>sec.11.2(b)<ol> [sec.11.2] of
this title (relating to <nl>Definitions<ol> [General Provisions]); 
(D) any change in the <nl>physical address of the books and
records described in sec.11.205 of this title (relating to Documents to
be Available During Examinations)<ol> [principal administrative office
within the approved service area(s) of the HMO]; 

(E) any change of the certificate of authority <nl>for a
domestic or foreign HMO. If the HMO is a foreign HMO, a certified coy of the
certificate of authority and power of attorney must be submitted<ol> [
from the domiciliary state's licensing authority and a power of attorney,
if the HMO is a foreign-licensed HMO]; 

<nl>(F)<ol> <nl>any new trademark or service mark, or
any changes to an existing trademark or service mark;<ol> 

<nl>(G)<ol> [(F)] a copy of the form of any
new contract <nl>or subcontracts<ol> or any [substantive] changes <nl>
to<ol> [in] previously filed copies of forms of all contracts
between the HMO and any physicians[,] or other providers described
in sec.11.204(13)(B) of this title (relating to Contents), <nl>and copies
of forms of all contracts between the HMO and an insurer or group hospital
service corporation to offer indemnity benefits,<ol> whether utilized with
all contracts or on an individual basis<nl>.<ol> <nl>If such contracts
are amended, each copy of such agreement must be marked to indicate revisions.
In addition, questions listed on the HMO certification and transmittal form,
must be answered<ol>; 

<nl>(H)<ol> [(G)] any <nl>insurance contracts
or amendments thereto<ol> [new or amendments to insurance]<nl>
, guarantees,<ol> or other protection against insolvency, including the
stop-loss or reinsurance agreements, if changing the carrier or description
of coverage, as described in sec.11.204(15) of this title (relating to 
Contents);
[and] 

<nl>(I)<ol> <nl>changes to any of the requirements mandated
for guarantees pursuant to sec.11.808 of this title (relating to Guarantee
from a Sponsoring Organization);<ol> 

<nl>(J)<ol> [(H)] any change in the affiliate
chart as described in sec.11.204(6)(A) of this title (relating to Contents); 
<nl>(K)<ol> [(I)] the written description of
health care plan terms and conditions made available to any current or 
prospective
group contract holder and current or prospective enrollee of the HMO<nl>
, including the enrollee handbook<ol>, pursuant to the requirements of <nl>
the<ol> Insurance Code[,] Article 20A.04(13) <nl>and sec.11.1600
of this title (relating to Information to Prospective and Current Group Contract
Holders and Enrollees)<ol>; [and] 

<nl>(L)<ol> [(J)] modifications to any types
of compensation arrangements, such as compensation based on fee-for-service
arrangements, risk-sharing arrangements, or capitated risk arrangements, made
to physicians and providers in exchange for the provision of, or the arrangement
to provide health care services to enrollees, including any financial incentives
for physicians and providers; [and] 

<nl>(M)<ol> [(K)] any material change in network
configuration; <nl>and<ol> 

<nl>(N)<ol> <nl>a description of the quality assurance
program, including a peer review program, as required by the Insurance Code
Article 20A.05(a)(1). Explanations of arrangements for sharing pertinent medical
records between physicians and/or providers contracting or subcontracting
pursuant to paragraph (13)(B) of sec.11.204 of this title (relating to Contents)
with the HMO and assuring the records' confidentiality must also be provided.
<ol> 

(6) Approval time period. Any modification for which
[the] commissioner's approval is required is considered approved
unless disapproved within 30 days from the date the filing is <nl>determined
by the department to be<ol> complete<nl>.<ol>[; provided that the
] <nl>The<ol> commissioner may postpone the action for <nl>a period
<ol> [such further time,] not <nl>to exceed<ol> [exceeding
an additional] 30 days, as necessary for proper consideration. The HMO
will be notified by letter of any postponement. 

(7) Filing Review Procedure. Within 20 days <nl>from
<ol> [after] the department's receipt of an initial filing for
commissioner's approval under this section, the department shall determine <nl>
whether<ol> the filing <nl>is<ol> [to be] complete or incomplete
for purposes of acceptance for review[,] and<nl>, if found to
be incomplete, the department shall<ol> issue written notice to the HMO
of <nl>its<ol> [an] incomplete filing. 

(A) Incomplete filing. The written notice <nl>of<ol> [
for] an incomplete filing shall state that the filing is not complete
and has not been accepted[ for filing] for review. <nl>In addition,
the notice shall specify the<ol> [and shall set out specific]
information, documentation <nl>and<ol> [or] corrections necessary
to make the filing complete, as provided in paragraph (1) of this section.
If a filing is resubmitted<nl>,<ol> <nl>in<ol> [is] whole
or in part<nl>,<ol> and is still incomplete, an additional written notice <nl>
shall be issued<ol> [is not required]. <nl>Such notice shall
specify the corrections or information necessary for completeness, and state
that the 30 day deemer will not begin until the date the department determines
the filing to be complete. If a filing is not resubmitted within 30 days of
the date of the written notice of incompleteness, then the filing shall be
considered withdrawn by the department and closed.<ol> 

(B) Processing of complete filing. The department shall in
writing approve or disapprove a complete filing within the period of time
set forth in paragraph (6) of this section, beginning on the date the filing
is determined to be complete<nl>.<ol>[, unless the] <nl>The
<ol> HMO <nl>may waive<ol> [waives] in writing the statutory
deemer[ of approval]. 

(C) Pending status. Complete filings will be [affirmatively
] approved or disapproved in writing within the statutory deemer [
of approval] period [of time] set forth in paragraph (6)
of this section unless, prior to the department's issuance of [actual
] notice <nl>of<ol> [for] proposed negative action pursuant
to sec.1.704(a) of this title (relating to Summary Procedure; Notice), the
HMO has been contacted by the department regarding corrections <nl>or additional
information<ol> necessary for commissioner's approval<nl>,<ol> and files
with the department a written consent to waive the statutory deemer[
of approval set forth in the Insurance Code, Article 20A.04(b) and paragraph
(6) of this section]. The deemer shall be waived upon the department's
receipt of <nl>the HMO's<ol> [a] written consent. [from
the HMO to waive the statutory deemer and the] <nl>The<ol> filing
shall be held in a pending status for 45 days from the date of the applicable
statutory deemer, either on the 30th or 60th day from the date the filing
is complete. If the necessary corrections <nl>or additional information<ol>
have not been filed by the end of <nl>45 days<ol> [the 45-day period,
the department shall return one copy of] the filing [which]
shall be considered withdrawn[ from further consideration until and unless
refiled. An HMO may request a specific longer period of time if the filing
cannot be corrected within 45 days. The department may deny a request for
a specific longer period of time if the department determines the HMO has
not used due diligence to correct the filing.] 

sec.11.302. Service Area Expansion Requests. 
<nl>(a)<ol> <nl>An HMO shall file for approval with the
department before the HMO may change an existing service area, or add a new
service area;<ol> 

<nl>(b)<ol> If any of the following items are changed by
a service area expansion request, the new item or any amendments to an existing
item must be submitted for approval or filed for information, as <nl>specified
in<ol> [applicable under] sec.11.301 of this title (relating
to Filing Requirements): 

(1) a description and a map with <nl>key and scale,<ol>
showing both the currently approved service area and the proposed new service
area as required by sec.11.204(12) of this title (relating to Contents); 
(2) a <nl>form<ol> [sample] of any new
contracts or [of the] amendment of any existing contracts in the
new area, as described in sec.11.204(13) of this title (relating to Contents); 
(3) a list of all physicians[, hospitals,]
and/or other providers to [be used to] provide services in the
new area<nl>, including<ol> [with] all information required
by sec.11.205(4) of this title (relating to Documents To Be Available During
[Qualifying] <nl>Examinations<ol> [Examination and/or the
Health Department Visit]); 

(4) a brief narrative description of the administrative
arrangements, organizational charts as described in sec.11.204(6) of this
title (relating to Contents), and other pertinent information; 

(5) biographical data sheets for any new management staff
assigned to the new area; 

(6) any new or <nl>amended<ol> [amendments to
any] evidence of coverage to be used in the new area, in accordance
with the requirements of Subchapter F of this chapter (relating to Evidence
of Coverage); 

(7) the formula or method for calculating the schedule
of charges for any new or amended evidence of coverage in accordance with
Subchapter H of this chapter (relating to Schedule of Charges); 

(8) copies of leases, loans, <nl>agreements<ol> and
contracts to be used in the proposed new area<nl>, including information
<ol> [as] described in sec.11.301(4)(C), (E), and (G) of this
title (relating to Filing Requirements); 

(9) separate and combined sources of financing and financial
projections as described in sec.11.204(10) of this title <nl>(relating
to Contents)<ol>; 

(10) any new or <nl>amended<ol> [amendments to
] officers and employees <nl>fidelity<ol> bonds, in accordance with
sec.11.204(7) and (13)(D) of this title (relating to Contents); 

(11) any new or <nl>amended<ol> [amendments to
] reinsurance agreements, insurance or other protection against insolvency,
as specified in sec.11.204(15) of this title (relating to Contents); and 
(12) a description of the method by which the complaint
procedure<nl>, as specified in the Insurance Code Article 20A.12 and related
regulations,<ol> will be made reasonably available in the new service area
or division, including a toll free call, and the information and complaint
telephone number required by the [Texas] Insurance Code[,
] Article 21.71, where applicable. For HMOs <nl>subject to the Insurance
Code<ol> [covered by] Article 21.71, the toll free call required
by this rule and the toll free information and complaint number required by
the [Texas] Insurance Code[,] Article 21.71, may be
the same number. 

<nl>(c)<ol> <nl>The department shall not accept a filing
for review until the filing is complete. An application to modify the 
certificate
of authority which requires the commissioner's approval in accordance with
the Insurance Code Articles 20A.04(b) and 20A.09(l) is considered complete
when all information required by sec.11.301 of this title (relating to Filing
Requirements), sec.11.302 of this title (relating to Service Area Expansion
Requests, and sec.sec.11.1901-11.1903 of this title (relating to Quality
of Care) that is reasonably necessary for a final determination by the 
department,
has been filed with the department.<ol> 

<nl>(d)<ol> <nl>Before consideration of a service area
expansion request, the HMO must be in compliance with the requirements of
sec.sec.11.1901-11.1903 of this title in the existing service areas and
in the proposed service areas.<ol>

sec.11.303. Examination. 
(a) The department has authority to conduct examinations of
HMOs under the Insurance Code Articles 20A.05, 20A.12 and 20A.17. Such 
examinations
may be to determine the financial condition ("financial exams"), quality of
health care services ("quality of care exams"), or such other exams regarding
compliance with laws affecting the conduct of business ("market conduct exams")
of the HMO. 

(b) On-site financial and market conduct examinations shall
be conducted pursuant to the Insurance Code Article 1.15 and sec.7.83 of
this title (relating to Examinations); 

(c) On-site quality of care examinations shall be conducted
pursuant to the following protocol: 

(1) Entrance conference. The assigned examiner shall hold
an entrance conference with the HMO's administrative personnel or their designee
before beginning the on-site examination. 

(2) Exit conference. Upon completion of the examination,
the examiner shall hold an exit conference with the HMO's administrative 
personnel
or their designee. 

(3) Written report of examination outcome. The examiner
shall prepare a written report of the examination outcome. The department
shall provide the HMO with the written report, and if any deficiencies are
cited, then the department shall issue a letter outlining the due dates for
the corrective action plan and corrective actions. 

(d) The HMO shall provide a plan of correction for each deficiency
cited in the letter outlining corrective action described in subsection (c)
of this section. 

(1) If examiner cites serious deficiencies, the HMO shall
provide the examiner with a signed plan of correction within one business
day of written notice of deficiencies. The HMO's plan of correction shall
provide up to 10 business days for correction of the deficiencies in accordance
with severity of the deficiencies. 

(2) If the examiner cites potentially serious deficiencies,
the HMO shall provide the examiner with a signed plan of correction within
10 business days of receiving written notice from the examiner specifying
the deficiencies. The HMO's plan of correction shall provide for correction
of these deficiencies no later than 30 days from the date of the exit 
conference. 
(3) If the examiner cites non-serious deficiencies, then
the HMO shall provide a signed plan of correction to the department no later
than 30 days from receipt of the written examination report. The HMO's plan
of correction must provide for correction of these deficiencies no later than
90 days from the receipt of the written examination report. 

(e) The department shall verify the correction of deficiencies
by submitted documentation or by on-site examination. 

(f) This section does not apply to complaint investigations
conducted under the Insurance Code Article 20A.12A. 

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 June
15, 1998.
TRD-9809529
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER F. Evidence of Coverage
28 TAC sec.sec.11.501-11.513
The amendments and new sections are proposed under the Insurance
Code, Chapter 20A, as amended by the 75th Legislature in Senate Bill 385,
and Article 1.03A. Insurance Code, Article 20A.02(b) provides that basic health
care services mean health care services which the commissioner determines
an enrolled population might reasonably require in order to be maintained
in good health, including, at a minimum, services designated as basic health
services under Section 1302, Title XIII, Public Health Service Act (42 U.S.C.,
Section 300e - 1(1). Insurance Code, Article 20A.22(a) provides that the 
commissioner
may promulgate rules and regulations as are necessary and proper to carry
out the provisions of the HMO Act (Insurance Code, Chapter 20A). Article 
20A.22(b)
provides that the commissioner is specifically authorized to promulgate rules
to ensure that enrollees have adequate access to health care services and
to establish minimum physician/patient ratios, mileage requirements for primary
and specialty care, maximum travel times, and maximum waiting times for 
obtaining
appointments. Article 20A.04(b) provides that the commissioner may promulgate
such reasonable rules and regulations as he deems necessary to the proper
administration of the HMO Act to require a health maintenance organization,
subsequent to receiving its certificate of authority, to submit the 
modifications
or amendments to the operations or documents submitted upon application for
a certificate of authority to the commissioner, either for his approval or
for information only, prior to the effectuation of the modification or 
amendment,
or to require the health maintenance organization to indicate the modifications
to the commissioner at the time of the next site visit or examination. Article
20A.05(b) sets forth the determinations the commissioner must make prior to
granting a certificate of authority to an HMO. Article 20A.37 provides that
the commissioner by rule may establish minimum standards and requirements
for ongoing internal quality assurance programs for health maintenance 
organizations,
including, but not limited to, standards for assuring availability, 
accessibility,
quality, and continuity of care. Article 1.03A provides that the Commissioner
of Insurance may adopt rules necessary for the conduct and execution of the
duties and functions of the Texas Department of Insurance only as authorized
by a statute. 

The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.501. Forms Which Must Be Approved Prior To
Use. 
No evidence of coverage or amendment thereto may be issued, delivered,
or used in Texas unless it has been filed for review and has received the
approval of the commissioner. The following forms are always considered to
be part of the evidence of coverage which must be approved by the commissioner
prior to use: 

(1) group agreement; 

(2) certificate issued to each subscriber who is enrolled
through a group<nl>.<ol> ([Note: ]The same form may be used
as both the group agreement and the group certificate); 

(3) <nl>conversion and individual agreements<ol> [
nongroup agreement]; 

(4) group<nl>, conversion<ol> [and nongroup]<nl>
, and individual<ol> applications for coverage; 

(5) group subscriber enrollment form; 

(6) riders, endorsements, amendments, letters of agreement; 
(7) any other form [that is] attached to or
made a part of the evidence of coverage. 

sec.11.502. Filing Requirements <nl>for Evidence
of Coverage<ol> [with Application for Certificate of Authority]. 
Filing requirements for the evidence of coverage[ and all related
forms], when filed as part of the application for a certificate of authority,
are as follows: 

(1)-(2) (No change.) 

(3) During the review period, applicant must submit <nl>
the original and four<ol> [two] copies of each new page or form
reflecting any revisions. 

[(4)] An approval or disapproval
order will be issued based on the content of final typed drafts. Printing
must comply with the specifications described in sec.11.505 of this title
(relating to Specifications for the Evidence of Coverage). Any discrepancy
between the language or form numbers of the final print and the approved draft
form is grounds for revocation of certificate of authority.] 

[(5)] Three copies of the
final print must be submitted to the HMO Unit within 30 days following printing
and must be certified by an officer of the HMO as being the same language
as has been approved on an HMO Form #9 referred to in sec.11.1001(10) of
this title (relating to Forms Adopted by Reference). One copy will be stamped
with the original approval order number and date and returned to the HMO for
its permanent file.] 

sec.11.503. Filing Requirements <nl>for Evidence
of Coverage<ol> Subsequent to Receipt of Certificate of Authority. 
Subsequent to receipt of a certificate of authority, no evidence of
coverage may be amended or altered in any manner, and no new evidence of 
coverage
may be used, unless the proposed new or revised evidence of coverage has been
filed for review and has received the approval of the commissioner. <nl>
Filing requirements for the evidence of coverage when filed subsequent to
receipt of a certificate of authority are as follows:<ol> 

(1) <nl>The original and four<ol> [Four copies of
HMO Form #5 and Form #8 must accompany any form or forms submitted for approval.
All submissions must be addressed to the HMO Unit. Four] copies of a
transmittal letter <nl>and the HMO transmittal and certification form shall
be submitted<ol> [must list each form submitted and show the form's
number and title or description]. <nl>All submissions must be addressed
to the Texas Department of Insurance, Life/Health HMO Intake Unit, P. O. Box
149104, Austin, Texas 78714-9104.<ol> 

(2) [Proposed forms must be neatly typed.] 
[(3)] The HMO will be notified in writing
of any deficiencies. 

<nl>(3)<ol> [(4)] An approval or disapproval
[order] will be [issued] based on the content of [
final typed] drafts <nl>submitted to the department. One stamped copy
of the approved or disapproved form will be returned to the HMO for its 
permanent
file.<ol> Printing must comply with the specifications described in sec.11.505
of this title (relating to Specifications for the Evidence of Coverage). Any
discrepancy in content between the final print <nl>to be issued<ol> and
the approved draft is grounds for revocation of certificate of authority. 
[(5)] Three copies of the
final print must be submitted to the HMO Unit within 30 days following printing
and must be certified by an officer of the HMO as being the same language
as has been approved. One copy will be stamped with the original approval
order number and date and returned to the HMO for its permanent file. ] 

<nl>(4)<ol> [(6)] The review period for
an evidence of coverage <nl>filed<ol> begins on the date on which an 
acceptable,[
filled-in,] typed draft of the form is received. 

<nl>(5)<ol> [(7)] The review period may
be extended upon <nl>30 days<ol> written notice of such extension to the
HMO before the expiration of the initial review period. 

<nl>(6)<ol> [(8)] At the end of the review
period, the evidence of coverage is considered approved unless it has already
been either affirmatively approved or disapproved by the <nl>commissioner
<ol> [commissioner's written order]. 

sec.11.504. Disapproval of an Evidence of Coverage.
(a) If any portion of any evidence of coverage is disapproved,
the commissioner will specify the reason for the disapproval. The commissioner
is authorized to disapprove any form or withdraw any previous approval <nl>
for any of the following reasons<ol> [if]: 

(1) it fails to meet the requirements of the Act, [or
of] these sections<nl>,<ol>[ ;] or <nl>other applicable
statutes and rules;<ol> 

(2) it does not properly describe the services and benefits;[
or] 

(3) it contains any statements that are unclear, untrue,
unjust, unfair, inequitable, misleading, or deceptive or that violate the
[Texas] Insurance Code[,] Articles 21.21, 21.21A, 21.21-1,
21.21-2,[or 21.21-3,] 21.21-5, <nl>21.21-6,<ol> or 21.55 [
with respect to out-of-area or emergency claims] in accordance with <nl>
Article 20A.09(j)<ol> [Article 20A.09(i)] or any regulations
thereunder or any other applicable law; [or] 

(4) it provides services or benefits that are too restrictive
to achieve the purpose for which the form was designed; [or] 

(5) it fails to attain a reasonable degree of readability,
simplicity and conciseness; [or] 

(6) [it is misleading, deceptive or obscure because
of physical aspects such as its format, typography, style, color, material,
or organization; or] 

[(7)] it provides services or benefits or
contains other provisions that would endanger the solvency of the issuing
HMO; or 

<nl>(7)<ol> [(8)] it is contrary to the
law or policy of this state. 

(b) [The commissioner may withdraw approval of any form.
[(c)] If a form is disapproved the HMO may file
a written request for a hearing on the matter. A hearing will be scheduled
within 30 days from the date the request is received. 

sec.11.505. Specifications for the Evidence of Coverage. 
(a) (No change.)

(b) For the <nl>conversion, individual,<ol> [nongroup
] and group agreements and group certificates and all amendments, type
must be light-faced, uniform sized, common-style not less than 10 points in
height and with a lowercase unspaced alphabet length not less than 120 points.
For other forms, type must be legible. 

(c) The style, arrangement and overall appearance shall give
no undue prominence to any portion of the text. The text of the group<nl>
, individual<ol> and <nl>conversion<ol> [nongroup] agreements,
the certificate, and all amendments include all printed matter except: 

(1)-(4) (No change.) 

(d) (No change.) 

(e) Each form must be identified by a suitable form number
in accordance with sec.11.301(2) of this title (relating to Filing 
Requirements). <nl>
Any change in form number is considered a change in the form and requires
approval as a new form.<ol> 

(f) Certain language <nl>shall not be varied<ol> [
may vary,] or [be] changed[,] without resubmitting
a form for the commissioner's approval. 

[(1)] Changeable language must be enclosed in brackets<nl>
and shall include the range of variable information or amounts<ol> and
is limited to rates, dates, addresses, phone numbers and other such information,
as approved by the commissioner. 

[(2)] An evidence of coverage
submitted with extensive changeable language is reviewed as if no changeable
language appears. Approval or disapproval is based on the specimen language
submitted and no variations are allowed.] 

<nl>(g)<ol> <nl>Each evidence of coverage must meet the
readability standards of sec.3.601 and sec.3.602 of this title (relating
to Purpose, Scope, Applicability and Definitions used in this subchapter,
and Plain Language Requirements).<ol> 

sec.11.506. Mandatory <nl>Contractual<ol> Provisions:
Group<nl>, Individual<ol> and <nl>Conversion<ol> [Non-Group Contract
] Agreement and Group Certificate. 
Each group<nl>, individual<ol> and <nl>conversion<ol> [
non-group] contract and group certificate must contain the following
provisions. Use of the standard language for each provision as presented
in Subchapter L of this chapter (relating to Standard Language for Mandatory
and Other Provisions) shall exempt from review that portion of the evidence
of coverage where standard language is contained. Such standard language
shall not be the only language accepted by the <nl>commissioner<ol> [Texas
Department of Insurance] for such provisions.

(1) Name, address, and phone number of the HMO -- the toll-free
number referred to in the [Texas] Insurance Code[,]
Article 21.71, where applicable, [and notice of any provision requiring
arbitration, indicating the location of such provisions within the evidence
of coverage,] must appear on the face page.

(A)-(C) (No change.)

[(D) HMOs who wish to be exempt from Article
21.71 requirements for fiscal year 1991 must have filed for the exemption
in accordance with the commissioner's bulletin of August 31, 1991. Exemptions
will be governed by Texas Insurance Code, Article 21.71, sec.1.601 of this
title (relating to Notice of Toll-Free Telephone Numbers and Procedures for
Obtaining Information and Filing Complaints) and the information contained
in the instructions for the filing of the annual statements.]

(2) [Arbitration -- a statement of any required
arbitration procedure. If enrollee complaints and grievances are resolved
through a specified arbitration agreement, the arbitration must be conducted
pursuant to the Texas Arbitration Act, Texas Civil Statutes, Articles 224-238.
[(3)] Benefits -- a schedule of all health
care services that are available to enrollees under the <nl>basic, limited,
<ol> [health care plan] or single health care service plan, including
any copayments or deductibles and a description of where and how to obtain
services. A variable copayment or deductible schedule may be used. The copayment
schedule must clearly indicate the benefit to which it applies. <nl>No copayment
or deductible shall be charged for immunizations as described in the Insurance
Code Article 21.53F for a child from birth through the date the child is six
years of age, except for small employer health benefit plans as defined by
the Insurance Code Chapter 26.<ol>

<nl>(A)<ol> <nl>Copayments. Payment for health care services
may be supplemented by nominal copayments. Each HMO may establish one or more
copayment options. An HMO may not impose copayment charges that exceed fifty
percent of the total cost of providing any single service to its enrollees,
nor in the aggregate more than twenty percent of the total cost to the HMO
of providing all basic, limited, or single health care services. An HMO may
not impose copayment charges on any enrollee in any calendar year, when the
copayments made by the enrollee in that calendar year total two hundred percent
of the total annual premium cost which is required to be paid by or on behalf
of that enrollee. This limitation applies only if the enrollee demonstrates
that copayments in that amount have been paid in that year. The copayment
shall be stated in the group, individual or conversion agreement and group
certificate. <ol>

<nl>(B)<ol> <nl>Deductibles. A deductible shall be for
a specific dollar amount of the cost of the basic, limited, or single health
care service. An HMO shall not charge a deductible for preventive health care
services, as described in sec.11.508(9) of this title (relating to Mandatory
Benefit Standards: Group, Individual and Conversion Agreements).<ol> 

<nl>(3)<ol> [(4)] Cancellation <nl>
and non-renewal<ol> -- a statement specifying the following grounds for
cancellation <nl>and non-renewal<ol> of coverage and the minimum notice
period that will apply. [The notice period will be as described in subparagraphs
(A)-(C) of this paragraph.] 

(A) Cancellation by an HMO of an enrollee <nl>in a group
<ol>, or if a subscriber, the subscriber and subscriber's enrolled dependents,
in the case of: 

(i) nonpayment of amounts due under the contract, coverage
may be cancelled after not less than 30 days written notice, except no written
notice will be required for failure to pay premium; 

(ii) fraud or <nl>intentional material<ol> misrepresentation,
except as described in paragraph <nl>(14)<ol> [(16)] of this
section, coverage may be cancelled after not less than 15 days written notice; 
(iii) fraud in the use of services or facilities, coverage
may be cancelled after not less than 15 days written notice; 

(iv) failure to meet eligibility requirements <nl>other than
the requirement that the subscriber reside, live, or work in the service area
<ol>, coverage may be cancelled immediately, subject to continuation of
coverage and conversion privilege provisions<nl>, if applicable<ol>; 

(v) misconduct detrimental to safe plan operations and the
delivery of services, coverage may be cancelled immediately; 

(vi) failure of the enrollee and a plan physician to establish
a satisfactory patient-physician relationship if it is shown that the HMO
has, in good faith, provided the enrollee with the opportunity to select an
alternative plan physician, the enrollee is notified in writing at least 30
days in advance that the HMO considers the patient-physician relationship
to be unsatisfactory and specifies the changes that are necessary in order
to avoid termination, and the enrollee has failed to make such changes, coverage
may be cancelled at the end of the 30 days. 

<nl>(vii)<ol> <nl>the subscriber neither resides, lives,
or works in the service area of the HMO, or area for which the HMO is authorized
to do business, but only if coverage is terminated uniformly without regard
to any health status-related factor of enrollees, coverage may be cancelled
after 30 days written notice. Coverage for a child who is the subject of a
medical support order cannot be cancelled solely because the child does not
reside, live or work in the service area.<ol> 

(B) Cancellation by an HMO of a group <nl>requires at least
60 days prior notice to the group except<ol>[,] in the <nl>
cases<ol> [case] of: 

(i) nonpayment of premium, all coverage may be cancelled at
the end of the grace period as described in paragraph <nl>(13)<ol> [
(15)] of this section; 

(ii) fraud on the part of the group, after 15 days written
notice; [or] 

(iii) <nl>for employer groups, violation of participation
or contribution rules, coverage may be cancelled in accordance with sec.26.8(h)
and sec.26.303(j) of this title (relating to Guaranteed Issue; Contribution
and Participation Requirements and Coverage Requirements)<ol> [any
cancellation other than described in clause (i) or (ii) of this subparagraph,
the HMO must give the group at least 60 days prior notice.]; 

<nl>(iv)<ol> <nl>for employer groups, in accordance with
sec.sec.26.16 and 26.309 of this title (relating to Refusal to Renew and
Application to Reenter Small Employer Market and Refusal to Renew and 
Application
to Reenter Large Employer Market), discontinuance of:<ol> 

<nl>(I)<ol> <nl>each of its small or large employer coverages;
or<ol> 

<nl>(II)<ol> <nl>a particular type of small or large employer
coverage.<ol> 

<nl>(v)<ol> <nl>no enrollee resides, lives, or works in
the service area of the HMO, or area for which the HMO is authorized to do
business, but only if the coverage is terminated uniformly without regard
to any health status-related factor of enrollees, coverage may be cancelled
after 30 days written notice.<ol> 

<nl>(vi)<ol> <nl>membership of an employer in an association
ceases, and if coverage is terminated uniformly without regard to the health
status of a covered enrollee, coverage may be cancelled after 30 days written
notice.<ol> 

(C) Cancellation by a group or individual contract holder
in the case of a material change by the HMO to any provisions required to
be disclosed to contract holders or enrollees pursuant to this chapter or
other law, the contract may be canceled after not less than 30 days written
notice to the HMO. 

<nl>(D)<ol> <nl>Cancellation by an HMO of an individual
contract in the case of: <ol>

<nl>(i)<ol> <nl>nonpayment of premiums in accordance with
the terms of the contract, including any timeliness provisions, may be cancelled
without written notice, subject to paragraph (13) of this section.<ol> 
<nl>(ii)<ol> <nl>fraud or intentional material misrepresentation,
except as described in paragraph (14) of this section, coverage may be cancelled
after not less than 15 days written notice.<ol> 

<nl>(iii)<ol> <nl>fraud in the use of services or facilities,
coverage may be cancelled after not less than 15 days written notice.<ol> 
<nl>(iv)<ol> <nl>the subscriber neither resides, lives,
or works in the service area of the HMO, or area for which the HMO is authorized
to do business, but only if coverage is terminated uniformly without regard
to any health status-related factor of enrollees, coverage may be cancelled
after 30 days written notice. Coverage for a child who is the subject of a
medial support order cannot be cancelled solely because the child does not
reside, live or work in the service area.<ol> 

<nl>(v)<ol> <nl>termination by discontinuance of a particular
type of individual coverage by the HMO in that service area, but only if 
coverage
is discontinued uniformly without regard to health status-related factors
of enrollees and dependents of enrollees who may become eligible for coverage,
coverage may be cancelled after 90 days written notice, in which case the
HMO must offer to each enrollee on a guaranteed-issue basis any other individual
basic health care coverage offered by the HMO in that service area.<ol> 
<nl>(vi)<ol> <nl>termination by discontinuance of all
individual basic health care coverage by the HMO in that service area, but
only if coverage is discontinued uniformly without regard to health status-
related
factors of enrollees and dependents of enrollees who may become eligible for
coverage, coverage may be cancelled after 180 days written notice to the 
commissioner
and the enrollees, in which case the HMO may not re-enter the individual market
in that service area for five years beginning on the date of discontinuance
at the last coverage not renewed.<ol>

<nl>(4)<ol> [(5)] Claim <nl>
payment<ol> [filing] procedure -- a provision that sets forth
the procedure for <nl>paying<ol> [filing] claims, including[
:] <nl>any time frame for payment of claims which must be in accordance
with the Insurance Code Articles 21.55 and 20A.09(j) and the applicable rules.
<ol> 

[(A)] any required notice to the
HMO of a claim;] 

[(B)] how, when, and where to
obtain claims forms, if required;] 

[(C)] requirements for filing
proper proofs of loss;] 

[(D)] any time limit for payment
of claims which must be in accordance with the Texas Insurance Code, Article
21.55 and Article 20A.09(i);] 

[(E)] notice of any requirement
for arbitration of disputed claims.] 

<nl>(5)<ol> [(6)] Complaint<nl> and
appeal procedures<ol> [procedure] -- a description of the HMO's <nl>
complaint and appeal process available to complainants<ol> [method
for resolving enrollee complaints, including the address, phone number to
which complaints must be directed, and toll free telephone number required
by Article 21.71, where applicable; and notice of time limits, appeal 
procedures,
and any requirement for arbitration].

[(7)] [Conversion privilege -- group
and non-group agreements and group certificates for an HMO must contain a
conversion privilege which provides that, upon termination of eligibility
for membership, each enrollee who resides in the service area has the right
to convert within 31 days to a non-group agreement issued by the HMO without
presenting evidence of insurability. No conversion privilege is required when
the entire group withdraws from the HMO or is cancelled by the HMO or for
any member whose coverage is cancelled pursuant to paragraph (4)(A)(i)-(iii),
(v), or (vi) of this section or for any enrollee covered under a Medicare
risk or Medicare cost contract.] 

<nl>(6)<ol> <nl>Continuation of coverage -- group
agreements must contain a provision providing for mandatory continuation of
coverage for enrollees who were continuously covered under a group certificate
for three months prior to termination of the group coverage, or newborn or
newly adopted children of enrollees with three months prior continuous coverage,
that is no less favorable than provided by the Insurance Code Article 20A.09(k).
An enrollee shall have the option to continue coverage as provided for by
the Insurance Code Article 20A.09(k), upon completion of any continuation
of coverage provided under The Consolidated Omnibus Budget Reconciliation
Act of 1985 (COBRA) (Public Law Number 99-272, 100 stat. 222) and any amendments
thereto. A dependent, upon completion of any continuation of coverage provided
under the Insurance Code Article 3.51-6 sec.3B, shall have the privilege
to continue coverage for the 6 months prescribed by the Insurance Code Article
20A.09(k). The mandatory continuation privilege and conversion option, if
elected to be offered, must be offered to the enrollee not less than 30 days
prior to the expiration of the COBRA or Article 3.51-6 sec.3B continuation
coverage period. Not less than 30 days before the end of the six months after
the date an enrollee has elected continuation under Article 20A.09(k), a basic
service HMO shall notify the enrollee that he/she may be eligible for coverage
under the Texas Health Insurance Risk Pool as provided under the Insurance
Code Article 3.77, and shall provide the address and toll-free number of the
pool.<ol>

[(8)] [Continuation of coverage for
certain dependents -- a provision providing for continuation of coverage for
certain dependents which is no less favorable than provided for by the Insurance
Code, Article 3.51-6, sec.3B.]

<nl>(7)<ol> [(9)] Definitions -- a provision
defining any words in the evidence of coverage which have other than the usual
meaning. Definitions must be in alphabetical order.

<nl>(8)<ol> [(10)] Effective date -- a
statement of the effective date requirements of various kinds of enrollees.
<nl>(9)<ol> [(11)] Eligibility -- a statement
of the eligibility requirements for membership, including:

(A) that the subscriber must <nl>reside,<ol> live <nl>
or work<ol> in the service area and the [permanent] legal residence
of any enrolled dependents must be the same as the subscriber, or the subscriber
must <nl>reside,<ol> live <nl>or work<ol> in the service area and the
residence of any enrolled dependents must be:

(i) in the service area with the person having temporary or
permanent conservatorship or guardianship of such dependents, <nl>including
adoptees or children that enrollees are seeking to adopt,<ol> where the
subscriber has legal responsibility for the health care of such dependents;[
or]

(ii) in the service area under other circumstances where the
subscriber is legally responsible for the health care of such dependents;[
or] (iii) in the service area with the subscriber's spouse; <nl>or
<ol>

<nl>(iv)<ol> <nl>anywhere in the United States for a
covered child whose coverage under a plan is required by a medical support
order.<ol>

(B) the conditions under which dependent enrollees may be
added to those originally covered; 

(C) any limiting age for subscriber and dependents[,
including effects of Medicare eligibility];

(D) a clear statement regarding the coverage of newborn children.
No evidence of coverage may contain any provision excluding or limiting coverage
for a newborn child of the subscriber of the subscriber's group. Congenital
defects must be treated the same as any other illness or injury for which
coverage is provided. The HMO may require that the subscriber notify the HMO
during the initial 31 days after the birth of the child and pay any premium
required to continue coverage for the newborn child. <nl>An HMO shall not
require that a newborn child receive health care services only from network
physicians or providers during the initial 31 days after the birth if the
newborn child is:<ol>

<nl>(i)<ol> <nl>born outside the HMO service area due
to an emergency, or<ol>

<nl>(ii)<ol> <nl>born in a non-network facility to a mother
who does not have HMO coverage.<ol>

(E) a clear statement regarding the coverage of the subscriber's
grandchildren under the conditions under which such coverage is required by
the [Texas] Insurance Code[,] Article 3.70-2, subsection
(L).

<nl>(10)<ol> [(12)] Emergency services
-- a description of how to obtain services in [a life-threatening and
a non-life-threatening] emergency <nl>situations<ol> [situation
] including:

(A) any requirements that the HMO be contacted before the
enrollee obtains care; 

(B) what to do in case of an emergency occurring outside or
inside the service area;

(C) a statement of any <nl>restrictions<ol> [restriction
] or limitations on out-of-area services;[.]

<nl>(D)<ol> <nl>a statement that the HMO will provide
for any medical screening examination or other evaluation required by state
or federal law that is necessary to determine whether an emergency medical
condition exists in a hospital emergency facility or comparable facility;
<ol>

<nl>(E)<ol> <nl>a statement that necessary emergency care
services will be provided, including the treatment and stabilization of an
emergency medical condition; and<ol>

<nl>(F)<ol> <nl>a statement that where stabilization of
an emergency condition originated in a hospital emergency facility or comparable
facility, as defined in subparagraph (G) of this paragraph, treatment subject
to such stabilization shall be provided to enrollees as approved by the HMO,
provided that the HMO is required to approve or deny coverage of 
poststabilization
care as requested by a treating physician or provider. Approval or denial
of such treatment shall be made within the time appropriate to the circumstances
relating to the delivery of the services and the condition of the patient,
but in no case is to exceed one hour from the time of the request.<ol>

<nl>(G)<ol> <nl>For purposes of this paragraph, "comparable
facility" includes the following:<ol>

<nl>(i)<ol> <nl>any stationary or mobile facility, including,
but not limited to, Level V Trauma Facilities and Rural Health Clinics which
have licensed and/or certified personnel and equipment to provide Advanced
Cardiac Life Support (ACLS) consistent with American Heart Association (AHA)
and American Trauma Society (ATS) standards of care;<ol>
<nl>(ii)<ol> <nl>for purposes of emergency care related
to mental illness, a mental health facility that can provide 24-hour residential
and psychiatric services and that is:<ol>

<nl>(I)<ol> <nl>a facility operated by the Texas Department
of Mental Health and Mental Retardation;<ol>

<nl>(II)<ol> <nl>a private mental hospital licensed by
the Texas Department of Health;<ol>

<nl>(III)<ol> <nl>a community center as defined by the
Texas Health and Safety Code, sec.534.001;<ol>

<nl>(IV)<ol> <nl>a facility operated by a community center
or other entity the Texas Department of Mental Health and Mental Retardation
designates to provide mental health services;<ol>

<nl>(V)<ol> <nl>an identifiable part of a general hospital
in which diagnosis, treatment, and care for persons with mental illness is
provided and that is licensed by the Texas Department of Health; or<ol>

<nl>(VI)<ol> <nl>a hospital operated by a federal agency.
<ol>

<nl>(11)<ol> [(13)] Entire
contract, amendments -- a provision stating that the form, applications, if
any, and any attachments constitute the entire contract between the parties
and that, to be valid, any change in the form must be approved by an officer
of the HMO and attached to the affected form and that no agent has the authority
to change the form or waive any of the provisions.

<nl>(12)<ol> [(14)] Exclusions and limitations
-- a provision setting forth any exclusions and limitations on <nl>basic,
limited<ol> [health care services], or [a] single
health care <nl>services<ol> [service, including any exclusion or
limitation of services for pre-existing conditions].

<nl>(13)<ol> [(15)] Grace period -- a
provision for a grace period of at least 30 days for the payment of any premium
falling due after the first premium during which the coverage remains in effect.
A charge may be added to the premium by the HMO for late payment received
within the grace period. If payment is not received within the 30 days, coverage
may be cancelled after the 30th day and the terminated members may be held
liable for the cost of services received during the grace period, if this
requirement is disclosed in the agreement.

<nl>(14)<ol> [(16)] Incontestability:
<nl>(A)<ol> <nl>All statements made by the subscriber
on the enrollment application shall be considered representations and not
warranties. The statements are considered to be truthful and are made to
the best of the subscriber's knowledge and belief. A statement may not be
used in a contest to void, cancel or non-renew an enrollee's coverage or reduce
benefits unless:<ol>

<nl>(i)<ol> <nl>it is in a written enrollment application
signed by the subscriber; and<ol>

<nl>(ii)<ol> <nl>a signed copy of the enrollment application
is or has been furnished to the subscriber or the subscriber's personal 
representative.
<ol>

<nl>(B)<ol> <nl>During the first two years of enrollment,
an individual contract may only be contested because of a material misstatement
made on the enrollment application. A group contract or certificate may only
be contested because of a material misstatement. For small employer coverage,
the misstatement shall be other than a misstatement related to health status.
<ol>

<nl>(C)<ol> <nl>After coverage has been in force for two
years, only an intentional fraudulent misstatement may be used to void coverage.
<ol>

<nl>(D)<ol> <nl>For a group contract or certificate, the
HMO may increase its premium to the appropriate level if the HMO determines
that the subscriber made a material misstatement of health status on the 
application.
The HMO must provide the contract holder 31 days prior written notice of
any premium rate change.<ol> [in the absence of fraud, all statements
made by a subscriber are considered representations and not warranties. During
the first two years, coverage can be voided for material misrepresentation
contained in a written application. After two years, coverage can be voided
only in the event of a fraudulent misstatement contained in the written 
application.
A copy of the written application must have been furnished to the subscriber
if the terms of the application or enrollment form are to be applied].
<nl>(15)<ol> [(17)] Out-of-network
services -- Each contract between an HMO and a contract holder must provide
that if medically necessary covered services are not available through network
physicians or providers, the HMO must, upon the request of a network physician
or provider, within <nl>the time appropriate to the circumstances relating
to the delivery of the services and the condition of the patient, but in no
event to exceed five business days after receipt of reasonably requested 
documentation,
<ol> [a reasonable time period], allow <nl>a<ol> referral
to a non-network physician or provider and shall fully reimburse the non-network
provider at the usual and customary or an agreed upon rate. <nl>For purposes
of determining whether medically necessary covered services are available
through network physicians or providers, the HMO's entire network, rather
than limited provider networks within the HMO delivery network, shall be 
offered.
The enrollee shall not be required to change his or her primary care physician
or specialist providers to receive medically necessary covered services that
are not available within the limited provider network.<ol> Each contract
must further provide for a review by a specialist of the same or similar 
specialty
as the type of physician or provider to whom a referral is requested before
the HMO may deny a referral.

<nl>(16)<ol> [(18)] Schedule of charges
-- A statement that discloses the HMO's right to change the rate charged with
30 days written notice pursuant to the [Texas] Insurance Code[
,] Article 3.51-10.

<nl>(17)<ol> [(19)] Service area -- <nl>
A description and a map of the service area, with key and scale, which shall
identify the county, or counties, or portions thereof, to be served<ol>
[a map or clear description of the service area] indicating [
major] primary <nl>care physicians, hospitals,<ol> and emergency
care [delivery] sites. [A zip code map and a provider list
may be used to meet this requirement].

<nl>(18)<ol> [(20)] Termination due to
attaining limiting age<nl>--<ol> [:]

[(A) ] [Medicare - A provision describing
the effect of becoming eligible for Medicare on the part of the subscriber
or a dependent; and]

[(B)] [Handicapped child -] A provision
that a child's attainment of a limiting age does not operate to terminate
the coverage of the child while that child is incapable of self-sustaining
employment due to mental retardation or physical disability, and chiefly 
dependent
upon the subscriber for support and maintenance. The subscriber may be required
to furnish proof of such incapacity and dependency within 31 days <nl>of
<ol> [before] the child's attainment of the limiting age and
subsequently as required, but not more frequently than annually following
the child's attainment of such limiting age.

<nl>(19)<ol> <nl>Termination due to student
dependent's change in status -- Each group agreement and certificate that
conditions dependent coverage for a child twenty-one years of age or older
on the child's being a full-time student at an educational institute shall
contain a provision in accordance with the Insurance Code Article 21.24-2.
<ol>

<nl>(20)<ol> [(21)] Conformity with state
law -- A provision that if the agreement or certificate contains any provision
not in conformity with the Act or other applicable laws it shall not be rendered
invalid but shall be construed and applied as if it were in full compliance
with the Act and other applicable laws.

<nl>(21)<ol> [(22)] Conformity with Medicare
supplement minimum standards and long-term care minimum standards -- Each
group<nl>, individual<ol> and <nl>conversion<ol> [non-group]
agreement and group certificate must comply with Chapter 3, Subchapter T of
this title (relating to [Medicare Supplement] Minimum Standards <nl>
for Medicare Supplement Policies<ol>), referred to in this paragraph as
Medicare <nl>supplement<ol> [supplemental] rules, and Chapter
3, Subchapter Y of this title (relating to [Long-term Care] Minimum
Standards <nl>for Benefits for Long-Term Care Coverage Under Individual and
Group Policies<ol>), referred to in this paragraph as long-term care rules,
where applicable. If there is a conflict between the Medicare supplement
rules and/or <nl>the<ol> long-term care rules and the HMO rules, the Medicare
supplement rules or long-term care rules shall govern to the exclusion of
the conflicting provisions of the HMO rules. Where there is no conflict,
both the Medicare supplement rules and/or the long-term care rules and the
HMO rules shall be followed where applicable.

<nl>(22)<ol> <nl>Nonprimary care physician specialist
as primary care physician -- A provision that allows enrollees with chronic,
disabling, or life threatening illnesses to apply to the HMO's medical director
to utilize a nonprimary care physician specialist as a primary care physician
as set forth in the Insurance Code Article 20A.09(g-i).<ol>

<nl>(23)<ol> <nl>Designated obstetrician or gynecologist
-- Individual, conversion and group agreements and certificates, except small
employer plans as defined by the Insurance Code Chapter 26, contain a provision
that permits an enrollee to select, in addition to a primary care physician,
an obstetrician or gynecologist to provide health care services within the
scope of the professional specialty practice of a properly credentialed 
obstetrician
or gynecologist, and subject to the provisions of the Insurance Code Article
21.53D. An enrollee shall not be precluded from selecting a family physician,
internal medicine physician, or other qualified physician to provide obstetrical
or gynecological care.<ol>

<nl>(A)<ol> <nl>An HMO shall permit an enrollee who designates
an obstetrician or gynecologist direct access to the health care services
of the designated obstetrician or gynecologist without a referral by the 
enrollee's
primary care physician or prior authorization or precertification from the
HMO.<ol>

<nl>(B)<ol> <nl>The access to health care services of
an obstetrician or gynecologist, includes, but is not limited to:<ol>

<nl>(i)<ol> <nl>one well-woman examination per year;
<ol>

<nl>(ii)<ol> <nl>care related to pregnancy;<ol>

<nl>(iii)<ol> <nl>care for all active gynecological conditions;
and<ol>

<nl>(iv)<ol> <nl>diagnosis, treatment, and referral to
a specialist within the HMO's network for any disease or condition within
the scope of the designated professional practice of a properly credentialed
obstetrician or gynecologist, including treatment of medical conditions 
concerning
the breasts.<ol>

<nl>(C)<ol> <nl>An HMO may require an enrollee who designates
an obstetrician or gynecologist to designate the obstetrician or gynecologist
from within the limited provider network to which the enrollee's primary care
physician belongs.<ol>

<nl>(D)<ol> <nl>An HMO may require a designated obstetrician
or gynecologist to forward information concerning the medical care of the
patient to the primary care physician. However, failure to provide this 
information
may not result in any penalty, financial or otherwise, being imposed upon
the obstetrician or gynecologist by the HMO if the obstetrician or gynecologist
has made a reasonable and good faith effort to provide the information to
the primary care physician.<ol>

<nl>(E)<ol> <nl>An HMO may limit an enrollee in the plan
to self-referral to one participating obstetrician and gynecologist for both
gynecological care and obstetrical care. Such limitation shall not affect
the right of the enrollee to select the physician who provides that care.
<ol>

<nl>(F)<ol> <nl>An HMO shall include in its enrollment
form a space in which an enrollee may select a designated obstetrician or
gynecologist as required in the Insurance Code Article 20A.11(a). Such enrollee
shall have the right at all times to select or change a designated obstetrician
or gynecologist. An HMO may limit an enrollee's request to change an 
obstetrician
or gynecologist to no more than four changes in any 12-month period.<ol>

<nl>(G)<ol> <nl>An enrollee that elects to receive obstetrical
or gynecological services from a primary care physician (i.e., a family 
physician,
internal medicine physician, or other qualified physician) shall adhere to
the HMO's standard referral protocol when accessing specialty obstetrical
or gynecological services.<ol>

<nl>(24)<ol> <nl>Diagnosis of Alzheimer's disease
-- An HMO that provides for the treatment of Alzheimer's disease must provide
that a clinical diagnosis of Alzheimer's disease by a physician licensed in
this state pursuant to the Insurance Code Article 3.78 shall satisfy any 
requirement
for demonstrable proof of organic disease.<ol>

<nl>(25)<ol> <nl>Drug Formulary changes -- If the
agreement or certificate includes benefits for prescription drugs, a provision
that the drug formulary may change during the contract year. If the drug
formulary is revised to remove a prescription drug that is currently being
utilized by an enrollee under a physician's written order, that prescription
drug must be made available to such enrollee either the period for which that
prescription drug is prescribed by a physician or the remainder of the contract
year, whichever is shorter.<ol>

<nl>(26)<ol> <nl>Inpatient care by non-primary care
physician -- If an HMO or limited provider network provides for an enrollee's
care by a physician other than the enrollee's primary care physician while
the enrollee is in an inpatient facility (e.g., hospital or skilled nursing
facility), a provision that upon admission to the inpatient facility a physician
other than the primary care physician may direct and oversee the enrollee's
care.<ol>

sec.11.507. Additional Mandatory <nl>Contractual
<ol> Provisions: <nl>Conversion and Individual<ol> [Non-group]
Agreements. 
<nl>Conversion and individual<ol> [Non-group] agreements
must contain the following additional mandatory provisions. 

(1) Reinstatement--A provision that clearly sets forth the
requirements for reinstatement and discloses how reinstatement changes or
affects the rights and coverages originally provided. New evidence of 
insurability
may be required. 

(2) Ten days to examine agreement -- A provision stating
that the <nl>contract holder<ol> [person] to whom the <nl>
contract<ol> [policy] is issued shall be permitted to return
the <nl>contract<ol> [policy] within 10 days of receiving it
and to have the premium paid refunded if, after examination of the <nl>contract
<ol>[ non-group agreement], such <nl>contract holder<ol> [
person] is not satisfied with it for any reason. If such <nl>contract
holder<ol> [person], pursuant to such provision, returns the <nl>
contract<ol> [non-group agreement] to the issuing HMO or to the
agent through whom it was purchased, it is considered void from the beginning
and the parties are in the same position as if no <nl>contract<ol> [
policy] had been issued. If services are rendered or claims paid by
the HMO during the 10 days, the subscriber is responsible for repaying the
HMO for such services or claims. 

(3) <nl>Consideration<ol> -- The original consideration <nl>
including premiums, application fee, and any other amounts to be paid<ol>
for coverage must be expressed in the agreement or in the application. 

<nl>(4)<ol> <nl>Continuance of coverage due to change
in marital status -- A provision stating that if a person loses coverage due
to a change in marital status, that person shall be issued coverage in 
accordance
with sec.21.407 of this title (relating to Continuance of Coverage).<ol>
sec.11.508. Mandatory Benefit Standards:
Group, Individual and Conversion Agreements.
(a) Each evidence of coverage providing basic health care
services shall contain the basic health care services defined in sec.11.2(b)(7)
of this title (relating to Definitions), and shall provide such services as
needed and without limitation as to time and cost, unless such limitation
is permitted in this section, including the following: 

(1) Diabetes. A provision for the treatment of diabetes and
conditions associated with diabetes pursuant to the Insurance Code Article
21.53G. 

(2) Diagnostic services. A provision for diagnostic laboratory
and diagnostic and therapeutic radiological services in support of basic health
services including professional fees. 

(3) Home health services. A provision for home health
services provided at an enrollee's home by health care personnel, as prescribed
or directed by the responsible physician or other authority designated by
the HMO. 

(4) Inpatient and outpatient services. A provision for
inpatient and outpatient services, including the following: 

(A) outpatient services, which must include diagnostic services,
treatment services and x-ray services, for patients who are ambulatory and
may be provided in a non-hospital based health care facility or at a hospital; 
(B) inpatient hospital services, which must include but not
be limited to, room and board, general nursing care, meals and special diets
when medically necessary, use of operating room and related facilities, use
of intensive care unit and services, x-ray services, laboratory, and other
diagnostic tests, drugs, medications, biologicals, anesthesia and oxygen 
services,
special duty nursing when medically necessary, radiation therapy, inhalation
therapy, and administration of whole blood and blood plasma; 

(C) outpatient services and inpatient hospital services must
include rehabilitative services and physical, speech and occupational therapy;
if in the opinion of a physician, the provision of those services and therapies
are medically necessary, those services and therapies may not be denied, 
limited,
or terminated if they meet or exceed treatment goals for the enrollee. For
a person that is physically disabled, treatment goals may include maintenance
of functioning or prevention of or slowing of further deterioration. 

(5) Breast cancer and related procedures. A provision
for coverage for breast cancer including the following: 

(A) coverage for mastectomy must provide coverage for breast
reconstruction. Breast reconstruction is subject to the same deductible or
copayment applicable to mastectomy. Breast reconstruction may not be denied
because the mastectomy occurred prior to the effective date of coverage. 
(B) coverage for the inpatient care for an enrollee in accordance
with the Insurance Code Article 21.52G. 

(6) Mental health services. A provision that provides
20 outpatient visits per enrollee per year, as may be necessary and appropriate
for short-term evaluative or crisis intervention mental health services, or
both. 

(7) Mother and newborn child. A provision for maternity
benefits must provide care for an enrollee and her newborn child as described
in the Insurance Code Article 21.53F. 

(8) Physician services. A provision that physician services
(including consultant and referral services by a physician) must be provided
by a licensed physician, or if a service of a physician may also be provided
under applicable state law by other health providers, an HMO may provide the
service through these other health providers. 

(9) Preventive health services. A provision for preventive
health services, which must be made available to enrollees and must include
at least the following: 

(A) a broad range of voluntary family planning services; 
(B) infertility medical services for artificial insemination,
including donor-related services, without limitation as to who may be a donor.
Such infertility medical services include medical treatment to diagnose and/or
treat the medical causes for the infertility of the male or female enrollee.
The infertility medical services appearing in sec.11.512(14) of this title
(relating to Optional Benefits) are not considered to be basic health care
services; 

(C) well-child care from birth; 

(D) periodic health evaluations for adults, including health
risk assessments not less than once every three years for adults and annual
well woman examinations; 

(E) a medically recognized diagnostic examination for the
detection of prostate cancer in accordance with the Insurance Code Article
21.53F; 

(F) annual eye and ear examinations for children through age
17, to determine the need for vision and hearing correction; and 

(G) pediatric and adult immunizations, in accord with accepted
medical practice, including immunizations for each covered child from birth
through the date the child is six years of age, as described in the Insurance
Code Article 21.53F and sec.11.506(2) of this title (relating to Mandatory
Contractual Provisions: Group, Individual and Conversion Agreement and Group
Certificate). An HMO shall not limit benefits to enrollees for immunizations
or vaccinations to circumstances in which an immunization or vaccination is
administered by a pharmacist under a physician's written protocol. 

(10) Transplants. A provision for benefits for kidney
transplants; corneal transplants; liver transplants for children with biliary
atresia and other rare congenital abnormalities; and bone marrow transplants
for aplastic anemia, leukemia, severe combined immunodeficiency disease, and
Wiskott-Aldrich syndrome, when medically necessary, including a provision
for the payment of the donor's expenses. An HMO may not require an enrollee
to travel out-of-state to receive transplant services unless the HMO obtains
the informed consent of the enrollee, which explains the benefits and detriments
of in-state and out-of-state options. 

(b) The benefits described in subsection (a)(1), (5) and (9)(E)
and (G) of this section do not apply to small employer plans as defined by
the Insurance Code Chapter 26. 

sec.11.509. Additional Mandatory
Benefit Standards:
Group Agreement Only. Group agreements must contain the following additional
mandatory provisions. 

(1) Certificate. Provisions that the contract holder must
be provided with subscriber certificates to be delivered to each subscriber;
that the certificate is a part of the group contract as if fully incorporated
therein; and that any direct conflict between the group agreement and the
certificate will be resolved according to the terms which are most favorable
to the subscriber. If the same form is used as both the group contract and
the certificate, a copy of the group contract must be delivered to each 
subscriber. 
(2) New members. A provision specifying the conditions
under which new members may be added to those originally covered, including
effective date requirements. For coverage issued to employers, a provision
for special enrollment in accordance with 45 C.F.R 146.117 (Health Insurance
Portability and Accessibility Act). 

(3) Chemical dependency. A provision to provide benefits
for the necessary care and treatment of chemical dependency that are not less
favorable than for physical illness generally, subject to the same durational
limits, dollar limits, deductibles and coinsurance factors. Dollar or durational
limits which are less favorable than for physical illness generally may be
set only if such limits are sufficient to provide appropriate care and treatment
under the guidelines and standards adopted under the Insurance Code Article
3.51-9, sec.2A(d), including sec.sec.3.8001 - 3.8022 of this title (relating
to Standards for Reasonable Cost Control and Utilization Review for Chemical
Dependency Treatment Centers). 

(A) Coverage for chemical dependency may be limited to a lifetime
maximum of three separate series of treatment for each covered individual
as described by the Insurance Code Article 3.51-9, sec.2A(b). 

(B) Benefits provided shall be determined as if necessary
care and treatment in a chemical dependency treatment center were care and
treatment in a hospital. 

(4) Osteoporosis. A provision that provides coverage
to a qualified individual as defined in the Insurance Code Article 21.53C
for medically accepted bone mass measurement for the detection of low bone
mass and to determine the person's risk of osteoporosis and fractures associated
with osteoporosis. 

(5) Serious mental illness. Group agreements, except
for contracts issued to small employer plans, must include a provision for
the treatment of serious mental illness, as required in the Insurance Code
Article 3.51-14. Small employer plans must be offered coverage for serious
mental illness as required in the Insurance Code Article 3.51-14. Serious
mental illness benefits are also subject to the provisions of the Insurance
Cod Articles 3.70-2(F) and 3.72. 

(6) Conditions affecting the temporomandibular joint.
Group agreements, except for contracts issued to small employer plans must
include a provision that provides coverage for a condition affecting the 
temporomandibular
joint as required by the Insurance Code Article 21.53A. 

(7) Inability to undergo dental treatment. Group agreements,
except for contracts issued to small employer plans, may not exclude from
coverage under the plan an enrollee who is unable to undergo dental treatment
in an office setting or under local anesthesia due to a documented physical,
mental, or medical reason as determined by the enrollee's physician or the
dentist providing the dental care. This benefit does not require an HMO to
provide dental services if dental services are not otherwise scheduled or
provided as part of the benefits covered by the agreement. 

sec.11.510. Mandatory Offers. 
Group agreements must offer the following provisions:

(1) Coverage for services and benefits on an expense incurred,
service, or prepaid basis for out-patient expenses that may arise from in-vitro
fertilization procedures. Benefits for in-vitro fertilization procedures must
be provided to the same extent as the benefits provided for other pregnancy-
related
procedures under the plan. The offer to make such coverage available is required
only under the conditions set out in the Insurance Code Article 3.51-6, 
sec.3A(e). 
(2) Hospital and medical coverage benefits for the necessary
care and treatment of loss or impairment of speech or hearing that are not
less favorable than for physical illness generally, subject to the same 
durational
limits, dollar limits, deductibles, and copayment factors, pursuant to the
Insurance Code Article 3.70-2(G). 

(3) Benefits for mental and emotional illness and disorders
when confined in a hospital, with corresponding alternative treatment facility
benefits pursuant to the Insurance Code Article 3.70-2 and 3.72, to the extent
that such benefits are not mandated as serious mental illness under 
sec.11.509(5)
of this title (relating to Additional Mandatory Benefit Standards: Group 
Agreement
Only). 

(4) For small employer groups, serious mental health
benefits pursuant to the Insurance Code Article 3.51-14. 

sec.11.511. Optional Provisions. 
Group, individual and conversion certificates may contain optional
provisions, including, but not limited to, the following: 

(1) Coordination of benefits. Group plans may contain a provision
that the value of any benefits or services provided by the HMO may be 
coordinated
with any other type of group insurance plan or coverage under governmental
programs so no more than 100% of eligible expenses incurred is paid. The 
coordination
of benefits provision applies to the plan when an enrollee has health care
coverage under more than one plan. This provision will only apply for the
duration of the enrollee's coverage in a group plan. 

(A) If benefits are covered by more than one plan, any plan
or plans that do not have a coordination of benefits provision are primary. 
(B) Group plans may not coordinate benefits with any type
of individual or conversion plan. 

(C) Requirements of the Insurance Code Article 3.51-6B and
sec.sec.3.3501-3.3511 of this title (relating to Group Coordination of
Benefits) relating to coordination of benefits by insurers should be followed
by HMOs that include a coordination of benefits provision in their plan. 
(2) Subrogation. A provision that the HMO receives
any rights of recovery allowed by Texas law acquired by an enrollee against
any person or organization for negligence or any willful act resulting in
illness or injury covered by HMO benefits, but only to the extent of the cost
to the HMO of providing such covered services. Upon receiving such services
from the HMO, the enrollee is considered to have assigned such rights of 
recovery
to the HMO and to have agreed to give the HMO any reasonable help required
to secure the recovery. The provision may include a statement that the HMO
may recover its share of attorney's fees and court costs only if the HMO aids
in the collection of damages from a third party. 

(3) Sale of substitutes to Workers' Compensation Insurance.
If the HMO chooses to market a product which provides coverage for on-the-job
injuries or illness, it shall comply with sec.5.6302 of this title (relating
to Sale of Substitutes to Workers' Compensation Insurance). 

(4) Conversion privilege. Group agreements and certificates
for an HMO may, at the HMO's option, contain a conversion privilege. If the
HMO elects to offer a conversion privilege, it must provide that, upon 
termination
of coverage, each enrollee who resides, lives or works in the service area
who has been covered under the group contract for a period of at least three
months, or in the case of a court-ordered dependent, lives outside the service
area, but within the United States, has the right to convert within 31 days
to a conversion agreement without presenting evidence of insurability. If
a basic service HMO does not offer each enrollee a conversion contract, the
HMO shall provide written notice of the availability of coverage through the
Texas Health Insurance Risk Pool. A single service or limited service HMO
shall offer a conversion contract without requiring evidence of insurability.
Charges for individuals must be in accordance with sec.11.704 of this title
(relating to Charges for Individuals). 

sec.11.512. Optional Benefits. 
An HMO may provide to its enrollees health services that are not included
as basic health care services under sec.11.508 of this title (relating to
Mandatory Benefit Standards; Group Individual and Conversion Agreements).
These health services may be limited as to time and cost. Group, individual
and conversion certificates may contain optional benefits, including but not
limited to: 

(1) corrective appliances and artificial aids; 

(2) cosmetic surgery; 

(3) ambulance services; 

(4) care for military service connected disabilities
for which the enrollee is legally entitled for services and for which facilities
are reasonably available to such enrollee; 

(5) care for conditions that state or local law requires
be treated in a public facility; 

(6) dental services, except for services required for
conditions affecting the temporomandibular joint and inability to undergo
dental treatment as set forth in sec.11.509(6) and (7) of this title (relating
to Additional Mandatory Benefit Standards: Group Agreement Only); 

(7) vision care; 

(8) custodial or domiciliary care; 

(9) experimental medical, surgical, or other experimental
health care procedures, unless approved as a basic health care service by
the policymaking body of the HMO; 

(10) personal or comfort items and private rooms, unless
medically necessary during inpatient hospitalization; 

(11) whole blood and blood plasma; 

(12) durable medical equipment for home use (such as
wheel chairs, surgical beds, respirators, dialysis machines); 

(13) infertility medical services, including gamete intrafallopian
transfer (GIFT), zygote intrafallopian transfer (ZIFT), and outpatient 
infertility
drugs; 

(14) reversal of voluntary sterilization; and

(15) prescribed drugs and medicines incident to outpatient
care.

sec.11.513. Additional Information
May be Required. 
The commissioner is authorized to require the submission of any other
relevant information deemed necessary in determining whether to approve or
disapprove a filing made pursuant to 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 June
15, 1998.
TRD-9809530
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER H. Schedule of Charges
28 TAC sec.sec.11.701, 11.706, 11.707
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.701. Must Be Filed Prior to Use. 
(a) No <nl>schedule of charges,<ol> formula or method for
calculating the schedule of charges[ for enrollee coverage], as
defined in sec.11.2(b) of this title (relating to Definitions), may be used
until a copy of such formula or method for calculating the schedule of charges
with [the required] supporting documentation as <nl>required by
<ol> [defined in] sec.11.703 of this title (relating to Supporting
Documentation) has been filed with the commissioner. 

(b) The schedule of charges <nl>shall include<ol> [
governed by this section includes] all charges made for group<nl>,
conversion<ol> or individual coverage, except <nl>for<ol> [that
] any fee collected as an <nl>administrative-service<ol> [administrative
service] only fee, whereby the HMO assumes no risk[, shall not
be governed by this section]. 

(c) Each filing must be accompanied by <nl>the<ol> HMO <nl>
reconciliation of benefits to schedule of charges form<ol> [Form #6
(SC#1) as referenced in sec.11.1001 of this title (relating to Related Forms
Adopted by Reference)]. This information may be substituted in the form
of a computer printout. 

sec.11.706. [Factors to be Considered in]
Determination of Reasonability of Rates.
(a) A rate is <nl>presumed<ol> inadequate if, after consideration
of all factors including the financial support of a parent company or sponsoring
organization, the rate anticipated results in lower per-member-per-month revenue
than required for the HMO to reach <nl>and maintain<ol> financial break-even
within <nl>three<ol> [five] years of the commencement of operations
[or subsequently jeopardize the financial viability of the HMO]. <nl>
For HMOs that have been in operation for at least three years, any rate 
deficiency
must be recorded in the form of a deficiency reserve liability. The deficiency
reserve liability amount shall be derived from the difference between the
proposed rate to be charged and the rate that would need to be charged to
cover all expenses without consideration of any parental or sponsoring 
organization's
support. The assumptions for enrollment and expenses shall be based upon the
current experience of the HMO. A deficiency reserve liability must be funded
with cash or other admitted assets in an amount equal to or greater than the
deficiency reserve liability. Such funding must take place prior to 
implementation
of the proposed rates. Any HMO required to establish a deficiency reserve
liability under this subsection shall provide a plan whereby the rates actually
charged by the HMO would be increased over a 24-month period to a level adequate
to support benefits and the expenses of the HMO. Such a plan and any deficiency
reserve liability must be developed and certified annually as actuarially
sound by a qualified actuary in conjunction with the actuarial certification
regulation under sec.11.702 of this title (relating to Actuarial Certification).
An HMO may apply to the commissioner for relief from the requirement to 
establish
and fund a deficiency reserve by specifying unusual or extraordinary 
circumstances
by which the above provisions are not appropriate. In no circumstances shall
such relief result in the lowering of existing rates.<ol> 

(b) The following factors shall be considered in any review
of rates under the [Texas] Insurance Code[,] Article
20A.09: 

(1)-(6) (No change.) 

(c) (No change.) 

sec.11.707. Subsequent Review of the Formula or Method
for Calculating the Schedule of Charges. 
If the formula or method for calculating the schedule of charges<nl>
, or the resulting rates<ol> is to be continued beyond a one-year period,
the HMO must file with the commissioner, by each anniversary of the effective
date of <nl>the<ol> [that] original filing, an actuarial statement
stating that the previously filed formula or <nl>method<ol> [methodology
] has been consistently applied<nl>,<ol> and <nl>that<ol> the
rates charged have proven and are expected to continue to be adequate, not
excessive, nor unfairly discriminatory. This statement must be accompanied
by <nl>reconciliation of benefits to schedule of charges form<ol> [
HMO Form #6].

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 June
15, 1998.
TRD-9809531
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER I. Financial Requirements
28 TAC sec.sec.11.801-11.804, 11.806, 11.808
The amendments and new sections are proposed under the Insurance
Code, Chapter 20A, as amended by the 75th Legislature in Senate Bill 385,
and Article 1.03A. Insurance Code, Article 20A.02(b) provides that basic health
care services mean health care services which the commissioner determines
an enrolled population might reasonably require in order to be maintained
in good health, including, at a minimum, services designated as basic health
services under Section 1302, Title XIII, Public Health Service Act (42 U.S.C.,
Section 300e - 1(1). Insurance Code, Article 20A.22(a) provides that the 
commissioner
may promulgate rules and regulations as are necessary and proper to carry
out the provisions of the HMO Act (Insurance Code, Chapter 20A). Article 
20A.22(b)
provides that the commissioner is specifically authorized to promulgate rules
to ensure that enrollees have adequate access to health care services and
to establish minimum physician/patient ratios, mileage requirements for primary
and specialty care, maximum travel times, and maximum waiting times for 
obtaining
appointments. Article 20A.04(b) provides that the commissioner may promulgate
such reasonable rules and regulations as he deems necessary to the proper
administration of the HMO Act to require a health maintenance organization,
subsequent to receiving its certificate of authority, to submit the 
modifications
or amendments to the operations or documents submitted upon application for
a certificate of authority to the commissioner, either for his approval or
for information only, prior to the effectuation of the modification or 
amendment,
or to require the health maintenance organization to indicate the modifications
to the commissioner at the time of the next site visit or examination. Article
20A.05(b) sets forth the determinations the commissioner must make prior to
granting a certificate of authority to an HMO. Article 20A.37 provides that
the commissioner by rule may establish minimum standards and requirements
for ongoing internal quality assurance programs for health maintenance 
organizations,
including, but not limited to, standards for assuring availability, 
accessibility,
quality, and continuity of care. Article 1.03A provides that the Commissioner
of Insurance may adopt rules necessary for the conduct and execution of the
duties and functions of the Texas Department of Insurance only as authorized
by a statute. 

The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.801. Capitalization. 
(a) At the time of the initial qualifying examination, an
applicant for a certificate of authority to operate <nl>an HMO<ol> [
a health maintenance organization] must have <nl>acceptable and unencumbered
<ol> assets in excess of all of its liabilities equal to or greater than
the required minimum surplus. 

(b) (No change.)

(c) After the qualifying examination, the applicant must maintain
unencumbered assets in excess of all of its liabilities by an amount equal
to or greater than the minimum surplus requirement until it receives its 
certificate
of authority, and thereafter, the HMO must meet the minimum surplus requirements
of the Insurance Code[,] Article 20A.13, by maintaining acceptable
unencumbered assets in excess of its uncovered liabilities equal to or greater
than the minimum surplus requirement. A liability may not be considered a
covered liability until the applicant receives its certificate of authority
and becomes a <nl>licensed<ol> [certified] HMO. 

(d) [Notwithstanding the previous provision of this section,
existing single health care service plan HMOs which are actively conducting
business as a single health care service plan HMO and are applying for a 
certificate
of authority in accordance with House Bill 1584, sec.10, shall be required
only to maintain the minimum surplus requirement net of uncovered liabilities
and may hold assets allowed existing certified HMOs at the time of the 
qualifying
examination. House Bill 1584, sec.10, 69th Legislature, 1985, is effective
August 26, 1985; it states "Not later than 120 days from the effective date
of this Act, each existing single health care service plan shall submit an
application for a certificate of authority. Each applicant may continue to
operate until the commissioner of insurance acts on the application. If an
application is denied, the applicant shall be treated as a single health care
service plan whose certificate of authority has been revoked."]

[(e)] Notwithstanding [the provision of] <nl>
subsections<ol> [subsection] <nl>(b) and (c)<ol> of this section,
[existing] foreign <nl>HMOs<ol> [health maintenance organizations
] seeking admission to this state which are actively conducting business
in other states<nl>, in addition to approved non-profit health corporations
authorized under the Insurance Code Article 21.52F,<ol> shall be required<nl>
, at a minimum, to comply with the Insurance Code Article 20A.13(j)<ol>
[to maintain only the minimum surplus requirement net of uncovered liabilities
and may hold assets allowed existing certified HMOs] at the time of
the qualifying examination.

sec.11.802. Statutory Deposit Requirements. 
(a) Statutory deposits made pursuant to the Insurance Code
Article 20A.13 must consist of funds in the form of either legal tender of
the United States, certificates of deposit, or United States Treasury bonds
or notes. 

(1) Certificates of deposit must be issued by a solvent, federally
insured and Texas domiciled bank. However, the amount of total deposits by
the HMO in the same depository bank may not exceed the greater of: 

(A) the limits of federal insurance coverage pertaining to
such deposits; or 

(B) 10% of the issuing depository bank's net worth, provided
that such net worth is in excess of $25 million. 

(2) United States Treasury bonds or notes must be
obtained through a Texas domiciled bank which is subject to supervision and
examination by the Board of Governors of the Federal Reserve System and must
be valued at the lesser of current fair market value or amortized cost. 

(b) Before the issuance of the certificate of authority, the
HMO must submit funds as described in subsection (a) of this section in the
amount required by the Insurance Code Article 20A.13, with four completed
originals of security deposit report form number 120, one original pledge
document on bank letterhead, and the applicable fees pursuant to sec.7.1301(d)
of this title (relating to Regulatory Fees) to the bond and securities officer
of the department. 

(c) Each HMO must annually determine the amount of statutory
deposit required as specified in the Insurance Code Article 20A.13 and deposit
any required additional funds by March 15 in the manner set forth as follows: 
(1) Any additional statutory deposit required shall be in
funds as described in subsection (a) of this section and shall be accompanied
by four completed originals of security deposit report form 120 and the 
applicable
fee. 

(2) If any statutory deposit is to be released, such
request for release must be accompanied by four completed originals of 
withdrawal
form number 121 and the applicable fee. If the commissioner directs such a
release, the bond and securities officer of the department shall execute a
release of any pledge and the funds shall be returned to the HMO. 

(d) For any substitution of funds, the HMO must submit four
completed originals of security deposit report form number 120, four completed
originals of withdrawal form number 121, one original pledge document on bank
letterhead, and the applicable fees. 

(e) If the HMO wishes to request a release of all or part
and/or a waiver of the statutory deposit requirements as permitted by the
Insurance Code Article 20A.13, a written request must be submitted to the
commissioner no less than 60 days prior to the March 15 due date. Such request
for any release or waiver must provide adequate information, including the
following, to justify the release: 

(1) Specification of the pertinent provision(s) of the Insurance
Code under which the release or waiver is being requested; 

(2) The amount of the statutory deposit for which a release
or waiver is being requested; 

(3) If a waiver is being requested, the period of time
over which the waiver is requested; 

(4) Supporting documentation that justifies such release
or waiver including: 

(A) Reasons for requesting the release or waiver; 

(B) Discussion as to impact of granting a release and/or waiver
and assurance that the HMO and its enrollees will not be harmed if the release
or waiver is granted; 

(C) Evidence that the HMO has reported net profits for the
previous 12 months; 

(D) Evidence that the HMO's net worth is in a positive position; 
(E) If a request is based upon a guarantee: 

(i) a copy of the guarantee; 

(ii) a copy of the most current financial statements of the
sponsoring organization; 

(iii) disclosure of the number of guarantees that the sponsoring
organization has issued; and 

(iv) disclosure of the dollar amount of all obligations guaranteed
and the amounts reflected as liabilities and the amounts guaranteed that are
not reflected as liabilities in the sponsoring organization's consolidated
financial statements; 

(5) If the request is based on projected uncovered
expenses: 

(A) Projections for the next calendar year which includes
an income statement, a balance sheet, a cash flow statement and enrollment,
including assumptions on which the projections are based; 

(B) An explanation as to why expenses are classified as "covered";
and 

(C) A reconciliation with explanation for any differences
between submitted projections and the previous calendar year's actual 
experience. 
(6) If a release is requested under sections (d)
or (e) of the Insurance Code Article 20A.13: 

(A) Evidence that the dollar amount of uncovered health care
expenses are likely to continue and will not exceed the amount remaining on
deposit; and 

(B) Explanation as to the reasons for the decrease in uncovered
health care expenses from that which was incurred during previous years. 
(7) If the commissioner approves the release or
waiver, the HMO must submit the forms required by subsection (c)(2) of this
section. 

(f) Whenever conditions upon which a waiver were granted change
to the extent that the HMO is no longer able to qualify for the waiver, the
HMO must deposit adequate funds to comply with the requirements of the Insurance
Code Article 20A.13, within 30 days. 

(g) All interest income when due on the statutory deposit
funds may be paid directly to the HMO by the bank. 

sec.11.803. Investments, Loans, and Other Assets. 
The admitted assets of [a] domestic and [a] foreign <nl>
HMOs<ol> [HMO] must comply with the provisions of this section. 
(1) Investment of minimum surplus. <nl>An HMO<ol> [
A health maintenance organization] must maintain assets in an amount
equivalent to its required minimum surplus in accordance with the <nl>Insurance
Code Article 20A.13<ol> [Texas Health Maintenance Organization Act,
sec.13], in the form of: 

(A) <nl>legal tender of the United States or<ol> [
cash and demand deposits, which cash may be in the form of legal tender of
the United States of America,] demand deposits, [or] savings <nl>
deposits<ol> or time deposits, [including certificates of savings and
certificates of deposit,] of the type that are federally insured in
solvent banks and savings and loan associations and branches thereof, which
are organized under the laws of the United States of America or under the
laws of any state of the United States of America, provided that the amount
of the total deposit in any one bank, savings and loan association, or credit
union does not exceed the greater of: 

(i) the amount of federal deposit insurance coverage pertaining
to such deposit; or 

(ii) 10% of the issuing financial institution's net worth,
provided that such net worth is in excess of $25 million; 

(B) United States government bonds, notes, bills, and evidences
of indebtedness or obligations issued by the United States Treasury[
, at the fair market value or discounted purchase price, whichever is less
(C)-(E) (No change.)

(F) shares of mutual funds with the fund having at least $1
million of net assets, doing business under the Investment Company Act of
1940 (15 <nl>U.S.C.<ol> [United States Code] sec.80a-1 et
seq.), provided that such mutual funds invest solely in securities which are
direct obligations of the United States of America or of any agency or 
instrumentality
of the United States of America and that all such investments are guaranteed
by the full faith and credit of the United States of America. 

(2) Investments of excess surplus. An HMO may invest
its excess surplus only in the following: 

(A)-(D) (No change.)

(E) investments issued by insurers or HMOs subject to the
following conditions: 

(i)-(iv) (No change.)

(v) the restrictions of clauses (iii) and (iv) of this subparagraph
shall not apply if the HMO is purchasing 100% of the stock of another HMO
for the purpose of merger, which is anticipated to take place no later than
three months from the purchase date, unless said period is extended by the
commissioner[ of insurance], and the resulting assets of the surviving
HMO meet the requirements set forth in this subchapter within three months
after said merger, unless said period of time is extended by the commissioner[
of insurance]; 

[(vi) the commissioner of insurance
may require to be sold any investment which would otherwise be authorized
under the provisions of this section if the commissioner finds that such 
investment
would cause the investing HMO to operate in a condition which is hazardous
to its enrollees, creditors, or the general public;] 

(F)-(G) (No change.)

(H) shares of mutual funds doing business under the Investment
Company Act of 1940 (15 <nl>U.S.C.<ol> [United States Code]
sec.80a-1, et seq.) and shares in real estate investment trusts as defined
in the Internal Revenue Code of 1954 (25 <nl>U.S.C.<ol> [United States
Code] sec.856), provided that such mutual funds and real estate investment
trusts [must] be solvent with at least $1 million of net assets
as of the date of its latest annual, or more recent, certified audited financial
statement; 

(I) loans by an HMO that are secured by valid first liens
on improved real estate, provided that: 

(i) there is a title insurance policy or attorney's opinion <nl>
evidencing<ol> that the borrower owns the real estate; 

(ii) there is an appraisal of the real estate and the loan
does not exceed 75% of such appraised value; 

(iii) there is an executed note evidencing the loan; 

(iv) there is a recorded deed of trust; [and] 
(v) if any part of the value of buildings is included in the
value of the real estate: 

(I) each such building is insured against [casualty]
loss <nl>by<ol> [in] a company authorized to do business in
Texas or in the state in which the real estate is located; and 

(II) the insurance policy is made payable to the HMO and is
in an amount equal to at least 50% of the value of such building, provided
that such insurance coverage need not exceed the outstanding balance owed
to the HMO when the outstanding balance falls below 50% of the value of such
building; [and] 

<nl>(vi)<ol> [(III)] the commissioner has the
right to obtain <nl>an independent<ol> [his own] appraisal,
at the HMO's expense, of real estate securing any loan; 

(J) loans to individuals secured by collateral, specified
in paragraph (1) of this section and subparagraphs (A)-(D) of this paragraph,
but the amount loaned may not exceed the value of the securities held as 
collateral; 
(K) loans, without limit, whether secured or unsecured <nl>
that are not in default<ol>, to medical and other health care providers
under contract with the HMO for the provision of health care services, but
in no event shall the value of any such loan or loans made under this 
subparagraph
exceed the maker's ability to repay the loan or loans; the maker's ability
to repay the loan or loans shall be determined by allowing only assets that
an HMO may hold to be considered toward determining any excess of assets over
all liabilities of the maker; 

(L) real estate acquired by way of security for loans previously
contracted or for moneys due; all such real property not qualifying under
any other provisions of this section shall be sold and disposed of within
five years after the HMO has acquired title to same unless the time for disposal
is extended by the commissioner; 

(M) investments in improved, income-producing real estate,
the value of which real estate and improvements shall be depreciated cost
or market value <nl>, whichever is less<ol> [as determined by the Insurance
Code[,] Article 1.15, sec.2]; 

(N) additional investments which are not otherwise specified
by this section, provided: 

(i) the amount of any one such investment shall not exceed
10% of the excess surplus of the HMO; and 

(ii) the total amount of investments authorized by this paragraph
shall not exceed the lesser of the HMO's net worth or 50% of the HMO's excess
surplus. 

(3) Valuation. Except where elsewhere specifically
provided, investments<nl>,<ol> [and] loans <nl>and assets<ol>
are valued in accordance with the <nl>Purposes and Procedures of the Securities
Valuation Office of the<ol> National Association of Insurance <nl>Commissioners
as it applies to entities not required to maintain an asset valuation reserve
<ol> [Commissioners' Valuation Standards]. <nl>If no such standard
applies, then the valuation shall be their liquidating value.<ol> 

(4) Evidence of ownership. A domestic HMO may own certificated
and uncertificated securities, as evidenced by book entry of banks and 
securities
brokerage limited as follows: 

(A) <nl>banks<ol> [Banks] must be members of
the Federal Deposit Insurance Corporation. 

(B) <nl>securities<ol> [Securities] brokerage
firms are incorporated securities brokers and dealers that: 

(i) are subject to the regulations of the Securities and Exchange
Commission of the United States of America; 

(ii) are members of the Securities Investor Protection Corporation;
and 

(iii) have a tangible net worth of not less than $100 million. 
<nl>(C)<ol> <nl>securities held by a bank or securities
brokerage firm must be held in accordance with a custodial agreement entered
into between the bank or securities brokerage firm and the HMO.<ol> 

<nl>(D)<ol> [(C)] Amounts invested in uncertificated
securities through a securities brokerage firm may not exceed that amount
of insurance protection provided by the Securities Investor Protection 
Corporation
except that additional amounts may be invested whenever a securities brokerage
firm has in effect additional coverage through an excess securities bond issued
by an insurance company licensed in Texas and having a statutory net worth
of at least 30 times the face amount of the excess securities bond, but in
no event having a statutory net worth of less than $100 million according
to its last filed annual statement, and then the limit on the amount that
may be invested in uncertificated securities through one securities brokerage
firm shall be extended to the total amount covered by the Securities Investor
Protection Corporation and the excess securities bond, combined. The HMO shall
be responsible for maintaining in its files a copy of the excess securities
bond with a letter or copy of a letter furnished by its securities brokerage
firm from the insurance company verifying the date through which premium is
paid that the excess securities bond is in effect. The letter shall also reflect
the excess bond number, face amount, company, and address of insuring company
and the name and title of <nl>the individual<ol> [person] signing
the letter. Whenever the date is exceeded, the HMO shall be responsible for
obtaining a similar letter updating the information. Certificated and 
uncertificated
securities may be evidenced by transaction records such as receipts, invoices,
and statements issued by banks and securities brokerage firms evidencing that
the records of the bank or securities brokerage firm reflect the HMO's or
its nominee's ownership of said securities. In addition, certificated securities
shall be maintained in the possession of the HMO as its nominee, subject to
obtaining any required approval under the Insurance Code[,] Article
1.28, if located outside the State of Texas, and registered securities shall
be in the name of the HMO or its nominee. An HMO may designate a depository
where certificated securities are to be held, provided access to said securities
is under the control of officers and employees of the HMO or its nominee as
designated by the HMO's board of directors. Certificated securities purchased
in transit from the vendor need not be in the HMO's or nominee's possession
within a period of 45 days from the purchase date. Certificated securities
in transit for the purpose of sale within 45 days of shipping date also are
exempted from the requirement that they be in the possession of the HMO or
its nominee. 

(5) Other assets. An HMO may have assets beyond
those required to be held for its minimum surplus which are either necessary
for its operations or invested as permitted by this section. Assets an HMO
may find necessary in its operations include, but are not limited to, the
following: 

(A) uncollected premiums or subscriptions with an adequate
provision for uncollectible premiums or subscriptions; 

(B) advances <nl>of capitation or other fees expected to
be paid for the next month<ol> to medical [, health care,] and
other <nl>health care<ol> service providers under contract with the HMO;
[the amount advanced may not exceed the amount expected to be payable
to the provider under contract for services to be rendered], provided
that no termination of the contract may take place prior to the end of the
period for which advances were paid; 

(C) equipment, vehicles, furniture, office equipment, and
other labor saving devices used both directly and indirectly for the provision
of medical services and the administration of the HMO, provided a detailed
inventory is maintained with each item marked by an identifying number and
a proof of cost is maintained, the items being required to be valued at 
depreciated
costs, depreciation being based on a method permitted in accordance with 
generally
accepted accounting principles; 

(D) inventories of necessary supplies, [but] it <nl>
being<ol> [shall be] the duty of the HMO to sufficiently prove
the value of such inventories; and 

(E) real estate and leasehold estates, including buildings
and improvements, and leasehold improvements on rented space, for the 
accommodation
of the HMO's current or expected business operations used in the provision
or support of health care services, including space for rent to any health
care provider under contract with the HMO which property shall be used in
the provision of health care services to members of the HMO by that provider. 
<nl>(6)<ol> <nl>Sale of investment. Section
7.4 of this title (relating to Admissible Assets) shall apply to investments
not specifically allowed under this subchapter. The commissioner may require
any investment to be sold which would otherwise be authorized under the 
provisions
of this section if the commissioner finds that such investment would cause
the investing HMO to operate in a condition which is hazardous to its enrollees,
creditors, or the general public.<ol> 

sec.11.804. Investment Management by Affiliate Companies. 
Subject to compliance with the provisions of the HMO Act, as amended,
nothing in this section shall prevent a domestic HMO, which is a member of
an HMO holding company system with assets in an aggregate amount in excess
of $1 billion and a tangible net worth of at least $100 million and having
affiliates licensed in this state, from authorizing an affiliated corporation[
,] which, if other than the ultimate parent holding company, is solvent
with at least $10 million tangible net worth and its performance and obligations
under a written agreement with the HMO <nl>are<ol> [is] guaranteed
by the ultimate holding company, to invest, hold and administer as agent or
nominee on behalf of such domestic HMO those bonds, notes, or other evidences
of indebtedness and repurchase agreements that are authorized and permissible
investments under the HMO Act and rules promulgated thereunder, and which
mature within one year of the date of acquisition thereof; provided that such
securities are invested, held, and administered pursuant to a written agreement
authorized by the board of directors of the HMO or an authorized committee
thereof, and which is submitted to the commissioner for prior approval, such
approval to be based upon satisfactory evidence that such agreement will 
facilitate
the operations of the domestic HMO and will not unreasonably diminish the
service to or protection of the domestic HMO's enrollees within this state.
The agreement must comply with the provisions of paragraphs (1) - (8) of this
section. 

(1) The affiliate shall specify in which office location it
shall maintain records adequate to identify and verify the securities (or
proportionate interest therein) belonging to the HMO organization. 

(2) The affiliate shall allow the commissioner or the
commissioner's designee to examine all records relating to those securities
held subject to the agreement and shall agree to furnish these records at
the principal office of the HMO within 10 business days of a request by the
commissioner [of insurance] or any one of his <nl>or her<ol>
commissioned examiners. 

(3) The HMO may authorize the affiliate to: 

(4) The HMO shall report annually, if required by the
commissioner, to the <nl>department<ol> [State Board of Insurance
(A) all investments with the affiliate pursuant to this section; 
(B) the market value of all securities held by the affiliate
on behalf of the HMO as of December 31 of the year next preceding (or other
date as the commissioner may require); and 

(C) the financial condition of the affiliate which may include,
at the commissioner's discretion, balance sheets, income statements, and 
supporting
schedules with an opinion as to those financial statements by an independent
certified public accountant for the most recent fiscal year. 

(5) All of such investments and transactions between
or among affiliates and the HMO must otherwise comply with all other applicable
provisions of the HMO Act, as amended, or applicable rules adopted thereunder
by the <nl>department<ol> [State Board of Insurance]. 

(6) If the HMO or the affiliate does not comply with
the HMO Act, as amended, and this chapter promulgated thereunder, or does
not comply with the written agreement governing such investing, holding, and
administering of securities, then the commissioner's approval will be withdrawn
after reasonable notice and ample opportunity to cure the noncompliance, and
any further desire to continue such arrangement must be submitted for approval. 
(7) At the instance of withdrawal of approval of the
agreement, the HMO shall undertake to obtain, and the affiliated corporation
shall undertake to return, those investments or funds resulting from the sale
or maturity of those investments [of] which the affiliated corporation
invested, held, and administered on behalf of the HMO and which return shall
be accomplished within 90 days unless: 

(A) the commissioner determines that such period of time creates
a hazard to the public, in which case the commissioner may designate that
the period may not exceed 30 days from the date of determination; or 

(B) the commissioner extends the period of time <nl>with
regard<ol> [in regards] to specific investments upon request
by the HMO and affiliated corporation, but in no event to exceed one year
from the date of the withdrawal of approval. 

(8) <nl>The affiliate or affiliated corporation
must be<ol> [As used herein, the term "affiliated corporation" means
a corporation or other legal entity:]

[(A)] [that is] organized under the
laws of one of the states of the United States of America or of the District
of Columbia<nl>.<ol>[; and] 

[(B) that is a wholly owned subsidiary of
a domestic HMO; is under common control with such HMO, such that the affiliated
corporation and the HMO are wholly owned subsidiaries, either direct or 
indirect,
of a controlling corporation; or is the corporation that wholly owns, directly
or indirectly, the HMO.]

sec.11.806. Liabilities. 
(a) Each HMO must establish and maintain records identifying
and supporting each [and every] liability the HMO incurs. Each
liability incurred by an HMO shall be reported on <nl>all<ol> [each
] financial <nl>statements<ol> [statement] filed with
the department[, including, as applicable, reports filed pursuant to
sec.11.304 of this title (relating to Annual Reports, Other Reports and
Taxes)]. A liability shall be incurred from the date a service was performed,
a product was delivered, <nl>a<ol> [or the] title was transferred,
or a contractual obligation entered into for an amount that is specified and
unconditionally owed. Each HMO must segregate its liabilities <nl>into 
classification
of<ol> [in accordance to whether a liability is classified as]
"covered" or "uncovered." Agreements to loan money or to make future capital
or surplus contributions do not, in themselves, cause liabilities to be covered.
Any guarantee of future contributions to surplus which are directed and based
on the payment of a debt will allow that debt to be reflected as a covered
liability. A liability, for which provision is made other than by the assets
of the HMO, may qualify as a covered liability if the amount owed: 

(1) is based on a provider contract with a hold-harmless clause
as provided in sec.11.1102 of this title (relating to Hold-Harmless Clause); 
(2) is subordinated in writing to the uncovered health
care liabilities of the HMO; or 

(3) is unconditionally guaranteed <nl>and the guarantee
is without monetary limit, as specified in sec.11.808 (relating to Guarantee
From a Sponsoring Organization),<ol> by a sponsoring organization which
has a tangible net worth of at least <nl>$10<ol> [$5] million
in excess of all amounts that <nl>the<ol> sponsoring organization has 
guaranteed. 
(b) Liabilities shall include, but are not limited to, the
following: 

(1) gross premiums received in payment for all or any part
of medical and other health care services to be provided by the HMO subsequent
to that financial reporting period (unearned premiums); 

(2) the <nl>unpaid balance<ol> [present amount
due] under any promissory note or other obligation evidencing amounts
owed by the HMO without any adjustment for unrealized gains or losses due
to an assumption of a loan or note payable at interest rates different from
the prevailing rate at the time of assumption; 

(3) capital leases in an amount equal to the value of
the admitted assets hypothecated by the lease or the present value of the
total amounts owed under the remaining term of the lease in accordance with
generally accepted accounting principles; in determining the present value
of the lease payments, the rate of interest should be equivalent to the rate
of interest on United States of America Treasury Notes as of December 31st
of the preceding calendar year; and 

(4) incurred claim liabilities, including all liabilities
and expenses relating to medical and health care services provided by HMO
delivery network and non-network physicians and providers. 

(c) An HMO shall not <nl>decrease its liabilities or establish
an asset<ol> [record a credit] on its balance sheet for any capitated
risk or other risk-sharing arrangement with a network physician or provider
relating to out-of-service area or emergency care provided by any non-network
physician or provider. For purposes of this subsection, non-network physician
or provider means a physician or provider who has not directly or indirectly
contracted with an HMO or an HMO's network physicians or providers to provide
medical or health care services to the HMO's enrollees. 

sec.11.808. Guarantee From a Sponsoring
Organization. 
(a) The following items are mandatory requirements to be incorporated
into a guarantee from a sponsoring organization in order for the HMO to report
expenses and liabilities as covered. 

(1) The guarantee must be approved by a board resolution of
the sponsoring organization; 

(2) The sponsoring organization must have a tangible
net worth of at least $10 million for each guarantee issued; 

(3) The sponsoring organization must agree to file audited
financial statements annually with the Financial Monitoring Unit of the 
department
within 180 days of the end of the sponsoring organization's fiscal year; 
(4) The guarantee must be unconditional and may not be
monetarily limited; 

(5) The guarantee, at a minimum, must cover otherwise
"uncovered" health care expenses and liabilities, including any present or
future contingencies which may arise from the delivery of health care. If
the HMO is writing Medicaid, all expenses and liabilities must be covered; 
(6) The guarantee must not be limited in duration; 

(7) The guarantee must provide for 6 months advance notice
to the department prior to its cancellation; and 

(8) The guarantee must be notarized and signed by the
president and another officer of the sponsoring organization. 

(b) If at any time a guarantee does not comply with every
requirement of this section, then the HMO will no longer qualify for the 
following: 
(1) covered expenses and liabilities; and 

(2) lower net worth and statutory deposit requirements
as specified in sec.11.1804(b) of this title (relating to Guarantees). 
(c) If the sponsoring organization has guaranteed the payment
of any debts, expenses, or contingent obligations of another person, or 
guaranteed
the performance of any service or other obligation of another person, the
HMO must provide a certified copy of the following: 

(1) the name of each person guaranteed; 

(2) the type of business of that person; 

(3) the extent of each guarantee issued, and the dollar
amount of debts and contingent obligations guaranteed individually and in
the aggregate. 

(d) In addition, the HMO must certify that the guaranteed
debts are reported as liabilities or contingent liabilities of the guarantor.
This certification must be submitted annually with the sponsoring organization's
audited financial statements. The certified copy must be notarized and signed
by the president or chief financial officer of the sponsoring organization,
with an acknowledgment of the guarantee by the president or chief financial
officer of the HMO. 

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 June
15, 1998.
TRD-9809532
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER J. <nl>Physician and Provider Contracts and Arrangements
<ol> [Requirements of the Texas Department of Health]
28 TAC sec.sec.11.900-11.904
The new sections are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.900. Nonprimary Care Physician
Specialist as Primary Care Physician. 
(a) An HMO shall allow enrollees with chronic, disabling,
or life threatening illnesses to apply to the HMO's medical director to utilize
a nonprimary care physician specialist as a primary care physician, provided
that: 

(1) the request includes the following information: 

(A) certification by the nonprimary care physician specialist
of the medical need for the enrollee to utilize the nonprimary care physician
specialist as a primary care physician; 

(B) a statement signed by the nonprimary care physician specialist
that he or she is willing to accept responsibility for the coordination of
all of the enrollee's health care needs; and 

(C) signature of the enrollee; 

(2) the nonprimary care physician specialist meets
the HMO's requirements for primary care physician participation, including
credentialing; 

(3) the HMO has ensured that the contractual obligations
of the nonprimary care physician specialist are consistent with the contractual
obligations of the HMO's primary care physicians; and 

(4) the HMO provides the nonprimary care physician specialist
with a current directory of participating specialist physicians and providers. 
(b) HMO Action on Nonprimary Care Physician Specialist as
Primary Care Physician. An HMO must approve or deny the request for special
consideration as specified in subsection (a) of this section and provide written
notification of the decision to the enrollee not later than 30 days after
receiving the request. If the request is denied, the HMO must provide in the
written notification to the enrollee the reasons for the denial of the request.
An HMO must establish written criteria for determining medical need for an
enrollee to utilize a non-primary care physician specialist as a primary care
provider, and must include such criteria in the provider manual. 

(c) Appeal of HMO Denial of NonPrimary Care Physician Specialist
as Primary Care Physician. If the request for consideration specified in 
subsection
(a) of this section is denied by the HMO, an enrollee may appeal the decision
through the HMO's established complaint and appeal process. 

sec.11.901. Required Provisions. 
Physician and provider contracts and arrangements shall include the
following provisions: 

(1) regarding hold harmless clause as described in the Insurance
Code Article 20A.18(g) and sec.11.1102 of this title (relating to Hold Harmless
Clause); 

(2) regarding retaliation as described in the Insurance
Code Article 20A.14(k); 

(3) regarding continuity of treatment, if applicable,
as described in the Insurance Code Article 20A.18(a)(c); 

(4) regarding written notification of termination to
a physician or provider at least 90 days prior to the effective date of the
termination of the physician or provider, except in the case of imminent harm
to patient health, action against license to practice, or fraud pursuant to
Insurance Code Article 20A.18A(b), in which case termination may be immediate.
Upon written notification of termination, a physician or provider may seek
review of the termination within a period not to exceed 60 days, pursuant
to the procedure set forth in the Insurance Code Article 20A.18A(b). The HMO
must provide notification of the termination of a physician or provider to
its enrollees receiving care from the provider being terminated at least 30
days before the effective date of the termination. Notification of termination
of a physician or provider to enrollees for reasons related to imminent harm
may be given to enrollees immediately. 

(5) regarding posting of complaints notice in physician/provider
offices as described in the Insurance Code Article 20A.18A(i). A representative
notice that complies with this requirement may be obtained from the Texas
Department of Insurance, HMO/UR/QA Group, P. O. Box 149104, Austin, Texas
78714-9104; 

(6) regarding indemnification of the HMO as described
in the Insurance Code Article 20A.18A(f); 

(7) regarding prompt payment of claims as described in
the Insurance Code Articles 20A.09(j) and 21.55 and sec.11.902 of this title
(relating to Prompt Payment of Claims for Physicians and Providers); 

(8) regarding capitation, if applicable, as described
in the Insurance Code Article 20A.18A(e); 

(9) regarding selection of a primary physician or provider,
if applicable, as described in the Insurance Code Article 20A.18A(e); and 
(10) regarding denial of a claim based solely upon lack
of pre-authorization, if a provider appeals an HMO decision to deny a claim
due to lack of pre-authorization and provides documentation to justify that
covered services were medically necessary and were provided to an enrollee,
the HMO must review this claim and consider payment based upon all merits
and may not uphold the decision to deny payment solely because the provider
failed to pre-authorize the service as required by the HMO. Any consequence
of failing to obtain pre-authorization must be included in writing in the
contract. 

sec.11.902. Prompt Payment of Claims
to Physicians and Providers.
(a) Investigation of claim except as provided by subsection
(c) of this section, an HMO shall, not later than the 15th day after receipt
of notice of a claim: 

(1) commence any investigation of the claim; and 

(2) request from the physician or provider all medical
records, items, statements, and forms that the HMO reasonably believes are
necessary to secure final proof of the claim. 

(b) Acceptance or rejection of claims. 

(1) An HMO shall notify a physician or provider in writing,
which may include but is not limited to claim explanation of benefit or 
electronic
claim resolution notice, of the acceptance or rejection of the claim not later
than the 40th day after the date the HMO receives all medical records, items,
statements, and forms required by the HMO. 

(2) If the HMO rejects the claim, the notice required
by paragraph (1) of this subsection must state the reasons for the rejection. 
(c) Payment of claims. If an HMO notifies a physician or provider
that the HMO will pay a claim or part of a claim under subsection (b) of this
section the HMO shall pay the claim not later than the fifth business day
after the notice has been made. If payment of the claim or part of the claim
is conditioned on the performance of an act by the physician or provider,
the HMO shall pay the claim not later that the fifth business day after the
date the HMO is notified that the act has been performed. 

(d) This section does not apply to enrollee claims, capitation
payments or where otherwise provided by contractual agreement. 

sec.11.903. Physician or Provider
Communication.
(a) An HMO may not, as a condition of a contract with a physician
or provider, or in any other manner, prohibit, attempt to prohibit, or 
discourage
a physician or provider from discussing with or communicating to a current,
prospective, or former patient, or a party designated by a patient, with respect
to: 

(1) information or opinions regarding the patient's health
care, including the patient's medical condition or treatment options; 

(2) information or opinions regarding the provisions,
terms, requirements, or services of the health care plan as they relate to
the medical needs of the patient; 

(3) the fact that the physician's or provider's contract
with the HMO has terminated or that the physician or provider will otherwise
no longer be providing medical care or health care services under the health
care plan; or 

(4) the fact that, if medically necessary covered services
are not available through network physicians or providers, the HMO must, upon
the request of a network physician or provider and, within time appropriate
to the circumstances relating to the delivery of the services and the condition
of the patient, but in no event to exceed five business days, allow referral
to a non-network physician or provider. 

(b) An HMO may not in any way penalize, terminate, or refuse
to compensate, for covered services, a physician or provider for communicating
with a current, prospective, or former patient, or a party designated by a
patient, in any way protected by this section. 

sec.11.904. Provision of Services
Related to Immunizations and Vaccinations. 
(a) An HMO shall not require a physician to issue an immunization
or vaccination protocol for an immunization or vaccination to be administered
to an enrollee by a pharmacist. 

(b) No contract between an HMO and a pharmacy or pharmacist
shall prohibit a pharmacist from administering immunizations or vaccinations
if such immunizations or vaccinations are administered in accordance with
the Texas Pharmacy Act, Article 4542a-1, Texas Civil Statutes and rules 
promulgated
thereunder. 

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 June
15, 1998.
TRD-9809533
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER K. <nl>Required<ol> Forms [Adopted by Reference
28 TAC sec.11.1001
The amendment is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1001. <nl>Required<ol> Forms [Adopted
by Reference]. 
The <nl>following<ol> [Texas Department of Insurance adopts
by reference certain application and filing] forms[, instructions,
checklists, and other blanks] <nl>are<ol> to be used in conjunction
with the rules adopted under this chapter. Copies of these forms may be obtained
by contacting the <nl>Insurer Services Division,<ol> [HMO Unit, Mail
Code 106-3A], Texas Department of Insurance, [333 Guadalupe,]
P.O. Box 149104, Austin, Texas 78714-9104. Each HMO or other person or entity
shall use such form or forms as are required by <nl>this title<ol> [
the rules adopted in this chapter] and as are appropriate to its particular
activities. The forms [which are adopted by reference are more specifically
identified] <nl>are listed<ol> as follows: 

(1) [HMO Form #1 Rev. 7/90 -] Name <nl>Application
Form Rev. 11/97<ol> [reservation]; 

(2) [HMO Form #2 Rev. 7/90 -] Application
for a <nl>Certificate<ol> [certificate] of <nl>Authority<ol>
[authority] to do business in the State of Texas<nl>, Rev. 11/97
<ol>; 

(3) [HMO Form #3 Rev. 7/90 -] State of Texas <nl>
Officers<ol> [officers] and <nl>Directors<ol> [directors
] <nl>Page<ol> [page]<nl>, Rev. 11/97<ol>; 

(4) [HMO Form #4 Rev. 7/90 -] <nl>State of
Texas<ol> Biographical <nl>Affidavit, Rev. 11/97<ol> [data for the
Texas Department of Insurance]; 

(5) [HMO Form #4A Rev. 7/90 - Instruction for completion
of biographical data forms;]

[(6)] HMO-- <nl>Certification and Transmittal
<ol> Form [#5] Rev. <nl>11/97<ol> [4/92 - Texas Certified
HMO, Article 20A.04(b) filing];

<nl>(6)<ol> [(7)] [HMO Form #6 Rev.
4/92] Reconciliation of <nl>Benefits<ol> [benefits] <nl>
to Schedule<ol> [schedule] of <nl>Charges<ol> [charges
] Form<nl>, Rev. 4/92<ol>;

<nl>(7)<ol> <nl>Deposit Report Form, No. 120; and
<ol>

(8) <nl>Withdrawal Form, No. 121.<ol> [(HMO Form
#7 Rev. 7/90 - Certification (of compliance);]

[(9) HMO Form #8 Rev. 7/90
- Texas Department of Insurance transmittal form for submissions; and]

[(10) HMO Form #9 Rev. 7/90
- Certification of language).]

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 June
15, 1998.
TRD-9809534
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER L. Standard Language for Mandatory and Other Provisions
28 TAC sec.11.1102
The amendment is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1102. Hold-harmless Clause. 
In accordance with the <nl>Insurance Code Article 20A.02(v)<ol>
[Act, sec.2(v)], <nl>where<ol> [if] a provision
of a health care provider agreement obligates the provider to look only to
the HMO [health maintenance organization] and not its enrollees
for payment for services (except as described in the evidence of coverage
issued to the enrollee) <nl>as required by the Insurance Code Article 20A.18A(g)
<ol>, then the costs of the services will not be considered uncovered <nl>
healthcare<ol> expenses in determining amounts of deposits necessary for
insolvency protection under the <nl>Insurance Code Article 20A.13<ol> [
Act, sec.13]. This type of provision is sometimes called a "hold-harmless
clause." The following language is an example of an approvable hold-harmless
clause: (Provider) hereby agrees that in no event, including, but not limited
to non-payment by the HMO, HMO insolvency, or breach of this agreement, shall
(provider) bill, charge, collect a deposit from, seek compensation, 
remuneration,
or reimbursement from, or have any recourse against subscriber, enrollee,
or persons other than HMO acting on their behalf for services provided pursuant
to this agreement. This provision shall not prohibit collection of supplemental
charges or copayments on HMO's behalf made in accordance with the terms of
(applicable agreement) between HMO and subscriber/enrollee. (Provider) further
agrees that this provision shall survive the termination of this agreement
regardless of the cause giving rise to termination and shall be construed
to be for the benefit of the HMO subscriber/enrollee, and that this provision
supersedes any oral or written contrary agreement now existing or hereafter
entered into between (provider) and subscriber, enrollee, or persons acting
on their behalf. Any modifications, addition, or deletion to the provisions
of this clause shall be effective on a date no earlier than 15 days after
the <nl>commissioner<ol> [Commissioner of Insurance] has received
written notice of such proposed changes.

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 June
15, 1998.
TRD-9809535
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER M. Acquisition of Control of, or Merger of, a Domestic <nl>
HMO<ol> [Health Maintenance Organization]
28 TAC sec.sec.11.1202-11.1205
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1202. Filing Requirements.
(a) Filing requirements [of public tenders or offers. 
[(1) Except as otherwise provided
in subsection (b) of this section, no person other than the issuer shall make
a public tender offer for, solicitation or a request or invitation for tenders
of, or enter into any agreement to exchange securities for, seek to acquire,
or acquire, in the open market or otherwise, from the shareholders, any voting
security of a domestic health maintenance organization if, after the 
consummation
thereof, such person would, directly or indirectly, or by conversion or by
exercise of any right to acquire, be in control of such health maintenance
organization, and no person shall enter into an agreement to merge with or
otherwise to acquire control of a domestic health maintenance organization
unless, at the time any such offer, request, or invitation is made or any
such agreement is entered into, or prior to the acquisition of such securities
if no offer or agreement is involved, such person has filed with the 
commissioner
and has sent to such health maintenance organization and such health maintenance
organization has sent to its shareholders, a statement containing the 
information
required by this section and such offer, request, invitation, agreement, or
acquisition has been approved by the commissioner in the manner hereinafter
prescribed.] 

[(2) For purposes of this
section, a domestic health maintenance organization shall include any other
person controlling a domestic health maintenance organization unless such
other person is either directly or through its affiliates primarily engaged
in business other than the business of operating a health maintenance 
organization.] 
[(b)] Filing requirements of negotiated agreements
<nl>(1)<ol> No person <nl>shall:<ol> 

<nl>(A)<ol> <nl>acquire in any manner<ol> [who
has executed or entered into a privately negotiated agreement or contract
directly with shareholders of a domestic health maintenance organization to
acquire] any voting security of <nl>a domestic<ol> [such] <nl>
HMO<ol> [health maintenance organization] <nl>if such person
is, or after such acquisition would be, directly or indirectly, in control
of a domestic HMO; or<ol> 

<nl>(B)<ol> <nl>otherwise acquire control of or exercise
any control over a domestic HMO<ol> [by which, after the consummation
thereof, such person would, directly or indirectly, or by conversion or by
exercise of any right to acquire, be in control of such health maintenance
organization, shall consummate or make effective any such agreement on control,
or exercise any control over such health maintenance organization],
until and unless such person has filed with the commissioner a statement 
containing
the information required by subsection <nl>(b)<ol> [(c)] of
this section and such [agreement, contract, and] acquisition <nl>
of control<ol> has been approved by the commissioner in the manner hereinafter
prescribed. The statement filed under this subsection shall be subject to
public inspection at the office of the commissioner, and a copy [thereof
] shall be sent <nl>by the acquiring party<ol> to the <nl>domestic
HMO<ol> [health maintenance organization but shall not be required
to be sent to the health maintenance organization shareholders]. 

<nl>(2)<ol> <nl>For purposes of this section,
a domestic HMO includes any person controlling a domestic HMO unless such
person is either directly or through its affiliates primarily engaged in 
business
other than the business of operating an HMO. A person controlling a domestic
HMO shall not be considered primarily engaged in the business of operating
an HMO only if that person meets each of the following tests, regardless of
whether any line of noninsurance business is a primary business of the person:
<ol> 

<nl>(A)<ol> <nl>the assets of all HMO subsidiaries constitutes
less than 20 percent of such person's consolidated assets:<ol> 

<nl>(B)<ol> <nl>the gross revenues including investment
income of all HMO subsidiaries constitute less than 20 percent of such person's
consolidated gross revenues; and<ol> 

<nl>(C)<ol> <nl>the stockholders' equity of all HMO subsidiaries
constitutes less than 20 percent of such person's consolidated stockholders'
equity.<ol> 

<nl>(b)<ol> [(c)] Content of statement. The statement
to be filed with the commissioner hereunder shall be made under oath or 
affirmation
and shall contain the following information: 

(1) the name and address of each person by whom or on whose
behalf the merger or other acquisition of control referred to in either 
subsection
(a) or (b) of this section is to be effected (hereinafter called acquiring
party), and: 

(A) if such person is an individual, his principal occupation
and all offices and positions held during the past five years, and any 
conviction
of crimes other than minor traffic violations during the past 10 years; and 
(B) if such person is not an individual, a report of the nature
of its business operations during the past five years or for such lesser period
as such person and any predecessors thereof shall have been in existence;
an informative description of the business intended to be done by such person
and such person's subsidiaries, and a list of all individuals who are or who
have been selected to become directors or executive officers of such person,
or who perform or will perform functions appropriate to such positions. Such
list shall include for each such individual the information required by 
subparagraph
(A) of this paragraph; 

(2) the source, nature, and amount of the consideration
used or to be used in effecting the merger or other acquisition of control,
a description of any transaction wherein funds were or are to be obtained
for any such purpose, and the identity of persons furnishing such consideration,
provided, however, that where a source of such consideration is a loan made
in the lender's ordinary course of business, the identity of the lender shall
remain confidential, if the person filing such statement so requests; 

(3) fully audited financial information as to the earnings
and financial condition of each acquiring party for the preceding <nl>three
<ol> [five] fiscal years of each such acquiring party (or for
such lesser period as such acquiring party and any predecessors thereof shall
have been in existence), and similar unaudited information as of a date not
earlier than 90 days prior to the filing of the statement, unless such acquiring
party is an individual[ person], in which case he <nl>or she<ol>
shall provide such personal financial information as required by the 
commissioner. 
(4) any plans or proposals which each acquiring party
may have to liquidate such <nl>HMO<ol>[ health maintenance organization
], to sell its assets, or merge or consolidate it with any person, or
to make any other material change in its business or corporate structure or
management; 

(5) the number of shares of any security referred to
in [either] subsection (a) [or (b)] of this section[
,] which such acquiring party proposes to acquire, [and]
the terms of the offer, request, invitation, agreement, or acquisition[
referred to in either subsection (a) or (b) of this section], and a
statement as to the method by which the fairness of the proposal was <nl>
achieved<ol>[ arrived at]; and 

(6) such additional information as the commissioner may
require as necessary or appropriate for the protection of enrollees [
and shareholders] of the <nl>HMO<ol>[ health maintenance organization
] or in the public interest. 

<nl>(c)<ol> [(d)] Supplemental information for
partnerships or other groups. If the person required to file the statement
referred to in [either] subsection (a) [or (b)] of this
section is a partnership, limited partnership, syndicate, or other group,
the commissioner may require that the information called for by subsection <nl>
(b)<ol> [(c)] of this section shall be given with respect to
each partner of such partnership or limited partnership, each member of such
syndicate or group, and each person who controls such partner or member. If
any such partner, member, or person is a corporation or the person required
to file the statement referred to in [either] subsection (a) [
or (b)] of this section is a corporation, the commissioner may require
that the information called for by subsection <nl>(b)<ol> [(c)]
of this section shall be given with respect to such corporation, each officer
and director of such corporation, and each person who is directly or indirectly
the beneficial owner of more than 10% of outstanding voting securities of
such corporation. 

<nl>(d)<ol> [(e)] Filing requirement for changes
in facts. If any material change occurs in the facts set forth in the statement
filed with the commissioner and sent to such <nl>HMO<ol> [health maintenance
organization] pursuant to this section, an amendment setting forth such
change, together with copies of all documents and other material relevant
to such change, shall be filed with the commissioner and sent to such <nl>
HMO<ol> [health maintenance organization] within two business
days after the person learns of such change. 

sec.11.1203. Form Filing.
(a) General requirements. 

(1) The form that is specified in sec.11.1204 of this title
(relating to Form A (HMO)) is intended to be a guide in the preparation of
the statement required by this subchapter. It is to provide notice of the
information required and the location in which it will be expected to be found.
In preparing <nl>any<ol> statement, the text of the form should be repeated
preceding the answer. Unless expressly provided otherwise, if any item is
inapplicable or the answer <nl>thereto<ol> is in the negative, an appropriate
statement to that effect shall be made. The form specified in sec.11.1204
of this title (relating to Form A (HMO)) is also referred to in this subchapter
as Form A (HMO) or as the acquisition statement. 

(2) <nl>One<ol> [Two] complete, originally
signed <nl>statement<ol> [statements] and two [three]
photocopies of same, including exhibits and all other papers and documents
filed as a part thereof, shall be filed with the commissioner by personal
delivery or by mail addressed to: <nl>Insurer Services<ol> [Commissioner
of Insurance], <nl>Texas Department<ol> [State Board]
of Insurance, <nl>P.O. Box 149104<ol>, [1110 San Jacinto Boulevard
], Austin, Texas <nl>78714-9104<ol> [78701-1998]. 

(3) Statements should be prepared on paper 8 1/2 by 11
inches in size and preferably bound at the top or top left hand corner. All
copies of any statement, exhibit, or financial statement shall be clear, easily
readable, and suitable for photocopying. Debits in credit categories and credits
in debit categories shall be designated so as to be clearly distinguishable
as such on photocopies. Statements shall be in the English language and monetary
values shall be stated in United States currency. If any exhibit or other
paper or document filed with a statement is in a foreign language, it shall
be accompanied by a translation into <nl>the<ol> English language, and
any monetary value shown in a foreign currency shall be converted into United
States currency <nl>and<ol> [with] the rate of exchange <nl>
shall be<ol> [used] disclosed in the submission. 

(4) (No change.) 

(b) Summaries and omissions. 

(1) (No change.) 

(2) By use of a reference to an exhibit, the person filing
shall be deemed to have verified the accuracy of the information referred
to as though it <nl>were<ol> [was] an original statement, unless
the person filing identifies such information as being not verified[
by the person filing]. 

(c) Additional information and exhibits. In addition to the
information expressly required <nl>by<ol> [to be included in the form
set out in] sec.11.1204 of this title (relating to Form A (HMO)),
there shall be added such further material information, if any, as may be
necessary to <nl>avoid misleading<ol> [make the] information[
contained therein not misleading]. The person filing may also file <nl>
additional<ol> [such] exhibits as desired[ in addition to
those expressly required by the statement]. Such exhibits shall be [
so] marked as to indicate clearly the subject matters to which they
refer. 

(d) Amendment. Any amendment to a statement shall include
on a cover page all [the] information required for the cover page
of the acquisition statement itself, as well as the phrase "Amendment No.
_____ to _____" and shall indicate the date of <nl>the<ol> amendment and
not the date of the original filing. 

(e) Information unknown or unavailable and extension of time
to furnish. 

(1) <nl>Required information<ol> [Information required
] need <nl>only<ol> be given [only] insofar as it is known
or reasonably available to the person filing the statement. If any required
information is unknown and not reasonably available to the person filing,
either because obtaining it would involve unreasonable effort or expense,
or because it rests peculiarly within the knowledge of another person not
affiliated with the person filing, the information may be omitted, subject
to the following conditions: 

(A) the person filing shall give such information on the subject
as he possesses or can acquire without unreasonable effort or expense, together
with the sources thereof; and 

(B) the person filing shall include a statement either showing
that unreasonable effort or expense would be involved or indicating the absence
of any affiliation with the person within whose knowledge the information
rests and stating the result of a request made to such person for the 
information. 
(2) If any required information, document, or report
is<nl> not included at the time of filing, then such application will be
considered incomplete in accordance with sec.11.301(7)(A) of this title
(relating to Filing Requirements)<ol> [available but impractical to
furnish at the time it is required to be filed, there may be filed with the
commissioner as a separate document or as a part of the Form A (HMO) an 
appropriate
statement:]

[(A)] [identifying the information, document,
or report in question;]

[(B)] [stating why the filing thereof at
the time required is impractical; and]

[(C)] [requesting the waiving of the requirement
for filing the information, document, or report to a specified date. If the
commissioner does not disapprove the request for extension of time, or grant
an extension for different period than requested, within 30 days of receipt
thereof, the request shall be deemed approved; however, the commissioner may,
by official order, postpone action on the request for such further time, not
exceeding 30 days, as may be necessary for proper consideration.]

sec.11.1204. Form A (HMO).
(a) Cover page for Form A (HMO). The following shall be placed,
centered, on the cover page of the Form A (HMO):

Figure: 28 TAC sec.11.1204(a)

(b) <nl>HMO<ol> [Health maintenance organization]
and method of acquisition. State the name and address of the domestic <nl>
HMO<ol> [health maintenance organization] to which this application
relates and a brief description of how control is to be acquired. 

(c) Identity and background of the applicant if not an individual.
(1) State the name and address of the applicant seeking to
acquire control over the <nl>HMO<ol> [health maintenance organization
(2) If the applicant is not an individual, state the
nature of its business operations for the past five years or for such lesser
period as such person and any predecessors thereof shall have been in existence.
Briefly describe the business intended to be done by the applicant and the
applicant's subsidiaries. 

(3) Furnish a chart or listing clearly identifying the
interrelationships between the applicant and all affiliates of the applicant.
Indicate in such chart or listing the percentage of voting securities of each
such person which is controlled by the applicant or by any other such person.
If control of any person is maintained other than by the ownership or control
of voting securities, indicate the basis of such control. As to each person
specified in such chart or listing, indicate the type of organization (e.g.,
corporation, trust, partnership) and the state or other jurisdiction of 
domicile.
If court proceedings looking toward a reorganization or liquidation are pending
with respect to any such person, indicate which person, and set forth the
title of the court, nature of proceedings, and the date when commenced.

(d) Identity and background of individuals associated with
the applicant. State the following with respect to all persons who are 
directors,
executive officers, or owners of 10% or more of the voting securities of the
applicant if the applicant is not an individual<nl>, in the biographical
affidavit form<ol>:

(1) name and business address; 

(2) present principal business activity, occupation,
or employment, including position and office held and the name, principal
business, and address of any corporation or other organization in which such
employment is carried on;

(3) material occupations, positions, offices, or employments
during the last five years, giving the starting and ending dates of each and
the name, principal business, and address of any business corporation, or
other organization in which each such occupation, position, office, or 
employment
required licensing by or registration with any federal, state, or municipal
governmental agency, indicate such fact, the current status of such licensing
or registration, and an explanation of any surrender, revocation, suspension,
or disciplinary proceedings in connection therewith; and 

(4) whether or not such person has ever been convicted
in a criminal proceeding (excluding minor traffic violation) during the last
10 years and, if so, give the date, nature of conviction, name and location
of court, and penalty imposed or other disposition of the case.

(e) Identity and background of individual applicant. <nl>
Provide<ol> [State] the following <nl>biographical data in the
biographical affidavit form<ol> with respect to the applicant if he <nl>
or she<ol> is an individual:

(1) name and business address;

(2) present principal business activity, occupation,
or employment, including position and office held and the name, principal
business, and address of any corporation or other organization in which such
employment is carried on;

(3) material occupations, positions, offices, or employments
during the last five years, giving the starting and ending dates of each and
the name, principal business, and address of any business corporation, or
other organization in which each such occupation, position, office, or 
employment
required licensing by or registration with any federal, state, or municipal
governmental agency, indicate such fact, the current status of such licensing
or registration, and an explanation of any surrender, revocation, suspension,
or disciplinary proceedings in connection therewith; and

(4) whether or not such person has ever been convicted
in a criminal proceeding (excluding minor traffic violations) during the last
10 years and, if so, give the date, nature of conviction, name and location
of court, and penalty imposed or other disposition of the case.

(f) Identity and background of individuals under any proposed
management contract concerning the <nl>HMO<ol> [health maintenance
organization] <nl>with biographical data in the biographical affidavit
form<ol>. State the following with respect to all persons who are directors,
executive officers, or owners of 10% or more of the voting securities of a
company with which there is a proposed management contract concerning the <nl>
HMO<ol> [health maintenance organization], as well as with respect
to any other individuals who may be empowered under a proposed contract to
manage the <nl>HMO<ol> [health maintenance organization]:

(1) name and business address;

(2) present principal business activity, occupation,
or employment, including position and office held and the name, principal
business, and address of any corporation or other organization in which such
employment is carried on;

(3) material occupations, positions, offices, or employments
during the last five years, giving the starting and ending dates of each and
the name, principal business, and address of any business corporation, or
other organization in which each such occupation, position, office or employment
required licensing by or registration with any federal, state, or municipal
governmental agency, including such fact, the current status of such licensing
or registration, and an explanation of any surrender, revocation, suspension,
or disciplinary proceedings in connection therewith; and

(4) whether or not such person has ever been convicted
in a criminal proceeding (excluding minor traffic violations) during the last
10 years and, if so, give the date, nature of conviction, name and location
of court, and penalty imposed or other disposition of the case.

(g) Nature, source, and amount of consideration. 

(1)-(2) (No change.)

(3) If the source of the consideration is a loan made
in the lender's ordinary course of business and if the applicant wishes the
identity to remain confidential, he <nl>or she<ol> must specifically request
that the identity be kept confidential. When confidentiality is requested,
such identity shall be provided by a separate instrument filed with, but not
forming part of, the acquisition statement.

(4) If the consideration is to consist in whole or in
part of the business and assets of the <nl>HMO<ol> [health maintenance
organization] or of a person controlled by the <nl>HMO<ol> [
health maintenance organization], state the value thereof and how such
value was <nl>derived<ol> [arrived at].

(h) Future plans for <nl>HMO<ol> [health maintenance
organization]. Describe any plans or proposals which the applicant
may have to declare an extraordinary dividend, to liquidate such <nl>HMO
<ol> [health maintenance organization], to sell its assets to
or merge it with any person or persons, or to make any other material change
in its business operations or corporate structure or management and any 
financial
or employment guarantees given to present and contemplated management. [
File as an exhibit a notarized written assurance that no change will be made
in the delivery of health care, as approved for the health maintenance 
organization
by the State Board of Health under the Act, sec.5(a)(2), without prior approval
of the State Board of Health.]

(i) Voting securities to be acquired. State the number of
shares of the <nl>HMO's<ol> [health maintenance organization's]
voting securities [(including securities convertible into voting securities)
] which the applicant, its affiliates, and any person listed in subsection
(d) of this section plan to acquire, and the terms of the offer, request,
invitation, agreement, or acquisition, and a statement as to the method by
which the fairness of the proposal was <nl>derived<ol> [arrived at
(j) Financial statements and exhibits.

(1) Financial statements and exhibits shall be attached to <nl>
Form A HMO<ol> [this statement] as an appendix, but list under
this subsection the financial statements and exhibits so attached.

(2) Subject to sec.11.1203 of this title (relating
to Form Filing), the financial statements shall include the annual financial
statements of the persons identified in subsection (c)(3) of this section
for the preceding <nl>three<ol> [five] fiscal years (or for
such lesser period as such applicant and its affiliates and any predecessors
thereof shall have been in existence), and similar information covering the
period from the end of such person's last fiscal year, if such information
is available. Such statements may be prepared on either an individual basis,
or unless the commissioner otherwise requires, on a consolidated basis if
such consolidated statements are prepared in the usual course of business.
Unless exempted by the commissioner, the annual financial statements of the
applicant shall be accompanied by the certificate of an independent public
accountant, if available, to the effect that such statements present fairly
the financial position of the applicant and the results of its operations
for the year then ended, in conformity with generally accepted accounting
principles or other accounting principles prescribed or permitted under law.
If such certificate is not available, then such financial statement shall
be sworn to by the applicant as correctly reflecting its financial condition,
and in such case, the commissioner [of insurance] at his <nl>
or her<ol> discretion may require such financial statement to be certified
by an independent public accountant. If the applicant is an insurer which
is actively engaged in the business of insurance, the financial statements
need not be certified, provided they are based on the annual statement of
such person filed with the insurance department of the person's domiciliary
state and are in accordance with the requirements of insurance or other 
accounting
principles prescribed or permitted under the law and regulations of such state.
(3) File as exhibits copies of all tender offers for,
requests or invitations for, tenders of, exchange offers for, and agreements
to acquire or exchange any voting securities of the <nl>HMO<ol> [
health maintenance organization] and (if distributed) of additional
soliciting material relating thereto.

<nl>(4)<ol> <nl>Financial projections for three years,
including a balance sheet, income statement, and cash flow statement for the
HMO and acquiring party. The HMO financial projections shall be on a quarterly
basis. In addition, if debt is incurred by an acquiring party to fund the
acquisition, such financial projections shall reflect the period of required
debt service until the debt is fully liquidated.<ol>

<nl>(5)<ol> [(4)] File as exhibits copies
of any proposed exclusive agency contract or management contract concerning
the <nl>HMO<ol> [health maintenance organization], and copies
of any proposed changes to contracts of the <nl>HMO<ol> [health maintenance
organization] that the form of which has been previously approved by
the commissioner.

<nl>(6)<ol> [(5)] With regard to all affiliates
of the applicant that are <nl>HMOs<ol> [health maintenance organizations
], file as an exhibit a detailed description of the guarantees or other
financial arrangements the applicant has in connection with the operation
of such affiliated <nl>HMOs<ol> [health maintenance organizations
<nl>(7)<ol> [(6)] If the applicant is part
of <nl>an HMO<ol> [a health maintenance organization] holding
company, file as exhibits certified consolidated financial statements for
all affiliated <nl>HMOs<ol> [health maintenance organizations]
and consolidated pro forma balance sheets to show the effect of the change
of control.

<nl>(8)<ol> [(7)] In addition to the material
required to be filed by this section, a person as described in sec.11.1202(a)(2)
of this title (relating to Filing Requirements) shall file, as an exhibit,
annual reports to the stockholders of the <nl>HMO<ol> [health maintenance
organization] and the applicant for the last two fiscal years. These
reports are for review of the <nl>Texas Department<ol> [State Board
] of Insurance and are not part of the material required to be submitted
under sec.11.1202(c) of this title (relating to Filing Requirements), or
to be mailed to shareholders under sec.11.1205(c) of this title (relating
to Approval by Commissioner; Hearings). The materials shall be open for public
inspection[, however,] at the <nl>department<ol> [State
Board of Insurance] during the pendency of the application.

(k) Additional information.

(1) Provider contracts. If contracts the <nl>HMO<ol> [
health maintenance organization] has entered into with providers are
not assignable at the option of the <nl>HMO<ol> [health maintenance
organization] under the terms thereof, file as an exhibit an agreement
by each provider to assignment of the contract to the applicant, to be effective
as of the date of approval by the commissioner of the change of control. 
In the event any provider declines to agree to assignment of the contract,
file as an exhibit a list of all such providers. 

(2) Authorization. If the change of control is to occur
pursuant to an agreement, file as exhibits notarized statements of all parties
thereto that the execution and delivery of the agreement, the consummation
of the transactions contemplated therein, and the performance by the parties
of their respective obligations thereunder have been duly and validly authorized
by all necessary corporate action.

(3) No conflict. File as an exhibit the opinion of legal
counsel for applicant that counsel is satisfied that the change of control
will not violate, conflict with, or result in a breach or acceleration of
or default under: 

(A) any laws, regulations, or requirements of any governmental
or regulatory body applicable to the business of the <nl>HMO<ol> [
health maintenance organization]; or

(B) any agreement, instrument, or obligation to which the <nl>
HMO<ol> [health maintenance organization] is a party (including,
without limitation, any contracts with an independent practice association,
insurance contracts for stop-loss coverage or otherwise, and any fidelity
bonds covering officers and employees of the <nl>HMO<ol> [health maintenance
organization]).

(l) Signature and certification. Signature and certification
in the following form.

Figure: 28 TAC sec.11.1204(l)

sec.11.1205. Approval by Commissioner; Hearings.
After notice and <nl>opportunity for<ol> hearing, if required, the
commissioner shall approve any such acquisition of control referred to in
sec.11.1202(a) or (b) of this title (relating to Filing Requirements) unless
he <nl>or she<ol> finds that:

(1) after the change of control the domestic <nl>HMO<ol>
[health maintenance organization] referred to sec.11.1202(a)
or (b) of this title (relating to Filing Requirements) would not be able to
satisfy the requirements for the issuance of a certificate of authority to
operate <nl>as an HMO<ol> [a health maintenance organization]
as it is presently licensed to do;

(2) the effect of such acquisition of control would be
substantially to lessen competition among <nl>HMOs<ol> [health maintenance
organizations] in this state or tend to create a monopoly therein; 
(3) the financial condition of any acquiring party is
such as might jeopardize the financial stability of the <nl>HMO<ol> [
health maintenance organization], or prejudice the interest of its enrollees
or the interests of any remaining shareholders who are unaffiliated with such
acquiring party;

(4) [the terms of the offer, request, invitation,
agreement, or acquisition referred to in sec.11.1202(a) of this title (relating
to Filing Requirements) are unfair and unreasonable to the shareholders of
the health maintenance organization;]

[(5)] the plans or proposals which the acquiring
party has to liquidate the <nl>HMO<ol> [health maintenance organization
], sell its assets, or consolidate or merge it with any person, or to
make any other material change in its business or corporate structure or 
management,
are unfair, prejudicial, hazardous, or unreasonable to enrollees [or
shareholders] of the <nl>HMO<ol> [health maintenance organization
] and not in the public interest;

<nl>(5)<ol> [(6)] the competence, trustworthiness,
experience, and integrity of those persons who would control the operation
of the <nl>HMO<ol> [health maintenance organization] are such
that it would not be in the interest of enrollees of the <nl>HMO<ol> [
health maintenance organization] and of the public to permit the merger
or other acquisition or control; or 

<nl>(6)<ol> [(7)] such acquisition or
merger would violate any law of this or any other state or of the United States.
(b) The public hearing<nl>, if required,<ol> referred to
in subsection (a) of this section shall be held within <nl>45<ol> [
30] days after the statement required by sec.11.1202(a) or (b) of
this title (relating to Filing Requirements) is accepted for filing as complete
in all aspects, and at least 20 days' notice thereof shall be given by the
commissioner to the person filing the statement and to the domestic <nl>
HMO<ol> [health maintenance organization]. Not less than 10
days' notice of such public hearing shall be given by the person filing the
statement to such other persons as may be designated by the commissioner.
The <nl>HMO<ol> [health maintenance organization] shall give
prompt notice of the hearing to <nl>such persons as may be designated by
the commissioner within the time and manner specified by the commissioner
<ol> [its shareholders as prescribed in subsection (c) of this section
]. All provisions of this subchapter relating to the timely notice
of hearing thereon before the commissioner may be waived by the unanimous
consent of all parties including the commissioner's staff. The commissioner
shall make a determination within <nl>60<ol> [30] days, after
the conclusion of such hearing. At such hearing, the person filing the 
statement,
the <nl>HMO<ol> [health maintenance organization], any person
to whom notice of hearing was sent, and any other person whose interest may
be affected thereby shall have the right to present evidence, examine and
cross-examine witnesses, and offer oral and written arguments in connection
therewith.

[(c) Mailings to shareholders;
payment of expenses. Except as provided in sec.11.1201(b) of this title
(relating to Filing Requirements), all statements, amendments, or other material
filed pursuant to sec.11.1202(a), (b), or (c) of this title (relating to
Filing Requirements), shall be mailed by the health maintenance organization
to its shareholder within five business days after the health maintenance
organization has received such statements, amendments, other material, or
notices. The expenses of mailing shall be borne by the person making the
filing. As security for the payment of such expenses, such person shall file
with the commissioner an acceptable bond or other deposit in an amount to
be determined by the commissioner.]

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 June
15, 1998.
TRD-9809536
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER N. <nl>HMO<ol> [Health Maintenance Organization
] Solvency Surveillance Committee Plan of Operation
28 TAC sec.sec.11.1301-11.1305
The amendments are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1301. Plan of Operation. 
This plan of operation, hereinafter referred to as the plan, shall
become effective upon written approval of the <nl>Texas Department<ol>
[State Board] of Insurance, hereinafter referred to as the <nl>
department<ol> [board], as provided by the Texas Health Maintenance
Organization Act, <nl>Insurance Code Chapter 20A,<ol> hereinafter referred
to as the Act. As used in this subchapter, the committee shall be the solvency
surveillance committee as provided for and defined in the Act, and the members
shall be the members of the committee as provided for and defined in the Act.
sec.11.1302. Solvency Surveillance Committee.
(a) Members. There shall be nine members of the committee
appointed by the commissioner [of insurance]. A member is a Texas
licensed <nl>HMO<ol> [health maintenance organization] as defined
in the Act or a public representative. Five of the members shall represent <nl>
HMOs<ol> [health maintenance organizations] or their holding
company system. The remaining four members shall be public representatives.
The commissioner [of insurance] shall appoint the HMO members along
with the officers or employees of the members who shall serve on the committee.
The HMO members shall be appointed[,] based on plan characteristics.
Of the HMO members, one shall be a single service <nl>HMO as<ol> [
health care service plan based] defined in the Act. The remaining HMO
members shall be selected by the commissioner [of insurance] with
due consideration of factors deemed appropriate including, but not limited
to, the varying categories of premium income and geographical location. No
two HMO members may be employees or officers of the same <nl>HMO<ol> [
health maintenance organization] or holding company system. Public 
representatives
may not be officers, directors or employees of <nl>an HMO, HMO<ol> [
a health maintenance organization, health maintenance organization]
agents, or any other business entities regulated by the <nl>department<ol>
[State Board of Insurance]; or persons required to register with
the <nl>Texas Ethics Commission<ol> [secretary of state] under
[the] Government Code, Chapter 305, or related to persons described
in this subsection within the second degree of affinity or consanguinity. 
(1) The HMO members' terms shall last for three years unless
otherwise appointed by the commissioner and shall be staggered with three
appointments expiring each year. A member's term shall terminate if the member
leaves the plan whose characteristics were the basis for appointment. The
plan shall not automatically continue as a member. 

(2) Members may serve multiple terms. 

(3) A member shall serve until a successor is appointed
unless such member's term is in conflict with the Act, or unless a member
misses two or more consecutive meetings or engages in willful misconduct,
in which case the commissioner may remove the member. If a member's term is
in conflict with the Act, the committee shall make recommendations to the
commissioner and the <nl>department<ol> [board] to fill this
vacancy. The committee may at such other times make recommendations to the
commissioner and the <nl>department<ol> [board] regarding vacancies
which may arise from time to time. Members shall not receive any remuneration
or emolument of office. 

(4) The members shall elect a chairman, a vice chairman,
a secretary-treasurer, and such other officers as they deem necessary. The
term of office shall be one year or until a successor is elected and qualified.
Vacancies occurring in elective office shall be filled by vote of the members. 
(b) Voting. A majority of the members present and voting shall
constitute a quorum for the transaction of business, and the acts of a majority
of the members voting in person at a meeting at which a quorum is present
shall be the acts of the committee; except that an affirmative vote of a 
majority
of the total membership of the committee shall be required: 

(1) to propose amendments to the plan; 

(2) to approve any contract or service agreement; 

(3) to levy an assessment or provide for a refund; 

(4) to borrow money; or 

(5) to extend funding of expenses of supervision, rehabilitation,
or conservation of an HMO beyond the statutory 150 days unless special notice
of the desire to take action on this item is part of the notice of the meeting,
in which case the acts of a majority of the members voting in person at a
meeting at which a quorum is present shall be the acts of the committee. 
(c) Meetings. On a day determined by the members, the committee
shall hold meetings at the <nl>department's offices<ol> [office of
the commissioner of insurance] no less frequently than quarterly each
year unless the officers, upon 10 days' notice, shall designate some other
date or place. Such notice can be oral or written. Notice of regular meetings
shall be provided by the chairman or other officer acting on his <nl>or her
<ol> behalf. At each such meeting the committee may: 

(1) review the plan and submit to the <nl>department<ol>
[board] for approval any proposed amendment to the plan. 

(2) review outstanding contracts or service agreements,
if any, and, to the extent possible, make necessary or desirable corrections,
improvements, or additions; 

(3) consider and provide for collection of assessments
for operating expenses of the committee; 

(4) consider facts relevant to, and provide for, the
collection of assessments as determined by the commissioner; 

(5) consider any extension of funding for the expenses
of supervision, rehabilitation, or conservation of an HMO beyond the statutory
150 days; 

(6) review latest financial statements of each HMO. Committee
members shall be provided with reports regarding the financial condition of
Texas licensed <nl>HMOs<ol> [health maintenance organizations]
and regarding the financial condition, administration, and status of <nl>
HMOs<ol> [health maintenance organizations] in rehabilitation,
liquidation, supervision, or conservation at meetings. Committee members shall
not reveal the condition of nor any information secured in the course of any
meeting of the committee with regard to any corporation, form, or person 
examined
by the committee; 

(7) advise the commissioner on actions necessary to prevent
financial impairment; 

(8) receive reports and advise the commissioner regarding
management of HMO impairments and insolvencies; 

(9) authorize appropriate legal action to recover unpaid
assessments; 

(10) review, consider, and act on the powers given the
committee for a special meeting as outlined in subsection (d)(1)-(3) of this
section; and 

(11) review, consider, and act on other matters deemed
by it to be necessary and proper for the administration of the committee. 
(d) Special meetings. The committee shall hold a special meeting
promptly after receiving notice from the commissioner of the need for such
meeting. Such meeting may be held at the <nl>department's offices<ol> [
office of the commissioner] or by telephone conference call at the discretion
of the commissioner. At least 48 hours' oral or written notice shall be given
each member of such meeting by the commissioner; provided, however, if the
period of notice is less than five days, such notice must be given orally
by telephone conference to a majority of the full committee; provided, further,
however, the committee may always act orally or in meeting by waiving the
48-hour notice. At such meetings, the committee, if appropriate, shall perform
the following functions. 

(1) The committee shall receive and consider the report of
the commissioner regarding HMO impairments or insolvencies within the meaning
of the Insurance Code[,] <nl>Articles<ol> [Article]
21.28 and [Article] 21.28-A. Such reports may include progress
and developments on management of such impairments or insolvencies. 

(2) In consultation with the commissioner, the committee
shall consider what assessment, if any, shall be levied, decide whether any
refund should be made to an HMO, and consider and decide whether any assessment
for expenses of supervision, rehabilitation, or conservation shall be extended
beyond 150 days. Assessments shall conform to the Act, sec.36(c) and (h).
Any HMO failing to pay an assessment after 30 days' written notice that payment
is due, shall be reported to the commissioner, and the committee shall consider
what other action, if any, shall be taken. 

(3) The committee shall take all steps permitted by law,
and deemed necessary, to protect the committee's rights as pertaining to the
impaired or insolvent HMO or its enrollees. 

(4) In addition to the powers described in paragraphs
(1)-(3) of this subsection, the committee shall have and exercise such other
powers as may be reasonably necessary to implement its powers and 
responsibilities
under the Act. 

(e)-(f) (No change.)

(g) Attendance at meeting. Committee meetings shall not be
open to the public and only members, the commissioner[ of insurance],
and persons authorized by the commissioner shall be in attendance at such
meeting. 

sec.11.1303. Operations. 
(a)-(b) (No change.)

(c) Custodian of accounts. 

(1) The committee hereby appoints the liquidator designated
by the <nl>department<ol> [State Board of Insurance] as the
custodian of the administrative account and as its agent for collecting 
assessments
from HMOs. In the name of the committee, the custodian shall maintain such
funds in depositories as provided by the Insurance Code[,] Article
21.28, sec.(2)(h). The committee may authorize the investment of some or
all of these funds in other type investments. 

(2) The liquidator shall maintain suitable records to
account for the funds under his custody and shall furnish the committee at
each regular meeting thereof a statement of the financial condition of the
committee and a statement of income and disbursements since the last report.
The liquidator shall be entitled to reimbursement for his actual expenses
in performing his duties under this subsection and is authorized to hire a
certified public accountant to audit the annual statement required by the <nl>
Insurance Code Article 20A<ol> [Act, sec.36(f)]. 

(3) (No change.) 

(d) (No change.) 

sec.11.1304. Records and Reports.
(a) Written record. A written record of the proceedings of
each committee meeting shall be made. The original of this record shall be
retained by the commissioner with copies being furnished to each member, and
to the <nl>department<ol> [State Board of Insurance]. Such record
shall be subject to the pertinent provisions of law including those as to
the confidentiality of the proceedings of the committee. 

(b) (No change.) 

sec.11.1305. Appeals. 
(a) (No change.)

(b) Appeal to <nl>district court<ol> [board].
Any HMO or HMO agent[,] which is affected by any ruling or action
of the commissioner [of insurance] <nl>may file a petition in
the District Court of Travis County, Texas<ol> [should have the right
] to have any such ruling or action reviewed by the <nl>court<ol>
[State Board of Insurance] pursuant to the Insurance Code[
,] Article 1.04, <nl>sec.(a)<ol> [sec.(d)].

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 June
15, 1998.
TRD-9809537
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER P. Prohibited Practices
28 TAC sec.11.1500
The new section is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1500. Discrimination Based
on Health Status-Related Factors.
(a) An HMO may not establish policies or procedures that are
based on health status-related factors for the eligibility of any individual
to enroll under a group plan. 

(b) An HMO may not require an enrollee to pay a premium or
contribution that is greater than the premium or contribution for a similarly
situated enrollee based on a health status-related factor. 

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 June
15, 1998.
TRD-9809538
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER Q. Other Requirements
28 TAC sec.sec.11.1600-11.1603, 11.1605-11.1608
The amendments and new sections are proposed under the Insurance
Code, Chapter 20A, as amended by the 75th Legislature in Senate Bill 385,
and Article 1.03A. Insurance Code, Article 20A.02(b) provides that basic health
care services mean health care services which the commissioner determines
an enrolled population might reasonably require in order to be maintained
in good health, including, at a minimum, services designated as basic health
services under Section 1302, Title XIII, Public Health Service Act (42 U.S.C.,
Section 300e - 1(1). Insurance Code, Article 20A.22(a) provides that the 
commissioner
may promulgate rules and regulations as are necessary and proper to carry
out the provisions of the HMO Act (Insurance Code, Chapter 20A). Article 
20A.22(b)
provides that the commissioner is specifically authorized to promulgate rules
to ensure that enrollees have adequate access to health care services and
to establish minimum physician/patient ratios, mileage requirements for primary
and specialty care, maximum travel times, and maximum waiting times for 
obtaining
appointments. Article 20A.04(b) provides that the commissioner may promulgate
such reasonable rules and regulations as he deems necessary to the proper
administration of the HMO Act to require a health maintenance organization,
subsequent to receiving its certificate of authority, to submit the 
modifications
or amendments to the operations or documents submitted upon application for
a certificate of authority to the commissioner, either for his approval or
for information only, prior to the effectuation of the modification or 
amendment,
or to require the health maintenance organization to indicate the modifications
to the commissioner at the time of the next site visit or examination. Article
20A.05(b) sets forth the determinations the commissioner must make prior to
granting a certificate of authority to an HMO. Article 20A.37 provides that
the commissioner by rule may establish minimum standards and requirements
for ongoing internal quality assurance programs for health maintenance 
organizations,
including, but not limited to, standards for assuring availability, 
accessibility,
quality, and continuity of care. Article 1.03A provides that the Commissioner
of Insurance may adopt rules necessary for the conduct and execution of the
duties and functions of the Texas Department of Insurance only as authorized
by a statute. 

The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1600. Information to Prospective and Current
Group Contract Holders and Enrollees. 
(a) An HMO shall provide [upon request] an accurate
written description of health care plan terms and conditions, [as referenced
in sec.11.204(17) of Subchapter C of this title (relating to Contents) and
sec.11.301(5)(I) of Subchapter D of this title (relating to Filing 
Requirements),
] to allow any prospective or current group contract holder and prospective
enrollee eligible for enrollment in a health care plan or a current enrollee
to make comparisons and informed decisions before selecting among health care
plans. 

(b) The written plan description must be in a readable and
understandable format <nl>that meets the requirements of sec.3.602 of this
title (relating to Plain Language Requirements)<ol>, by category, and must
include a clear, complete and accurate description of these items in the 
following
order: 

(1) a statement that the entity providing the coverage is <nl>
an HMO<ol> [a Health Maintenance Organization (HMO)]; 

(2) a toll-free number, unless exempted by statute or
rule, and address for the prospective <nl>or current<ol> group contract
holder or prospective <nl>or current<ol> enrollee <nl>for obtaining<ol>
[to obtain] additional information, including provider information; 
(3) (No change.) 

(4) emergency care services and benefits, including coverage
for <nl>out-of-area<ol> [out of area] emergency care services
and information on access to after-hours care; 

(5) <nl>out-of-area<ol> [out of area] services
and benefits (if any); 

(6) an explanation of enrollee financial responsibility
for payment of premiums, copayments, deductibles, and any other <nl>out-of-
pocket
<ol> [out of pocket] expenses for noncovered or out-of-plan services,
and [, if applicable,]an explanation that network physicians and
providers have agreed to look only to the HMO and not to its enrollees for
payment of covered services, except as set forth in this description of the
plan; 

(7) any limitations <nl>or<ol> [and] exclusions,
including the existence of any drug formulary limitations; 

(8) any prior authorization <nl>requirements<ol>,
including limitations or restrictions <nl>thereon<ol>[ on],
and a summary of procedures to obtain approval for, referrals to providers
other than primary care physicians or dentists, and other review requirements,
including preauthorization review, concurrent review, post service review,
and post payment review, and the consequences resulting from the failure to
obtain any required authorizations; 

(9) (No change.) 

(10) a summary of the complaint <nl>and appeal<ol>
[resolution] procedures of the HMO, <nl>a statement of the availability
of the independent review process<ol>, and a statement that the HMO is 
prohibited
from retaliating against a group contract holder or enrollee because the group
contract holder or enrollee has filed a complaint against the HMO or appealed
a decision of the HMO, and is prohibited from retaliating against a physician
or provider because the physician or provider has, on behalf of an enrollee,
reasonably filed a complaint against the HMO or appealed a decision of the
HMO; 

(11) a current list of physicians and providers<nl>
, including behavioral health providers,<ol> updated on at least a quarterly
basis, including names and locations of physicians and providers, a statement
of limitations of accessibility and referrals to <nl>specialists, including
any limitations imposed by a limited provider network<ol>, [specialist
] and a disclosure of which physicians and providers will not accept
new enrollees or participate in closed provider networks serving only certain
enrollees. <nl>If an HMO limits enrollees' access to a limited provider network,
it shall provide the following information to prospective and current group
contract holders and enrollees:<ol> 

<nl>(A)<ol> <nl>a notice in substantially the following
form: "Choosing Your Physician - Now that you have chosen XYZ Health Plan,
your next choice will be deciding who will provide the majority of your health
care services. Your Primary Care Physician (PCP) will be the one you call
when you need medical advice, when you are sick and when you need preventive
care such as immunizations. Your PCP is also part of a "network" or association
of health professionals who work together to provide a full range of health
care services. That means when you choose your PCP, you are also choosing
a network and in most instances you are not allowed to receive services from
any physician or health care professional that is not also part of your PCP's
network. All of your care will be provided by or arranged for within the network
to which your PCP belongs, so make sure that your PCP's network includes the
specialists and hospitals that you prefer."<ol> 

<nl>(B)<ol> <nl>If an HMO opts to limit a female enrollee's
designation of an obstetrician or gynecologist to the limited provider network
to which that enrollee's primary care physician belongs, a notice in 
substantially
the following form: "ATTENTION FEMALE ENROLLEES: Your Choice of Physician
Affects your Choice of OB/GYN - In selecting your Primary Care Physician (PCP),
remember that your PCP's network affects your choice of an OB/GYN. You have
the right to designate an OB/GYN to whom you have access without first obtaining
a referral from your PCP. However, the OB/GYN you designate must belong to
the same network as your PCP. This is another reason to make certain that
your PCP's network includes the specialists, particularly the OB/GYN and 
hospitals
that you prefer."<ol> 

<nl>(C)<ol> <nl> If an HMO does not limit an enrollee's
designation of an obstetrician or gynecologist to the limited provider network
to which that enrollee's primary care physician belongs, a notice in 
substantially
the following form: "ATTENTION FEMALE ENROLLEES: Although your choice of Primary
Care Physician (PCP) in most cases limits your selection of specialists and
hospitals to those specialists and hospitals that belong to your PCP's network,
such is not the case in your choice of an OB/GYN. You have the right to 
designate
an OB/GYN to whom you have access without first obtaining a referral from
your PCP.<ol> [Name of HMO] has opted not to limit your selection
of an OB/GYN to your PCP's network." 

<nl>(D)<ol> <nl>An HMO shall clearly differentiate limited
provider networks and open networks within its service area by assigning 
different
colors, symbols, or other distinguishing marks to each network. An HMO shall
provide a separate listing of its limited provider networks and an alphabetical
listing of all the physicians and providers available in the limited provider
network. Specialists shall be listed in alphabetical order by specialty. An
index of the alphabetical listing of all physicians and providers, including
behavioral health providers, within the HMO's service area shall be included,
and shall include the name, the color, symbol or other distinguishing mark
indicating the limited provider network(s) to which the physician or provider
belongs, and the page number where the physician or provider's name can be
found.<ol> 

(12) (No change.) 

(c) (No change.) 

(d) An HMO may utilize its handbook to satisfy
the requirements of this section if the information contained in the handbook
contains all the information required under subsection (b) of this section.
sec.11.1601. Enrollee Identification
Cards. 
If an HMO allows physicians or providers to require that enrollees
present an identification (ID) care in order to receive services, that HMO
shall issue to an enrollee an ID card within 30 calendar days of receiving
notice of the enrollee's designation of a primary care physician. The enrollee
ID care will include, at a minimum, all necessary information to allow an
enrollee to access all services under the certificate or evidence of coverage
which require presentation of the card. 

sec.11.1602. Access to Certain Information. 
(a) An HMO shall include on its enrollment form a space in
which an enrollee may indicate : 

(1) his or her primary language; and 

(2) whether the enrollee has a disability affecting the
enrollee's ability to communicate or read. 

(b) The HMO shall provide, at its own expense, an enrollee
handbook and materials relating to the complaint and appeal process and the
availability of the independent review process in the language of the major
population of the HMO's enrolled population pursuant to the Insurance Code
Article 20A.11A. 

(c) If an enrollee has a disability affecting the enrollee's
ability to communicate or read, the HMO shall provide, at its own expense,
an enrollee handbook and materials relating to the complaint and appeal process
and the availability of the independent review process in the appropriate
format, including but not limited to, the following: 

(1) Braille; 

(2) large print, no smaller than seventeen point; 

(3) audio tape; 

(4) TDD access; and/or 

(5) an interpreter. 

sec.11.1603. Notification of Change
in Payment Arrangements. 
(a) An HMO shall notify all affected group contract holders
in writing of a substantive change in the payment arrangement for physicians
and providers within 30 days of such substantive change. A substantive change
includes, but is not limited to the following: 

(1) the type of payment arrangement changes, e.g., from capitation
to fee for service, from fee for service to capitation, for any type of service
whether inpatient, primary care, specialty care, etc., if the cost of that
service affected equals either twenty-five percent of the total costs associated
with that type of service or ten percent of the total overall medical and
other health care costs of the HMO within the affected service area; 

(2) the rate of payment changes, e.g., capitation rates
are reduced or increased by: 

(A) five percent or more if such adjustment affects more than
ten percent of the total number of service providers within a service area; 
(B) five percent or more if such adjustment applies to physicians
or other health care providers, which in the aggregate, were responsible for
five percent or more of the total service area medical and hospital costs
during the previous 12 months; 

(C) ten percent or more if the costs incurred under the affected
contracts for the previous 12 months equates twenty-five percent of the total
costs incurred within a service area associated with the type of service; 
(D) twenty percent or more for any individual physician or
other health care provider (including any impact from loss of withheld amounts
or payment of bonuses), but said notification is only required to group contract
holders that have members assigned to or are receiving services from that
individual physician or other health care provider. 

(b) The notification of the change must include a description
of the payment arrangement that has been changed and a description of the
new payment arrangement. 

sec.11.1605. Pharmaceutical Services. 
Should an HMO provide prescription drug coverage, such coverage shall
be subject to copayments for both generic drugs and name brand drugs. If the
actual cost of the drug is less than the copayment, the enrollee shall pay
the lower cost. The copayments may be the same, or if different, shall be
applied as follows: 

(1) if the prescription is for a generic drug, the enrollee
shall pay no more than the generic copayment; 

(2) if the prescription is for a name brand drug, the
enrollee shall pay no more than the name brand copayment if: 

(A) the prescription is written "Dispense as written"; or 
(B) there is no generic equivalent for the prescribed drug; 
(3) if the prescription is written "product selection
permitted" and the enrollee elects to receive a name brand drug when a generic
equivalent is available, the enrollee shall pay no more than the generic 
copayment
plus the difference between the cost of the generic drug and the cost of the
name brand drug. 

(4) if the enrollee's prescription benefit requires the
use of generic equivalent drugs ("required generic") and the enrollee receives
a name brand drug when a generic equivalent is available, the enrollee shall
pay no more than the generic copayment plus the difference between the cost
of the generic drug and the cost of the name brand drug, even when the 
prescription
is written "dispense as written." 

sec.11.1606. Organization of <nl>an HMO<ol> [
a Health Maintenance Organization and Service Area]. 
(a) [Organizationally, the HMO shall be governed by a
governing body that is legally responsible for the operation of the HMO. The
governing body may include physicians, dentists or other providers, or other
individuals.] 

[(b)] The governing body <nl>as described in
the Insurance Code Article 20A.07,<ol> shall be responsible for the development,
approval, implementation and enforcement of administrative, operational, 
personnel
and patient care policies, procedures and related documents for the operation
of the HMO.

[(c)] [An HMO may establish one or more service
areas within Texas.]

[(d)] [The HMO shall provide within each
service area]:

[(1)] [all services identified at sec.11.2001
of this title (relating to Ambulatory Health Care Services), sec.11.2002
of this title (relating to Emergency Care), sec.11.2003 of this title (relating
to Inpatient Hospital and Medical Services), sec.11.2004 of this title (relating
to Diagnostic and Therapeutic Services) and perform the quality improvement
and utilization review functions required by sec.11.1901 of this title (relating
to Quality Improvement), sec.11.1902 of this title (relating to Quality
Improvement Program), and sec.11.1903 of this title (relating to Quality
Improvement Committee). The HMO may also provide one, all or a combination
of the services in sec.11.2005 of this title (relating to Optional Services);
[(2)] [at least one physically identifiable
administrative office in Texas. If an HMO has multiple service areas under
one certificate of authority, the HMO shall locate the office within one of
those multiple service areas;]

<nl>(b)<ol> [(3)] <nl>The HMO shall provide
<ol> a full time chief executive officer or operations officer <nl>and
at least one full time medical director, and if a limited service health care
plan or single service health care plan, a director<ol> who is available <nl>
within a service area.<ol> [on site at an administrative office; and
[(4)] [a medical director or single service
director who:]

[(A)] [shall be currently licensed in Texas
or otherwise authorized to practice in this state;]

[(B)] [shall reside in the service area;
and]

[(C)] [may serve in a part-time capacity.
However, the medical director or a physician designee or single service director
or designee shall be available at all times to address complaints under 
Insurance
Code, Article 20A.12(e)].

<nl>(c)<ol> <nl>The HMO may establish one or more service
areas within Texas. Each defined service area must meet the following:<ol>

<nl>(1)<ol> <nl>demonstrate to the department the ability
to provide continuity, accessibility, availability and quality of services;
<ol>

<nl>(2)<ol> <nl>specify the counties and zip codes,
or any portions thereof, included in the service area;<ol>

<nl>(3)<ol> <nl>provide a complete physician and
provider listing for all enrollees residing, living or working in the defined
service area;<ol>

<nl>(4)<ol> <nl>maintain separate cost center accounting
for each service area to facilitate the reporting of divisional operations
as required for HMO financial reporting.<ol>

<nl>(d)<ol> <nl>The HMO shall ensure the service area
maintains the following:<ol>

<nl>(1)<ol> <nl>if a basic health care service plan,
a medical director, and if a limited health care service plan or a single
health care service plan, a director who:<ol>

<nl>(A)<ol> <nl>shall be currently licensed in Texas or
otherwise authorized to practice in this state in the field of services offered
by the HMO;<ol>

<nl>(B)<ol> <nl>shall reside in the service area; and
<ol>

<nl>(C)<ol> <nl>may serve in a part-time capacity and
shall be available at all times to each defined service area. However, the
medical director or a physician designee or single service director or designee
meeting the criteria described in subparagraphs (A) and (B) of this paragraph,
shall be available at all times to address complaints, clinical issues, 
utilization
review and any quality of care inquiries on behalf of the HMO.<ol>

<nl>(2)<ol> <nl>compliance with all requirements
for quality improvement and utilization review functions as described in 
Subchapter
T of this chapter (relating to Quality of Care).<ol>

[(e)] [The HMO shall ensure the administrative
office maintains:]

[(1)] [quality improvement and utilization
review plans;]

[(2)] [a current list of all participating
physicians and, if applicable, providers of care such as dentists and physical
therapists;]

[(3)] [current files containing copies
of contracts for all participating physicians and, if applicable, other 
providers
of care such as dentists and physical therapists that are updated on an ongoing
basis;]

[(4)] [files on subcontracting physicians
and, if applicable, providers such as dentists and physical therapists which
contain sufficient information to assure current licensure or other 
authorizations
to practice in the State of Texas; and]

[(5)] [current physician manual, dentist
manual and current provider manual which shall be provided to each contracting
physician, dentist and other provider. The manuals shall contain details
of the requirements by which the physicians and providers will be governed.
[(f)] [An enrollee shall not be required
to travel in excess of 30 miles to reach a primary care physician and general
hospital care except as provided in subsections (h) and (i) of this section.
[(g)] [An enrollee shall not have to travel
in excess of 75 miles to secure initial contact with referral specialists;
special hospitals; psychiatric hospitals; diagnostic and therapeutic services;
and single service health care physicians, dentists or providers except as
provided in subsections (h) and (i) of this section.]

[(h)] [If any service or provider is not
available to an enrollee within the mileage radii specified in subsections
(f) and (g) of this section, the HMO shall submit to the department for approval
health care utilization data which indicates a normal pattern for securing
health care services within the service area.]

[(i)] [The provisions in subsections (f)
and (g) of this section do not preclude an HMO from making arrangements with
another source outside the service area for enrollees to receive a higher
level of skill or specialty than the level which is available within the HMO
service area such as, but not limited to, treatment of cancer, burns, and
cardiac diseases.]

[(j)] [An HMO shall require the HMO physicians,
dentists and other providers of care who employ physician assistants, advanced
practice nurses, dental hygienists and individuals other than physicians to
assess the health care needs of HMO enrollees to have written policies which
are implemented and enforced and describe the duties of all such providers
in accordance with statutory requirements for licensure, delegation, 
collaboration,
and supervision as appropriate.]

[(k)] [The HMO shall systematically and regularly
verify that health care services furnished by physicians and providers of
care such as dentists and physical therapists are available and accessible
to enrollees without unreasonable periods of delay.]

[(l)] [The HMO shall develop and maintain
a statistical reporting system which allows for compiling, developing, 
evaluating,
and reporting statistics relating to the cost of operation, the pattern of
utilization of its services, and the availability and accessibility of its
services.]

[(m)] [The HMO shall submit directly to the
department one copy of its annual report on or before the first day of March
in accordance with the Insurance Code[,] Article 20A.10(4).]

[(n)] [An HMO shall notify the department
and shall comply with the Insurance Code, Chapter 20A and Chapter 11 of this
title (relating to Health Maintenance Organizations) before the HMO may add
new service areas outside the service area(s) originally identified in the
application for a certificate of authority.]

sec.11.1607. Accessibility and
Availability Requirements.
(a) An enrollee shall not be required to:

(1) travel in excess of 30 miles to reach a primary care
physician and general hospital care except as provided in subsections (b)
and (c) of this section;

(2) travel in excess of 75 miles to secure contact with
referral specialists, special hospitals, psychiatric hospitals, diagnostic
and therapeutic services, and single or limited service health care physicians
or providers except as provided in subsections (b) and (c) of this section;
(b) If any covered health care service or a participating
physician and provider is not available to an enrollee within the mileage
radii specified in subsection (a)(1) and (2) of this section because physicians
and providers are not located within such mileage radii, or physicians and
providers meeting the minimum quality of care and credentialing requirements
of the HMO are not located within the mileage radii, the HMO shall submit
a plan to the department for approval, at least 30 days before implementation.
The plan shall include the following:

(1) the geographic area identified by county, city, ZIP code,
mileage, or other identifying data in which services and/or physicians and
providers are not available;

(2) for each geographic area identified as not having
covered health care services and/or physicians or providers available, the
reason or reasons that covered health care services and/or physicians and
providers cannot be made available;

(3) a map, with key and scale, which identifies the
areas in which such covered health care services and/or physicians and providers
are not available;

(4) the HMO's general plan for making covered health
care services and/or physicians and providers available to enrollees in each
geographic area identified;

(5) the names and addresses of the participating physicians
and providers and a listing of the covered health care services to be provided
through the HMO delivery network to meet the medical needs of the enrollees
covered under the HMO's general plan required under paragraph (4) of this
subsection;

(6) the names and address of other physicians and providers
and a listing of the specialties for any other health care services or 
physicians
and providers to be made available in the geographic area in addition to those
physicians and providers participating in the HMO delivery network listed
under paragraph (5) of this subsection;

(7) a general description of the day to day procedures
to be followed by the HMO to assure that primary care physicians, general
hospitals, referral specialists, special hospitals, psychiatric hospitals,
diagnostic and therapeutic services, or single or limited health care service
providers and all other mandated health care services are made available and
accessible to enrollees in the geographic areas identified as being areas
in which such covered health care services and/or physicians and providers
are not available and accessible, and any plans of the HMO for attempting
to develop an HMO delivery network through which covered health care services
are available and accessible to enrollees in these geographic areas in the
future; and

(8) any other information which is necessary to assess
the HMO's plan.

(c) The HMO is not precluded from making arrangements with
physicians or providers outside the service area for enrollees to receive
a higher level of skill or specialty than the level which is available within
the HMO service area such as, but not limited to, treatment of cancer, burns,
and cardiac diseases.

(d) The HMO shall require the HMO physicians and other providers
of care who employ physician assistants, advanced practice nurses, dental
hygienists and individuals other than physicians to assess the health care
needs of HMO enrollees to have written policies which are implemented and
enforced and describe the duties of all such providers in accordance with
statutory requirements for licensure, delegation, collaboration, and supervision
as appropriate.

(e) The HMO shall systematically and regularly verify that
health care services furnished by physicians and providers of care such as
dentists and physical therapists are available and accessible to enrollees
without unreasonable periods of delay.

(f) The HMO shall develop and maintain a statistical reporting
system which allows for compiling, developing, evaluating, and reporting 
statistics
relating to the cost of operation, the pattern of utilization of its services,
and the availability and accessibility of it services.

(g) Each health benefit plan delivered or issued for delivery
by an HMO must include an HMO delivery network which is adequate and complies
with the Insurance Code Article 20A.05(a)(1).

(h) The HMO shall not be required to expand services outside
its service area to accommodate enrollees who live outside the service area,
but work within the service area.

(i) Each evidence of coverage or certificate delivered or
issued for delivery by an HMO may provide enrollees the option to access covered
health care services through telemedicine.

(j) Before providing telemedicine services to an enrollee,
an HMO shall provide the enrollee with the option to select a physician or
provider within the HMO delivery network to provide the covered health care
services, or to elect to receive telemedicine services and shall obtain the
informed consent of the enrollee.

<nl>(k)<ol> <nl>In order to provide covered health care
services to any enrollee by telemedicine, an HMO shall satisfy the criteria
specified under subsection (a) of this section.<ol>

sec.11.1608. Designation of Obstetrician/Gynecologist
Notice.
(a) An HMO shall issue a notice in a readable and understandable
format to its female enrollees, a clear, complete and accurate description
of that enrollee's rights under the Insurance Code Article 21.53D. The notice
shall include these items in the following order:

(1) a heading in bold print and all capital letters indicating
the information in the notice relates to an enrollee's right to designate
an obstetrician or gynecologist,

(2) a statement that the notice is being provided to
advise the enrollee of rights under the Insurance Code Article 21.53D, including
the HMO's complete licensed name,

(3) a heading in bold print describing the right being
provided, for example, Right to Designate Obstetrician or Gynecologist, (4)
a description of the enrollee's rights under the Insurance Code Article 21.53D,
(5) a statement identifying the HMO, and providing a
phone number and address to which an enrollee may direct questions regarding
the rights for which the notice is being provided.

(b) The notice required by this section shall be in no less
than 10 point type.

(c) A representative notice that complies with these requirements
may be obtained from the Texas Department of Insurance, HMO/UR/QA Group Unit,
P.O. Box 149104, Austin, Texas, 78714-9104.

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 June
15, 1998.
TRD-9809539
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER S. Solvency Standards for Managed Care Organizations
Participating in Medicaid
28 TAC sec.sec.11.1802-11.1806
The amendments and new sections are proposed under the Insurance
Code, Chapter 20A, as amended by the 75th Legislature in Senate Bill 385,
and Article 1.03A. Insurance Code, Article 20A.02(b) provides that basic health
care services mean health care services which the commissioner determines
an enrolled population might reasonably require in order to be maintained
in good health, including, at a minimum, services designated as basic health
services under Section 1302, Title XIII, Public Health Service Act (42 U.S.C.,
Section 300e - 1(1). Insurance Code, Article 20A.22(a) provides that the 
commissioner
may promulgate rules and regulations as are necessary and proper to carry
out the provisions of the HMO Act (Insurance Code, Chapter 20A). Article 
20A.22(b)
provides that the commissioner is specifically authorized to promulgate rules
to ensure that enrollees have adequate access to health care services and
to establish minimum physician/patient ratios, mileage requirements for primary
and specialty care, maximum travel times, and maximum waiting times for 
obtaining
appointments. Article 20A.04(b) provides that the commissioner may promulgate
such reasonable rules and regulations as he deems necessary to the proper
administration of the HMO Act to require a health maintenance organization,
subsequent to receiving its certificate of authority, to submit the 
modifications
or amendments to the operations or documents submitted upon application for
a certificate of authority to the commissioner, either for his approval or
for information only, prior to the effectuation of the modification or 
amendment,
or to require the health maintenance organization to indicate the modifications
to the commissioner at the time of the next site visit or examination. Article
20A.05(b) sets forth the determinations the commissioner must make prior to
granting a certificate of authority to an HMO. Article 20A.37 provides that
the commissioner by rule may establish minimum standards and requirements
for ongoing internal quality assurance programs for health maintenance 
organizations,
including, but not limited to, standards for assuring availability, 
accessibility,
quality, and continuity of care. Article 1.03A provides that the Commissioner
of Insurance may adopt rules necessary for the conduct and execution of the
duties and functions of the Texas Department of Insurance only as authorized
by a statute. 

The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1802. Minimum Surplus or Net Worth.
(a) Subject to the reduction specified in sec.11.1804 of
this title (relating to Guarantees) and the exception specified in sec.11.1801
of this title (relating to Entities Covered), <nl>an<ol> [a]
MCO must possess the greater of: 

(1) $1.5 million <nl>for a basic service MCO, $1.0 million
for a limited service MCO, and $500,000 for a single service MCO<ol> of
admitted assets in excess of all liabilities plus sufficient capital of a
nature acceptable to the <nl>department<ol> [Texas Department of Insurance
(hereinafter the "department")] to cover the first <nl>12<ol> [
18] months of reasonably projected losses, with the <nl>12<ol> [
18] months beginning from the date of inception of the initial Medicaid
contract executed with the MCO which is subject to this subchapter; [
and] <nl>or<ol> 

(2) (No change.) 

(b) In addition, <nl>an<ol> [a] MCO must infuse
capital in a form acceptable to the department at the end of every six months
to fund any losses in excess of its originally projected losses or to maintain
the $25 per enrollee requirement provided above. 

sec.11.1803. Statutory Deposits. 
(a) As used in this section, "uncovered health care expenses"
means the estimated cost of health care services that are not guaranteed,
insured, or assumed by a person other than the MCO. 

(b) Subject to the reduction specified in sec.11.1804 of
this title (relating to Guarantees), <nl>an<ol> [a] MCO must
have on deposit with the Office of the Comptroller of Public Accounts of Texas
the greater of: 

(1) $500,000 <nl>if a basic service MCO; $375,000 if a limited
service MCO; or $250,000 if a single service MCO,<ol> [and] <nl>
or<ol> 

(2) an amount equal to uncovered health care expenses
incurred for the previous calendar year. If <nl>an<ol> [a] MCO
has not existed for a full calendar year, then this amount must equal the
reasonably projected uncovered health care expenses for the first 12 months
of operation. 

(c) This deposit may be used to [fully] protect
the interests of the enrollees of the MCO, including but not limited to the
payment of the costs delineated in sec.11.1805(a)(2)(C) of this title (relating
to Performance and Fidelity Bonds) or related to uncovered health care services.
Any deposit is subject to the <nl>procedures set forth in sec.11.802 of
this title (relating to Statutory Deposit Requirements)<ol> [practices
of the department for the establishment, maintenance, and release of statutory
deposits of insurance companies]. 

sec.11.1804. Guarantees. 
(a) As used in this section, the phrase "certified audited
financial statements" means financial statements audited by a CPA utilizing <nl>
generally accepted auditing standards<ol> [Generally Accepted Auditing
Standards] which attest that the financial condition of the MCO is fairly
represented in accordance with <nl>generally accepted accounting principles
<ol>[ Generally Accepted Accounting Principles]; and the phrase
"section 1115 waiver expansion program" means the Medicaid program involving
children of the ages 6-18 years in a socio-economic level of up to 133% over
the federal poverty level and who are not eligible under the regular Medicaid
program. 

(b) If [and only if] a guarantee issued for the
benefit of <nl>an<ol> [a] MCO satisfies the conditions and requirements
set forth in [subsection (c)(2)(A) in] this section, then the <nl>
requirements shall be reduced as follows<ol> [$1.5 million figure required
in sec.11.1802(a) (1) of this title (relating to Minimum Surplus or Net
Worth), is reduced to $1 million and the $500,000 figure required in 
sec.11.1803(b)
of this title (relating to Statutory Deposits ), is reduced to $250,000.]:
Figure: 28 TAC sec.11.1804(b) 

(c) A guarantee must: 

(1) be unconditional<nl>, monetarily unlimited, cover all
expenses and liabilities,<ol> and approved by the department, filed with
the <nl>contracting state agency<ol> [Texas Department of Health],
and provide for 6 months advance notice to the department and the 
<nl>contracting
state agency<ol> [Texas Department of Health] prior to its cancellation;
and 

(2) be executed by a sponsoring organization with: 

(A) a minimum tangible worth equal to $10 million for each
guarantee it has issued, and be supported by <nl>board<ol> resolutions
[of its Board of Directors] which are properly created, certified,
and filed with the department and the <nl>contracting state agency<ol>
[Texas Department of Health]. In addition, the sponsoring organization
must timely provide to the department and the <nl>contracting state agency
<ol> [Texas Department of Health] certified audited financial
statements for the most recent fiscal year, a report identifying in detail
all guarantees issued or made, and notification in detail of any guarantees
issued or made while a guarantee described in paragraph (1) of this subsection
is in force or exists; or 

(B) taxing authority <nl>over a portion of the population
of Texas<ol> for the purpose of funding medical care[ over a portion
of the population of Texas]. For the MCO to qualify for this reduction,
its sponsoring organization must submit satisfactory and verifiable evidence
to the Texas Health and Human Services Commission and the department that
it actually has the ability to tax a portion of the population of Texas. 
(d) If at any time a guarantee issued for the benefit of <nl>
an<ol> [a] MCO does not comply with [each and] every
[condition and] requirement of this section, then the reductions
provided for in this section terminate and the amounts stated in sec.11.1802(a)
and sec.11.1803(b) of this title immediately apply to the MCO. 

sec.11.1805. Performance and Fidelity Bonds. 
(a) <nl>An<ol> [A] MCO must provide a performance
bond to the <nl>contracting state agency<ol> [Texas Department of
Health], and file a copy with the department, which: 

(1) names the <nl>contracting state agency<ol> [Texas
Department of Health] as the obligee; 

(2) provides for the faithful performance of the MCO
in accordance with the contract and all specifications related to the Medicaid
Program, and covers: 

(A) any expenses (including, but not limited to, administrative,
personnel and legal expenses) incurred by the <nl>contracting state agency
<ol> [Texas Department of Health] resulting from <nl>an<ol>
[a] MCO's non-performance; 

(B) the additional costs for services rendered after the termination
of a contract for non-performance until other arrangements for services are
made; and 

(C) any costs for services not paid by the MCO under its contract
that ultimately may be the responsibility of the <nl>contracting state agency
<ol> [Texas Department of Health] or State of Texas; 

(3) is in an amount of <nl>at least<ol> $100,000 <nl>
with no deductible;<ol> and 

(4) (No change.) 

(b) In addition, <nl>an<ol> [a] MCO must maintain
the fidelity bonds required by and comply with [Article 20A.30 of]
the [Texas] Insurance Code<nl> Article 20A.30<ol>.

sec.11.1806. Additional Information
to be Submitted by an MCO Participating in Medicaid. 
(a) Within 30 days after the end of each month, the MCO shall
file a complete set of monthly financial exhibits pertaining to the state
Medicaid program, in the format of the Managed Care Financial Statistical
Report, as may be modified or amended by the Texas Department of Health. The
MCO shall file, on two separate occasions, an original Managed Care Financial
Statistical Report reflecting the state Medicaid program operations for each
contract year in the same format as the monthly Managed Care Financial 
Statistical
Report. The first annual report shall reflect data completed through the 90th
day after the end of the contract year, and shall be submitted within 120
days after the end of the contract year. The second annual report shall reflect
data completed through the 270th day after the end of the contract year, and
shall be submitted 300 days after the end of the contract year. The second
(final) report shall be accompanied by a written opinion from a CPA attesting
to the fact that the subject report presents fairly, in all material respects,
the financial and statistical results of the contract's state Medicaid program
operations for the period stated therein, in conformity with generally accepted
accounting principles consistently applied throughout the reported period(s). 
(b) The MCO shall submit the same financial projections, including
a cash flow statement, submitted to the Texas Department of Health with the
request for application (RFA). This information shall be submitted with the
certificate of authority if the MCO is not already a licensed MCO. If the
MCO is a licensed operation then the financial projections should be sent
with the next financial statement due to the department. 

(c) Any similar financial or statistical reports required
by other contracting state agencies shall also be submitted to the department
in the same manner as described in subsections (a) and (b) of this section. 
(d) Information submitted pursuant to this section shall be
sent to the Texas Department of Insurance, Financial Monitoring Unit, P.O.
Box 149104, Austin, Texas 78714-9104. 

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 June
15, 1998.
TRD-9809540
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER T. Quality of Care
28 TAC sec.11.1902
The amendment is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.1902. Quality Improvement Program. 
The quality improvement program shall be continuous and comprehensive
including both the quality of clinical care and the quality of service requiring
updates as needed. The HMO shall dedicate resources such as personnel, analytic
capabilities, and data resources to the program that are adequate to meet
the needs of the program. 

(1)-(4) (No change.)

(5) Credentialing. <nl>An HMO shall implement a documented
process for selection and retention of affiliated providers, which includes
the following elements, as applicable:<ol> 

<nl>(A)<ol> HMOs shall develop written
criteria for credentialing of physicians and providers appropriate to the
nature of the services to be furnished to enrollees. HMOs shall also develop
written procedures for verifications. 

<nl>(i)<ol> The governing body shall approve the policies
and procedures. 

<nl>(ii)<ol> The policies and procedures shall be evaluated
by practicing physicians and providers on at least an annual basis. 

<nl>(iii)<ol> Credentialing shall be required for all physicians
and other providers who are permitted to practice independently under state
law. Except for advanced practice nurses and physicians' assistants, 
credentialing
is not required for: providers who furnish services only under the direct
supervision of a physician or provider; hospital-based physicians or providers
who provide services incident to hospital services, unless those physicians
or providers are separately identified in enrollee materials as available
to enrollees. Students, residents, or fellows do not require credentialing.
Physicians or providers who are members of a contracting group shall be 
credentialed
individually. 

<nl>(iv)<ol> The initial credentialing process, including
application, verification of information, and a site visit (if applicable),
must be completed before the effective date of the initial contract with the
physician or provider. 

(v) Information collected pursuant to subparagraphs (B)(ii)
and (iii) of this paragraph must be no more than six months old on the date
on which the physician, dentist, or provider is determined to be eligible
for contract by a peer review or credentialing committee, with the exception
of information relating to the site visit and medical record review, which
shall be no more than two years old. 

<nl>(vi)<ol> An HMO shall have written policies and procedures
for suspending or terminating affiliation with a contracting physician or
provider, including an appeals process, pursuant to the Insurance Code Article
20A.18A(b). 

<nl>(vii)<ol> The HMO shall have written procedures for
recredentialing at least every two years through a process that updates 
information
obtained in initial credentialing and considers performance indicators. The
HMO shall maintain documentation of current state licensure and required permits
to practice. 

<nl>(viii)<ol> If the HMO delegates the credentialing functions
to other entities, it shall have written procedures for delegation of 
credentialing
functions to other entities which include, but are not limited to, criteria
for delegation, pre-delegation audit procedure and criteria, delegation 
agreement,
monitoring plan, and a procedure for termination of the delegation agreement
for non-performance. Documentation of pre-delegation evaluations performed,
executed delegation agreements, reports received from the delegated entities,
current rosters or copies of signed contracts of physicians and providers
who are affected by the delegation agreement, and continuing monitoring 
evaluations
shall be maintained by the HMO and made available to the department for review.
Credentialing files at the delegated entity shall be made available to the
department for examination upon request. 

<nl>(ix)<ol> The HMO's procedures shall ensure that selection
and retention criteria do not discriminate against physicians or providers
who serve high-risk populations or who specialize in the treatment of costly
conditions. 

<nl>(x)<ol> The HMO's procedures shall include a procedure
for notifying licensing or disciplinary bodies or other appropriate authorities
when a practitioner's or provider's affiliation is suspended or terminated
due to quality deficiencies. 

<nl>(B)<ol> Initial credentialing process
for physicians and individual providers shall include, but not be limited
to, the following: 

<nl>(i)<ol> The applicant shall complete an application
for affiliation. The application shall include a work history covering at
least five years and a statement by the applicant regarding any limitations
in ability to perform the functions of the position, history of loss of license
and/or felony convictions; and history of loss or limitation of privileges
or disciplinary activity. The application shall also include whether the 
physician
will accept new patients from the HMO. 

<nl>(ii)<ol> The following shall be verified from primary
sources and included in credentialing files: 

<nl>(I)<ol> A current valid license to practice in the
State of Texas. The primary source for verification shall be the state licensing
agency or board for Texas. 

<nl>(II)<ol> If applicable, clinical privileges in good
standing at the hospital designated by the physician or dentist as the primary
network admitting facility. The primary source for verification shall be the
hospital. 

<nl>(III)<ol> Education and training, including evidence
of graduation from the appropriate professional school and completion of a
residency or specialty training, if applicable. Primary source verification
shall be sought from the appropriate schools, training facilities or the 
American
Medical Association's MasterFile. If the state licensing board or agency 
verifies
education and training with the physician or provider's schools and facilities,
evidence of current state licensure shall also serve as primary source 
verification
of education and training. 

<nl>(IV)<ol> Board certification, if the physician or provider
states that he/she is board certified on the application. Primary source 
verification
may be obtained from the American Board of Medical Specialties Compendium,
the American Osteopathic Association, the American Medical Association 
MasterFile,
or from the specialty boards. 

<nl>(iii)<ol> The following shall also be included in the
physician or individual provider's credentialing file: 

<nl>(I)<ol> Malpractice history from the National Practitioner
Data Bank; 

<nl>(II)<ol> Information on previous sanction activity
by Medicare and Medicaid; 

<nl>(III)<ol> Copy of a valid Drug Enforcement Agency (DEA)
and Department of Public Safety Controlled Substance permit, if applicable; 
<nl>(IV)<ol> Evidence of current, adequate malpractice
insurance meeting the HMO's requirements; 

<nl>(V)<ol> Information about sanctions or limitations
on licensure from the applicable state licensing agency or board. 

<nl>(iv)<ol> The HMO shall perform a site visit to the
offices of each primary care physician, or primary care dentist, as part of
the initial credentialing process. In addition, the HMO shall have written
procedures for determining the high-volume physicians and non-institutional
providers, and shall perform a site visit to the offices of those providers.
If physicians or providers are part of a group practice which shares the same
office, one visit to the site may be used for all physicians and providers
in that office as long as medical records for each physician or provider are
sampled. 

<nl>(v)<ol> Site visits shall be conducted by clinical
personnel (or teams including clinical personnel) , and shall consist of an
evaluation of the site's accessibility, appearance, and space, and of the
adequacy of equipment, using standards developed by the HMO. In addition,
as a result of the site visits, it shall be determined whether the site conforms
to the HMO's standards for medical record keeping practices and confidentiality
requirements. 

<nl>(C)<ol> Recredentialing procedures
for physicians and individual providers shall include, but not be limited
to, the following processes: 

<nl>(i)<ol> The following shall be reverified from primary
sources: 

<nl>(I)<ol> Licensure; 

<nl>(II)<ol> Clinical privileges; 

<nl>(III)<ol> Board certification only if the physician
or dentist was due to be recertified or states that he or she has become board
certified since the last time he or she was credentialed or recredentialed. 
<nl>(ii)<ol> The HMO shall requery the National Practitioner
Data Bank and obtain updated sanction or restriction information from licensing
agencies, Medicare, and Medicaid. 

<nl>(iii)<ol> Site visits conducted by clinical personnel
(or teams including clinical personnel) shall be repeated for primary care
physicians and high-volume physicians and providers. Multi-practitioner sites
should be visited every two years. Medical record audits, including evaluation
of the quality of encounter notes, shall be performed within the two years
prior to recredentialing. 

<nl>(D)<ol> <nl>Credentialing process for institutional
providers shall include, but not be limited to, the following:<ol> 

<nl>(i)<ol> The HMO procedure shall require evidence of
state licensure, and of compliance with any other applicable state or federal
requirements. 

<nl>(ii)<ol> <nl>The HMO procedure shall require evidence
of Medicare certification, as applicable.<ol> 

<nl>(iii)<ol> <nl>The HMO procedure shall require evidence
of approval by a recognized accrediting body. If the provider is not accredited,
the HMO shall establish written standards for participation, and maintain
evidence of evaluation of the provider against those standards in the provider's
credentials file.<ol> 

<nl>(iv)<ol> <nl>The HMO shall maintain evidence of current
licensure and Medicare certification in the provider's credentialing files
at all times.<ol> 

<nl>(v)<ol> <nl>The HMO procedures shall provide for recredentialing
of institutional providers at least every three years.<ol> [The quality
improvement program shall provide for the credentialing and recredentialing
of all contracting physicians, dentists and other providers, including an
application which contains information on education and professional background,
admitting privileges, current relevant permit to practice, Drug Enforcement
Agency certificate and Texas Controlled Substance Certificate, if applicable.
(6)-(9) (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 June
15, 1998.
TRD-9809541
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER U. Services
28 TAC sec.11.2001
The amendment is proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.2001. Ambulatory Health Care Services.
(a) Primary care physician services. 

(1) Participating primary care physicians or their designated
physician coverage shall be available and accessible to enrollees 24 hours
per day, seven days per week within the HMO's service area. 

(A) There shall be telephone access to participating primary
care physicians or their designated physician coverage at all times. 

(B) The HMO shall develop a method by which enrollees may
secure health care services after hours which shall be clearly communicated
in writing to enrollees in the languages predominantly spoken in the service
area. 

(2) An adequate number of participating primary
care physicians shall have admitting privileges at one or more participating
general hospitals located within the HMO's service area to assure that necessary
admissions are made. 

<nl>(3)<ol> <nl>Each HMO shall have the equivalent
of one full-time primary care provider for every 2,000 enrollees or an 
alternative
mechanism to demonstrate an adequate physician/patient ratio.<ol>

[(3)] [There shall be a sufficient number
of participating primary care physicians to meet the needs of the enrollees.
<nl>(4)<ol> <nl>HMOs must arrange for covered health
care services, including referrals to participating and nonparticipating 
referral
specialists, to be accessible to enrollees on a timely basis in accordance
with medically appropriate guidelines consistent with generally accepted 
practice
parameters. Waiting time to obtain appointments for the following types of
care shall be provided as follows:<ol> 

<nl>(A)<ol> <nl>Urgent care shall be provided within 24
hours of contact by the enrollee or a person acting on behalf of the enrollee;
<ol> 

<nl>(B)<ol> <nl>Routine appointments shall be offered
within two weeks from the date the enrollee or a person acting on behalf of
the enrollee contacts the physician or provider for an appointment; and<ol> 
<nl>(C)<ol> <nl>Preventive health services shall be offered
to a child within two months and to an adult within three months from the
date the enrollee or a person acting on behalf of the enrollee contacts the
physician or provider for an appointment.<ol> 

(b) Referral specialists. 

(1) Referral specialist services shall be available and accessible
24 hours per day, seven days per week, within the HMO's service area. 

(2) There shall be sufficient number of referral specialists
with appropriate hospital admitting privileges who are available and accessible
24 hours per day, seven days per week, to meet the needs of the enrollees. 
<nl>(c)<ol> <nl>If an HMO limits enrollees' access to
a limited provider network, it must ensure that such limited provider network
complies with the provisions 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 June
15, 1998.
TRD-9809542
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER W. Single Service HMOS
28 TAC sec.sec.11.2200-11.2205
The new sections are proposed under the Insurance Code, Chapter
20A, as amended by the 75th Legislature in Senate Bill 385, and Article 1.03A.
Insurance Code, Article 20A.02(b) provides that basic health care services
mean health care services which the commissioner determines an enrolled 
population
might reasonably require in order to be maintained in good health, including,
at a minimum, services designated as basic health services under Section 1302,
Title XIII, Public Health Service Act (42 U.S.C., Section 300e - 1(1). Insurance
Code, Article 20A.22(a) provides that the commissioner may promulgate rules
and regulations as are necessary and proper to carry out the provisions of
the HMO Act (Insurance Code, Chapter 20A). Article 20A.22(b) provides that
the commissioner is specifically authorized to promulgate rules to ensure
that enrollees have adequate access to health care services and to establish
minimum physician/patient ratios, mileage requirements for primary and specialty
care, maximum travel times, and maximum waiting times for obtaining 
appointments.
Article 20A.04(b) provides that the commissioner may promulgate such reasonable
rules and regulations as he deems necessary to the proper administration of
the HMO Act to require a health maintenance organization, subsequent to 
receiving
its certificate of authority, to submit the modifications or amendments to
the operations or documents submitted upon application for a certificate of
authority to the commissioner, either for his approval or for information
only, prior to the effectuation of the modification or amendment, or to require
the health maintenance organization to indicate the modifications to the 
commissioner
at the time of the next site visit or examination. Article 20A.05(b) sets
forth the determinations the commissioner must make prior to granting a 
certificate
of authority to an HMO. Article 20A.37 provides that the commissioner by rule
may establish minimum standards and requirements for ongoing internal quality
assurance programs for health maintenance organizations, including, but not
limited to, standards for assuring availability, accessibility, quality, and
continuity of care. Article 1.03A provides that the Commissioner of Insurance
may adopt rules necessary for the conduct and execution of the duties and
functions of the Texas Department of Insurance only as authorized by a statute.
The following statutes are affected by this proposal: Insurance Code, Articles
20A.02, 20A.03, 20A.04, 20A.05, 20A.09, 20A.11, 20A.11A, 20A.11B, 20A.12,
20A.12A, 20A.13, 20A.14, 20A.15, 20A.15A, 20A.17, 20A.18, 20A.18A, 20A.19,
20A.20, 20A.22, 20A.23, 20A.26, 20A.28, 20A.31, 20A.32, 20A.33, 20A.36, 20A.37,
21.53D, 21.53F, 21.53G, 21.58A, 21.58C, 21.58K of the Insurance Code and Title
XIII, Public Health Services Act (42 U.S.C. Section 300E-1(1)) 

sec.11.2200. Definitions. 
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise. 
(1) ADA--The American Dental Association. 

(2) CDT--The current dental terminology users manual
developed and revised periodically by the ADA. 

(3) ADA code/dental procedure description--Numerical
codes and corresponding descriptions specified in CDT to describe bona fide
dental procedures. 

(4) Comparable Facility--The location where emergency
dental services are rendered, including, but not limited to, the office of
a licensed dentist, a dental clinic, or other such facility. 

(5) Emergency Dental Services--Under a single health
care service plan providing dental care services and benefits, emergency dental
services include, but are not limited to, treatment for the teeth and supporting
structures which is administered in a dentist's office, dental clinic, or
other comparable facility, to evaluate and stabilize dental conditions of
a recent onset and severity and is necessary to relieve the sudden onset of
pain or to treat a condition which would lead a prudent layperson possessing
an average knowledge of dentistry to believe that a delay in treatment would
cause a worsening of the condition. 

sec.11.2201. General Provisions.
(a) Each single service HMO shall provide uniquely-described
services with any corresponding copayments for each covered service and benefit
and shall provide a single health care service plan as defined under Insurance
Code, Article 20A.02(y). Each single service HMO must comply with all 
requirements
for a single health care service plan specified in this subchapter. 

(b) Each single service HMO schedule of enrollee copayments
shall specify an appropriate description of covered services and benefits
and may specify recognized procedure codes or other information which is used
for the purpose of maintaining a statistical reporting system, as required
under sec.11.1606 of this title (relating to Organization of an HMO and
Service Area). 

(c) Each single service HMO evidence of coverage shall include
a glossary of terminology defining the terms, including but not limited to,
such terms used in the evidence of coverage required by sec.11.501 of this
title (relating to Evidence of Coverage). Such glossary shall be included
in the information to prospective and current group contract holders and 
enrollees,
as required under Insurance Code, Article 20A.11. 

sec.11.2202. Limitations and Exclusions.
Single service HMOs are prohibited from: 

(1) Excluding services required for pre-existing conditions
which would otherwise be covered under the plan; 

(2) Establishing waiting periods for coverage of pre-existing
conditions; and 

(3) Imposing a lifetime coverage maximum for any covered
service or benefit. 

sec.11.2203. Minimum Standards,
Dental Care Services and Benefits. 
(a) Each single service HMO evidence of coverage which uses
any dental procedure codes must use such codes as specified in the current
version of CDT, as defined in sec.11.2200 of this subchapter (relating to
Definitions). 

(b) Each single service HMO evidence of coverage providing
coverage for dental care services and benefits shall cover dental treatment
in progress and may, if clearly disclosed, require the enrollee to have such
treatment completed by a participating provider in the Health Maintenance
Organization Delivery Network, as defined under Insurance Code, Article 
20A.02(w),
or as otherwise arranged by the single service HMO. 

(c) Each single service HMO evidence of coverage providing
coverage for dental care services and benefits may include an infection control
(sterilization) fee and shall provide primary and preventive dental care 
services
and benefits, including, but not limited to, office visit-during and after
regularly scheduled hours; oral evaluations-limited (emergency), periodic,
comprehensive, detailed & extensive (problem focused); x-rays; bitewings;
panoramic film; dental prophylaxis (adult and child); topical fluoride 
treatment;
dental sealants; amalgam fillings (one, two, three and four or more surface,
primary and permanent-including polishing); anterior resin fillings (one,
two, three and four or more surface or involving incisal angle, primary and
permanent-including polishing); oral surgery (extractions); surgical incision
and drainage of abscess-intraoral soft tissue; and palliative (emergency)
treatment of dental pain; 

(d) Each single service HMO evidence of coverage providing
coverage for dental care services and benefits may include an infection control
(sterilization) fee, and may provide secondary dental care services and 
benefits,
including, but not limited to, posterior resin restorations, one, two, three
and four or more surface (to include polishing); crowns and crown recementation;
composite resin crowns, anterior-primary; sedative fillings; core buildup,
including any pins, and pin retention; pulp cap (direct and indirect); 
therapeutic
pulpotomy; root canal therapy, anterior, bicuspid and molar; gingival curretage;
osseous surgery; periodontal scaling and root planing; periodontal maintenance
procedures; complete denture (maxillary and mandibular); partial denture 
(maxillary
and mandibular); root removal-exposed roots; surgical removal of erupted tooth
requiring elevation of mucoperiosteal flap and removal of bone and/or section
of tooth; removal of impacted tooth (soft tissue and completely bony); tooth
reimplantation and/or stabilization of accidentally evulsed or displaced tooth
and/or alveolus; alveoplasty; occlusal guard (bruxism appliance); or 
orthodontia.
sec.11.2204. Minimum Standards,
Vision Care Services and Benefits.
(a) Each single service HMO evidence of coverage providing
vision care services and benefits shall provide the following as covered primary
and preventive vision services: comprehensive eye examination to include medical
history; visual acuities, with correction (distance and near), without 
correction
(distance and near); cover test at 20 feet and at 16 inches; versions; external
examination of the eye lids, cornea, conjunctiva, pupillary reaction 
(neurological
integrity) and muscle function; binocular measurements for far and near; 
internal
eye examination (ophthalmoscopy); autorefraction/refraction (far point and
near point); tonometry (reasonable attempt or equivalent testing if 
contraindicated);
retinoscopy; biomicroscopy; intraocular pressure - glaucoma test; slit lamp
examination and urgent care as defined in sec.11.2 (51) of this title (relating
to Definitions). 

(b) A single service HMO evidence of coverage providing vision
care services and benefits may provide coverage for secondary vision care
services which include, but are not limited to, contact lens examination;
fitting; training; follow - up visits, or eye glasses. 

sec.11.2205. Prohibited Practices.
(a) A single service HMO shall not limit or otherwise interfere
with an enrollee's right to terminate his or her membership in the plan before
the end of the enrollment year; 

(b) A single service HMO shall not limit coverage for emergency
services under a single health care service plan. 

(c) A single service HMO shall not charge an emergency fee
in addition to a copayment for emergency 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 June
15, 1998.
TRD-9809543
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

CHAPTER 11. Health Maintenance Organizations
The Texas Department of Insurance proposes repeal of sec.sec.11.103,
11.208, 11.303, 11.304, 11.306, 11.508 - 11.510, 11.802, and 11.1605 concerning
health maintenance organizations ("HMOs"). Simultaneous with the repeal of
these sections, a comprehensive revision of Chapter 11 of Title 28 of the
Texas Administrative Code is being proposed and is published elsewhere in
this issue of the Texas Register. The passage of Senate Bill 385 by the 75th
Texas Legislature resulted in the need for the comprehensive amendment of
the regulations relating to health maintenance organizations in Texas. 

The repeal of sec.11.103 is necessary because this provision is being
proposed as a subsection of amended sec.11.102 of this title (relating to
Information Required for Name Applications). The repeal of sec.11.208 is
necessary because an applicant for a certificate of authority is allowed to
request an extnesion of time under amended sec.11.203 of this title (relating
to Revisions During Review Process). The repeal of sec.11.303 is necessary
to reflect the transfer of the regulatory responsibility for examinations
from the Texas Department of Health to the Texas Department of Insurance,
pursuant to Insurance Code Article 20A.17(b)(4). 

The repeal of sec.11.304 is necessary because each year the Texas Department
of Insurance promulgates a new rule adopting a current format for annual 
statements
required of HMOs. The reports contained in this section are required by sec.7.67
of this title (relating to Requirements for Filing the 1997 Annual and 1998
Quarterly Statements, Other Reporting Forms, and Diskettes). The repeal of
sec.11.306 is necessary because the penalties contained in this section
are each addressed elsewhere in the Insurance Code. The repeal of sec.11.508
is necessary because new sec.11.508 is being proposed which sets forth minimum
benefit standards for basic service health maintenance organizations in Texas.
The language of existing sec.11.508 is being proposed, with minor revisions,
as new sec.11.509. The repeal of sec.11.509 is necessary because new sec.11.509
is being proposed, which sets forth additional benefit standards for group
agreements. The language of existing sec.11.509 is being proposed, with
minor revision, as new sec. 11.511. The repeal of sec.11.510 is necessary
because new sec.11.510 is being proposed, which sets forth benefits which
group agreements must offer their contract holders. The language of existing
sec.11.510 is being proposed as new sec.11.513. 

The repeal of sec.11.802 is necessary to clarify existing language, and
due to changes in internal processing of statutory deposit requirements by
the Texas Department of Insurance. New sec.11.802 is being proposed to provide
consistency with the department's processing procedures. The repeal of 
sec.11.1605
is necessary because the case of Texas Pharmacy Ass'n v. Prudential Ins. Co.
of America, 105 F.3d 1035 (5th Cir. 1997) cert. denied 118 S.Ct. 75 (1997)
held that the statutory authority upon which this section was adopted, Insurance
Code Article 21.52D, is preempted by ERISA. 

The department will consider the adoption of the proposed repeal for 
sec.sec.11.103,
11.208, 11.303, 11.304, 11.306, 11.508-11.510, 11.802, and 11.1605 concerning
health maintenance organizations ("HMOs") in a public hearing under Docket
No. 2367, scheduled for 10:00 a.m. on August 17, 1998, in Room 100 of the
William P. Hobby Jr. State Office Building, 333 Guadalupe Street in Austin,
Texas. The department encourages any interested party to provide the department
with any comments prior to the hearing or at the hearing. 

Rose Ann Reeser, associate commissioner, Regulation and Safety, has determined
that during the first five years that the proposed repeal is in effect, there
will be no fiscal impact on state or local government as a result of enforcing
or administering the sections. There will be no measurable effect on local
employment or the local economy. 

Ms. Reeser has also determined that for each year of the first five years
the repeal of the sections is in effect, the public benefit anticipated as
a result of administration and enforcement of the repealed sections will be
increased efficiency in the operation of the Department arising from consistent
application of procedures among types of regulated entities. Additionally,
the legislative intent of the 75th Legislature in passing Senate Bill 385
is being implemented through the comprehensive revision of the HMO regulations,
of which the repeal of these sections is but a small part. There is no 
anticipated
difference in cost of compliance between small and large businesses. There
is no anticipated economic cost to persons who are required to comply with
the proposed repeal. 

Comments on the proposal must be submitted within 30 days after publication
of the proposed sections in the Texas Register to Lynda H. Nesenholtz, Acting
General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of 
Insurance,
P. O. Box 149104, Austin, Texas, 78714-9104. Additional copies of the comment
are to be submitted to Rose Ann Reeser, Associate Commissioner, Regulation
and Safety, Mail Code 107-2A, Texas Department of Insurance, P. O. Box 149104,
Austin, Texas, 78714-9104 and to Jose Montemayor, Associate Commissioner,
Financial Division, Mail Code 305-2A, Texas Department of Insurance, P.O.
Box 149104, Austin, Texas, 78714-9104. 

SUBCHAPTER B. Name Reservation Procedure
28 TAC sec.11.103
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Texas Department of Insurance or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.103. Certain Words May Not Be Used in Name.
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 June
15, 1998.
TRD-9809520
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER C. Application for Certificate of Authority
28 TAC sec.11.208
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Texas Department of Insurance or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.208. Request to Extend Review Period. 
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.

Filed with the Office of the Secretary of State on June
15, 1998.
TRD-9809521
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER D. Regulatory Requirements for an HMO Subsequent
to Issuance of Certificate of Authority
28 TAC sec.sec.11.303, 11.304, 11.306
(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 Insurance or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.303. Examination. 
sec.11.304. Annual Reports, Other Reports, and Taxes.
sec.11.306. Penalties. 
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 June
15, 1998.
TRD-9809522
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER F. Evidence of Coverage
28 TAC sec.sec.11.508-11.510
(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 Insurance or in the Texas Register office, Room
245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.508. Additional Mandatory Provisions--Group
Agreement Only. 
sec.11.509. Optional Provisions. 
sec.11.510. Additional Information May Be Required.
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 June
15, 1998.
TRD-9809523
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER I. Financial Requirements
28 TAC sec.11.802
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Texas Department of Insurance or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.802. Deposit Requirements. 
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.

Filed with the Office of the Secretary of State on June
15, 1998.
TRD-9809524
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

SUBCHAPTER Q. Other Requirements
28 TAC sec.11.1605
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Texas Department of Insurance or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)

Repeal of sec.sec.11.103, 11.208, 11.303, 11.304,
11.306 and 11.508 - 11.510, 11.802, and 11.1605 is proposed pursuant to 
Insurance
Code Article 20A.22 and Insurance Code, Article 1.03A. Under the Insurance
Code, Article 20A.22, the commissioner shall adopt rules as necessary to 
implement
the Insurance Code, Chapter 20A. Article 1.03A provides that the Commissioner
of Insurance may adopt rules and regulations to execute the duties and functions
of the Texas Department of Insurance only as authorized by statute. 

The proposed repeal affects regulation pursuant to the following statutes:
The Insurance Code Chapter 20A. 

sec.11.1605. Contracts for Pharmaceutical 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 June
15, 1998.
TRD-9809525
Lynda H. Nesenholtz

Acting General Counsel and Chief Clerk

Texas Department of Insurance

Earliest possible date of adoption: August 2, 1998 

For further information, please call: (512) 463-6327

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 35.Emergency and Temporary Orders and Permits; Temporary
Suspension or Amendment of Permit Conditions
The Texas Natural Resource Conservation Commission (commission) proposes
new sec.sec.35.1-35.3, 35.11-35.13, 35.21-35.30, 35.101, 35.201,
35.202, 35.301-35.303, 35.401, 35.402, 35.501, 35.502, 35.601, 35.701, 35.801-
35.809,
and 35.901, concerning emergency and temporary orders. This action implements
Senate Bill (SB) 1876, 75th Legislature, 1997, and continues the commission's
effort to consolidate agency procedural rules and make certain processes 
consistent
among different agency programs. This action also includes certain changes
necessary to implement SB 1, 75th Legislature, 1997, which are noted as follows.
Finally, certain provisions of the rules will constitute a revision to the
state implementation plan. 

The new Chapter 35 is largely derived from previously existing rules. Thus,
the commission is concurrently proposing amendments to emergency and temporary
order provisions in sec.sec.116.410, 291.14, 291.22, 291.142, 291.143,
305.21, 305.29, 305.31, 305.535, 321.80, 321.132, 321.134, 321.152, 321.158,
321.219, 321.232, 321.239, 321.258, and 334.83. The commission is also proposing
the repeal of the following current rules relating to emergency and temporary
orders: sec.sec.116.411-116.418, 291.10, 291.13, 297.57, 305.22-305.28,
305.30, and 305.32. The commission also proposes new sec.297.57 and sec.305.30.
These changes are published in this edition of the Texas Register.

EXPLANATION OF PROPOSED RULES 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders, and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. General application, term, and hearing requirements
applicable to all affected programs are included. Finally, specific requirements
are listed for specific program areas. The statute will allow the commission
or the executive director to act expeditiously to address unforeseen 
circumstances. 
These proposed rules conform with the provisions provided in TWC, Chapter
5, Subchapter L, and provide procedural requirements for implementation. TWC,
sec.5.501, concerning Emergency and Temporary Order or Permit; Temporary
Suspension or Amendment of Permit Condition, expressly authorizes the commission
to prescribe rules necessary to carry out and administer Subchapter L. 

The proposed new Chapter 35 contains general provisions that are applicable
to all affected programs and program-specific requirements. The latter are
largely derived from emergency and temporary order rules that already exist
in other chapters within Title 30 of the Texas Administrative Code (for example,
Chapter 305, Subchapter B). These provisions have been derived from current
commission rules and placed into the new Chapter 35, and the commission is
not proposing many substantive changes to these rules as they currently exist. 
However, there are some substantive changes being proposed. As authorized
by TWC, sec.5.501, the proposed new Chapter 35 provides for the delegation
of authority to issue certain orders to the executive director. Additionally,
the commission is proposing changes to program-specific requirements that
result from the passage of SBs 1 and 1876. Finally, the commission proposes
changes to clarify some notice requirements for temporary and emergency orders,
and it proposes a fee increase. These changes are noted where applicable. 
Proposed new Subchapter A, concerning Purpose, Applicability, and Definitions,
sets forth certain general provisions necessary for administration of the
chapter. Proposed new sec.35.1, concerning Purpose, provides that the purpose
of the new chapter is to implement the commission's authority under TWC, Chapter
5, Subchapter L, to issue temporary or emergency mandatory, permissive, or
prohibitory orders, and by those orders to issue temporary permits or 
temporarily
suspend or amend permit conditions. This provision is in accordance with TWC,
sec.5.501, which contains the statutory authorization for the issuance of
these orders. 

Proposed new sec.35.2, concerning Applicability, provides that the chapter
applies to any application under TWC, Chapter 5, Subchapter L, to issue 
temporary
or emergency mandatory, permissive, or prohibitory orders. 

Proposed new sec.35.3, concerning Definitions, provides definitions for
emergency order, severe property damage, and temporary order. The purpose
of this section to provide general definitions for the chapter and to help
administer the provisions of TWC, Chapter 5, Subchapter L. An emergency order
is defined as an order that must be issued immediately in order to protect
human health and safety or the environment; or for reasons specified in proposed
new sec.35.302, concerning Application for Emergency and Temporary Orders
to Discharge. The definition of severe property damage is the same as that
in sec.305.2, concerning Definitions, and is necessary for the requirements
governing water quality emergency and temporary orders. Temporary order is
defined as an order of short-duration which must be issued as quickly as 
possible,
or which might allow an authorization for a short-term activity, setting 
conditions
and limitations that will adequately protect human health or safety or the
environment, or for the reasons specified in new sec.35.302. 

Proposed new Subchapter B, concerning Authority of Executive Director,
is comprised of three sections and regards delegation to the executive director,
as authorized by TWC, sec.5.501. New sec.35.11, concerning Purpose and
Applicability, provides that the purpose of Subchapter B is to allow the 
executive
director to act on behalf of the commission. 

Proposed new sec.35.12, concerning Authority of the Executive Director,
authorizes the executive director, or a representative or representatives
authorized in writing by the executive director, to act on his or her behalf
to receive applications for and issue emergency orders. The section also 
provides
notice and hearing procedures. 

Proposed new sec.35.13, concerning Eligibility of Executive Director,
provides for the authority of the executive director or the executive director's
representative to act on Texas pollutant discharge elimination system (TPDES)
permits or other TPDES-related approvals if the executive director meets the
qualifications specified in sec.50.41, concerning Eligibility of Executive
Director. 

Proposed new Subchapter C, concerning General Provisions, provides general
requirements for issuing emergency and temporary orders. Proposed new sec.35.21,
concerning Action by Commission or Executive Director, allows the commission
or executive director to issue temporary or emergency orders and, by temporary
or emergency order, to issue a temporary permit or temporarily suspend or
amend a permit condition. The new provisions implement TWC, sec.5.501. 
Proposed new sec.35.22, concerning Term and Renewal of Orders, provides
that unless otherwise noted by a program-specific requirement, the term of
an emergency order is a maximum of 180 days, and that an emergency order may
be renewed once for an additional period of up to 180 days by submittal of
a new application. The section also provides that a temporary order is limited
to a reasonable time specified by the order. This provision implements TWC,
sec.5.505, concerning Term of Order. 

Proposed new sec.35.23, concerning Effect of Orders, provides that an
emergency or temporary order does not vest any rights in the permit holder
or recipient and expires in accordance with its terms. 

Proposed new sec.35.24, concerning Application for Emergency or Temporary
Order, specifies requirements governing applications. The section prescribes
the necessary contents of the application and requires its filing with the
chief clerk. Subsection (b) specifies that an application for an emergency
or temporary order for a bypass of untreated and partially treated wastewater,
if the state has national pollutant discharge elimination system (NPDES) 
authorization,
will constitute prior notice of an anticipated bypass, as required by 30 TAC
sec.305.535. Section 35.24 also requires copies of the application to be
provided to the division director of the appropriate program on behalf of
the executive director, and to the public interest counsel, at the same time
it is filed with the chief clerk. Finally, the section prescribes the manner
in which applications are to be signed. The new section implements TWC, 
sec.5.502,
concerning Application for Emergency or Temporary Order, and contains procedural
requirements necessary for implementation. 

Proposed new sec.35.25, concerning Notice and Opportunity for Hearing,
provides the notice and hearing requirements for emergency and temporary orders.
The section provides that an emergency order can be issued with or without
notice and/or opportunity for hearing, and that if one is issued without a
hearing, the order will set a time and place for a hearing to affirm, modify,
or set aside the order to be held before the commission or its designee as
soon as practicable after the order is issued. In addition, the section provides
that unless otherwise provided by program-specific requirements, notice of
a hearing for issuance of an emergency order or to affirm, modify, or set
aside the order must be given not later than the tenth day before the date
set for the hearing and provide that an affected person may request an 
evidentiary
hearing on the issuance of the emergency order. The section also provides
that temporary orders require a hearing before their issuance, and that notice
must be given not later than the 20th day before the hearing and provide that
an affected person can request an evidentiary hearing on issuance of the 
temporary
order. Program-specific notice requirements are also set out. Some of these
notice requirements are not in existing Chapter 305 and provide clarification
of notice requirements. In addition, the newspaper notice for air catastrophes
replaces the existing requirement for notice to be given in the Texas Register. 
The proposed section implements TWC, sec.5.504. 
Proposed new sec.35.26, concerning Contents of Emergency or Temporary
Order, contains the minimum requirements for information that must be included
in these types of orders. The contents are derived from the application 
requirements
contained in TWC, sec.5.502. 

Proposed new sec.sec.35.27, 35.28, and 35.29, concerning Hearing Required,
Hearing Requests, and Procedures for a Hearing, respectively, provide for
hearings, hearing requests, and procedures for hearings on emergency and 
temporary
orders. The rules provide that hearings will be conducted in accordance with
the Administrative Procedure Act and commission rules. The hearing procedures
implement TWC, sec.5.115(a), concerning Persons Affected in Commission Hearings,
and TWC, sec.5.504, concerning Hearing to Affirm, Modify, or Set Aside Order. 
Proposed new sec.35.30, concerning Application Fees, provides that the
application fee for an emergency or temporary order under this chapter is
$500, plus the actual cost of the required notice. TWC, sec.5.501, authorizes
the adoption of fees for administering the program. In addition, the increase
is authorized by TWC, sec.5.235, which establishes fee authority, and by
Rider 9 under the commission's appropriation in Article VI of HB 1, 75th 
Legislature,
1997, the General Appropriations Act. The commission proposes to increase
the current fee from $100 to $500 in order to more adequately cover commission
expenses incurred when issuing these orders. 

Proposed new Subchapter D concerns Emergency Suspension of Beneficial Inflows.
The subchapter implements TWC, sec.5.506, concerning Emergency Suspension
of Permit Condition Relating to Beneficial Inflows to Affected Bays and 
Estuaries
and Instream Uses, and contains previously existing requirements that have
been moved to the new Chapter 35. 

New sec.35.101, concerning Emergency Suspension of Permit Conditions
Relating to Beneficial Inflows to Affected Bays and Estuaries and Instream
Uses, provides the criteria to be used by the commission in its review and
action on an application by a water right holder for the temporary suspension
of conditions relating to beneficial inflows to bays and estuaries and instream
uses during an emergency. The new section is entirely derived from current
sec.297.57, concerning Emergency Suspension of Permit Conditions, and the
commission proposes no substantive changes to the requirements as they currently
exist in Chapter 297. 

Proposed new Subchapter E concerns Emergency Orders for Utilities. The
subchapter implements TWC, sec.5.507, concerning Emergency Order for Operation
of Utility that Discontinues Operation or is Referred for Appointment of 
Receiver,
and sec.5.508, concerning Emergency Order for Rate Increase in Certain 
Situations.
Proposed Subchapter E also includes provisions necessary to implement SB 1,
and it includes existing commission rules from Chapter 291 that have been
moved to new Chapter 35. While largely derived from current commission rules,
the commission proposes to allow the executive director to issue the orders
under this subchapter, as authorized by TWC, sec.5.501. 

Proposed new sec.35.201, concerning Emergency Order for Operation of
Utility that Discontinues Operation or is Referred for Appointment of a 
Receiver,
authorizes the commission or executive director to appoint a person by emergency
order to temporarily manage and operate a utility that has discontinued or
abandoned operations, or which has been or is being referred to the Attorney
General for the appointment of a receiver under TWC, sec.13.412. This provision
implements both TWC, sec.5.508, concerning these types of orders; and TWC,
sec.13.412, as amended by SB 1, which expanded the definition of abandonment.
The proposed new section also authorizes the issuance of an emergency order
in accordance with current sec.291.142, concerning Operation of Utility
that Discontinues Operation or is Referred for Appointment of a Receiver,
and sec.291.143, concerning Operation of a Utility by a Temporary Manager. 
Proposed new sec.35.202, concerning Emergency Order for Rate Increase
in Certain Situations, authorizes the commission or executive director to
authorize an emergency rate increase for a utility under certain conditions.
Specific requirements in the section are entirely derived from current 
sec.291.22,
concerning Notice of Intent to Change Rates, that have been moved to the new
Chapter 35, and the commission proposes no substantive changes to those 
requirements. 
Proposed new Subchapter F concerns Water Quality Emergency and Temporary
Orders. The subchapter implements TWC, sec.5.509, concerning Temporary or
Emergency Order Relating to Discharge of Waste or Pollutants, and includes
existing commission rules that have been moved to the new Chapter 35 from
Chapter 305, Subchapter B. While largely derived from current commission rules,
the commission is proposing to allow the executive director to issue the orders
under this subchapter, as authorized by TWC, sec.5.501. The commission takes
this action in order to provide for the more expeditious issuance of emergency
and temporary orders. 

Proposed new sec.35.301, concerning Emergency and Temporary Orders Authorized,
authorizes the commission or executive director to issue emergency orders,
and the commission to issue temporary orders, for the discharge of waste or
pollutants into or adjacent to any water in the state when expeditious action
is necessary. 

Proposed new sec.35.302, concerning Application for Emergency and Temporary
Orders to Discharge, contains application requirements that are specific to
Subchapter F. In addition to the application requirements specified in proposed
sec.35.24, this proposed section requires a person desiring to obtain an
emergency or temporary order to provide specific information, including a
statement that the order is necessary to enable action to be taken more 
expeditiously
than is otherwise provided by TWC, Chapter 26, to effectuate the policy and
purposes of that chapter, and statements on the nature of the proposed 
discharge.
Additionally, the section reflects a change in the law that provides that
amelioration of serious drought conditions can be a condition necessitating
the issuance of an emergency or temporary order to the extent consistent with
state assumption of the NPDES program. Further, upon assumption of the NPDES
program, a permittee seeking to discharge into state waters must address 
alternatives
to a bypass in its application. 

Proposed new sec.35.303, concerning Emergency Orders and Temporary Orders,
provides the conditions under which the commission or executive director may
issue emergency or temporary orders. 

Proposed new Subchapter G concerns Solid Waste and Uranium By-product Emergency
Orders. It implements TWC, sec.5.511, concerning Emergency Administrative
Order Concerning Imminent and Substantial Endangerment, and sec.5.512, 
concerning
Emergency Order Concerning Activity of Solid Waste Management, and contains
provisions from existing commission rules. While largely derived from current
commission rules, the commission is proposing to allow the executive director
to issue the orders under this subchapter, as authorized by TWC, sec.5.501. 
Proposed new sec.35.401, concerning Emergency Orders for Nonhazardous
Solid Waste Activities and Underground Injection of Uranium By-product 
Materials,
authorizes the commission or executive director to issue a mandatory or 
prohibitory
emergency order regarding any activity of solid waste management within its
jurisdiction, whether the activity is covered by permit or not, if it determines
that an emergency exists. The section also provides for terms of these orders.
The new section was derived from existing sec.305.29, concerning Emergency
Orders for Solid Waste Activities. As noted, the commission proposes to 
authorize
the executive director to issue these orders, as allowed by statute. In 
addition,
the commission proposes to add requirements for underground injection control
(UIC) emergency orders previously only set out in federal rules. 

Proposed new sec.35.402 concerns Emergency Actions Concerning Hazardous
Waste, and was derived in its entirety from current sec.305.30, concerning
Emergency Actions Concerning Hazardous Waste. As previously noted, the 
commission
proposes to allow the executive director to issue orders under the proposed
section. 

Proposed Subchapter H concerns Radioactive Substances and Materials Emergency
Orders. The proposed subchapter implements TWC, sec.5.516, which authorizes
the issuance of emergency orders under Health and Safety Code (HSC), 
sec.401.056,
concerning Emergency Orders. 

Proposed new sec.35.501, concerning Emergency Orders Relating to Radioactive
Substances, provides for commission or executive director action if it is
determined that radioactive substances threaten the public health or safety
or the environment, and that a licensee managing the radioactive substances
is unable to remove the threat. The section also provides program-specific
notice and hearing requirements, as well as provisions relating to financial
assurance. The section is entirely derived from current sec.305.31, concerning
Emergency Orders Relating to Radioactive Substances, but the commission does
propose modifications. The proposed rule provides for action by the executive
director. In addition, proposed sec.35.501(g), concerning financial assurance,
contains changes to what is in current sec.305.31(h), to better reflect
the relevant statutory language. Additionally, former sec.305.31(b) and
(c), concerning by-product material, are deleted due to the transfer of 
jurisdiction
over those wastes to the Texas Department of Health, under SB 1857, 75th 
Legislature,
1997 (see this edition of the Texas Register).
The commission proposes no other changes to the rules concerning this matter
as they currently exist, and the provisions are simply incorporated into the
new Chapter 35. 

Proposed new sec.305.502, concerning Emergency Impoundment of Radioactive
Material, provides for commission and executive director action to impound
or order the impoundment of radioactive material possessed by any person not
equipped to observe, or failing to observe, the provisions of the Texas 
Radiation
Control Act (TRCA), the rules of 30 TAC Chapter 336 (relating to Radioactive
Substance Rules), or a license or order issued by the commission under TRCA
or Chapter 336. The section also provides for the disposition of the radioactive
material. The section is derived from current sec.305.32, concerning Emergency
Impoundment of Radioactive Material, and the commission proposes only to provide
for action by the executive director. The commission proposes no other changes
to the rules concerning this matter as they currently exist, and the provisions
are simply incorporated into the new Chapter 35. 

Proposed new Subchapter I concerns Storage Tank Emergency Orders. The subchapter
implements TWC, sec.5.510, which authorizes the issuance of these orders.
Proposed sec.35.601, concerning Emergency Order Concerning Underground or
Aboveground Storage Tanks, authorizes the commission or executive director
to issue an order to the owner or operator of an underground storage tank
regulated under TWC, Chapter 26, and 30 TAC Chapter 334 (relating to Underground
and Aboveground Storage Tanks). The section contains program-specific 
requirements
concerning the content of the order, and it provides for the delivery of the
order to people identified in the order. The section is derived from current
sec.334.83, concerning Emergency Orders. The only significant change proposed
by the commission is to provide for action by the commission, as well as the
executive director, whereas the existing rule provides only for action by
the executive director. Otherwise, the commission proposes no other changes
to the rules concerning this matter as they currently exist, and the provisions
are simply incorporated into the new Chapter 35. 

Proposed new Subchapter J, concerning Imminent and Substantial Endangerment,
implements TWC, sec.5.511, concerning Emergency Administrative Order Concerning
Imminent and Substantial Endangerment. Proposed sec.35.701, concerning Emergency
Orders, allows the commission or the executive director to issue an emergency
administrative order under HSC, sec.361.272, in the manner prescribed by
proposed Chapter 35. 

Proposed new Subchapter K, concerning Air Orders, implements TWC, sec.5.514
and sec.5.515, concerning Order Issued Under Air Emergency and Emergency
Order Because of Catastrophe, respectively. The proposed rules are derived
from current Chapter 116, Subchapter E, concerning Emergency Orders. The 
commission
proposes changes to make the provisions consistent with SB 1876. This subchapter
will also become part of the state implementation plan because it replaces
the rules currently found in Chapter 116, Subchapter E. 

Proposed new sec.35.801, concerning Emergency Orders Because of Catastrophe,
authorizes the commission or executive director to issue an emergency order
authorizing immediate action for the addition, replacement, or repair of 
facilities
or control equipment, and authorizing associated emissions of air contaminants,
whenever catastrophic event necessitates such action that would otherwise
be precluded by the Texas Clean Air Act. Catastrophic events are also defined. 
Proposed new sec.35.802, concerning Application for an Emergency Order,
requires the submission of an application in accordance with proposed sec.35.24.
The section also provides the information that must be submitted in addition
to the general application requirements. The section is derived from current
sec.116.411, concerning Application for an Emergency Order. 

Proposed new sec.35.803, concerning Public Notification, is derived from
current sec.116.412 and contains changes to rules as they currently exist
in that section. The new section requires the commission or executive director
to publish notice of the emergency order and the hearing to affirm, modify,
or set aside in a newspaper of general circulation in the nearest municipality
not later than the tenth day before the hearing. This is a change from current
sec.116.412, which requires Texas Register 
notice as soon as practicable after issuance. The new section also contains
changes allowing the commission or the executive director to act. 

Proposed new sec.35.804, concerning Issuance of Order, authorizes the
commission or executive director to issue an order under this subchapter if
certain conditions are found to exist. 

Proposed new sec.35.805, concerning Contents of an Emergency Order, prescribes
content requirements that are in addition to those specified in sec.35.38.
The provisions are derived entirely from current sec.116.415, concerning
Contents of an Emergency Order. 

Proposed new sec.35.806, concerning Requirement to Apply for a Permit
or Modification, requires the owner or operator of a facility for which an
emergency order has been issued to submit an application within 60 days of
issuance of the order in accordance with statute and commission rules. The
section is derived in its entirety from current sec.116.416, concerning
Requirement to Apply for a Permit or Modification. 

Proposed new sec.35.807, concerning Affirmation of an Emergency Order,
provides the conditions under which the commission affirms a proposed or issued
order. The section is derived in its entirety from current sec.116.414,
concerning Affirmation of an Emergency Order. 

Proposed new sec.35.808, concerning Modification of an Emergency Order,
provides the conditions under which an emergency order must be modified. The
section is derived from current sec.116.417, concerning Modification of
an Emergency Order. 

Proposed new sec.35.809, concerning Setting Aside an Emergency Order,
requires a proposed or issued order to be set aside if the hearing record
does not show that the order should be affirmed or modified. The section is
derived from current sec.116.418, concerning Setting Aside and Emergency
Order. 

Proposed Subchapter L, concerning On-site Sewage Disposal System, implements
TWC, sec.5.513, which authorizes the issuance of these orders. Proposed
sec.35.901, concerning Emergency Order Concerning On-Site Sewage Disposal
System, authorizes the commission to issue an emergency order suspending the
registration of an installer of an on-site sewage disposal system, regulating
an on-site sewage disposal system, or both, under certain conditions. 

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 a small reduction
in costs as a result of the delegation of certain actions to the executive
director and the overall simplification and standardization of emergency and
temporary order provisions. Revenues collected by the commission will increase
by $400 for each order applied for under the provisions of these rules. The
effect on local governments will be an increase of $400 in application fees
under the proposed increase from $100 to $500. Any other implications for
units of local government making application for orders under these proposed
sections will be similar to those effects on any applicant. 

PUBLIC BENEFIT 

Mr. Minick has also determined that for the first five years the sections
as proposed are in effect, the public benefit anticipated as a result of 
enforcement
of and compliance with the sections will be improved consistency between 
commission
regulations and statutory authority for emergency and temporary orders, more
uniform requirements for such orders, and more cost-effective administration
and processing of orders. The costs to persons, including small businesses,
required to comply with the sections as proposed are the proposed increase
in application fee for an order from $100 to $500 and the stipulation that
an applicant is required to reimburse the commission for any costs of public
notice incurred by the commission on behalf of the applicant. The costs of
notice will vary on a case-by-case basis with the type of application and
the number of parties to whom notice for a particular application is required.
Some minor cost savings from the simplification and standardization of emergency
and temporary orders may also accrue to affected parties, but these effects
have not been determined and are not anticipated to be significant for most
applicants. No other economic costs are anticipated for any person required
to comply with the sections as proposed. 

DRAFT REGULATORY IMPACT ANALYSIS

Staff has reviewed the proposed rulemaking under the regulatory analysis
requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not major environmental rules because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly granted authority by TWC,
sec.5.501. The rules also concern procedural requirements of the agency,
such as delegation of the authority to issue such orders by the commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort.

TAKINGS IMPACT ASSESSMENT

The commission has prepared a takings impact assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, Chapter 5, Subchapter L. The rules will also provide for
the delegation of authority to issue emergency orders by the commission to
the executive director, consolidate agency procedural rules, and make certain
processes consistent among different agency programs. The rules will 
substantially
advance these specific purposes by providing specific provisions on these
matters. Promulgation and enforcement of these rules will not burden private
real property which is the subject of the rules because they concern commission
procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the
proposal is a rulemaking identified in the Coastal Coordination Implementation
Rules, 31 TAC sec.505.11, or will affect an action/authorization identified
in the Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11,
and will, therefore, require that applicable goals and policies of the Coastal
Management Program (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 found that the proposed rules are consistent
with the applicable CMP goals and policies. The following is a summary of
that determination. The CMP goal applicable to the proposed rules is the goal
to protect, preserve, restore, and enhance the diversity, quality, quantity,
functions, and values of coastal natural resource areas. CMP policies applicable
to the proposed rules include the administrative policies and the policies
for specific activities related to: construction and operation or solid waste
treatment, storage, and disposal facilities; discharge of municipal and 
industrial
wastewater to coastal areas; nonpoint source water pollution; and appropriations
of water. Promulgation and enforcement of these proposed rules is consistent
with the applicable CMP goals and policies because the proposed rules will
establish clear and consistent requirements governing the issuance of emergency
and temporary orders, as authorized by TWC, Chapter 5, Subchapter L. Under
the authority granted by statute, the commission may issue emergency or 
temporary
orders to address unforeseen circumstances, such as drought conditions or
potential catastrophes. Promulgation and enforcement of these rules will not
violate or exceed any standards identified in the applicable CMP goals and
policies because they will allow the commission to take steps to mitigate
emergency or potential emergency situations, which will result in environmental
benefits for the entire state, including coastal areas. 

The commission invites public comment on the consistency of the proposed
rules. 

PUBLIC HEARING

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760. 
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 Definitions
30 TAC sec.sec.35.1-35.3
STATUTORY AUTHORITY 

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks, and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.1.Purpose.
The purpose of this chapter is to implement the commission's authority
under Texas Water Code, Chapter 5, Subchapter L, to issue temporary or emergency
mandatory, permissive, or prohibitory orders and by those orders to issue
temporary permits or temporarily suspend or amend permit conditions. 

sec.35.2.Applicability.
This chapter applies to any application under Texas Water Code, Chapter
5, Subchapter L, to issue temporary or emergency mandatory, permissive, or
prohibitory orders. 

sec.35.3.Definitions.
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise. 

(1) Emergency order-An order which must be issued immediately,
in order to protect human health or safety or the environment, or for other
reasons specified by statute. Specific requirements for an emergency order
are specified in the rules in this chapter relating to each program. 

(2) Severe property damage-Substantial physical damage
to property, damage to treatment facilities which causes them to become 
inoperable,
or substantial and permanent loss of natural resources which can reasonably
be expected to occur in the absence of a discharge. Severe property damage
does not mean economic loss caused by delays in production. 

(3) Temporary order-An order of short duration which
must be issued as quickly as possible or which might allow an authorization
for a short term activity, setting conditions and limitations that will 
adequately
protect human health or safety or the environment, or for the reasons specified
in sec.35.302 of this title (relating to Application for Emergency and Temporary
Orders to Discharge). Specific requirements for a temporary order are specified
in the rules in this chapter relating to each 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
June 19, 1998.
TRD-9809858
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER B.Authority of Executive Director
30 TAC sec.sec.35.11-35.13
STATUTORY AUTHORITY

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks; and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.11.Purpose and Applicability.
The purpose of this subchapter is to delegate authority to the executive
director and to specify applications for emergency orders on which the executive
director may take action on behalf of the commission under this chapter. 
sec.35.12.Authority of Executive
Director.
(a) The executive director may receive applications and issue
emergency orders under this chapter. If an emergency order is issued without
notice and a hearing, notice shall be issued and a hearing by the commission
to affirm, modify, or set aside shall be set. If a hearing request is received,
and the commission grants the request, the commission shall either hold a
contested case hearing, or remand the case to SOAH. 

(b) The executive director may authorize, in writing, a representative
or representatives to act on the executive director's behalf under this chapter.
sec.35.13.Eligibility of Executive
Director.
Upon assumption of national pollutant discharge elimination system
permit authority, the executive director, or the executive director's 
representative
or representatives, may act under this chapter on Texas pollutant discharge
elimination system (TPDES) permits or other TPDES-related approvals only if
he or she meets the qualifications set out for the executive director in 
sec.50.41
of this title (relating to Eligibility of Executive Director). 

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
June 19, 1998.
TRD-9809859
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER C.General Provisions
30 TAC sec.sec.35.21-35.30
STATUTORY AUTHORITY

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks; and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.21.Action by Commission or
Executive Director.
For the purposes of, and in the manner provided by this chapter, the
commission may issue a temporary order; and the commission or the executive
director may issue an emergency, mandatory, permissive, or prohibitory order;
and the commission by temporary order, or the executive director or commission
by emergency order, may:

(1) issue a temporary permit; or 

(2) temporarily suspend or amend a permit condition. 
sec.35.22.Term and Renewal of Orders.
Unless otherwise provided by this chapter, an emergency order issued
under this chapter is limited to a reasonable time specified by the order,
which may not exceed 180 days and may be renewed once for an additional period
not to exceed 180 days by submittal of a new application. A temporary order
must be limited to a reasonable time specified by the order.

sec.35.23.Effect of Orders.
An emergency or temporary order issued under this chapter does not
vest any rights in the permit holder or recipient and expires in accordance
with its terms. 

sec.35.24.Application for Emergency
or Temporary Order.
(a) A person wanting an emergency or temporary order under
this chapter shall submit a written application to the chief clerk. Unless
the person submitting the application is the executive director or the executive
director's representative, the application must be sworn. 

(b) If the State of Texas has been authorized to administer
the national pollutant discharge elimination system program, and a person
seeks an emergency or temporary order for a bypass of untreated or partially
treated wastewater, as that term is defined in sec.305.2 of this title (relating
to Definitions), from a facility that is subject to a Texas pollutant discharge
elimination system permit, the filing of the application for an emergency
or temporary order constitutes prior notice of an anticipated bypass. Filing
of the application for bypass shall be done, if possible, at least ten days
before the date of the bypass. The person must comply with all bypass 
requirements
under sec.305.535 of this title (relating to Bypasses from TPDES Permitted
Facilities). 

(c) The application must: 

(1) state the name, address, and telephone number of the applicant,
the person submitting the application on the applicant's behalf, and the person
signing the application on the applicant's behalf; 

(2) contain information sufficient to identify the facility
and location to be affected by the order; 

(3) describe the condition of emergency or other condition
justifying the issuance of the order; 

(4) allege facts to support any findings required under
this chapter; 

(5) estimate the dates on which the proposed order should
begin and end and the dates on which the activity proposed to be allowed,
mandated, or prohibited should begin and end; 

(6) describe the action sought and the activity proposed
to be allowed, mandated, or prohibited; 

(7) include any other statement or information required
by this chapter; and 

(8) be accompanied by payment of any application fees
required by the commission. 

(d) A copy of the application must be provided to the division
director of the appropriate program on behalf of the executive director, and
to the public interest counsel, at the same time it is filed with the chief
clerk. The division director may designate another representative of the 
executive
director for this service. 

(e) All applications shall be signed as follows. 

(1) For a corporation, the application shall be signed by
a responsible corporate officer. For purposes of this paragraph, a responsible
corporate officer means a president, secretary, treasurer, or vice-president
of the corporation in charge of a principal business function, or any other
person who performs similar policy or decision-making functions for the 
corporation;
or the manager of one or more manufacturing, production, or operating facilities
employing more than 250 persons or having gross annual sales or expenditures
exceeding $25 million (in second-quarter 1980 dollars), if authority to sign
documents has been assigned or delegated to the manager in accordance with
corporate procedures. Corporate procedures governing authority to sign permit
applications may provide for assignment or delegation to applicable corporate
positions rather than to specific individuals. Documentation of authority
to sign must be provided with the application. 

(2) For a partnership or sole proprietorship, the application
shall be signed by a general partner or the proprietor, respectively. 

(3) For a municipality, state, federal, or other public
agency, the application shall be signed by either a principal executive officer
or a ranking elected official. For purposes of this paragraph, a principal
executive officer of a federal agency includes the chief executive officer
of the agency, or a senior executive officer having responsibility for the
overall operations of a principal geographic unit of the agency (e.g., regional
administrator of the United States Environmental Protection Agency). 

(4) For the executive director, the application shall
be signed by the executive director or any duly authorized representative; 
(5) A person other than the executive director or the
executive director's representative signing an application shall make the
following certification: "I certify under penalty of law that this document
and all attachments were prepared under my direction or supervision in 
accordance
with a system designed to assure that qualified personnel properly gather
and evaluate the information submitted. Based on my inquiry of the person
or persons who manage the system, or those persons directly responsible for
gathering the information, the information submitted is, to the best of my
knowledge and belief, true, accurate, and complete. I am aware there are 
significant
penalties for submitting false information, including the possibility of fine
and imprisonment for knowing violations." 

(6) For hazardous solid waste applications, the owner
and operator of a facility must sign the application. 

(7) For radioactive material license applications under
Chapter 336 of this title (relating to Radioactive Substance Rules), the 
applicant
or person duly authorized to act for and on the applicant's behalf must sign
the application. 

sec.35.25.Notice and Opportunity
for Hearing.
(a) An emergency order under this chapter may be issued with
notice and an opportunity for hearing, or without notice and an opportunity
for hearing, as provided by this chapter. 

(b) If an emergency order is issued under this chapter without
a hearing, the order shall set a time and place for a hearing to affirm, modify,
or set aside the order to be held before the commission or its designee as
soon as practicable after the order is issued. 

(c) Except as otherwise provided by this chapter, notice of
a hearing to affirm, modify, or set aside an emergency order under this chapter
shall be given not later than the tenth day before the date set for the hearing.
This notice shall provide that an affected person may request an evidentiary
hearing on issuance of the emergency order. 

(d) Temporary orders require a hearing before the issuance
of the order. Notice of a hearing on a temporary order shall be given not
later than the 20th day before the hearing on the order. This notice of hearing
shall provide that an affected person may request an evidentiary hearing on
issuance of the temporary order. 

(e) In addition to the notice requirements provided elsewhere
in these rules, notice shall be provided as follows. 

(1) For water quality temporary orders, notice of a hearing
that is held before issuance of the order shall be provided: 

(A) by mail to persons requesting public notice of certain
applications, in accordance with sec.39.7 of this title (relating to Mailing
Lists) and to persons or agencies identified in sec.39.13 of this title
(relating to Mailed Notice); 

(B) by publication by the applicant in a newspaper of largest
general circulation that is published in the county in which the facility
is located or proposed to be located. If a newspaper is not published in the
county in which the facility is located or proposed to be located, the notice
must be published in the newspaper of general circulation in the county in
which the facility is located or proposed to be located. The applicant must
file an affidavit with the chief clerk certifying facts that constitute 
compliance
with the publication requirements. The deadline to file the affidavit is 15
days after publication of the notice. Filing an affidavit certifying facts
that constitute compliance with notice requirements creates a rebuttable 
presumption
of compliance with the requirement to publish notice; and 

(C) at least 20 days before the hearing. 

(2) For water quality emergency orders, notice of
the issuance of the order and the hearing to affirm, set aside, or modify
if a hearing is held shall be provided in accordance with paragraph (1)(A)
and (C) of this subsection. 

(3) For nonhazardous underground injection control (UIC)
emergency orders, notice shall be mailed and published at least 30 days before
the hearing to affirm, modify, or set aside the emergency order, as is required
by Chapter 39 of this title (relating to Public Notice) for notice of a hearing
on an application for a UIC permit. 

(4) For nonhazardous solid waste emergency orders, notice
shall be mailed and published not later than the tenth day before the hearing
to affirm, modify, or set aside the emergency order, as is required by Chapter
39 of this title for notice of a hearing on an application for a nonhazardous
waste permit. 

(5) For hazardous solid waste emergency orders, including
UIC emergency orders, notice shall be mailed and published at least 30 days
before the hearing to affirm, modify or set aside the emergency order, as
required by Chapter 39 of this title for notice of a hearing on an application
for a hazardous waste permit. The commission must also give at least 45 days
for public comment before issuing the order. 

(6) For suspension of beneficial inflows under Texas
Water Code, sec.11.148, notice shall be published in a newspaper or newspapers
of general circulation in the affected area not later than the 15th day before
the hearing to all affected persons. 

(7) For water utility emergency orders for operation
of a utility, notice shall be mailed or hand delivered to the utility not
later than the tenth day before the hearing to affirm modify or set aside. 
(8) For water utility temporary rate increase orders,
notice shall be mailed or delivered to the affected ratepayers not later than
the tenth day before the hearing to affirm, modify or set aside. 

(9) For air catastrophe emergency orders, notice shall
be published in a newspaper of general circulation in the nearest municipality
not later than the tenth day before the hearing. 

(10) For generalized condition of air pollution emergency
orders, the timing, method, and recipients of notice shall be as practicable
under the circumstances. 

(11) For radioactive substances emergency orders, notice
shall be provided by personal service or certified mail to those named in
the order not later than the tenth day before the hearing to affirm, modify,
or set aside. 

(12) For radioactive material impoundment, notice shall
be provided by personal service or certified mail to those named in the order
not later than the tenth day before the hearing to affirm, modify, or set
aside. 

(13) For petroleum storage tank emergency orders, notice
shall be provided by certified mail, hand delivery, or if that fails, one
time in the Texas Register or published once
in the county newspaper not later than the tenth day before the hearing to
affirm, modify, or set aside. 

(14) For imminent and substantial endangerment emergency
orders, notice shall be given by certified mail for hand delivery to the person
named in the order, and if that fails, published once in the Texas Register and 
once in the newspaper of general circulation not
later than the tenth day before the hearing to affirm, modify, or set aside. 
(15) For on-site sewage and disposal system emergency
orders, notice shall be mailed to those in the order not later than ten days
before the hearing to affirm, modify, or set aside. 

(f) Statutes or rules requiring notice of hearing or setting
procedures for the issuance of permits do not apply to a hearing on an emergency
order issued under this chapter unless they specifically require notice for
an emergency order. 

(g) If the commission acts on an application for a temporary
order, or the commission or executive director acts on an application for
an emergency order, the chief clerk or the office designated by the executive
director shall mail notice of the action to the applicant, the executive 
director,
public interest counsel, and other persons who have filed hearing requests
or public comment. 

sec.35.26.Contents of Emergency
or Temporary Order.
An emergency or temporary order issued under this chapter shall contain
at least the following: 

(1) the name and address of the applicant and information
sufficient to identify the facility or location affected by the order; 

(2) a description of the condition of emergency or other
condition justifying the issuance of the order; 

(3) any findings of facts required under this chapter; 
(4) a statement of the term of the order, including the
dates on which it shall begin and end and the dates on which the activity
proposed to be allowed, mandated, or prohibited shall begin and end; 

(5) a description of the action sought and the activity
proposed to be allowed, mandated, or prohibited; 

(6) if the order was issued without a hearing, a statement
to that effect and a provision setting a time and place for a hearing before
the commission or its designee; and 

(7) any other statement or information required by this
chapter. 

sec.35.27.Hearing Required.
A hearing shall be held before the issuance of each temporary order
and either before or after the issuance of each emergency order. If no hearing
is held before the issuance of an emergency order, a hearing to affirm, modify,
or set aside the order shall be held before the commission or its designee
as soon as practicable after the order is issued. 

sec.35.28.Hearing Requests.
(a) The executive director, the applicant, or an affected
person as defined by Texas Water Code, sec.5.115(a) may request a contested
case hearing. 

(b) The commission is not required to hold a hearing if it
determines that the basis of a person's request for a hearing as an affected
person is not reasonable or is not supported by competent evidence. 

(c) All relevant factors shall be considered in the evaluation
of a person's request for a hearing as an affected person, including, but
not limited to, the following: 

(1) whether the interest claimed is one protected by the law
under which the application will be considered; 

(2) distance restrictions or other limitations imposed
by law on the affected interest; 

(3) whether a reasonable relationship exists between
the interest claimed and the activity regulated; 

(4) likely impact of the regulated activity on the health,
safety, and use of property of the person; 

(5) likely impact of the regulated activity on use of
the impacted natural resource by the person; and 

(6) for governmental entities, their statutory authority
over or interest in the issues relevant to the application. 

(d) A group or association may request a contested case hearing
only if the group or association meets all of the following requirements: 
(1) one or more members of the group or association would
otherwise have standing to request a hearing in their own right; 

(2) the interests the group or association seeks to protect
are germane to the organization's purpose; and 

(3) neither the claim asserted nor the relief requested
requires the participation of the individual members in the case. 

sec.35.29.Procedures for a Hearing.
(a) Hearings before the commission under this chapter shall
be conducted in accordance with Chapter 10 of this title (relating to Commission
Meetings). Contested case hearings shall be conducted under the APA and Chapter
80 of this title (relating to Contested Case Hearings). 

(b) If a contested case hearing is requested on the application,
and the commission grants the request, the commission shall either conduct
the contested case hearing or remand the matter to SOAH. 

(c) The commission or judge may, consistent with the requirements
of the APA, reduce the time periods specified in the commission's rules 
governing
contested case hearings. 

(d) For any hearing on a temporary or emergency order, the
following procedures will apply: 

(1) parties will be designated by the commission or judge.
To be designated as a party, the person seeking party status must show a 
justiciable
interest. For each hearing under this section, the applicant, the public 
interest
counsel, and the executive director are parties by rule; 

(2) the testimony of all witnesses will be under oath,
with an opportunity for questioning by the commission or judge and cross-
examination
by the other parties; 

(3) other parties to the hearing will be given an opportunity
to present rebuttal evidence and testimony; 

(4) the applicant will have the burden of proving its
need for an emergency or temporary order, and will have the right to open
and close the evidentiary parts of the hearing. The fact that an emergency
order was issued without a hearing, standing alone, will not constitute evidence
of the need for such authorization; 

(5) the commission or judge will have the right to limit
the number of witnesses; to limit the time for direct questioning or cross-
examination
of a witness; to refuse illustrative and documentary evidence; and to limit
argument. 

(e) If a hearing request is denied, the procedures contained
in sec.80.271 and sec.80.273 of this title (relating to Motion for Rehearing;
and Decision Final and Appealable ) apply. 

sec.35.30.Application Fees.
The application fee for an emergency or temporary order under this
chapter is $500 plus the actual cost of the required notice. The fee is payable
at the time the application is filed, and is not refundable. 

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
June 19, 1998.
TRD-9809860
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER D.Emergency Suspension of Beneficial Inflows
30 TAC sec.35.101
STATUTORY AUTHORITY 

The new section is proposed under TWC, Chapter 5, Subchapter L, which 
establishes
the commission's authority concerning emergency and temporary orders. Other
relevant sections of the TWC under which the commission takes this action
include: sec.5.103, which establishes the commission's general authority
to adopt rules; sec.5.105, which establishes the commission's authority
to set policy by rule; sec.5.235, as amended by Article VI, Rider 9, House
Bill 1, 75th Legislature, 1997, which establishes fee authority; sec.11.148,
which establishes the commission's authority to issue orders relating to 
beneficial
inflows to affected bays and estuaries and instream uses; sec.13.041, which
establishes the commission's authority to adopt rules to exercise its 
jurisdiction
over TWC, Chapter 13; sec.26.011, which establishes the commission's authority
over water quality in the state; sec.26.351, which establishes the commission's
authority concerning corrective action; sec.26.354, which establishes the
commission's authority to issue emergency orders concerning petroleum storage
tanks; and sec.27.019, which establishes the commission's authority to adopt
rules concerning underground injection control. Additionally, relevant sections
of the HSC include: sec.361.011, which establishes the commission's jurisdiction
over municipal solid waste; sec.361.017, which establishes the commission's
jurisdiction over industrial hazardous waste; sec.361.024, which establishes
the commission's authority to establish rules for the control of solid waste;
sec.366.012, which establishes the commission's authority to establish rules
for on-site disposal systems; sec.382.017, which establishes the commission's
rulemaking authority; sec.382.051, which establishes the commission's authority
to adopt rules concerning air permits; sec.382.0513, which establishes the
commission's authority to adopt rules concerning permit conditions; sec.401.011,
which establishes the commission's authority over radioactive substances;
sec.401.051, which establishes the commission's authority to adopt rules
for the control of radiation; sec.401.056, which establishes the commission's
authority to issue emergency orders concerning radiation; and sec.401.412,
which establishes the commission's authority concerning licenses for radioactive
substance disposal. 

The proposed new section implements TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.101.Emergency Suspension
of Permit Conditions Relating to Beneficial Inflows to Affected Bays and 
Estuaries
and Instream Uses.
(a) The purpose of this section is to set forth the procedures
and criteria to be used by the commission or the executive director in its
review and action on an application by a water right holder for the temporary
suspension of conditions in the water right relating to beneficial inflows
to bays and estuaries and instream uses during an emergency, under Texas Water
Code, sec.5.506 and sec.11.148. The emergency relief provided by this
section shall only be used when the commission finds that: 

(1) emergency conditions exist that present an imminent threat
to the public health, safety, and welfare and that override the necessity
to comply with general procedures and criteria for changing the conditions
in a water right; and 

(2) there are no feasible, practicable alternatives to
the emergency authorization. 

(b) The commission may approve an application filed by the
affected water right holder for the temporary suspension of all or a part
of conditions in a water right relating to beneficial inflows to affected
bays and estuaries and instream uses if the commission finds that an emergency
exists and there is no feasible, practicable alternative to the suspension.
The burden of demonstrating that the application should be granted in accordance
with this section is on the applicant. For purposes of this section, an 
emergency
is a condition where water supplies available to the applicant have been reduced
or impaired to such an extent that an imminent peril to the public health,
safety, or welfare exists. This condition may include, but not be limited
to: 

(1) the reduction of public water supplies to critical levels
as a result of a severe and sustained drought; 

(2) the failure of a dam for a public water supply reservoir; 
(3) the significant contamination of a public water supply;
or 

(4) the failure or destruction of public water supply
pipelines or other distribution systems. 

(c) The application shall be filed in accordance with and
must contain the information required by sec.35.24 of this title (relating
to Application for Emergency or Temporary Order), and the following: 

(1) copies of the affected permits, certificates of adjudication,
or certified filings; 

(2) a description of the emergency's impact on public
health, safety, and welfare; 

(3) a description of all existing and potential water
supplies available to the applicant and their corresponding uses and costs; 
(4) a summary of the examination made by the applicant
of whether feasible, practicable alternatives exist to the suspension of permit
conditions and reasons why those alternatives do not exist; 

(5) the amount of water over and above available supplies
that are necessary to alleviate emergency conditions; 

(6) copies of the water right holder's water conservation
and drought contingency plans, if any, and a summary of their status and 
implementation,
including the reasons why any remaining conservation or drought contingency
measures provided by the plans have not or will not be implemented; 

(7) a copy of the reservoir operating procedures, if
applicable; and 

(8) the proposed conditions and trigger levels for the
suspension and reinstatement of the releases or other affected permit 
conditions. 
(d) A copy of the application must be filed by the applicant
with the Texas Parks and Wildlife Department (TPWD) at the same time it is
filed with the chief clerk. 

(e) Upon receipt of the application, the chief clerk shall
provide notice of the time and location of the commission's consideration
of the application to the TPWD, executive director, and public interest counsel
as soon as practicable after receipt of the application, but in no event shall
the petition be considered less than 72 hours after receipt of notice by the
TPWD. 

(f) The TPWD, executive director, and public interest counsel
shall be provided an opportunity to submit comments on the application before
the commission action. The applicant shall be afforded opportunity to respond
to all comments at the time of the commission's consideration of the matter. 
(g) The commission's order shall set out the extent of any
suspension and any special condition upon which a suspension is granted. The
commission's initial order may also indicate the referral of the matter to
SOAH for an expedited hearing under subsection (i) of this section. 

(h) Published notice of the initial suspension of water right
conditions, if granted, shall be provided and paid for by the applicant 
immediately
following a favorable commission initial decision by publication in a newspaper
or newspapers of general circulation in the affected area. The published notice
may not be smaller than 96.8 square centimeters or 15 square inches with the
shortest dimension at least 7.6 centimeters or three inches. Such published
notice must contain a summary of the information contained in the application
as provided by subsection (c) of this section and the time and location of
the subsequent commission hearing provided by subsection (i) of this section.
Such publication shall occur not later than seven calendar days before this
hearing. For the purposes of this rule, the affected area shall be each county,
in whole or in part, downstream of the diversion point or impoundment authorized
under the affected water right. The applicant shall file with the chief clerk
a publisher's affidavit as proof that such notice was published in accordance
with this subsection. 

(i) If the commission initially grants an emergency suspension
of permit conditions without a hearing, the commission shall hold the hearing
required by sec.35.25 of this chapter (relating to Notice and Opportunity
for Hearing) as soon as practicable, but in no event later than 15 days after
the initial emergency suspension is granted to determine whether to affirm,
modify, or set aside the initial emergency suspension. Written notice of the
hearing shall be provided to the TPWD and affected persons not later than
ten days before the hearing. 

(j) An emergency order granted under this section may be for
a period of not more than 120 days if the commission finds that emergency
conditions exist that present an imminent threat to public health, safety,
and welfare and that override the necessity to comply with permit conditions
and there are no feasible, practicable alternatives to the emergency 
authorization.
This emergency authorization may be renewed once for not longer than 60 days. 
(k) In determining whether feasible, practicable alternatives
exist to the suspension of water right conditions, the commission shall examine: 
(1) the amount and purposes of use for water currently being
used by the applicant; 

(2) all evidence relating to the availability of alternative,
supplemental water supplies to the applicant; and 

(3) the applicant's efforts to curtail water use not
essential for the protection of the public health, safety, and welfare. 

(l) If the water right holder has a water conservation plan
and/or drought contingency plan, the suspension of water right conditions
may be contingent upon the full implementation of those plans and measures
corresponding to the staged reduction of releases for existing instream uses
and beneficial inflows. If the water right holder does not have a water 
conservation
plan and drought contingency plan in accordance with Chapter 288 of this title
(relating to Water Conservation Plans, Guidelines, and Requirements), the
order granting an application under this section shall require the permittee
to develop and implement those plans within a prescribed time period as provided
in the order. 

(m) In granting an application, all existing instream flows
shall be passed up to that amount necessary to maintain water quality standards
for the affected stream. Additional flows necessary to protect a species in
accordance with the federal Endangered Species Act or other species that are
considered to be of "high interest" (self-sustaining wild populations that
are endemic to the affected stream, have significant scientific value, or
commercial value) may also be required. 

(n) In order to assist in the preparation and planning for
water management during an emergency, the commission may provide conditions
in a water right necessary for relief consistent with applicable portions
of this section when the water right is initially granted or subsequently
amended. These conditions may include, but shall not be limited to, a staged
approach to the reduction in the pass-through amounts that provide for the
pass-through of water for instream uses and bays and estuaries when it is
available, and allow water to be captured or diverted for the protection of
the public health, safety, and welfare during an emergency, subject to the
protection of stream flows necessary under subsection (m) of this section
for the maintenance of water quality standards. These conditions may also
include full implementation by the water right holder of water conservation
and drought contingency plans as a precondition for obtaining relief. 

(o) If the applicant's water right already contains provisions
for the temporary, total, or partial suspension of permit conditions for the
maintenance of instream flows or freshwater inflows to bays and estuaries,
further or different relief requested in an application submitted under this
section generally will be denied unless the applicant can show new or changed
circumstances or an emergency condition not contemplated when the water right
condition was issued. 

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 19, 1998.
TRD-9809861
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER E.Emergency Orders for Utilities
30 TAC sec.35.201, sec.35.202
STATUTORY AUTHORITY 

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks, and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control.. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.201.Emergency Order for Operation
of Utility that Discontinues Operation or is Referred for Appointment of a
Receiver.
(a) The commission or executive director may appoint a person
by emergency order under Texas Water Code, sec.5.507 and sec.13.4132,
to temporarily manage and operate a utility that has discontinued or abandoned
operations, or which is being referred to the attorney general for the 
appointment
of a receiver under Texas Water Code, sec.13.412. 

(b) An emergency order may be issued under this section under
the provisions of sec.291.142 and sec.291.143 of this title (relating
to Operation of Utility that Discontinues Operation or is Referred for 
Appointment
of a Receiver and Operation of a Utility by a Temporary Manager). 

(c) Notice of an action under this section is adequate if the
notice is mailed or hand-delivered to the last known address of the utility's
headquarters. 

sec.35.202.Emergency Order for Rate
Increase in Certain Situations.
(a) The commission or executive director may authorize an
emergency rate increase under Texas Water Code, sec.5.508 and sec.13.4133
for a utility: 

(1) for which a person has been appointed under Texas Water
Code, sec.13.4132; or 

(2) for which a receiver has been appointed under Texas
Water Code, sec.13.412; and 

(3) when the increase is necessary to ensure the provision
of continuous and adequate services to the utility's customers. 

(b) Notwithstanding the provisions of sec.35.22 of this
title (relating to Term and Renewal of Orders), an emergency rate increase
may be granted under this section for a period not to exceed 15 calendar months
from the date on which the increase takes effect. The commission shall schedule
a hearing to establish a final rate within that period. 

(c) A request for an emergency rate increase must be filed
by the utility in accordance with, and must contain the information required
by, sec.35.24 of this title (relating to Application for Emergency or Temporary
Order) and the following: 

(1) the effective date of the rate increase; 

(2) sufficient information to support the computation
of the proposed rates; and 

(3) any other information requested by the executive
director. 

(d) The effective date must be the first day of a billing
cycle, unless otherwise authorized by the commission or the executive director.
(e) Any emergency rate increase related to charges for actual
consumption will be for consumption after the effective date. An increase
or the portion of an increase which is not related to consumption may be billed
at the emergency rate on the effective date or the first billing after approval
by the commission or the executive director. 

(f) A utility receiving authorization for an emergency rate
increase shall provide notice of the increase to each ratepayer as soon as
possible, but not later than the effective date for the new rate. The notice
shall contain the following: 

(1) the utility's name and address, the previous rates, the
emergency rates, the effective date of the rate increase, and the classes
of utility customers affected; and 

(2) this statement: "This emergency rate increase has
been approved by the Texas Natural Resource Conservation Commission under
authority granted by the Texas Water Code, sec.5.508 and sec.13.4133,
to ensure the provision of continuous and adequate service to the utility's
customers. The commission is also required to schedule a hearing to establish
a final rate within 15 months after the date on which the emergency rates
take effect. The utility is required to provide notice of the hearing to all
customers at least 10 days before the date of the hearing. The additional
revenues collected under this emergency rate increase are subject to refund
if the commission finds that the rate increase was larger than necessary to
ensure continuous and adequate service." 

(g) The utility shall maintain adequate books and records
for a period not less than 12 months to allow for the determination of a cost
of service as set forth in sec.291.31 of this title (relating to Cost of
Service). 

(h) During the pendency of the emergency rate increase, the
commission may require that the utility deposit all or part of the rate increase
into an interest-bearing escrow account as set forth in sec.291.30 of this
title (relating to Escrow of Proceeds Received Under Rate Increase). 

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
June 19, 1998.
TRD-9809862
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER F.Water Quality Emergency and Temporary Orders
30 TAC sec.sec.35.301- 35.303
STATUTORY AUTHORITY 

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks, and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.301.Emergency and Temporary
Orders Authorized.
The commission may issue temporary orders, and the commission or executive
director may issue emergency orders, relating to the discharge of waste or
pollutants into or adjacent to any water in the state under Texas Water Code,
sec.5.509 when necessary to enable action to be taken more expeditiously
than is otherwise provided by Texas Water Code, Chapter 26 to effectuate the
policy and purposes of that chapter.

sec.35.302.Application for Emergency
and Temporary Orders to Discharge.
(a) A person desiring to obtain an order to discharge waste
into the waters in the state under this subchapter shall submit an application
in accordance with sec.35.24 of this title (relating to Application for
Emergency or Temporary Order). The application must contain the information
required by that section and the following: 

(1) statements that: 

(A) the order is necessary to enable action to be taken more
expeditiously than is otherwise provided by Texas Water Code, Chapter 26,
to effectuate the policy and purposes of that chapter; 

(B) the discharge is unavoidable to: 

(i) prevent loss of life, serious injury, or severe property
damage, in an application filed either before or after the State of Texas
is authorized to administer the national pollutant discharge elimination system
(NPDES) program; 

(ii) if the State of Texas is not authorized to administer
the NPDES program, prevent severe economic loss, to ameliorate serious drought
conditions, or to make necessary and unforeseen repairs to the facility; or
(iii) if the State of Texas is authorized to administer the
NPDES program, to ameliorate serious drought conditions to the extent consistent
with the requirements of the federal Clean Water Act for authorization of
the NPDES program. 

(C) there is no feasible alternative to the proposed discharge;
(D) the discharge will not cause significant hazard to human
life and health, unreasonable damage to property of persons other than the
applicant, or unreasonable economic loss to persons other than the applicant;
and 

(E) the proposed discharge will not present a significant
hazard to the uses that may be made of the receiving water after the discharge;
(2) if the State of Texas is authorized to administer
the NPDES program, statements that there are no feasible alternatives to the
bypass, such as the use of auxiliary treatment facilities, retention of 
untreated
wastes, or maintenance during normal periods of equipment downtime. This 
condition
is not satisfied if adequate back-up equipment should have been installed
in the exercise of reasonable engineering judgment to prevent a bypass from
occurring during normal periods of equipment downtime or preventive maintenance;
(3) a statement of the volume and quality of the proposed
discharge; 

(4) an explanation of measures proposed to minimize the
volume and duration of the discharge; 

(5) an explanation of measures proposed to maximize the
waste treatment efficiency of units not taken out of service or facilities
provided for interim use; and 

(6) for temporary orders, a list of potentially affected
persons in accordance with sec.305.48(a)(2) of this title (relating to 
Additional
Contents for Applications for Wastewater Discharge Permits). 

(b) A person desiring to obtain an order to discharge adjacent
to waters in the state under this subchapter shall submit an application in
accordance with sec.35.24 of this title. The application must contain the
information required by that section and the following: 

(1) statements that: 

(A) the order is necessary to enable action to be taken more
expeditiously than is otherwise provided by Texas Water Code, Chapter 26,
to effectuate the policy and purposes of that chapter; 

(B) the discharge is unavoidable to: 

(i) prevent loss of life, serious injury, severe property
damage, or severe economic loss; 

(ii) ameliorate serious drought conditions; or 

(iii) make necessary and unforeseen repairs to a facility;
(C) there is no feasible alternative to the proposed discharge;
(D) the discharge will not cause significant hazard to human
life and health, unreasonable damage to property of persons other than the
applicant, or unreasonable economic loss to persons other than the applicant;
and 

(E) the proposed discharge will not present a significant
hazard to the area of or surrounding the discharge; 

(2) a statement of the volume and quality of the
proposed discharge; 

(3) an explanation of measures proposed to minimize the
volume and duration of the discharge; 

(4) an explanation of measures proposed to maximize the
waste treatment efficiency of units not taken out of service or facilities
provided for interim use; and 

(5) for temporary orders, a list of potentially affected
persons in accordance with sec.305.48(a)(2) of this title. 

sec.35.303.Emergency Orders and
Temporary Orders.
(a) The commission or executive director may issue emergency
orders, and the commission may issue temporary orders, under this subchapter
only if it is found that: 

(1) the order is necessary to enable action to be taken more
expeditiously than is otherwise provided by Texas Water Code, Chapter 26 to
effectuate the policy and purposes of that chapter; 

(2) for discharges into water in the state, the discharge
is unavoidable to: 

(A) prevent loss of life, serious injury, or severe property
damage, in an order which is issued either before or after the State of Texas
is authorized to administer the national pollutant discharge elimination system
(NPDES) program; 

(B) if the State of Texas is not authorized to administer
the NPDES program, to prevent severe economic loss, ameliorate serious drought
conditions, or to make necessary and unforeseen repairs to a facility; or
(C) if the State of Texas is authorized to administer the
NPDES program, to ameliorate serious drought conditions, to the extent 
consistent
with the requirements of the federal Clean Water Act for authorization of
the NPDES program. 

(3) for discharges adjacent to waters in the state,
the discharge is unavoidable to prevent loss of life, serious injury, severe
property damage, to ameliorate serious drought conditions, or to make necessary
and unforeseen repairs to a facility; 

(4) there is no feasible alternative to the proposed
discharge; 

(5) the discharge will not cause significant hazard to
human life and health, unreasonable damage to property of persons other than
the applicant, or unreasonable economic loss to persons other than the 
applicant;
(6) the proposed discharge will not present a significant
hazard either to the uses that may be made of the receiving water after the
discharge, or the area surrounding the discharge; 

(7) the dates on which the proposed discharge will begin
and end and the volume and quality of the proposed discharge are reasonable
and attainable; and 

(8) the measures proposed to minimize the volume and
duration of the discharge and the measures proposed to maximize the waste
treatment efficiency of units not taken out of service or facilities provided
for interim use are reasonable. 

(b) After assumption of the NPDES program, the issuing authority
may issue emergency orders and temporary orders to discharge waste or pollutants
into water in the state under this subchapter only if the discharge is from
an NPDES or Texas pollutant discharge elimination system-permitted treatment
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
June 19, 1998.
TRD-9809863
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER G.Solid Waste and Uranium By-Product Emergency Orders
30 TAC sec.35.401, sec.35.402
STATUTORY AUTHORITY 

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks, and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.401.Emergency Orders for
Non-hazardous Solid Waste Activities and Underground Injection of Uranium
By-product Materials.
(a) The commission or executive director may issue a mandatory
or prohibitory emergency order under Texas Water Code, sec.5.512, regarding
any activity of solid waste management within its jurisdiction, if it determines
that an emergency exists requiring immediate action to protect public health
and safety or the environment. 

(b) An emergency order issued under this section shall not
exceed 90 days, but may be renewed once. 

(c) An emergency order affecting an underground injection
control permit may be issued for a time no longer than that required to prevent
the hazard, and may not be renewed. The injection authorized by the emergency
order may not result in the movement of fluids into underground sources of
drinking water. 

sec.35.402.Emergency Actions Concerning
Hazardous Waste.
(a) Whenever there is good reason to believe that the storage,
processing, or disposal of hazardous waste should be authorized to alleviate
an imminent and substantial endangerment to human health or safety or the
environment; and if there are no alternative, permitted facilities reasonably
available for the proper management of the waste, the commission or executive
director, on its own motion, or at the request of the executive director or
any other party, may issue an emergency order under Texas Water Code, sec.5.512,
authorizing the processing, storage, or disposal of the hazardous waste at
a nonpermitted facility or at a permitted facility with no authorization under
its permit to receive the hazardous waste in need of immediate management.
(b) In addition to the information required under sec.35.24
of this title (relating to Application for Emergency or Temporary Order) a
party, other than the executive director, requesting such an emergency order
shall include a description of any alternatives investigated. 

(c) The executive director shall review the request and may
require the requesting party to supply additional information as may be 
reasonably
required to assist in making the findings set out in subsection (a) of this
section. 

(d) An emergency order issued under this section: 

(1) shall not exceed 90 days in duration; 

(2) shall clearly specify the hazardous wastes to be
received, and the manner and location of their processing, storage, or disposal;
(3) may be terminated by the commission at any time without
notice and hearing if it determines that termination is appropriate to protect
human health or the environment; 

(4) shall incorporate, to the extent possible and not
inconsistent with the emergency situation, all applicable requirements of
this chapter and Chapter 335 of this title (relating to Industrial Solid Waste
and Municipal Hazardous Waste); and 

(5) for underground injection control permits issued
under this section, shall be for no longer duration than required to prevent
the hazard. The injection authorized may not result in the movement of fluids
into underground sources of drinking water. 

(e) Public notice shall accompany the emergency order, shall
allow at least 45 days for public comment, and shall be given at least 30
days before the hearing on the emergency order. Public notice of the order
may be given at the same time as public notice and opportunity for comment
on the order, and the two notices may be combined. The notice shall include:
(1) the name and address of the applicant; 

(2) the name and location of the hazardous waste management
facility; 

(3) a brief description of the wastes involved; 

(4) a brief description of the action authorized or to
be authorized, and the reasons for authorization; 

(5) the duration of the emergency order; and 

(6) the name and address of the commission (the office
granting the order). 

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
June 19, 1998.
TRD-9809864
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER H.Radioactive Substances and Materials Emergency
30 TAC sec.35.501, sec.35.502
STATUTORY AUTHORITY 

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks; and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412.

sec.35.501.Emergency Orders Relating
to Radioactive Substances.
(a) When an emergency exists as a result of a matter under
the commission's jurisdiction that requires immediate action to protect the
public health or safety or the environment, the commission or executive director
may issue an emergency order under Texas Water Code, sec.5.516, and Texas
Health and Safety Code, sec.401.056. 

(b) The commission or executive director may issue an emergency
order directing any action or corrective measure needed to correct or remove
the threat to public health or safety or the environment when the commission
or executive director determines that radioactive substances under its 
jurisdiction
threatens the public health or safety or the environment and that the licensee
managing the radioactive substances is unable to remove the threat. 

(c) An emergency order issued under this section takes effect
immediately. A person to whom an emergency order is directed shall comply
immediately with that order. 

(d) The emergency order shall be delivered to the person to
whom the order is directed by hand delivery or by certified mail, return receipt
requested. Affidavit of personal service, proof of mailing to the proper 
address,
or the receipt shall be conclusive evidence of service. 

(e) If the commission or executive director issues the emergency
order without notice or hearing, the commission shall provide the person to
whom the order is directed an opportunity for a hearing on written request
within 30 days of the date of the order. If a hearing is requested, notice
of the hearing shall be given to the person to whom the order is directed
by hand delivery or certified mail, return receipt requested, at least ten
days before the hearing. A requested hearing shall be held not earlier than
the 11th day and not later than the 20th day following the date of receipt
of the hearing request. 

(f) All provisions of the emergency order shall remain in
full force and effect during the pendency of a hearing, unless otherwise altered
by the commission. At the conclusion of the hearing and after the proposal
for decision is made, the commission shall make a determination to affirm,
modify, or revoke the emergency order and may modify, revoke, or suspend the
license based on the determination made. 

(g) The commission shall use the financial assurance mechanism
provided by a licensee to pay the costs of actions and corrective measures
that are taken or that are to be taken under this section. The commission
shall use this financial assurance mechanism under the procedure set out in
Texas Health and Safety Code, Chapter 401. 

(h) If the costs of actions and corrective measures require
more funds than the financial assurance mechanism has provided, the commission
shall request the attorney general to seek reimbursement from the licensee
or person causing the threat. 

(i) The commission shall seek reimbursement through a commission
order or shall request the attorney general to file suit for reimbursement
if the commission uses the funds provided by the licensee for security under
Texas Health and Safety Code, Chapter 401, to pay for actions or corrective
measures to remedy spills or contamination by radioactive material resulting
from a violation of the Texas Radiation Control Act (TRCA), the rules of this
chapter, or a license or order issued by the commission under the TRCA or
this chapter. 

sec.35.502.Emergency Impoundment
of Radioactive Material.
(a) In the event of an emergency, the commission or the executive
director shall have the authority to impound or order the impoundment of 
radioactive
material possessed by any person not equipped to observe or failing to observe
the provisions of the Texas Radiation Control Act (TRCA), the rules of Chapter
336 of this title (relating to Radioactive Substance Rules), or a license
or order issued by the commission under the TRCA or Chapter 336 of this title.
(b) As determined by the commission, the impounded radioactive
material may be: 

(1) returned to a properly licensed owner who did not cause
the emergency; 

(2) released as evidence to police or courts; 

(3) returned to a licensee after the emergency conditions
have ceased and any compliance action is settled; 

(4) sold; 

(5) disposed of at an authorized disposal facility; or
(6) otherwise appropriately transferred or disposed.
(c) If disposition of the impounded radioactive material is
necessary to protect the public health and safety, no prior notice need be
given the owner or possessor. If action is not necessary to protect the public
health and safety, the commission shall give written notice to the owner and/or
possessor of the intention to dispose of the material. Notice shall be given
by personal service or certified mail, return receipt requested. The owner
or possessor shall have 30 days from the date of personal service or mailing
to make a written request for a hearing. If no hearing is requested within
that time, the commission may take the proposed action. 

(d) Upon disposition of impounded radioactive material, the
commission may notify the owner and/or possessor of any expense the commission
may have incurred during the impoundment and/or disposition and request 
reimbursement.
If the amount is not paid within 60 days from the date of notice, the commission
may request the attorney general to file suit against the owner or possessor
for the amount requested. If the owner or possessor desires to contest the
amount of this charge, he may request a hearing. 

(e) If the commission determines from the facts available
that impounded radioactive material is abandoned, with no reasonable evidence
showing the owner or possessor, the commission may make such disposition of
the material as it sees fit. 

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
June 19, 1998.
TRD-9809865
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER I.Storage Tank Emergency Orders
30 TAC sec.35.601
STATUTORY AUTHORITY 

The new section is proposed under TWC, Chapter 5, Subchapter L, which 
establishes
the commission's authority concerning emergency and temporary orders. Other
relevant sections of the TWC under which the commission takes this action
include: sec.5.103, which establishes the commission's general authority
to adopt rules; sec.5.105, which establishes the commission's authority
to set policy by rule; sec.5.235, as amended by Article VI, Rider 9, House
Bill 1, 75th Legislature, 1997, which establishes fee authority; sec.11.148,
which establishes the commission's authority to issue orders relating to 
beneficial
inflows to affected bays and estuaries and instream uses; sec.13.041, which
establishes the commission's authority to adopt rules to exercise its 
jurisdiction
over TWC, Chapter 13; sec.26.011, which establishes the commission's authority
over water quality in the state; sec.26.351, which establishes the commission's
authority concerning corrective action; sec.26.354, which establishes the
commission's authority to issue emergency orders concerning petroleum storage
tanks; and sec.27.019, which establishes the commission's authority to adopt
rules concerning underground injection control. Additionally, relevant sections
of the HSC include: sec.361.011, which establishes the commission's jurisdiction
over municipal solid waste; sec.361.017, which establishes the commission's
jurisdiction over industrial hazardous waste; sec.361.024, which establishes
the commission's authority to establish rules for the control of solid waste;
sec.366.012, which establishes the commission's authority to establish rules
for on-site disposal systems; sec.382.017, which establishes the commission's
rulemaking authority; sec.382.051, which establishes the commission's authority
to adopt rules concerning air permits; sec.382.0513, which establishes the
commission's authority to adopt rules concerning permit conditions; sec.401.011,
which establishes the commission's authority over radioactive substances;
sec.401.051, which establishes the commission's authority to adopt rules
for the control of radiation; sec.401.056, which establishes the commission's
authority to issue emergency orders concerning radiation; and sec.401.412,
which establishes the commission's authority concerning licenses for radioactive
substance disposal. 

The proposed new section implements TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.601.Emergency Order Concerning
Underground or Aboveground Storage Tanks.
(a) The commission or executive director may issue orders
under Texas Water Code, sec.5.510, to the owner or operator of an underground
storage tank (UST) regulated under Texas Water Code, Chapter 26, and Chapter
334 of this title (relating to Underground and Aboveground Storage Tanks),
if it finds that: 

(1) there is an actual or threatened release of a regulated
substance from a UST; and 

(2) more expeditious corrective action than is otherwise
provided for under Texas Water Code, Chapter 26 is necessary to protect the
public health and safety or the environment. 

(b) An order issued under subsection (a) of this section may
prohibit a person from allowing or continuing a release or threatened release
and may require the person to take the actions necessary to eliminate the
release or threatened release. 

(c) An emergency order issued under this section must be:
(1) mailed by certified mail, return receipt requested, to
each person identified in the order; 

(2) hand delivered to each person identified in the order;
or 

(3) on failure of service by certified mail or hand delivery,
published one time in the Texas Register,
and one time in a newspaper with general circulation in each county in which
any of the persons identified in the order had a last known address. 

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
June 19, 1998.
TRD-9809866
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER J.Imminent and Substantial Endangerment
30 TAC sec.35.701
STATUTORY AUTHORITY

The new section is proposed under TWC, Chapter 5, Subchapter L, which 
establishes
the commission's authority concerning emergency and temporary orders. Other
relevant sections of the TWC under which the commission takes this action
include: sec.5.103, which establishes the commission's general authority
to adopt rules; sec.5.105, which establishes the commission's authority
to set policy by rule; sec.5.235, as amended by Article VI, Rider 9, House
Bill 1, 75th Legislature, 1997, which establishes fee authority; sec.11.148,
which establishes the commission's authority to issue orders relating to 
beneficial
inflows to affected bays and estuaries and instream uses; sec.13.041, which
establishes the commission's authority to adopt rules to exercise its 
jurisdiction
over TWC, Chapter 13; sec.26.011, which establishes the commission's authority
over water quality in the state; sec.26.351, which establishes the commission's
authority concerning corrective action; sec.26.354, which establishes the
commission's authority to issue emergency orders concerning petroleum storage
tanks; and sec.27.019, which establishes the commission's authority to adopt
rules concerning underground injection control. Additionally, relevant sections
of the HSC include: sec.361.011, which establishes the commission's jurisdiction
over municipal solid waste; sec.361.017, which establishes the commission's
jurisdiction over industrial hazardous waste; sec.361.024, which establishes
the commission's authority to establish rules for the control of solid waste;
sec.366.012, which establishes the commission's authority to establish rules
for on-site disposal systems; sec.382.017, which establishes the commission's
rulemaking authority; sec.382.051, which establishes the commission's authority
to adopt rules concerning air permits; sec.382.0513, which establishes the
commission's authority to adopt rules concerning permit conditions; sec.401.011,
which establishes the commission's authority over radioactive substances;
sec.401.051, which establishes the commission's authority to adopt rules
for the control of radiation; sec.401.056, which establishes the commission's
authority to issue emergency orders concerning radiation; and sec.401.412,
which establishes the commission's authority concerning licenses for radioactive
substance disposal. 

The proposed new section implements TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412.

sec.35.701.Emergency Orders.
The commission or the executive director may issue an emergency administrative
order under Health and Safety Code, sec.361.272, in the manner provided
by this chapter. 

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
June 19, 1998.
TRD-9809867
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER K.Air Orders
30 TAC sec.sec.35.801-35.809
STATUTORY AUTHORITY

The new sections are proposed under TWC, Chapter 5, Subchapter L, which
establishes the commission's authority concerning emergency and temporary
orders. Other relevant sections of the TWC under which the commission takes
this action include: sec.5.103, which establishes the commission's general
authority to adopt rules; sec.5.105, which establishes the commission's
authority to set policy by rule; sec.5.235, as amended by Article VI, Rider
9, House Bill 1, 75th Legislature, 1997, which establishes fee authority;
sec.11.148, which establishes the commission's authority to issue orders
relating to beneficial inflows to affected bays and estuaries and instream
uses; sec.13.041, which establishes the commission's authority to adopt
rules to exercise its jurisdiction over TWC, Chapter 13; sec.26.011, which
establishes the commission's authority over water quality in the state; 
sec.26.351,
which establishes the commission's authority concerning corrective action;
sec.26.354, which establishes the commission's authority to issue emergency
orders concerning petroleum storage tanks; and sec.27.019, which establishes
the commission's authority to adopt rules concerning underground injection
control. Additionally, relevant sections of the HSC include: sec.361.011,
which establishes the commission's jurisdiction over municipal solid waste;
sec.361.017, which establishes the commission's jurisdiction over industrial
hazardous waste; sec.361.024, which establishes the commission's authority
to establish rules for the control of solid waste; sec.366.012, which 
establishes
the commission's authority to establish rules for on-site disposal systems;
sec.382.017, which establishes the commission's rulemaking authority; 
sec.382.051,
which establishes the commission's authority to adopt rules concerning air
permits; sec.382.0513, which establishes the commission's authority to adopt
rules concerning permit conditions; sec.401.011, which establishes the 
commission's
authority over radioactive substances; sec.401.051, which establishes the
commission's authority to adopt rules for the control of radiation; sec.401.056,
which establishes the commission's authority to issue emergency orders 
concerning
radiation; and sec.401.412, which establishes the commission's authority
concerning licenses for radioactive substance disposal. 

The proposed new sections implement TWC, sec.sec.5.103, 5.105, 5.501-5.517,
11.148, 13.041, 26.011, 26.351, and 26.354; and HSC, sec.sec.361.011,
361.017, 361.024, 366.012, 382.017, 382.051, 382.0513, 401.011, 401.051, 
401.056,
and 401.412. 

sec.35.801.Emergency Orders Because
of Catastrophe.
The commission or executive director may issue emergency orders under
Texas Water Code, sec.5.515, to authorize immediate action for the addition,
replacement, or repair of facilities or control equipment, and authorizing
associated emissions of air contaminants, whenever a catastrophic event 
necessitates
such construction and emissions otherwise precluded under the TCAA. For purposes
of this section, a catastrophic event is an unforeseen event including, but
not limited to, an act of God, an act of war, severe weather conditions, 
explosions,
fire, or other similar occurrences beyond the reasonable control of the 
operator,
which renders a facility or its functionally related appurtenances inoperable.
sec.35.802.Application for an Emergency
Order.
The owner or operator of a facility desiring to obtain an order under
this subchapter shall submit an application in accordance with sec.35.24
of this title (relating to Application for Emergency or Temporary Order).
The application must contain the information required by that section and
the following: 

(1) a statement that the proposed construction and emissions
are essential to prevent loss of life, serious injury, severe property damage,
or severe economic loss not attributable to the applicant's actions, and are
necessary for the addition, replacement, or repair of facilities or control
equipment necessitated by a catastrophic event; 

(2) a description of the catastrophic event; 

(3) a statement that there are no practicable alternatives
to the proposed construction and emissions; 

(4) a statement that the emissions will not cause or
contribute to a condition of air pollution; 

(5) a statement that the proposed construction and emissions
will occur only at the property where the catastrophic event occurred or on
other property owned by the owner or operator of the damaged facility, which
produces the same intermediates, products, or by-products, providing that
no more than a de minimus increase will occur
in the predicted concentration of the air contaminants at or beyond the property
line at such other property; 

(6) a description of the proposed construction and the
type and quantity of air contaminants to be emitted; 

(7) an estimate of the dates on which the proposed construction
and emissions will begin and end; 

(8) an estimate of the date on which the facility will
begin operation; and 

(9) any other information or item the executive director
may require to support or explain the need for, or to expedite the issuance
of, an emergency order; including information regarding the applicability
of and compliance with any federal requirements for new or modified sources.
sec.35.803.Public Notification.
The commission or executive director shall publish notice of the issuance
of an emergency order in the Texas Register 
as soon as practicable after issuance of the order. If the order is issued
prior to a hearing, the order shall fix a time and location for a hearing
which is to be held as soon as practicable after the order is issued. Notice
of any hearing shall be published in a newspaper of general circulation in
the nearest municipality not later than ten days before the hearing. Notice
of the issuance and notice of the hearing may be consolidated for publication
in the newspaper. 

sec.35.804.Issuance of Order.
The commission or executive director may issue an order under this
subchapter if it is found that: 

(1) the proposed construction and emissions are essential
to prevent loss of life, serious injury, severe property damage, or severe
economic loss not attributable to the applicant's actions and are necessary
for the addition, replacement, or repair of facilities or control equipment
that is necessitated by a catastrophic event; 

(2) there are no practicable alternatives to the proposed
construction and emissions; 

(3) the emissions will not cause or contribute to a condition
of air pollution; 

(4) the proposed construction or emissions will occur
only: 

(A) at property where the catastrophic event occurred; or
(B) at other property owned by the owner or operator of the
damaged facility which produces the same intermediates, products, or by-
products,
so long as there will be no more than a de minimis 
increase in the predicted concentration of the air contaminants at
or beyond the property line at such other property; 

(5) the time limits in the order for the beginning
and completion of the proposed construction and emissions are reasonable;
and 

(6) the schedule in the order for submission of a complete
permit application is reasonable.

sec.35.805.Contents of an Emergency
Order.
In addition to the requirements of sec.35.26 of this title (relating
to Contents of Emergency or Temporary Order), an emergency order issued under
this subchapter shall contain at least the following: 

(1) a description of the emergency construction and emissions
to be authorized; 

(2) reasonable time limits for the beginning and the
completion of the proposed construction and emissions; 

(3) authorization for action only at the property where
the catastrophic event occurred or on other property owned by the owner or
operator of the damaged facility, which also produces the same intermediates,
products, or byproducts, provided there will be no more than a de minimis 
increase in the concentration of air contaminants at or
beyond the property line at such other property; and 

(4) a schedule for submission of a complete construction
permit application under provisions of TCAA, sec.382.0518. 

sec.35.806.Requirement to Apply
for a Permit or Modification.
The owner or operator of a facility for which an emergency order has
been issued under this subchapter shall submit an application within 60 days
of issuance of the order under TCAA, sec.382.063, and in accordance with
provisions of TCAA, sec.382.0518, and with Chapter 116, Subchapter B of
this title (relating to New Source Review Permits). The application shall
be reviewed and acted upon by the executive director without regard to 
construction
activity authorized by the emergency order. The appropriate permit fee shall
be due and payable under sec.sec.116.140, 116.141, and 116.143 of this
title (relating to Permit Fees). Costs and expenses related to additions,
replacement, or repair of facilities or control equipment shall not be a 
consideration
in any determination in the review of this application.

sec.35.807.Affirmation of an Emergency
Order.
The commission shall affirm a proposed or issued order if the applicant
shows at the hearing, by a preponderance of the evidence, that: 

(1) the proposed construction and emissions are essential
to prevent loss of life, serious injury, severe property damage, or severe
economic loss not attributable to the applicant's actions and are necessary
for the addition, replacement, or repair of facilities or control equipment
that is necessitated by a catastrophic event; 

(2) there are no practicable alternatives to the proposed
construction and emissions; 

(3) the emissions will not cause or contribute to a condition
of air pollution; 

(4) the proposed construction or emissions will occur
only: 

(A) at property where the catastrophic event occurred; or
(B) at other property owned by the owner or operator of the
damaged facility which produces the same intermediates, products, or by-
products,
so long as there will be no more than a de minimis 
increase in the predicted concentration of the air contaminants at
or beyond the property line at such other property; 

(5) the time limits in the order for the beginning
and completion of the proposed construction and emissions are reasonable;
and 

(6) the schedule in the order for submission of a complete
permit application is reasonable. 

sec.35.808.Modification of an Emergency
Order.
The commission shall modify a proposed or issued order if the hearing
record shows that: 

(1) construction and emissions otherwise precluded under the
TCAA are essential to prevent loss of life, serious injury, severe property
damage, or severe economic loss not attributable to the applicant's actions
and are necessary for the addition, replacement, or repair of facilities or
control equipment that is necessitated by a catastrophic event; 

(2) there is no practicable alternative to such construction
and emissions; and 

(3) modification of certain terms of the proposed or issued
order is necessary to make the order, construction, and/or emissions meet
the requirements stated in sec.35.807 of this title (relating to Affirmation
of an Emergency Order). 

sec.35.809.Setting Aside an Emergency
Order.
The commission shall set aside a proposed or issued order if it is
not shown, in accordance with sec.35.807 of this title (relating to Affirmation
of an Emergency Order) or sec.35.808 of this title (relating to Modification
of an Emergency Order), that the order should be either affirmed or modified
and adopted as modified. 

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
June 19, 1998.
TRD-9809868
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER L.On-site Sewage Disposal System
30 TAC sec.35.901
STATUTORY AUTHORITY 

The new section is proposed under TWC, Chapter 5, Subchapter L, which 
establishes
the commission's authority concerning emergency and temporary orders. Other
relevant sections of the TWC under which the commission takes this action
include: sec.5.103, which establishes the commission's general authority
to adopt rules; sec.5.105, which establishes the commission's authority
to set policy by rule; sec.5.235, as amended by Article VI, Rider 9, House
Bill 1, 75th Legislature, 1997, which establishes fee authority; sec.11.148,
which establishes the commission's authority to issue orders relating to 
beneficial
inflows to affected bays and estuaries and instream uses; sec.13.041, which
establishes the commission's authority to adopt rules to exercise its 
jurisdiction
over TWC, Chapter 13; sec.26.011, which establishes the commission's authority
over water quality in the state; sec.26.351, which establishes the commission's
authority concerning corrective action; sec.26.354, which establishes the
commission's authority to issue emergency orders concerning petroleum storage
tanks; and sec.27.019, which establishes the commission's authority to adopt
rules concerning underground injection control. Additionally, relevant sections
of the HSC include: sec.361.011, which establishes the commission's jurisdiction
over municipal solid waste; sec.361.017, which establishes the commission's
jurisdiction over industrial hazardous waste; sec.361.024, which establishes
the commission's authority to establish rules for the control of solid waste;
sec.366.012, which establishes the commission's authority to establish rules
for on-site disposal systems; sec.382.017, which establishes the commission's
rulemaking authority; sec.382.051, which establishes the commission's authority
to adopt rules concerning air permits; sec.382.0513, which establishes the
commission's authority to adopt rules concerning permit conditions; sec.401.011,
which establishes the commission's authority over radioactive substances;
sec.401.051, which establishes the commission's authority to adopt rules
for the control of radiation; sec.401.056, which establishes the commission's
authority to issue emergency orders concerning radiation; and sec.401.412,
which establishes the commission's authority concerning licenses for radioactive
substance disposal. 

The proposed new section implements TWC, sec.sec.5.103, 5.105, 5.501,
5.502, 5.503, 5.504, 5.505, 5.506, 5.507, 5.508, 5.509, 5.510, 5.511, 5.512,
5.513, 5.514, 5.515, 5.516, 5.517, 11.148, 13.041, 26.011, 26.351, and 26.354;
and HSC, sec.sec.361.011, 361.017, 361.024, 366.012, 382.017, 382.051,
382.0513, 401.011, 401.051, 401.056, and 401.412. 

sec.35.901.Emergency Order Concerning
On-site Sewage Disposal System.
The commission may issue an emergency order suspending the registration
of the installer of an on-site sewage disposal system, regulating an on-site
sewage disposal system, or both, if the commission finds that an emergency
exists and that the public health and safety is endangered because of the
operation of an on-site sewage disposal system that does not comply with Texas
Health and Safety Code, Chapter 366, or a rule adopted under that chapter.
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
June 19, 1998.
TRD-9809869
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 116.Control of Air Pollution by Permits for New Construction
or Modification
The Texas Natural Resource Conservation Commission (commission) proposes
an amendment to sec.116.410, concerning emergency orders. The commission
also proposes the repeal of sec.sec.116.411-116.418, concerning emergency
orders. This action also constitutes a revision to the state implementation
plan. This action is part of the commission's implementation of Senate Bill
(SB) 1876, 75th Legislature, 1997, which consolidated the commission's emergency
and temporary order authority. 

In addition to these amendments and repeals, the commission is concurrently
proposing to consolidate agency emergency and temporary order provisions under
a new Chapter 35, concerning Emergency and Temporary Orders and Permits; 
Temporary
Suspension or Amendment of Permit Conditions. The commission is also 
concurrently
proposing amendments to emergency and temporary order provisions in 
sec.sec.291.14,
291.22, 291.142, 291.143, 305.21, 305.29, 305.31, 305.535, 321.80, 321.132,
321.134, 321.152, 321.158, 321.219, 321.232, 321.239, 321.258, and 334.83,
and the repeal of the following rules relating to emergency and temporary
orders: sec.sec.291.10, 291.13, 297.57, 305.22-305.28, 305.30, and 305.32.
The commission is also proposing new sec.297.57 and sec.305.30. These
changes are published in this edition of the Texas Register. 

EXPLANATION OF PROPOSED RULES 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders, and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. Finally, general application, term, and hearing
requirements that are be applicable to all affected programs are included.
The statute will allow the commission or the executive director to act 
expeditiously
to address unforeseen circumstances. TWC, sec.5.515, as added by SB 1876,
expressly authorizes the commission to issue these emergency orders. 

The proposed amendments to sec.116.410, concerning Applicability, add
a reference to new Chapter 35, make a conformity change, and delete the 
definition
of a catastrophic event, which is defined in proposed new sec.35.801, concerning
Emergency Orders Because of Catastrophe. 

The proposed repeals concern provisions incorporated into the new Chapter
35. These provisions are moved in their entirety to proposed new Chapter 35,
Subchapter K. In that proposal, the commission does propose changes to notice
requirements. Proposed new sec.35.803 would require the commission or executive
director to publish notice of the emergency order and the hearing to affirm,
modify, or set aside in a newspaper of general circulation in the nearest
municipality not later than the tenth day before the hearing. This is a change
from current sec.116.412, which requires Texas
Register notice as soon as practicable after issuance. The commission
also proposes conforming changes, as well as regulatory reform changes to
terminology that were identified during the commission's review of Chapter
116 under Article IX, sec.167, of House Bill 1, 75th Legislature, 1997,
the General Appropriations Act. 

FISCAL NOTE 

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the sections are in effect there will
be no significant fiscal implications for state or local government as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT

Mr. Minick 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 enhanced consistency in the issuance of emergency and
temporary orders. The sections will also allow the commission or executive
director to act expeditiously to address unforeseen circumstances. 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. 

DRAFT REGULATORY IMPACT ANALYSIS 

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not a major environmental rule because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly granted authority by TWC,
sec.5.501. The rules also concern procedural requirements of the agency,
such as delegation of the authority to issue such orders by the commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort. 

TAKINGS IMPACT ASSESSMENT

The commission has prepared a takings impact assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, Chapter 5, Subchapter L, concerning emergency and temporary
orders. The rules will also consolidate agency procedural rules and make certain
processes consistent among different agency programs. The rules will 
substantially
advance these specific purposes by providing specific provisions on these
matters. Promulgation and enforcement of these rules will not burden private
real property which is the subject of the rules because they concern commission
procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the
rules are neither identified in Coastal Coordination Act Implementation Rules,
31 TAC sec.505.11, relating to Actions and Rules Subject to the Coastal
Management Program, nor will they affect any action/authorization identified
in Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11. Therefore,
the proposed rules are not subject to the CMP. 

PUBLIC HEARING 

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760. 
Persons with disabilities who have special communication or other accommodation
needs who are planning to attend the hearing should contact the agency at
(512) 239-4900. Requests should be made as far in advance as possible. 

SUBCHAPTER E.Emergency Orders
30 TAC sec.116.410
STATUTORY AUTHORITY 

The amendment is proposed under TWC, sec.sec.5.103, 5.105, and 5.501
and Texas Health and Safety Code, sec.sec.382.017, 382.051, and 382.0513.
Section 5.103 establishes the commission's general authority to adopt rules.
Section 5.105 establishes the commission's authority to set policy by rule.
Section 5.501 establishes the commission's authority to adopt rules to implement
the emergency and temporary order provisions of TWC, Chapter 5, Subchapter
L. Section 382.017 establishes the commission's authority to adopt rules.
Section 382.051 establishes the power of the commission to adopt rules 
concerning
permits. Section 382.0513 establishes the power of the commission to establish
certain permit conditions. 

The proposed amendment implements TWC, sec.sec.5.103, 5.105, 5.515
and Texas Health and Safety Code, sec.sec.382.017, 382.051, and 382.0513. 
sec.116.410.Applicability.
The owner or operator of a facility may apply to <nl>the commission
or <ol> the executive director for an emergency order <nl>under Texas Water
Code, sec.5.515, and Chapter 35 of this title (relating to Emergency and
Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions), <ol> to authorize immediate action for the addition, replacement,
or repair of facilities or control equipment, and authorizing associated 
emissions
of air contaminants, whenever a catastrophic event necessitates such 
construction
and emissions otherwise precluded under the Texas Clean Air Act. [For
purposes of this section, a catastrophic event is an unforeseen event including,
but not limited to, an act of God, an act of war, severe weather conditions,
explosions, fire, or other similar occurrences beyond the reasonable control
of the operator, which renders a facility or its functionally related 
appurtenances
inoperable.] 

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
June 19, 1998.
TRD-9809874
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

30 TAC sec.sec.116.411-116.418
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Natural Resource Conservation Commission or in the Texas Register
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY

The repeals are proposed under Texas Water Code, sec.sec.5.103, 5.105,
and 5.501 and Texas Health and Safety Code, sec.sec.382.017, 382.051,
and 382.0513. Section 5.103 establishes the commission's general authority
to adopt rules. Section 5.105 establishes the commission's authority to set
policy by rule. Section 5.501 establishes the commission's authority to adopt
rules to implement the emergency and temporary order provisions of Texas Water
Code, Chapter 5, Subchapter L. Section 382.017 establishes the commission's
authority to adopt rules. Section 382.051 establishes the power of the 
commission
to adopt rules concerning permits. Section 382.0513 establishes the power
of the commission to establish certain permit conditions. 

The proposed repeals implement Texas Water Code, sec.sec.5.103, 5.105,
5.515 and Texas Health and Safety Code, sec.sec.382.017, 382.051, and
382.0513. 

sec.116.411.Application for an Emergency Order.
sec.116.412.Public Notification.
sec.116.413.Public Hearing for an Emergency Order.
sec.116.414.Affirmation of an Emergency Order.
sec.116.415.Contents of an Emergency Order.
sec.116.416.Requirement to Apply for a Permit or
Modification.
sec.116.417.Modification of an Emergency Order.
sec.116.418.Setting Aside an Emergency Order.
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
June 19, 1998.
TRD-9809875
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 291.Water Rates
The Texas Natural Resource Conservation Commission (commission) proposes
the repeal of sec.291.10 and sec.291.13, concerning procedural rules related
to utilities. The commission also proposes amendments to sec.sec.291.14,
291.22, 291.142, and 291.143, concerning emergency orders and the operations
of certain utilities. This action includes certain changes related to the
operation of certain utilities necessary to implement Senate Bill (SB) 1,
75th Legislature, 1997. This action is also part of the commission's 
implementation
of SB 1876, 75th Legislature, 1997, which consolidated the commission's 
emergency
and temporary order authority. 

In addition to these amendments, the commission is concurrently proposing
to consolidate agency emergency and temporary order provisions under a new
Chapter 35, concerning Emergency and Temporary Orders and Permits; Temporary
Suspension or Amendment of Permit Conditions. The commission is also 
concurrently
proposing amendments to emergency and temporary order provisions in 
sec.sec.116.410,
305.21, 305.29, 305.31, 305.535, 321.80, 321.132, 321.134, 321.152, 321.158,
321.219, 321.232, 321.239, 321.258, and 334.83, and the repeal of the following
rules relating to emergency and temporary orders: sec.sec.116.411-116.418,
297.57, 305.22-305.28, 305.30, and 305.32. The commission also proposes new
sec.297.57 and sec.305.30. These changes are published in this edition
of the Texas Register. 

EXPLANATION OF PROPOSED RULES 

SB 1 amended Texas Water Code (TWC), sec.13.412, to expand the definition
of abandonment and modified TWC, sec.13.4132, to allow a person who has
been appointed to temporarily manage a utility to access all utility system
components. The commission is proposing changes to Chapter 291 that will make
the rules conform to these amendments. 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new TWC, Chapter 5, Subchapter L. The new statute 
expressly
authorizes the commission to issue temporary or emergency mandatory, permissive,
or prohibitory orders, and issue temporary permits or suspend permit conditions
by temporary or emergency order. It allows the commission to issue emergency
orders with or without notice. Additionally, it authorizes the commission
to delegate authority to the executive director to receive applications and
issue emergency orders and authorize representatives to act on his or her
behalf. Finally, general application, term, and hearing requirements that
are applicable to all affected programs are included. The statute will allow
the commission or the executive director to act expeditiously to address 
unforeseen
circumstances. TWC, sec.5.507 and sec.5.508, as added by SB 1876, expressly
authorize the commission to issue emergency orders for the appointment of
a temporary utility manager, and for rate increases under certain conditions. 
The proposed repeal of sec.291.10, concerning Request for Public Hearing,
removes procedural requirements that are duplicative of those in Chapter 55,
concerning Requests for Contested Case Hearings; Public Comment. The commission
takes this action to continue the consolidation of agency procedural rules. 
The proposed repeal of sec.291.13, concerning Record of Proceeding, eliminates
the requirement that a record be kept of all proceedings before the commission.
This requirement is duplicative of requirements in current commission procedural
rules and is therefore unnecessary. 

The proposed amendments to sec.291.14, concerning Emergency Orders, make
nonsubstantive clarifying and conforming changes to reference TWC, sec.5.507
and sec.5.508, and the new Chapter 35. 

The proposed amendment to sec.291.22, concerning Notice of Intent to
Change Rates, amends subsection (g) to reference the new Chapter 35 and make
conformity changes. The amendment also eliminates specific requirements 
governing
emergency rate increases that have been moved to proposed sec.35.202, concerning
Emergency Order for Rate Increase in Certain Situations. 

The proposed amendments to sec.291.142, concerning Operation of a Utility
that Discontinues Operation or is Referred for Appointment of a Receiver,
implement both SB 1 and SB 1876. The section is amended to allow the commission
or the executive director to authorize a willing person to temporarily manage
and operate a utility that is being referred to the attorney general for 
appointment
of a receiver for having expressed an intent to abandon operation of its 
facilities.
Additionally, the definition of abandonment is expanded in accordance with
TWC, sec.13.412, as amended by SB 1. Finally, the section is amended to
reference new Chapter 35 and remove the provision that notice of the action
is adequate if the notice is mailed or hand-delivered to the last known address
of the utility's headquarters. This provision is moved to proposed new 
sec.35.201,
and is therefore unnecessary. 

The proposed amendments to sec.291.143, concerning Operation of a Utility
by a Temporary Manager, also implement both SB 1 and SB 1876. The section
is amended to expressly grant to a person appointed to temporarily manage
and operate a utility the power to take certain actions. The amendment also
allows the person, in addition to the previously existing duties, to access
all system components. These changes implement TWC, sec.13.4132, as amended
by SB 1. Finally, the amendments make nonsubstantive conforming changes to
reference TWC, sec.5.507, and the proposed new Chapter 35. 

FISCAL NOTE 

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the sections are in effect there will
be no significant fiscal implications for state or local government as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT

Mr. Minick 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 section will be enhanced consistency in the issuance of emergency and
temporary orders. In addition, the proposed rules will make it easier for
the agency to appoint a temporary receiver to manage a system that was failing
to protect public health. The sections will also allow the commission or 
executive
director to act expeditiously to address unforeseen circumstances. 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. 

DRAFT REGULATORY IMPACT ANALYSIS

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not a major environmental rule because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly authorized by statute to
adopt rules. The rules also concern procedural requirements of the agency,
such as delegation of the authority to issue such orders by the commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort. 

TAKINGS IMPACT ASSESSMENT 

The commission has prepared a Takings Impact Assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, sec.13.412 and sec.13.4132, and TWC, Chapter 5, Subchapter
L, concerning emergency and temporary orders relating to utilities. The rules
will also consolidate agency procedural rules and make certain processes 
consistent
among different agency programs. The rules will substantially advance these
specific purposes by providing specific provisions on these matters. 
Promulgation
and enforcement of these rules will not burden private real property which
is the subject of the rules because they concern commission procedural rules. 
COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the
rules are neither identified in Coastal Coordination Act Implementation Rules,
31 TAC sec.505.11, relating to Actions and Rules Subject to the Coastal
Management Program, nor will they affect any action/authorization identified
in Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11. Therefore,
the proposed rules are not subject to the CMP. 

PUBLIC HEARING

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760. 
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.General Provisions
30 TAC sec.291.10, sec.291.13
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Natural Resource Conservation Commission or in the Texas Register
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY 

The repeals are proposed under TWC, sec.sec.5.103, 5.105, 5.501, 13.041,
and 26.011. Section 5.103 establishes the commission's general authority to
adopt rules. Section 5.105 establishes the commission's authority to set policy
by rule. Section 5.501 establishes the commission's authority to adopt rules
to implement the emergency and temporary order provisions of TWC, Chapter
5, Subchapter L. Section 13.041 establishes the commission's authority to
adopt rules to exercise its jurisdiction over TWC, Chapter 13. Section 26.011
establishes the commission's authority over water quality in the state. 

The proposed repeals implement TWC, sec.sec.5.103, 5.105, 5.507, 5.508,
13.041, 13.412, 13.4132, and 26.011.

sec.291.10.Request for Public Hearing.
sec.291.13.Record of Proceeding.
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
June 19, 1998.
TRD-9809876
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

30 TAC sec.291.14
STATUTORY AUTHORITY 

The amendment is proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, 13.041, and 26.011. Section 5.103 establishes the commission's general
authority to adopt rules. Section 5.105 establishes the commission's authority
to set policy by rule. Section 5.501 establishes the commission's authority
to adopt rules to implement the emergency and temporary order provisions of
Texas Water Code, Chapter 5, Subchapter L. Section 13.041 establishes the
commission's authority to adopt rules to exercise its jurisdiction over Texas
Water Code, Chapter 13. Section 26.011 establishes the commission's authority
over water quality in the state. 

The proposed amendment implements Texas Water Code, sec.sec.5.103,
5.105, 5.507, 5.508, 13.041, 13.412, 13.4132, and 26.011. 

sec.291.14.Emergency Orders.
(a) The commission may issue emergency orders, with or without
a hearing: 

(1) to compel a water or sewer service provider that has obtained
or is required to obtain a certificate of public convenience and necessity
to provide continuous and adequate water service, sewer service, or both,
if the discontinuance of the service is imminent or has occurred because of
the service provider's actions or failure to act. These orders may contain
provisions requiring specific utility actions to ensure continuous and adequate
utility service and compliance with regulatory guidelines; 

(2) to compel a retail public utility to provide an emergency
interconnection with a neighboring retail public utility for the provision
of temporary water or sewer service, or both, for not more than 90 days if
service discontinuance or serious impairment in service is imminent or has
occurred; <nl>and/or <ol> 

(3) to establish reasonable compensation for the temporary
service required under subsection (a)(2) of this section and may allow the
retail public utility receiving the service to make a temporary adjustment
to its rate structure to ensure proper payment<nl>. <ol>[ ;] 
<nl>(b)<ol> <p<nl> The commission or executive
director may also issue orders under Chapter 35 of this title (relating to
Emergency and Temporary Orders and Permits; Temporary Suspension or Amendment
of Permit Conditions): 

<nl> (1)<ol> [(4)] to appoint a temporary manager under
[the] Texas Water Code, <nl>sec.5.507 and sec.13.4132 <ol>
[sec.13.4134]; and/or

<nl>(2)<ol> [(5)] to approve an emergency
rate increase under <nl>Texas Water <ol> [the] Code, <nl>sec.5.508
and <ol> sec.13.4133. 

<nl>(c)<ol> [(b)] If an order is issued under
[subsection (a) of] this section without a hearing, the order shall
fix a time, as soon after the emergency order is issued as is practicable,
and place for a hearing to be held before 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
June 19, 1998.
TRD-9809877
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER B.Rates, Rate-Making, and Rate/Tariff Changes
30 TAC sec.291.22
STATUTORY AUTHORITY

The amendment is proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, 13.041, and 26.011. Section 5.103 establishes the commission's general
authority to adopt rules. Section 5.105 establishes the commission's authority
to set policy by rule. Section 5.501 establishes the commission's authority
to adopt rules to implement the emergency and temporary order provisions of
Texas Water Code, Chapter 5, Subchapter L. Section 13.041 establishes the
commission's authority to adopt rules to exercise its jurisdiction over Texas
Water Code, Chapter 13. Section 26.011 establishes the commission's authority
over water quality in the state. 

The proposed amendment implements Texas Water Code, sec.sec.5.103,
5.105, 5.507, 5.508, 13.041, 13.412, 13.4132, and 26.011.

sec.291.22.Notice of Intent to Change Rates.
(a)-(f) (No change.) 

(g) <nl>Emergency rate increase in certain circumstances 
<ol> [Emergency Rate Increase in Certain Circumstances]. 

[(1)] After receiving a request, the commission <nl>
or executive director <ol> may authorize an emergency rate increase <nl>
under Texas Water Code, sec.5.508 and sec.13.4133 and Chapter 35 of this
title (relating to Emergency and Temporary Orders and Permits; Temporary 
Suspension
or Amendment of Permit Conditions) <ol> for a utility: 

<nl>(1)<ol> [(A)] for which a person has
been appointed under [the] Texas Water Code, sec.13.4132; or 
<nl>(2)<ol> [(B)] for which a receiver
has been appointed under [the] Texas Water Code, sec.13.412;
and 

<nl>(3)<ol> [(C)] if the increase is necessary
to ensure the provision of continuous and adequate services to the utility's
customers. 

[(2) <p<ol> A request for an emergency
rate increase must include the following:] 

[(A) <p<ol> the effective date of the
rate increase;] 

[(B) <p<ol> a summary of the reasons
for the rate increase;] 

[(C) <p<ol> sufficient information to
support the computation of the proposed rates; and] 

[(D) <p<ol> any other information requested
by the executive director.] 

[(3) <p<ol> The effective date
must be the first day of a billing cycle unless otherwise authorized by the
commission.] 

[(4) <p<ol> Any emergency rate increase
related to charges for actual consumption will be for consumption after the
effective date. An increase or the portion of the increase which is not related
to consumption may be billed at the emergency rate on the effective date or
the first billing after approval by the commission.] 

[(5) <p<ol> The utility, after receiving
authorization for the emergency rate increase, shall provide notice of the
rate increase to each ratepayer as soon as possible, but not later than the
effective date for the new rate. This notice shall contain the following 
information:] 
[(A) <p<ol> the utility name and address,
the previous rates, the emergency rates, the effective date of the rate 
increase,
and the classes of utility customers affected; and] 

[(B) <p<ol> the following statement:
"This emergency rate increase has been approved by the Texas Natural Resource
Conservation Commission under authority granted by the Texas Water Code, 
sec.13.4133
to ensure the provision of continuous and adequate service to the utility's
customers. The commission is also required to schedule a hearing to establish
a final rate within 15 months after the date on which the emergency rates
take effect. The utility is required to provide notice of the hearing to all
customers at least ten days prior to the date of the hearing. The additional
revenues collected under this emergency rate increase are subject to refund
if the commission finds that the rate increase was larger than necessary to
ensure continuous and adequate service."] 

[(6) <p<ol> The utility shall
maintain adequate books and records for a period not less than 12 months to
allow for the determination of a cost of service as set forth in sec. 291.31
of this title (relating to Cost of Service).] 

[(7) <p<ol> During the pendency
of the emergency rate increase, the commission may require that the utility
deposit all or part of the rate increase into an interest-bearing escrow account
as set forth in sec.291.30 of this title (relating to Escrow of Proceeds
Received Under Rate Increase).] 

(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
June 19, 1998.
TRD-9809878
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER J.Enforcement, Supervision, and Receivership
30 TAC sec.291.142, sec.291.143
STATUTORY AUTHORITY 

The amendments are proposed under Texas Water Code, sec.sec.5.103,
5.105, 5.501, 13.041, and 26.011. Section 5.103 establishes the commission's
general authority to adopt rules. Section 5.105 establishes the commission's
authority to set policy by rule. Section 5.501 establishes the commission's
authority to adopt rules to implement the emergency and temporary order 
provisions
of Texas Water Code, Chapter 5, Subchapter L. Section 13.041 establishes the
commission's authority to adopt rules to exercise its jurisdiction over Texas
Water Code, Chapter 13. Section 26.011 establishes the commission's authority
over water quality in the state. 

The proposed amendments implement Texas Water Code, sec.sec.5.103,
5.105, 5.507, 5.508, 13.041, 13.412, 13.4132, and 26.011. 

sec.291.142.Operation of Utility that Discontinues
Operation or is Referred for Appointment of a Receiver.
(a) The commission <nl>or the executive director,<ol> after
providing to the utility notice and an opportunity for a hearing, may authorize
a willing person to temporarily manage and operate a utility that [has
(1) <nl>has <ol> discontinued or abandoned operations or
the provision of services; or 

(2) is being referred to the attorney general for the
appointment of a receiver under [the] Texas Water Code, sec.13.412
for: 

(A) having <nl>expressed an intent to abandon or <ol> abandoned
operation of its facilities; or 

(B)-(C) (No change.) 

(b) The commission <nl>or the executive director <ol> may
appoint a person under this section by emergency order <nl>under Chapter
35 of this title (relating to Emergency and Temporary Order and Permits; 
Temporary
Suspension or Amendment of Permit Conditions <ol> [, and notice of
the action is adequate if the notice is mailed or hand-delivered to the last
known address of the utility's headquarters.] A corporation may be appointed
a temporary manager. 

(c) Abandonment includes<nl>, <ol> but is not limited to: 
(1) failure to pay <nl>a bill <ol> [utility bills;
] or <nl>obligation owed to a retail public utility or to an electric
or gas utility with the result that the utility service provider has issued
a notice of discontinuance of necessary services;<ol> 

<nl>(2)<ol> <p<nl> failure to provide appropriate
water or wastewater treatment so that a potential health hazard results; 
<nl>(3)<ol> [(2)] failure to <nl>adequately
maintain facilities or to provide sufficient facilities resulting in potential
health hazards, extended outages, or repeated service interruptions; <ol>
[make necessary and timely repairs to maintain continuous and adequate
service.] 

<nl>(4)<ol> <p<nl> failure to provide customers
adequate notice of a health hazard or potential health hazard; 

<nl>(5)<ol> <p<nl> failure to secure an
alternative available water supply during an outage; 

<nl>(6)<ol> <p<nl> displaying a pattern
of hostility toward or repeatedly failing to respond to the commission or
the utility's customers; and 

<nl>(7)<ol> <p<nl> failure to provide the
commission or its customers with adequate information on how to contact the
utility for normal business and emergency purposes. 

(d) (No change.) 

sec.291.143.Operation of a Utility by a Temporary
Manager.
(a) By emergency order under [the] Texas Water
Code, <nl>sec.5.507 and <ol> sec.13.4132, the commission <nl>or the
executive director <ol> may appoint a person <nl>under Chapter 35 of this
title (relating to Emergency and Temporary Orders and Permits; Suspension
and Amendment of Permit Conditions) <ol> to temporarily manage and operate
a utility that has discontinued or abandoned operations <nl>or the provision
of services,<ol> or which <nl>has been or <ol> is being referred to the <nl>
attorney general <ol> [Attorney General] for the appointment
of a receiver under [the] Texas Water Code, sec.13.412. 

(b) A person appointed under this section has the powers <nl>
and duties <ol> necessary <nl>to <ol> [and shall] ensure the
continued operation of the utility and the provision of continuous and adequate
services to customers<nl>, including the power and duty to <ol> [
. The duties of the temporary manager appointed by the commission will include
(1) <nl>read <ol> [reading] meters; 

(2) <nl>bill <ol> [billing] for utility
services; 

(3) <nl>collect <ol> [collecting] revenues; 
(4) <nl>disburse <ol> [disbursing] funds; 
(5) <nl>request <ol> [requesting] rate
increases if needed; 

<nl>(6)<ol> <p<nl> access all system components; 
<nl>(7)<ol> [(6)] <nl>conduct required 
<ol> sampling; 

<nl>(8)<ol> [(7)] <nl>make <ol> [
making] necessary repairs; and 

<nl>(9)<ol> [(8)] <nl>perform <ol> [
performing] other acts necessary to assure continuous and adequate utility
service as authorized by the commission. 

(c)-(i) (No change.) 

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 19, 1998.
TRD-9809879
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 297.Water Rights, Substantive
The Texas Natural Resource Conservation Commission (commission) proposes
the repeal of sec.297.57 and new sec.297.57, concerning emergency suspension
of permit conditions. This action implements Senate Bill (SB) 1876, 75th 
Legislature,
1997, and continues the commission's effort to consolidate agency procedural
rules and make certain processes consistent among different agency programs.
In addition to this action, the commission is concurrently proposing to
consolidate agency emergency and temporary order provisions under a new Chapter
35, concerning Emergency and Temporary Orders and Permits; Temporary Suspension
or Amendment of Permit Conditions. The commission is also concurrently proposing
amendments to emergency and temporary order provisions in sec.sec.116.410,
291.14, 291.22, 291.142, 291.143, 305.21, 305.29, 305.31, 305.535, 321.80,
321.132, 321.134, 321.152, 321.158, 321.219, 321.232, 321.239, 321.258, and
334.83, and the repeal of the following rules relating to emergency and 
temporary
orders: sec.sec.116.411-116.418, 291.10, 291.13 305.22-305.28, 305.30,
and 305.32. The commission also proposes new sec.305.30. These changes are
published in this edition of the Texas Register.
EXPLANATION OF PROPOSED RULES

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders, and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. Finally, general application, term, and hearing
requirements that are be applicable to all affected programs are included.
The statute will allow the commission or the executive director to act 
expeditiously
to address unforeseen circumstances. TWC, sec.5.506, as added by SB 1876,
concerns the emergency suspension of a permit condition relating to beneficial
inflows to affected bays and estuaries and instream uses. 

The proposed repeal provides for moving existing requirements from sec.297.57,
concerning Emergency Suspension of Permit Conditions, into the new Chapter
35. These provisions may be found in proposed Chapter 35, Subchapter D, 
concerning
Emergency Suspension of Beneficial Inflows. There are no substantive changes
to the requirements as they currently exist. 

The proposed new sec.297.57 simply references the commission's authority
under TWC, sec.5.506, and the new Chapter 35. The section also allows the
executive director to act, as authorized by TWC, sec.5.501. 

FISCAL NOTE

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the sections are in effect there will
be no significant fiscal implications for state or local government as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT 

Mr. Minick 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 enhanced consistency in the issuance of emergency and
temporary orders. 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. 

DRAFT REGULATORY IMPACT ANALYSIS 

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not a major environmental rule because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly authorized by TWC, sec.5.501
to take this action. The rules also concern procedural requirements of the
agency, such as delegation of the authority to issue such orders by the 
commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort. 

TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, Chapter 5, Subchapter L. The rules will also consolidate
agency procedural rules and make certain processes consistent among different
agency programs. The rules will substantially advance these specific purposes
by providing specific provisions on these matters. Promulgation and enforcement
of these rules will not burden private real property which is the subject
of the rules because they concern commission procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW 

The commission has reviewed the proposed rulemaking and found that the
proposal is a rulemaking identified in the Coastal Coordination Implementation
Rules, 31 TAC sec.505.11, or will affect an action/authorization identified
in the Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11,
and will, therefore, require that applicable goals and policies of the Coastal
Management Program (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 found that the proposed rules are consistent
with the applicable CMP goals and policies. The following is a summary of
that determination. The CMP goal applicable to the proposed rules is the goal
to protect, preserve, restore, and enhance the diversity, quality, quantity,
functions, and values of coastal natural resource areas. CMP policies applicable
to the proposed rules include the administrative policies and the policies
for specific activities related to: construction and operation or solid waste
treatment, storage, and disposal facilities; discharge of municipal and 
industrial
wastewater to coastal areas; nonpoint source water pollution; and appropriations
of water. Promulgation and enforcement of these proposed rules is consistent
with the applicable CMP goals and policies because the proposed rules will
establish clear and consistent requirements governing the issuance of emergency
and temporary orders, as authorized by TWC, Chapter 5, Subchapter L. Under
the authority granted by statute, the commission may issue emergency or 
temporary
orders to address unforeseen circumstances, such as drought conditions or
potential catastrophes. Promulgation and enforcement of these rules will not
violate or exceed any standards identified in the applicable CMP goals and
policies because they will allow the commission to take steps to mitigate
emergency or potential emergency situations, which will result in environmental
benefits for the entire state, including coastal areas. 

The commission invites public comment on the consistency of the proposed
rules. 

PUBLIC HEARING 

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760.
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 E.Issuance and Conditions of Water Rights or Certificate
of Adjudication
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the Texas Natural Resource Conservation Commission or in the Texas Register
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
30 TAC sec.297.57
STATUTORY AUTHORITY

The repeal is proposed under TWC, sec.sec.5.103, 5.105, 5.501, 11.148,
and 26.011. Section 5.103 establishes the commission's general authority to
adopt rules. Section 5.105 establishes the commission's authority to set policy
by rule. Section 5.501 establishes the commission's authority to adopt rules
to implement the emergency and temporary order provisions of TWC, Chapter
5, Subchapter L. Section 11.148 establishes the commission's authority to
suspend permit conditions relating to beneficial inflows to affected bays
and estuaries. Section 26.011 establishes the commission's authority over
water quality in the state. 

The proposed repeal implements TWC, sec.sec.5.103, 5.105, 5.506, 13.041,
11.148, 26.011. 

sec.297.57.Emergency Suspension of Permit Conditions.
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
June 19, 1998.
TRD-9809880
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

30 TAC sec.297.57
STATUTORY AUTHORITY 

The new section is proposed under Texas Water Code, sec.sec.5.103,
5.105, 5.501, 11.148, and 26.011. Section 5.103 establishes the commission's
general authority to adopt rules. Section 5.105 establishes the commission's
authority to set policy by rule. Section 5.501 establishes the commission's
authority to adopt rules to implement the emergency and temporary order 
provisions
of Texas Water Code, Chapter 5, Subchapter L. Section 11.148 establishes the
commission's authority to suspend permit conditions relating to beneficial
inflows to affected bays and estuaries. Section 26.011 establishes the 
commission's
authority over water quality in the state. 

The proposed new section implements Texas Water Code, sec.sec.5.103,
5.105, 5.506, 13.041, 11.148, 26.011. 

sec.297.57.Emergency Suspension
of Permit Conditions.
The commission or executive director may review and act, under Texas
Water Code, sec.5.506 and sec.11.148, and under sec.35.51 of this title
(relating to Emergency Suspension of Permit Conditions Relating to Beneficial
Inflows to Affected Bays and Estuaries and Instream Uses on a petition by
a water right holder for the temporary suspension of conditions in the water
right relating to beneficial inflows to bays and estuaries and instream uses
during an emergency. 

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
June 19, 1998.
TRD-9809881
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 305.Consolidated Permits
The commission proposes amendments to sec.sec.305.21, 305.29,
305.31, and 305.535, concerning emergency and temporary orders. The commission
also proposes the repeal of sec.sec.305.22-305.28, 305.30, and 305.32,
concerning emergency orders. Finally, the commission proposes new sec.305.30,
concerning emergency actions. This action implements Senate Bill (SB) 1876,
75th Legislature, 1997, and continues the commission's effort to consolidate
agency procedural rules and make certain processes consistent among different
agency programs. 

In addition to these amendments and repeals, the commission is concurrently
proposing to consolidate agency emergency and temporary order provisions under
a new Chapter 35, concerning Emergency and Temporary Orders and Permits; 
Temporary
Suspension or Amendment of Permit Conditions. The commission is also 
concurrently
proposing amendments to emergency and temporary order provisions in 
sec.sec.116.410,
291.14, 291.22, 291.142, 291.143, 321.80, 321.132, 321.134, 321.152, 321.158,
321.219, 321.232, 321.239, 321.258, and 334.83, and the repeal of the following
rules relating to emergency and temporary orders: sec.sec.116.411-116.418,
291.10, 291.13, and 297.57. The commission is also proposing new sec.297.57.
These changes are published in this edition of the Texas Register. 

EXPLANATION OF PROPOSED RULES 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. Finally, general application, term, and hearing
requirements that are applicable to all affected programs are included. The
statute will allow the commission or the executive director to act expeditiously
to address unforeseen circumstances. TWC, sec.5.509, as added by SB 1876,
concerns temporary or emergency orders relating to the discharge of waste
or pollutants. TWC, sec.5.512, concerns emergency orders relating to solid
waste management. TWC, sec.5.516, concerns emergency orders issued under
Health and Safety Code, sec.401.056, concerning Emergency Orders. 

The proposed amendment to sec.305.21, concerning Emergency Orders and
Temporary Orders Authorized, provides reference to the commission's authority
under TWC, sec.5.509, and the new Chapter 35. The amendment also makes 
conforming
changes. 

The proposed repeals of sec.305.22, concerning Application for Orders
or Authorizations to Discharge; sec.305.23, concerning Emergency Orders;
and sec.305.25, concerning Executive Director Authorizations to Discharge,
delete provisions that have been moved to proposed Chapter 35, Subchapter
F, concerning Water Quality Emergency and Temporary Orders. 

The proposed repeals of sec.305.24, concerning Notice; sec.305.26,
concerning Hearings for Temporary Orders, Executive Director Authorizations
and Emergency Orders; sec.305.27, concerning Application Fees; and sec.305.28,
concerning Renewals of Emergency and Temporary Orders, delete provisions that
are addressed in proposed Chapter 35, Subchapter C, concerning General 
Provisions. 
The proposed amendments to sec.305.29, concerning Emergency Orders for
Solid Waste Activities, provide reference to the commission's authority under
TWC, sec.5.512, and the new Chapter 35, and makes conforming changes. The
amendments also delete provisions that have been moved to proposed Chapter
35, Subchapter G, concerning Solid Waste and Uranium By-product Emergency
Orders. 

The proposed new sec.305.30, concerning Emergency Actions Concerning
Hazardous Waste, provides reference to the commission's authority under TWC,
sec.5.512, and the new Chapter 35 and contains conforming changes. The repeal
of current sec.305.30, concerning Emergency Actions Concerning Hazardous
Waste, deletes provisions that have been moved to proposed Chapter 35, 
Subchapter
G. 

The proposed amendments to sec.305.31, concerning Emergency Orders Relating
to Radioactive Substances and sec.305.32, concerning Emergency Impoundment
of Radioactive Material, provide reference to the commission's authority under
TWC, sec.5.512, and the new Chapter 35 and makes conforming changes. The
amendments also delete provisions that have been moved to proposed Chapter
35, Subchapter H, concerning Radioactive Substances and Materials Emergency
Orders. 

The proposed amendments to sec.305.535, concerning Bypasses from TPDES
Permitted Facilities, make conforming changes to reflect the proposed new
Chapter 35. The section is also amended to grant to the commission the authority
to determine if the required conditions for authorizing a bypass are met.
The executive director has that authority in the rules as they currently exist. 
FISCAL NOTE

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the sections are in effect there will
be no significant fiscal implications for state or local government as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT

Mr. Minick 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 enhanced consistency in the issuance of emergency and
temporary orders. 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. 

DRAFT REGULATORY IMPACT ANALYSIS 

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not a major environmental rule because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly granted authority by statute.
The rules also concern procedural requirements of the agency, such as delegation
of the authority to issue such orders by the commission to the executive 
director,
and are a result of the commission's continuing regulatory reform effort. 
TAKINGS IMPACT ASSESSMENT

The commission has prepared a Takings Impact Assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, Chapter 5, Subchapter L. The rules will also consolidate
agency procedural rules and make certain processes consistent among different
agency programs. The rules will substantially advance these specific purposes
by providing specific provisions on these matters. Promulgation and enforcement
of these rules will not burden private real property which is the subject
of the rules because they concern commission procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW

The commission has reviewed the proposed rulemaking and found that the
proposal is a rulemaking identified in the Coastal Coordination Implementation
Rules, 31 TAC sec.505.11, or will affect an action/authorization identified
in the Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11,
and will, therefore, require that applicable goals and policies of the Coastal
Management Program (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 found that the proposed rules are consistent
with the applicable CMP goals and policies. The following is a summary of
that determination. The CMP goal applicable to the proposed rules is the goal
to protect, preserve, restore, and enhance the diversity, quality, quantity,
functions, and values of coastal natural resource areas. CMP policies applicable
to the proposed rules include the administrative policies and the policies
for specific activities related to: construction and operation or solid waste
treatment, storage, and disposal facilities; discharge of municipal and 
industrial
wastewater to coastal areas; nonpoint source water pollution; and appropriations
of water. Promulgation and enforcement of these proposed rules is consistent
with the applicable CMP goals and policies because the proposed rules will
establish clear and consistent requirements governing the issuance of emergency
and temporary orders, as authorized by TWC, Chapter 5, Subchapter L. Under
the authority granted by statute, the commission may issue emergency or 
temporary
orders to address unforeseen circumstances, such as drought conditions or
potential catastrophes. Promulgation and enforcement of these rules will not
violate or exceed any standards identified in the applicable CMP goals and
policies because they will allow the commission to take steps to mitigate
emergency or potential emergency situations, which will result in environmental
benefits for the entire state, including coastal areas. 

The commission invites public comment on the consistency of the proposed
rules. 

PUBLIC HEARING

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760. 
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 B.Emergency Orders, Temporary Orders, and Executive
Director Authorizations
30 TAC sec.sec.305.21, 305.29, 305.30, 305.31
STATUTORY AUTHORITY 

The sections are proposed under TWC, sec.sec.5.103, 5.105, 5.501, and
26.011 and Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024,
401.011, 401.051, 401.056, and 401.412. Section 5.103 establishes the 
commission's
general authority to adopt rules. Section 5.105 establishes the commission's
authority to set policy by rule. Section 5.501 establishes the commission's
authority to adopt rules to implement the emergency and temporary order 
provisions
of TWC, Chapter 5, Subchapter L. Section 26.011 establishes the commission's
authority over water quality in the state. Section 361.011 establishes the
commission's jurisdiction over municipal solid waste. Section 361.017 
establishes
the commission's jurisdiction over industrial hazardous waste. Section 361.024
establishes the commission's authority to establish rules for the control
of solid waste. Section 401.011 establishes the commission's authority over
radioactive substances. Section 401.051 establishes the commission's authority
to adopt rules for the control of radiation. Section 401.056 establishes the
commission's authority to issue emergency orders concerning radiation. Section
401.412 establishes the commission's authority concerning licenses for 
radioactive
substance disposal. 

The proposed sections implement TWC, sec.sec.5.103, 5.105, 5.506, 13.041,
26.011, and Texas Health and Safety Code, sec.sec.361.011, 361.017, 361.024,
401.011, 401.051, 401.056, and 401.412.

sec.305.21.Emergency Orders and Temporary Orders
Authorized.
The commission <nl>or executive director <ol> may issue emergency
orders <nl>, <ol> or <nl>the commission may issue <ol> temporary orders<nl>
, <ol> relating to the discharge of waste or pollutants into or adjacent
to any water in the state <nl>under Texas Water Code, sec.5.509, and Chapter
35 of this title (relating to Emergency and Temporary Orders and Permits;
Temporary Suspension or Amendment of Permit Conditions) <ol> [, where
the discharge is regulated by a Texas pollutant discharge elimination system
(TPDES) permit or where a TPDES permit is not required, when necessary to
enable action to be taken more expeditiously than is otherwise provided by
the Texas Water Code, Chapter 26, to effectuate the policy and purposes of
this chapter]. 

sec.305.29.Emergency Orders for Solid Waste Activities.
[(a)] The commission <nl>or executive director 
<ol> may issue a mandatory or prohibitory emergency order regarding any
activity of solid waste management within its jurisdiction <nl>under Texas
Water Code, sec.5.512 and Chapter 35 of this title (relating to Emergency
and Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions) <ol> [, whether the activity is covered by a permit or
not, if the commission determines that an emergency exists requiring immediate
action to protect public health and safety or the environment. The order may
be issued without notice and hearing, or with such notice and hearing as the
commission deems practicable under the circumstances.] 

[(b) <p<ol> If an emergency order is
issued without a hearing, the commission shall fix a time and place for a
hearing before the commission to affirm, modify, or set aside the order.] 
[(c) <p<ol> The requirements of Health
and Safety Code sec.361.088, relating to notice do not apply to a hearing
to affirm, modify or set aside an emergency order issued under this section,
but such general notice of the hearing shall be given in accordance with 
commission
rules.] 

[(d) <p<ol> An emergency order issued
under this section shall not exceed 90 days in duration but may be renewed.
For emergency orders affecting UIC permits, the duration may be no longer
than required to prevent the hazard]. 

sec.305.30.Emergency Actions Concerning
Hazardous Waste.
The commission or executive director may issue an emergency administrative
order relating to hazardous waste under Texas Water Code, sec.5.512 and
Chapter 35 of this title (relating to Emergency and Temporary Orders and 
Permits;
Temporary Suspension or Amendment of Permit Conditions). 

sec.305.31.Emergency Orders Relating to Radioactive
Substances.
[(a)] When an emergency exists as a result of a
matter under the commission's jurisdiction that requires immediate action
to protect the public health or safety or the environment, [the executive
director may recommend and] the commission <nl>or executive director 
<ol> may [, without notice or hearing,] issue an order <nl>
under Texas Water Code, sec.5.516, Texas Health and Safety Code, sec.401.056,
and Chapter 35 of this title (relating to Emergency and Temporary Orders and
Permits; Temporary Suspension or Amendment of Permit Conditions) <ol> stating
the existence of the emergency and requiring that actions be taken to meet
the emergency. 

[(b) <p<ol> The commission may, without
notice or hearing, issue an emergency order directing any action or corrective
measure needed to correct or remove the threat to public health or safety
or the environment:] 

[(1) <p<ol> when the executive director
determines that byproduct material, as defined in subparagraph (B) of the
definition of "byproduct material" in sec.336.2 of this title (relating
to Definitions), or the operation generating the byproduct material threatens
the public health or safety or the environment; or] 

[(2) <p<ol> to a person responsible
for an activity, including a past activity, concerning the recovery or 
processing
of source material or the disposal of byproduct material, as defined in 
subparagraph
(B) of the definition of "byproduct material" in sec.336.2 of this title,
if it appears that there is an actual or threatened release of source material
or byproduct material that presents an imminent and substantial danger to
the public health or safety or the environment, regardless of whether the
activity was lawful at the time; or] 

[(3) <p<ol> when the commission
determines that radioactive substances under its jurisdiction threaten the
public health or safety or the environment and that the licensee managing
the radioactive substances is unable to remove the threat.] 

[(c) <p<ol> An emergency order issued
under subsection (b)(2) of this section may restrain the person to whom the
order is directed from allowing or continuing the release or threatened release
and require the person to take any action necessary to provide and implement
an environmentally-sound remedial action plan designed to eliminate the release
or threatened release.] 

[(d) <p<ol> An emergency order issued
under this section takes effect immediately. A person to whom an emergency
order is directed shall comply immediately with that order.] 

[(e) <p<ol> The emergency order shall
be delivered to the person to whom the order is directed by hand delivery
or by certified mail, return receipt requested. Affidavit of personal service,
proof of mailing to the proper address, or the receipt shall be conclusive
evidence of service. In the case of an order issued under subsection (b)(2)
of this section, if delivery by hand delivery or certified mail fails, the
order may be served on the person by publication once in the Texas Register
and once in a newspaper of general circulation in each county of the person's
last known address.] 

[(f) <p<ol> If the commission issues
the emergency order without notice or hearing:] 

[(1) <p<ol> In the case of an order issued
under subsection (a) or (b)(3) of this section, the commission shall provide
the person to whom the order is directed an opportunity for a hearing on written
request within 30 days of the date of the order. If a hearing is requested,
notice of the hearing shall be given to the person to whom the order is directed
by hand delivery or certified mail, return receipt requested, at least ten
days before the hearing. A requested hearing shall be held not earlier than
the 11th day and not later than the 20th day following the date of receipt
of the hearing request.] 

[(2) <p<ol> In the case of an order
issued under subsection (b)(1) or (2) of this section, the order shall set
a time, at least ten but not more than 30 days following the date of issuance
of the order, and a place for a hearing to be held.] 

[(g) <p<ol> All provisions of the emergency
order shall remain in full force and effect during the pendency of a hearing,
unless otherwise altered by the commission. At the conclusion of the hearing
and after the proposal for decision is made, the commission shall make a 
determination
to affirm, modify, or revoke the emergency order and may modify, revoke, or
suspend the license based on the determination made.] 

[(h) <p<ol> The commission shall use
the financial assurance mechanism provided by the licensee to pay the costs
of actions and corrective measures that are taken or that are to be taken
under this section. The commission shall send to the Comptroller of Public
Accounts a copy of its order and the necessary documents authorizing the 
Comptroller
of Public Accounts to:] 

[(1) <p<ol> enforce the financial assurance
mechanism supplied by the licensee;] 

[(2) <p<ol> convert the necessary
amount of the financial assurance mechanism into cash; and] 

[(3) <p<ol> disburse from the Radiation
and Perpetual Care Fund the amount necessary to pay the costs of the 
commission's
actions and corrective measures.] 

[(i) <p<ol> If the costs of actions and
corrective measures require more funds than the financial assurance mechanism
has provided, the commission shall request the Attorney General to seek 
reimbursement
from the licensee or person causing the threat.] 

[(j) <p<ol> The commission shall seek
reimbursement through a commission order or shall request the Attorney General
to file suit for reimbursement if the commission uses the Radiation and 
Perpetual
Care Fund to pay for actions or corrective measures to remedy spills or 
contamination
by radioactive material resulting from a violation of the Texas Radiation
Control Act (TRCA), the rules of this chapter, or a license or order issued
by the commission under the TRCA or this chapter.] 

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
June 19, 1998.
TRD-9809882
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

30 TAC sec.sec.305.22-305.28, 305.30, 305.32
(Editor's note: The text of the following sections proposed for
repeal will not be published. The sections may be examined in the offices
of the Texas Natural Resource Conservation Commission or in the Texas Register
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY

The repeals are proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, and 26.011 and Texas Health and Safety Code, sec.sec.361.011, 361.017,
361.024, 401.011, 401.051, and 401.412. Section 5.103 establishes the 
commission's
general authority to adopt rules. Section 5.105 establishes the commission's
authority to set policy by rule. Section 5.501 establishes the commission's
authority to adopt rules to implement the emergency and temporary order 
provisions
of Texas Water Code, Chapter 5, Subchapter L. Section 26.011 establishes the
commission's authority over water quality in the state. Section 361.011 
establishes
the commission's jurisdiction over municipal solid waste. Section 361.017
establishes the commission's jurisdiction over industrial hazardous waste.
Section 361.024 establishes the commission's authority to establish rules
for the control of solid waste. Section 401.011 establishes the commission's
authority over radioactive substances. Section 401.051 establishes the 
commission's
authority to adopt rules for the control of radiation. Section 401.056 
establishes
the commission's authority to issue emergency orders concerning radiation.
Section 401.412 establishes the commission's authority concerning licenses
for radioactive substance disposal. 

The proposed repeals implement Texas Water Code, sec.sec.5.103, 5.105,
5.506, 13.041, 26.011 and Texas Health and Safety Code, sec.sec.361.011,
361.017, 361.024, 401.011, 401.051, 401.056, and 401.412. 

sec.305.22.Application for Orders or Authorizations
to Discharge.
sec.305.23.Emergency Orders.
sec.305.24.Notice.
sec.305.25.Executive Director Authorizations to Discharge.
sec.305.26.Hearings for Temporary Orders, Executive
Director Authorizations and Emergency Orders.
sec.305.27.Application Fees.
sec.305.28.Renewals of Emergency Orders and Temporary
Orders.
sec.305.30.Emergency Actions Concerning Hazardous
Waste.
sec.305.32.Emergency Impoundment of Radioactive Material.
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
June 19, 1998.
TRD-9809883
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER O.Additional Conditions and Procedures for Wastewater
Discharge Permits and Sewage Sludge Permits
30 TAC sec.305.535
STATUTORY AUTHORITY 

The amendment is proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, and 26.011 and Texas Health and Safety Code, sec.sec.361.011, 361.017,
361.024, 401.011, 401.051, and 401.412. Section 5.103 establishes the 
commission's
general authority to adopt rules. Section 5.105 establishes the commission's
authority to set policy by rule. Section 5.501 establishes the commission's
authority to adopt rules to implement the emergency and temporary order 
provisions
of Texas Water Code, Chapter 5, Subchapter L. Section 26.011 establishes the
commission's authority over water quality in the state. 

The proposed amendment implements Texas Water Code, sec.sec.5.103,
5.105, 5.506, 13.041, and 26.011. 

sec.305.535.Bypasses from TPDES Permitted Facilities;
Minimum Requirements for TPDES Permitted Facilities.
(a) (No change.) 

(b) Notice. 

(1) Anticipated bypass. In accordance with the procedures
described in <nl>Chapter 35 of this title (relating to Emergency and Temporary
Orders and Permits; Temporary Suspension or Amendment of Permit Conditions) 
<ol> [sec.305.21, 305.22 and sec.305.23 of this title (relating
to Emergency Orders, Temporary Orders, and Executive Director Authorizations
], if the permittee knows in advance of the need for a bypass, it shall
submit prior notice <nl>under sec.35.24 of this title (relating to Application
for Emergency or Temporary Order) if possible at least ten days before the
date of the bypass.<ol> 

(2) (No change.) 

(c) Prohibition of bypass. 

(1) (No change.) 

(2) The commission may approve an anticipated bypass
in accordance with the procedures described in <nl>Chapter 35 of this title
(relating to Emergency and Temporary Orders and Permits; Temporary Suspension
or Amendment of Permit Conditions) <ol> [sec.305.21, 305.22 and sec.305.23
of this title (relating to Emergency Orders, Temporary Orders, Application
for Orders or Authorizations to Discharge and Executive Director Authorizations
], after considering its adverse effects, if the <nl>commission <ol>
[executive director] determines that it will meet the three conditions
listed in paragraph (1) of this subsection. 

(d) (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
June 19, 1998.
TRD-9809884
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 321.Control of Certain Activities by Rule
The commission proposes amendments to sec.sec.321.80, 321.132,
321.134, 321.152, 321.158, 321.219, 321.232, 321.239, and 321.258, concerning
emergency and temporary orders. This action implements Senate Bill (SB) 1876,
75th Legislature, 1997, and continues the commission's effort to consolidate
agency procedural rules and make certain processes consistent among different
agency programs. 

In addition to these amendments, the commission is concurrently proposing
to consolidate agency emergency and temporary order provisions under a new
Chapter 35, concerning Emergency and Temporary Orders and Permits; Temporary
Suspension or Amendment of Permit Conditions. The commission is also 
concurrently
proposing amendments to emergency and temporary order provisions in 
sec.sec.116.410,
291.14, 291.22, 291.142, 291.143, 305.21, 305.29, 305.31, 305.535, and 334.83,
and the repeal of the following rules relating to emergency and temporary
orders: sec.sec.116.411-116.418, 291.10, 291.13, 297.57, 305.22-305.28,
305.30, and 305.32. The commission is also proposing new sec.297.57 and
sec.305.30. These changes are published in this edition of the Texas Register. 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders, and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. Finally, general application, term, and hearing
requirements that are be applicable to all affected programs are included.
The statute will allow the commission or the executive director to act 
expeditiously
to address unforeseen circumstances. 

The proposed amendments make nonsubstantive changes to make cross-references
to the new Chapter 35, as well as to Chapter 70, concerning Enforcement. The
commission also proposes nonsubstantive changes to terminology for regulatory
reform purposes. 

FISCAL NOTE

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the sections are in effect there will
be no significant fiscal implications for state or local government as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT

Mr. Minick 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 enhanced consistency in the issuance of emergency and
temporary orders. 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. 

DRAFT REGULATORY IMPACT ANALYSIS

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rules are not a major environmental rule because their
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly granted authority by TWC,
sec.5.501. The rules also concern procedural requirements of the agency,
such as delegation of the authority to issue such orders by the commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort. 

TAKINGS IMPACT ASSESSMENT 

The commission has prepared a Takings Impact Assessment for these rules
under Texas Government Code, sec.2007.043. The following is a summary of
that assessment. The specific purpose of these rules is to implement the 
statutory
provisions of TWC, Chapter 5, Subchapter L. The rules will also consolidate
agency procedural rules and make certain processes consistent among different
agency programs. The rules will substantially advance these specific purposes
by providing specific provisions on these matters. Promulgation and enforcement
of these rules will not burden private real property which is the subject
of the rules because they concern commission procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW 

The commission has reviewed the proposed rulemaking and found that the
proposal is a rulemaking identified in the Coastal Coordination Implementation
Rules, 31 TAC sec.505.11, or will affect an action/authorization identified
in the Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11,
and will, therefore, require that applicable goals and policies of the Coastal
Management Program (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 found that the proposed rules are consistent
with the applicable CMP goals and policies. The following is a summary of
that determination. The CMP goal applicable to the proposed rules is the goal
to protect, preserve, restore, and enhance the diversity, quality, quantity,
functions, and values of coastal natural resource areas. CMP policies applicable
to the proposed rules include the administrative policies and the policies
for specific activities related to: construction and operation or solid waste
treatment, storage, and disposal facilities; discharge of municipal and 
industrial
wastewater to coastal areas; nonpoint source water pollution; and appropriations
of water. Promulgation and enforcement of these proposed rules is consistent
with the applicable CMP goals and policies because the proposed rules will
establish clear and consistent requirements governing the issuance of emergency
and temporary orders, as authorized by TWC, Chapter 5, Subchapter L. Under
the authority granted by statute, the commission may issue emergency or 
temporary
orders to address unforeseen circumstances, such as drought conditions or
potential catastrophes. Promulgation and enforcement of these rules will not
violate or exceed any standards identified in the applicable CMP goals and
policies because they will allow the commission to take steps to mitigate
emergency or potential emergency situations, which will result in environmental
benefits for the entire state, including coastal areas. 

The commission invites public comment on the consistency of the proposed
rules. 

PUBLIC HEARING 

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will 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. All comments should reference Rule Log Number 97142-035-AD.
Comments must be received by 5:00 p.m., August 3, 1998. For further information,
please contact Brian Christian, Policy Research Division, (512) 239-1760.
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 E.Surface Coal Mining, Preparation, and Reclamation
Activities
30 TAC sec.321.80
STATUTORY AUTHORITY 

The amendment is proposed under TWC, sec.sec.5.103, 5.105, 5.501, and
26.011. Section 5.103 establishes the commission's general authority to adopt
rules. Section 5.105 establishes the commission's authority to set policy
by rule. Section 5.501 establishes the commission's authority to adopt rules
to implement the emergency and temporary order provisions of TWC, Chapter
5, Subchapter L. Section 26.011 establishes the commission's authority over
water quality in the state. 

The proposed amendment implements TWC, sec.sec.5.103, 5.105, 5.501,
and 26.011. 

sec.321.80.Associated Facilities.
The provisions of this section are applicable to discharges from a
coal preparation plant and coal preparation plant associated areas. 

(1)-(2) (No change.) 

(3) In order to prevent immediate harm to human health
or the environment which is not otherwise avoidable, or to allow necessary
maintenance and repair work, the commission may, <nl>under Chapter 35 of
this title (relating to Emergency and Temporary Orders and Permits; Temporary
Suspension or Amendment of Permit Conditions) <ol> [pursuant to sec.305.21
of this title (relating to Emergency Orders and Temporary Orders Authorized)
] <nl>, <ol> grant a temporary or emergency order authorizing the
discharge of process or other wastewater regulated by this subchapter. 

(4) (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
June 19, 1998.
TRD-9809885
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER H.Discharge to Surface Waters From Treatment of Petroleum
Substance Contaminated Waters
30 TAC sec.321.132, sec.321.134
STATUTORY AUTHORITY

The amendments are proposed under Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. Section 5.103 establishes the commission's general
authority to adopt rules. Section 5.105 establishes the commission's authority
to set policy by rule. Section 5.501 establishes the commission's authority
to adopt rules to implement the emergency and temporary order provisions of
Texas Water Code, Chapter 5, Subchapter L. Section 26.011 establishes the
commission's authority over water quality in the state. 

The proposed amendments implement Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. 

sec.321.132.Applicability.
(a) The purpose of this subchapter is to regulate by rule
the surface discharge of water contaminated by a release of a petroleum 
substance
into or adjacent to water in the state, within the statutory jurisdiction
of the <nl>commission <ol> [TNRCC] to regulate and not otherwise
prohibited elsewhere in the rules of the <nl>commission <ol> [TNRCC
], and: 

(1)-(2) (No change.) 

(b) <nl>Commission <ol> [TNRCC] registration
in accordance with sec.321.133 or sec.321.134 of this title is not required
if one of the following conditions exists: 

(1) free product is removed and the remaining contaminated
water is routed to an existing <nl>commission <ol> [TNRCC] permitted
wastewater treatment system capable of treating the wastes; 

(2) petroleum substance contaminated water is land applied
on-site with no runoff if: 

(A) the volume to be land applied is 500 gallons or less during
any quarter. However, the general and specific conditions of sec.321.133
or sec.321.134 of this title, excluding notification of the <nl>commission 
<ol> [TNRCC] region office, monitoring/reporting requirements<nl>
, <ol> and any other condition not appropriate to the land application of
petroleum substance contaminated water, shall apply to any discharge. The
responsible party must be able to demonstrate that any discharge <nl>under 
<ol> [pursuant to] this exclusion was compliant with discharge
limits based on laboratory analysis or the petroleum substance contaminated
water is treated by a properly operated and maintained system to produce a
compliant effluent; and 

(B) (No change.) 

(3) the discharge is drainage from a facility where
preparation and implementation of a Spill Prevention Control and Counter-measure
Plan is required <nl>under <ol> [pursuant to] 40 Code of Federal
Regulations, Part 112; 

(4)-(5) (No change.) 

(c) For discharges located in or within ten miles upstream
of the Edwards Aquifer recharge zone as defined in Chapter 313 of this title
(relating to Edwards Aquifer), the executive director may require a responsible
party to obtain a permit or other authorization from the <nl>commission 
<ol> [TNRCC] for such a discharge, in accordance with sec.321.138
of this title (relating to Reservation). 

(d) An application for an emergency order, temporary order,
or permit as provided by <nl>Chapter 35 of this title (relating to Emergency
and Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions) <ol> [Chapter 305 of this title (relating to Consolidated
Permits)] must be submitted and the order or permit issued [by
the TNRCC] either before water contaminated by any substance not regulated
by this subchapter can be discharged or as an alternative to compliance with
the requirements of this subchapter. 

(e)-(f) (No change.)

sec.321.134.Discharge of Water Contaminated by Other
Petroleum Substances.
(a) Registration. Except as provided in sec.321.132 of this
title (relating to Applicability) and sec.321.135 of this title (relating
to Telephone Utilities), a registration form must be submitted to the Watershed
Management Division, <nl>Texas Natural Resource Conservation Commission (TNRCC) 
<ol> [TNRCC] Austin office. The registration form shall be submitted
a minimum of 60 days prior to the expected date of discharge, except for: 
(1) an emergency as defined in <nl>Chapter 35 of this title
(relating to Emergency and Temporary Orders and Permits; Temporary Suspension
or Amendment of Permit Conditions) <ol> [sec.305.23(a) of this title
(relating to Emergency Orders)] where the registration form may be submitted
at any time but a discharge cannot occur until approved by the executive 
director
or designated representative as provided by this section; or 

(2) water contaminated by a diesel release may be discharged
upon the submission of the registration form less the following items but
subject to the discharge limits and the monitoring/reporting requirements
of this section and shall include: 

(A)-(B) (No change.) 

(C) a written description of the discharge route. Submittal
of the registration form (excluding diesel fuel contaminated water) does not
constitute an authorization to discharge. The <nl>commission <ol> [
TNRCC] will review requests for registration on a case-by-case basis
and [the agency] may request additional information, including
additional sampling and analytical data. Submittal of a registration form
is acknowledgment that the responsible party or their agent has determined
that the requirements of this subchapter are applicable to the proposed 
discharge,
and that all criteria for discharge will be satisfied. If the registration
is approved, the executive director or designated representative shall notify
the responsible party or their agent in writing and this notification shall
constitute an authorization to discharge wastewater. Requirements in addition
to those listed in subsection (c)(2)(A) of this section may be specified on
a case-by-case basis. 

(b) (No change.) 

(c) Specific Requirements for Discharge. Except as provided
in sec.321.135 of this title (relating to Telephone Utilities), the following
specific requirements apply. 

(1) (No change.) 

(2) Effluent limitations and monitoring requirements. 
(A) -(D) (No change.) 

(E) Discharge of wastewater shall cease within 24 hours of
the time that the responsible party or their agent learns that any one of
the polynuclear aromatic hydrocarbons has been detected at a concentration
of 0.01 mg/liter or greater. A written report shall be provided to the TNRCC
Austin and regional office within five working days. Discharge may not be
resumed under the provisions of this subchapter without written authorization
from the executive director. The executive director may require the responsible
party to obtain a permit from the <nl>commission <ol> [TNRCC]
for such a discharge. 

(F) (No change.) 

(G) Sample containers, holding times, preservation methods
and the physical, chemical and microbiological analyses of effluent shall
meet the requirements specified in regulations published in 40 Code of Federal
Regulations Part 136 <nl>under <ol> [pursuant to] the Federal
Water Pollution Control Act, sec.304(g), and be conducted according to this
federal regulation or the latest edition of "Standard Methods for the 
Examination
of Water and Wastewater." 

(3) Reporting Requirements. All analytical results
shall be reported to the Watershed Management Division, TNRCC Austin office
using the "Petroleum Substance Contaminated Water Report" form provided by
the executive director. Results of sampling activities shall be submitted
to the <nl>commission <ol> [TNRCC] no later than the 20th day
of the month following the discharge unless the discharge occurs one day per
quarter based on the frequency of discharge noted on the registration form
and reports for these discharges are due no later than the 20th day in the
months of April, July, October, and January. Any report form reflecting that
a discharge limit was exceeded must be accompanied by a report prepared in
accordance with subsection (b)(5) 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
June 19, 1998.
TRD-9809886
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER J.Discharge to Surface Waters From Ready-Mixed Concrete
Plants and/or Concrete Products Plants or Associated Facilities
30 TAC sec.321.152, sec.321.158
STATUTORY AUTHORITY 

The amendments are proposed under Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. Section 5.103 establishes the commission's general
authority to adopt rules. Section 5.105 establishes the commission's authority
to set policy by rule. Section 5.501 establishes the commission's authority
to adopt rules to implement the emergency and temporary order provisions of
Texas Water Code, Chapter 5, Subchapter L. Section 26.011 establishes the
commission's authority over water quality in the state. 

The proposed amendments implement Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. 

sec.321.152.Purpose and Applicability.
(a)-(b) (No change.) 

(c) If the executive director denies a registration application
under this subchapter, the facility must obtain a permit <nl>under <ol>
[pursuant to the] Texas Water Code, Chapter 26. 

(d) Facilities which do not meet the requirements of sec.321.154
and sec.321.155 of this title and do not discharge or transport facility
wastewater to a publicly owned treatment works (POTW) which has a wastewater
discharge permit issued by the executive director must apply for an emergency
order, temporary order, or permit as provided by <nl>Chapter 35 of this title
(relating to Emergency and Temporary Orders and Permits; Temporary Suspension
or Amendment of Permit Conditions) <ol> [Chapter 305, Subchapter B
of this title (relating to Consolidated Permits)] for the discharge
of wastewater into or adjacent to water in the state. 

sec.321.158.Enforcement and Revocation.
If any registrant or facility regulated by this subchapter fails to
comply with the terms of this subchapter, the executive director may take
enforcement action as provided by the Texas Water Code and <nl>under Chapter
70 <ol> [in accordance with Chapter 337] of this title (relating
to Enforcement). The executive director may revoke any registration granted
to a registrant or facility due to noncompliance with the requirements of
this subchapter, after notice to the registrant and opportunity for hearing,
and such registrant shall cease any discharge until such time as the facility
is issued a wastewater discharge permit, an emergency order, or temporary
order as provided by <nl>Chapter 35 of this title (relating to Emergency
and Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions) <ol> [Chapter 305, Subchapter B of this title (relating
to Consolidated Permits)] .for the discharge of wastewater into or adjacent
to water in the state

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
June 19, 1998.
TRD-9809887
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER L.Discharge to Surface Waters From Motor Vehicles
Cleaning Facilities
30 TAC sec.321.219
STATUTORY AUTHORITY 

The amendment is proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, and 26.011. Section 5.103 establishes the commission's general authority
to adopt rules. Section 5.105 establishes the commission's authority to set
policy by rule. Section 5.501 establishes the commission's authority to adopt
rules to implement the emergency and temporary order provisions of Texas Water
Code, Chapter 5, Subchapter L. Section 26.011 establishes the commission's
authority over water quality in the state. 

The proposed amendment implements Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. 

sec.321.219.Enforcement and Revocation.
If any registrant or facility regulated by this subchapter fails to
comply with the terms of this subchapter, the executive director may take
enforcement action as provided by the Texas Water Code and <nl>under Chapter
70 <ol> [in accordance with Chapter 337] of this title (relating
to Enforcement). The executive director may revoke any registration granted
to a registrant or facility due to noncompliance with the requirements of
this subchapter, after notice to the registrant and opportunity for hearing,
and such registrant shall cease any discharge until such time as the facility
is issued a wastewater discharge permit, an emergency order, or temporary
order as provided by <nl>Chapter 35 of this title (relating to Emergency
and Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions) <ol> [Chapter 305, Subchapter B of this title (relating
to Consolidated Permits)] for the discharge of wastewater into or adjacent
to water in the state. The executive director may require a motor vehicle
cleaning facility defined as exempt from registration under sec.321.212
of this title (relating to Purpose and Applicability) to obtain a registration
when an exempt facility is causing water pollution that could be avoided through
compliance with the requirements of this subchapter.

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
June 19, 1998.
TRD-9809888
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER M.Discharges to Surface Waters From Petroleum Bulk
Stations and Terminals
30 TAC sec.321.232, sec.321.239
STATUTORY AUTHORITY 

The amendments are proposed under Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. Section 5.103 establishes the commission's general
authority to adopt rules. Section 5.105 establishes the commission's authority
to set policy by rule. Section 5.501 establishes the commission's authority
to adopt rules to implement the emergency and temporary order provisions of
Texas Water Code, Chapter 5, Subchapter L. Section 26.011 establishes the
commission's authority over water quality in the state. 

The proposed amendments implement Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. 

sec.321.232.Purpose and Applicability.
(a)-(c) (No change.) 

(d) An application for an emergency order, temporary order,
or permit as provided by <nl>Chapter 35 of this title (relating to Emergency
and Temporary Orders and Permits; Temporary Suspension or Amendment of Permit
Conditions) <ol> [Chapter 305, Subchapter B of this title (relating
to Consolidated Permits)] must be submitted for the discharge of any
other wastewater not authorized by this rule to the water in the state. 
(e)-(h) (No change.) 

(i) If the executive director denies a registration application
under this subchapter, the facility must obtain a permit <nl>under <ol>
[pursuant to the] Texas Water Code, Chapter 26. 

sec.321.239.Enforcement and Revocation.
If any registrant or facility regulated by this subchapter fails to
comply with the terms of this subchapter, the executive director may take
enforcement action as provided by the Texas Water Code and in accordance with
Chapter <nl>70 <ol> [337] of this title (relating to Enforcement).
The executive director may revoke any registration granted to a registrant
or facility due to noncompliance with the requirements of this subchapter,
after notice to the registrant and opportunity for hearing, and such registrant
shall cease any discharge until such time as the facility is issued a wastewater
discharge permit, an emergency order, or temporary order as provided by <nl>
Chapter 35 of this title (relating to Emergency and Temporary Orders and
Permits; Temporary Suspension or Amendment of Permit Conditions) <ol> [
Chapter 305, Subchapter B of this title (relating to Consolidated Permits)
] for the discharge of wastewater into or adjacent to water in the state.
The executive director may require a small PBST defined as exempt from 
registration
under sec. 321.232(h) of this title (relating to Purpose and Applicability)
to register under the terms of this subchapter if an exempt facility is causing
water pollution that could be avoided through compliance with the requirements
of this subchapter.

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
June 19, 1998.
TRD-9809889
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

SUBCHAPTER N.Handling of Wastes From Commercial Facilities Engaged
in Livestock Trailer Cleaning
30 TAC sec.321.258
STATUTORY AUTHORITY 

The amendment is proposed under Texas Water Code, sec.sec.5.103, 5.105,
5.501, and 26.011. Section 5.103 establishes the commission's general authority
to adopt rules. Section 5.105 establishes the commission's authority to set
policy by rule. Section 5.501 establishes the commission's authority to adopt
rules to implement the emergency and temporary order provisions of Texas Water
Code, Chapter 5, Subchapter L. Section 26.011 establishes the commission's
authority over water quality in the state. 

The proposed amendment implements Texas Water Code, sec.sec.5.103,
5.105, 5.501, and 26.011. 

sec.321.258.Enforcement and Revocation.
If any registrant or facility regulated by this subchapter fails to
comply with the terms of this subchapter, the executive director may take
enforcement action as provided by the Texas Water Code and in accordance with
Chapter <nl>70 <ol> [337] of this title (relating to Enforcement).
The executive director may revoke any registration granted to a registrant
or facility due to noncompliance with the requirements of this subchapter,
after notice to the registrant and opportunity for hearing, and such registrant
shall cease any discharge until such time as the facility is issued a wastewater
discharge permit, an emergency order, or temporary order as provided by <nl>
Chapter 35 of this title (relating to Emergency and Temporary Orders and
Permits; Temporary Suspension or Amendment of Permit Conditions) <ol> [
Chapter 305, Subchapter B of this title (relating to Consolidated Permits)
] for the discharge of wastewater into or adjacent to water in the state.
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
June 19, 1998.
TRD-9809890
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

CHAPTER 334.Underground and Aboveground Storage Tanks
SUBCHAPTER D.Release Reporting and Corrective Action
30 TAC sec.334.83
The Texas Natural Resource Conservation Commission (commission)
proposes an amendment to sec.334.83, concerning emergency orders. This action
implements Senate Bill (SB) 1876, 75th Legislature, 1997, and continues the
commission's effort to consolidate agency procedural rules and make certain
processes consistent among different agency programs. 

In addition to this action, the commission is concurrently proposing to
consolidate agency emergency and temporary order provisions under a new Chapter
35, concerning Emergency and Temporary Orders and Permits; Temporary Suspension
or Amendment of Permit Conditions. The commission is also concurrently proposing
amendments to emergency and temporary order provisions in sec.sec.116.410,
291.14, 291.22, 291.142, 291.143, 305.21, 305.29, 305.31, 305.535, 321.80,
321.132, 321.134, 321.152, 321.158, 321.219, 321.232, 321.239, and 321.258,
and the repeal of the following rules relating to emergency and temporary
orders: sec.sec.116.411-116.418, 291.10, 291.13, 297.57, 305.22-305.28,
305.30, and 305.32. The commission is also proposing new sec.297.57 and
sec.305.30. These changes are published in this edition of the Texas Register. 

SB 1876 consolidated various statutory provisions governing emergency and
temporary orders under new Texas Water Code (TWC), Chapter 5, Subchapter L.
The new statute expressly authorizes the commission to issue temporary or
emergency mandatory, permissive, or prohibitory orders, and issue temporary
permits or suspend permit conditions by temporary or emergency order. It allows
the commission to issue emergency orders with or without notice. Additionally,
it authorizes the commission to delegate authority to the executive director
to receive applications and issue emergency orders and authorize representatives
to act on his or her behalf. Finally, general application, term, and hearing
requirements that are be applicable to all affected programs are included.
The statute will allow the commission or the executive director to act 
expeditiously
to address unforeseen circumstances. TWC, sec.5.510, as added by SB 1876,
provides for emergency and temporary orders for underground or aboveground
storage tanks. 

The proposed amendment to sec.334.83, concerning Emergency Orders, provides
reference to the commission's authority under TWC, sec.5.510, and the new
Chapter 35. The amendment also makes a conforming change and deletes provisions
that have been moved to proposed Chapter 35, Subchapter I, concerning Storage
Tank Emergency Orders. 

FISCAL NOTE 

Stephen Minick, Strategic Planning and Appropriations Division, has determined
that for the first five-year period the section is in effect there will be
no significant fiscal implications for state or local government as a result
of enforcing or administering the section. 

PUBLIC BENEFIT 

Mr. Minick 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 enhanced consistency in the issuance of emergency and
temporary orders. 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. 

DRAFT REGULATORY IMPACT ANALYSIS 

The commission has reviewed the proposed rulemaking under the regulatory
analysis requirements of Texas Government 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 that statute,
and it does not meet any of the four applicability requirements listed in
sec.2001.0225(a). The rule is not a major environmental rule because its
primary intent is to consolidate already existing emergency and temporary
order rules under one chapter. In addition, the applicability requirements
do not apply because the commission is expressly granted authority by TWC,
sec.5.501. The rule also concerns procedural requirements of the agency,
such as delegation of the authority to issue such orders by the commission
to the executive director, and are a result of the commission's continuing
regulatory reform effort. 

TAKINGS IMPACT ASSESSMENT 

The commission has prepared a takings impact assessment for this rule under
Texas Government Code, sec.2007.043. The following is a summary of that
assessment. The specific purpose of this rule is to implement the statutory
provisions of TWC, Chapter 5, Subchapter L. The rule will also consolidate
agency procedural rules and make certain processes consistent among different
agency programs. The rule will substantially advance these specific purposes
by providing specific provisions on these matters. Promulgation and enforcement
of this rule will not burden private real property which is the subject of
the rule because it concerns commission procedural rules. 

COASTAL MANAGEMENT PROGRAM CONSISTENCY REVIEW 

The commission has reviewed the proposed rulemaking and found that the
proposal is a rulemaking identified in the Coastal Coordination Implementation
Rules, 31 TAC sec.505.11, or will affect an action/authorization identified
in the Coastal Coordination Act Implementation Rules, 31 TAC sec.505.11,
and will, therefore, require that applicable goals and policies of the Coastal
Management Program (CMP) be considered during the rulemaking process. 

The commission has prepared a consistency determination for the proposed
rule under 31 TAC sec.505.22, and found that the proposed rule is consistent
with the applicable CMP goals and policies. The following is a summary of
that determination. The CMP goal applicable to the proposed rule is the goal
to protect, preserve, restore, and enhance the diversity, quality, quantity,
functions, and values of coastal natural resource areas. CMP policies applicable
to the proposed rule include the administrative policies and the policies
for specific activities related to: construction and operation or solid waste
treatment, storage, and disposal facilities; discharge of municipal and 
industrial
wastewater to coastal areas; nonpoint source water pollution; and appropriations
of water. Promulgation and enforcement of the proposed rule is consistent
with the applicable CMP goals and policies because the proposed rule will
establish clear and consistent requirements governing the issuance of emergency
and temporary orders, as authorized by TWC, Chapter 5, Subchapter L. Under
the authority granted by statute, the commission may issue emergency or 
temporary
orders to address unforeseen circumstances, such as drought conditions or
potential catastrophes. Promulgation and enforcement of the rule will not
violate or exceed any standards identified in the applicable CMP goals and
policies because it will allow the commission to take steps to mitigate 
emergency
or potential emergency situations, which will result in environmental benefits
for the entire state, including coastal areas. 

The commission invites public comment on the consistency of the proposed
rule. 

PUBLIC HEARING 

A public hearing on this proposal will be held August 3, 1998, at 2:00
p.m. in Room 2210 of Texas Natural Resource Conservation Commission (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 will answer questions before and after the hearing. 

SUBMITTAL OF COMMENTS

Written comments may be mailed to Lisa Martin, TNRCC Office of Policy and
Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas, 78711-3087
or faxed to (512) 239-4808. All comments should reference Rule Log Number
97142-035-AD. Comments must be received by 5:00 p.m., August 3, 1998. For
further information, please contact Brian Christian, Policy Research Division,
(512) 239-1760. 

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 amendment is proposed under TWC, sec.sec.5.103, 5.105, 5.501, 26.011,
26.351, and 26.354. Section 5.103 establishes the commission's general authority
to adopt rules. Section 5.105 establishes the commission's authority to set
policy by rule. Section 5.501 establishes the commission's authority to adopt
rules to implement the emergency and temporary order provisions of TWC, Chapter
5, Subchapter L. Section 26.011 establishes the commission's authority over
water quality in the state. Section 26.351 establishes the commission's 
authority
concerning corrective action. Section 26.354 establishes the commission's
authority to issue emergency orders concerning petroleum storage tanks. 

The proposed amendment implements TWC, sec.sec.5.103, 5.105, 5.510,
26.011, 26.351, and 26.354. 

sec.334.83.Emergency Orders.
[(a)] Notwithstanding any other provision of this
subchapter, the <nl>commission or the <ol> executive director may issue <nl>
emergency <ol> orders under <nl>Texas Water Code, sec.5.510 and Chapter
35 of this title (relating to Emergency and Temporary Orders and Permits;
Temporary Suspension or Amendment of Permit Conditions) <ol> [this
section] to the owner or operator of an underground storage tank<nl>
. <ol> [, if it appears that:] 

[(1) <p<ol> there is an actual or threatened
release of a regulated substance from an underground storage tank; and] 

[(2) <p<ol> the executive director
determines that more expeditious corrective action than is otherwise provided
for under this subchapter is necessary to protect the public health and safety
or the environment.] 

[(b) <p<ol> An order issued under subsection
(a) of this section may prohibit a person from allowing or continuing the
release or the threatened release and require the person to take the actions
necessary to eliminate the release or threatened release.] 

[(c) <p<ol> An emergency order issued
under this section shall be:] 

[(1) <p<ol> mailed by certified mail,
return receipt requested, to each person identified in the order;] 

[(2) <p<ol> hand delivered to each
person identified in the order; or] 

[(3) <p<ol> on failure of service
by certified mail or hand delivery, service by publication one time in the
Texas Register and one time in a newspaper with general circulation in each
county in which any of the persons identified in the order had a last known
address.] 

[(d) <p<ol> An emergency order issued
under this section does not require notice or an adjudicative hearing before
its issuance. If the executive director issues an order under this section,
the commission shall fix a time and place for a hearing to affirm, modify,
or set aside the emergency order issued by the executive director. The hearing
before the commission shall be held as soon as practicable after the issuance
of the emergency order.]

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
June 19, 1998.
TRD-9809891
Kevin McCalla

Director, Legal Division

Texas Natural Resource Conservation Commission

Proposed date of adoption: September 23, 1998

For further information, please call: (512) 239-1966

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART X. Texas Water Development Board
CHAPTER 357.Regional Water Planning Guidelines
31 TAC sec.357.2, sec.357.7
The Texas Water Development Board (board) proposes amendments
to sec.357.2, Definitions and sec.357.7, concerning Regional Water Plan
Development. The proposed amendments will clarify the requirement for providing
regional water planning during conditions where flows are at 50% and 75% of
normal, and also will clarify the categories into which population projections,
water need projections, and water supply strategies must be reported. 

During the initial adoption of Chapter 357, many comments were received
on definitions of "normal hydrological conditions," "flows at 50% of normal,"
and "flows at 75% of normal." Based upon discussions since the initial rule
adoption, the board concludes that references in Senate Bill 1 that require
regional water planning groups to "submit a plan that has specific provisions
for water management strategies to be used when flows are at 50% of normal
and when flows are at 75% of normal" require strategies that will be employed
as the water supply condition changes from normal availability to the worst
case of drought of record. These are often referred to as drought continency
planning or similar such phrases. As the rules are currently written, the
regional water planning groups could be required to develop a total of three
plans which could be based on water supplies during a period that has less
water supply than during the drought of record. This does not appear to be
the intent of the legislation. 

A key aspect of the type of planning called for in the proposed amendments
is that it reflects conditions that are "current and real time" and are not
solely dependent on legal authorizations. Several major water providers have
such plans, including the City of Corpus Christi, Lower Colorado River 
Authority,
and Colorado River Municipal Water District. In the proposed revisions, the
regional water planning groups are to identify the actions, referred to as
water management strategies, that would be used when the amount of water in
the water source reaches 75% and 50% of the normal amount, such as when a
lake contains 50% of its normal amount of water. Examples of the water 
management
strategies that could be considered include water conservation and drought
response planning, including water demand management. 

To implement these concepts, the board now proposes amendments to sec.357.2
(Definitions) that would eliminate the definition of "normal hydrological
conditions," which currently is based on median flows in the flow range that
occurs most frequently for surface water, and on median precipitation values
in the precipitation range that occurs most frequently for groundwater. 
Amendments
are proposed to the definitions of "flows at 50% of normal" and "flows at
75% of normal" to remove reliance on the definition of "normal hydrological
conditions." Section 357.2 is also amended to number all definitions in 
conformity
with current Texas Register format requirements. 

Amendments are proposed to sec.357.7(a)(3) and (5) (relating to Regional
Water Plan Development) to clarify that the regional water planning groups
are required only to develop a water plan for drought of record conditions,
and are not required to develop separate water plans for conditions where
flows are 50% and 75% of normal. The amendments make clear that the basis
for planning will be drought of record. The amendments would provide that
the regional water planning groups would be required to identify water 
management
strategies for times that flows are at 50% and 75% of normal. The 50% and
75% levels are triggered by the amount of water that remains in the source
compared to normal conditions. Amendments also would specify that the executive
administrator, after coordination with staff of the Texas Natural Resource
Conservation Commission and Texas Parks & Wildlife Department and 
representatives
of the regional water planning groups, would identify the methodology to be
used to calculate water availability during drought of record and to describe
conditions when flows are at 50% and 75% of normal. Rules currently require
the executive administrator to consult and develop this calculation for "normal
hydrologic conditions." 

Amendments to sec.357.7(a)(2), (3), and (4) are designed to clarify that
the data for current and projected population, for evaluation of adequacy
of current supplies, and for water supply and demand analysis are to be 
presented
in the regional water plans in the following ways: by city, county and river
basin; by major providers for municipal and manufacturing purposes; and by
specified categories of use. The current language provides some ambiguity
as to how these data are to be formatted. 

Patricia Todd, Director of Finance and Accounting, has determined that
for each year of the first five-year period these sections are in effect,
there will be no estimated effect on state government. The board estimates
a cost savings to local governments for each year of the first five years
the amendments are in place based upon a simplified planning process, however
it is not clear how much cost savings will be realized since the regional
water planning groups have not developed their scopes of work. 

Ms. Todd also has determined that for the first five years the amendments
as proposed are in effect the public benefit anticipated as a result of 
enforcement
of and administration of the sections will be improved regional water planning,
including planning that incorporates real-time strategies for dealing with
water supplies that drop to less than normal. This will provide a means for
local entities to react more quickly when supplies are diminished. Ms. Todd
has determined there will be no economic costs to small businesses or 
individuals
required to comply with sections as proposed. 

Comments on the proposed amendments will be accepted for 30 days following
publication and may be submitted to Suzanne Schwartz, (512) 463-7981, Texas
Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231. A public
hearing on the rule amendments will be held Monday, July 13, 1998, 10:00 a.m.,
Room 1-111, William B. Travis Building, 7101 North Congress Avenue, Austin,
Texas 78701. 

These sections are proposed under the authority granted in Texas
Water Code, sec.6.101, which provides the board with the authority to adopt
rules necessary to carry out its powers and duties under the Texas Water Code
and laws of Texas, and under the authority of Texas Water Code, sec.16.053,
which requires the board to develop rules and guidelines: to provide procedures
for adoption of regional water plans by regional water planning groups and
approval of regional water plans by the board, to govern procedures to be
followed in carrying out the responsibilities in Texas Water Code, sec.16.053;
and for the format in which information is to be presented in the regional
water plans. The board also proposes the sections under the authority of the
provisions of Texas Water Code, sec.16.053 which require regional water
plans to be consistent with guidance principles for the state plan, and which
require regional water plans to provide information based on data provided
or approved by the board, and which provides certain statutory requirements
for the regional water plans. 

The statutory provisions affected by the amendments are Texas Water Code,
sec.16.051 and sec.16.053. 

sec.357.2. Definitions. 
The following words and terms, when used in this chapter, shall have
the following meanings, unless the context clearly indicates otherwise. Words
defined in the applicable provisions of the Texas Water Code, Chapter 16,
and not defined here shall have the meanings provided in Chapter 16. 

<nl>(1)<ol> Board - The Texas Water Development Board.
<nl>(2)<ol> Drought of record - The period of time
when natural hydrological conditions provided the least amount of water supply. 
<nl>(3)<ol> Executive administrator - The executive
administrator of the board or a designated representative. 

<nl>(4)<ol> Flows at 50% of normal - <nl>50% of<ol>
the amount of water <nl>normally in the water source<ol> [supply based
on 75% of the normal hydrological condition]. 

<nl>(5)<ol> Flows at 75% of normal - <nl>75% of<ol>
the amount of water <nl>normally in the water source<ol> [supply based
on 75% of the normal hydrological condition]. 

<nl>(6)<ol> Long-term water needs - Those needs which
must be met by implementation of water management strategies within the next
30 to 50 years based on federal census years (2040, 2050, etc). 

<nl>(7)<ol> Near-term water needs - Those needs which
must be met by implementation of water management strategies within the next
30 years based on federal census years (2000, 2010, 2020, 2030, etc). [
Normal hydrological conditions - For surface water sources, the median of
all stream flows adjusted for effects of upstream releases, return flows,
evaporation, changes in storage, and diversions in the flow range that occurs
most frequently. For ground water sources, the median of all precipitation
values in the precipitation range that occurs most frequently.] 

<nl>(8)<ol> Political subdivision - City, county,
district or authority created under the Texas Constitution, Article III, sec.52,
or Article XVI, sec.59, any other political subdivision of the state, any
interstate compact commission to which the state is a party, and any nonprofit
water supply corporation created and operating under Acts of the 43rd 
Legislature,
1933, 1st Called Session, Chapter 76, (Vernon's Texas Civil Statutes, Article
1434a). 

<nl>(9)<ol> Regional water plan - Plan or amendment
to an adopted or approved regional water plan developed by a regional water
planning group for a regional water planning area pursuant to the Texas Water
Code, sec.16.053 and this chapter. 

<nl>(10)<ol> State water plan - The most recent state
water plan adopted by the board under the Texas Water Code, Chapter 16.

sec.357.7. Regional Water Plan Development.
(a) Regional water plan development shall include the following: 
(1) (No change.) 

(2) presentation of current and projected population and
water demands. Results shall be reported by city, county and that portion
of a river basin within the regional water planning area<nl>, by<ol> [
for] major providers of water for municipal and manufacturing purposes,
and <nl>by <ol> [for] categories of water use including municipal,
manufacturing, irrigation, steam electric power generation, mining, and 
livestock
watering;

(3) evaluation of adequacy of current water supplies available
to the regional water planning area for use during drought of record[
, when flows are at 50% of normal, and when flows are at 75% of normal].
This evaluation shall consider surface water and groundwater data from the
state water plan, existing water rights, contracts and option agreements,
other planning and water supply studies, and analysis of water supplies 
currently
available to the regional water planning area. Analysis of surface water 
available
during drought of record from reservoirs shall be based on firm yield analysis
of reservoirs. Firm yield is defined as the supply the reservoir can provide
during a drought of record using reasonable sedimentation rates and the 
assumption
that all senior water rights will be totally utilized. Until information is
provided by the Texas Natural Resource Conservation Commission, regional water
planning groups may use estimates of the projected amount of water that would
be available from existing water rights during a drought of record, when flows
are at 75% of normal, and when flows are at 50% of normal. Once this information
is available from the Texas Natural Resource Conservation Commission, the
regional water planning group shall incorporate it in its next planning cycle.
The executive administrator, after coordination with staff of the Texas Natural
Resource Conservation Commission and the Texas Parks and Wildlife Department,
shall identify the methodology, in consultation with representatives of regional
water planning groups, to be used by regional water planning groups to calculate 
<nl>
water availability during drought of record and describe conditions when flows
are at 50% and 75% of <ol> normal[ hydrological condition]. The
executive administrator shall provide available technical assistance to the
regional water planning groups upon request to assist them in selecting 
appropriate
methods and data to be used to determine water supply availability. Results
of evaluations shall be reported by city, county, and portion of a river basin
within the regional water planning area<nl>, by<ol> [for] major
providers of municipal and manufacturing water<nl>,<ol> and <nl>by<ol>
[for ]categories of water use including municipal, manufacturing,
irrigation, steam electric power generation, mining, and livestock watering; 
(4) water supply and demand analysis comparing water
demands as developed in paragraph (2) of this subsection with current water
supplies available to the regional water planning area as developed in paragraph
(3) of this subsection to determine if the water users in the regional water
planning area will experience a surplus of supply or a need for additional
supplies. The social and economic impact of not meeting these needs shall
be evaluated by the regional water planning groups and reported by regional
water planning area and river basin. Other results shall be reported by city,
county, and portion of a river basin within the regional water planning area<nl>
, by<ol> [for] major providers of municipal and manufacturing
water<nl>,<ol> and <nl>by<ol> [for] categories of water use
including municipal, manufacturing, irrigation, steam electric power generation,
mining, and livestock watering. The executive administrator shall provide
available technical assistance to the regional water planning groups, upon
request, on water supply and demand analysis, including methods to evaluate
the social and economic impacts of not meeting needs; 

(5) using the water supply needs identified in paragraph
(4) of this subsection, plans to be used during the drought of record[
, when flows are at 75% of normal, and when flows are at 50% of normal ]to
provide sufficient water supply to meet the needs identified in paragraph
(4) of this subsection and in accordance with <nl>water management strategies
and scenarios described in<ol> paragraph (8) of this subsection. [
Separate plans shall be developed to include the recommended] <nl>
Also,<ol> water management strategies <nl>shall be identified to be used
when <ol>[or alternative long-term scenarios for each of the three
water supply conditions (drought of record, ]flows <nl>are<ol> at
50% of normal[,] and <nl>when<ol> flows <nl>are<ol> at 75%
of normal[) under guidelines of paragraph (8) of this subsection. Alternatively,
one or two plans shall be developed that include recommended water management
strategies or alternative long-term scenarios applicable for all or a 
combination
of the three water supply conditions (drought of record, flows at 50% of normal,
and flows at 75% of normal) under guidelines of paragraph (8) of this 
subsection,
respectively]. <nl>Water management strategies shall be developed for
major providers of municipal and manufacturing water and for categories of
use including municipal, manufacturing, irrigation, steam electric power 
generation,
mining and livestock watering. The plan to be used for water supply during
drought of record <ol>[These plans] shall meet all needs for
the water use categories of municipal, manufacturing, irrigation, steam electric
power generation, mining, and livestock watering except:

(A)-(B) (No change.) 

(6)-(9) (No change.) 

(b)-(c) (No change.)

This agency hereby certifies that the proposal has been reviewed
by legal counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on
June 22, 1998.
TRD-9809937
Suzanne Schwartz

General Counsel

Texas Water Development Board

Proposed date of adoption: August 20, 1998

For further information, please call: (512) 463-7981

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART I. Texas Department of Public Safety
CHAPTER 18.Driver Education
SUBCHAPTER C.Department Approved Education Courses
37 TAC sec.18.31
The Texas Department of Public Safety proposes an amendment
to sec.18.31, concerning Department Approved Driver Education Courses. 
Subsection
(a) is amended to correct reference to statute due to the recodification of
Texas Civil Statutes to Texas Transportation Code. Subsection (b) is amended
to include an exemption to the requirement of a textbook. 

Tom Haas, Chief of Finance, has determined that for each year of the first
five-year period the rule is in effect there will be no fiscal implications
as a result of enforcing or administering the rule. 

Mr. Haas also has determined that for each year of the first five years
the rule is in effect the public benefit anticipated as a result of enforcing
the rule will be a reduction in the cost of the Parent-Taught Driver Education
Course by not having to purchase unnecessary textbooks. There are no anticipated
economic costs to small or large businesses. The cost to persons who are 
required
to comply with the section as proposed will be the approximately $20 cost
of the Texas Education Agency Driver Education Instruction Curriculum Model.
Comments on the proposal may be submitted to Mary Ann Courter, Chief, Legal
Service, Texas Department of Public Safety, Box 4087, Austin, Texas 78773-0140,
(512) 424-2890. 

The amendment is proposed pursuant to Texas Transportation Code,
sec.521.205 which provides the department by rule shall provide for approval
of a driver education course conducted by the parent or legal guardian of
a person who is required to complete a driver education course to obtain a
Class C license. 

Texas Transportation Code, sec.521.205 is affected by this proposal.
sec. 18.31. Requirements for Approval of Course.
(a) Texas <nl>Transportation Code, sec.521.205<ol>[
Civil Statutes, Article 6687b, sec.7A], provides the department may
not approve a course unless it determines that the course materials are at
least equal to those required in a course approved by the Central Education
Agency. To be approved, a course must contain a minimum of the units.

Figure 1: 37 TAC sec.18.31(a). 

(b) A textbook, approved by the Texas Education Agency <nl>
(TEA)<ol> for driver education, is an integral part of driver training and
is a required resource. <nl>The only exception to this requirement is if
a curriculum does not require the use of a TEA approved textbook. The curriculum
will have to provide its own resource materials, i.e., textbook, student 
workbook,
instructor guides, or any other materials that have been approved as the 
textbook
replacement by the department.<ol> 

(c) Behind-the-wheel instruction and practice hours during
the laboratory phase. 

Figure 2: 37 TAC sec.18.31(c). 

(d) The department adopts by reference the DRIVER EDUCATION
INSTRUCTION CURRICULUM MODEL FOR PARENTS AND LEGAL GUARDIANS and it is the
standard upon which each program will be evaluated and may be used as an 
approved
course. 

(e) The curriculum is available for inspection at the department's
Austin headquarters. 

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
June 19, 1998.
TRD-9809601
Dudley M. Thomas

Director, Texas Department of Public Safety

Texas Department of Public Safety

Proposed date of adoption: August 2, 1998

For further information, please call: (512) 424-2890

TITLE 43. TRANSPORTATION
PART I. Texas Department of Transportation
CHAPTER 25.Traffic Operations
SUBCHAPTER I.Debarment of a Maintenance Contractor
43 TAC sec.sec.25.501-25.506
(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 theTexas Department of Transportation or in the Texas Register office,
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)

The Texas Department of Transportation proposes the repeal
of sec.sec.25.501-25.506, concerning debarment of a maintenance contractor. 
EXPLANATION OF PROPOSED REPEALS 

Sections 25.501-25.506 provide procedures for the debarment of state highway
maintenance contractors. The current rules refer to a Safety and Maintenance
Operations Division and delegate certain responsibilities to the Deputy 
Director,
Field Operations. Due to recent department reorganizations, the maintenance
duties of the former Safety and Maintenance Operations Division now reside
in the new Maintenance Division, and the position of Deputy Director, Field
Operations no longer exists. Accordingly, the existing rules proposed for
repeal appear in Chapter 25, Traffic Operations and the proposed new sections
will more appropriately appear in Chapter 29, Maintenance. These sections
are no longer necessary due to the simultaneous proposed adoption of the re-
enacted
subject matter in new sec.sec.29.21-29.26, concerning this same subject. 
FISCAL NOTE 

Frank J. Smith, Director, Finance Division, has determined that for the
first five-year period the repeals are in effect, there will be no significant
fiscal implications for state or local governments as a result of enforcing
or administering the sections. There are no anticipated economic costs for
persons required to comply with the sections as proposed. 

Robert Jackson, Acting General Counsel, has certified that there will be
no significant impact on local economies or overall employment as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT 

Mr. Jackson has also determined that for each year of the first five years
the sections are in effect, the public benefit anticipated as a result of
the repeals will be efficient and effective procedures for the debarment of
maintenance contractors. There will be no effect on small businesses. 

SUBMITTAL OF COMMENTS 

Written comments on the proposed repeals may be submitted to Robert Jackson,
Acting General Counsel, 125 East 11th Street, Austin, Texas 78701-2483. The
deadline for receipt of comments will be 5:00 p.m. on August 3, 1998. 

STATUTORY AUTHORITY 

The repeals are proposed under Transportation Code, sec.201.101, which
provides the Texas Transportation Commission with the authority to establish
rules for the conduct of the work of the Texas Department of Transportation.
No statutes, articles, or codes are affected by the proposed repeals.

sec.25.501. Purpose .
sec.25.502. Definitions.
sec.25.503. Debarment.
sec.25.504. Notice and Appeal.
sec.25.505. Effective Date of Debarment.
sec.25.506. Period of Debarment. 
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
June 19, 1998.
TRD-9809813
Bob Jackson

Acting General Counsel

Texas Department of Transportation

Proposed date of adoption: August 2, 1998

For further information, please call: (512) 463-8630

CHAPTER 29.Maintenance
SUBCHAPTER B.Debarment of Maintenance Contractors
43 TAC sec.sec.29.21-29.26
The Texas Department of Transportation proposes new sec.sec.29.21-29.26,
concerning debarment of maintenance contractors. 

EXPLANATION OF PROPOSED NEW SECTIONS 

Due to recent department reorganizations, the maintenance duties of the
former Safety and Maintenance Operations Division now reside in the new 
Maintenance
Division, and the position of Deputy Director, Field Operations no longer
exists. Accordingly, the existing rules proposed for repeal appear in Chapter
25, Traffic Operations and the proposed new sections will more appropriately
appear in Chapter 29, Maintenance. New sec.sec.29.21-29.26 have been rewritten
to refer to the Maintenance Division and to delegate responsibilities to the
executive director or the director's designee not below the level of deputy
or assistant executive director. The new sections also correct the name of
the department and its commission. 

New sec.29.23, provides for approval of subletting by the department
and approval of assignments by the executive director or the director's designee
not below the level of deputy or assistant executive director since approval
of assignments and subletting is more efficiently handled by department staff. 
FISCAL NOTE 

Frank J. Smith, Director, Finance Division, has determined that for the
first five-year period the new sections are in effect, there will be no 
significant
fiscal implications for state or local governments as a result of enforcing
or administering the sections. There are no anticipated economic costs for
persons required to comply with the sections as proposed. 

Robert Jackson, Acting General Counsel, has certified that there will be
no significant impact on local economies or overall employment as a result
of enforcing or administering the sections. 

PUBLIC BENEFIT 

Mr. Jackson 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
the new sections will be efficient and effective procedures for the debarment
of maintenance contractors. There will be no effect on small businesses. 
SUBMITTAL OF COMMENTS 

Written comments on the proposed new sections may be submitted to Robert
Jackson, Acting General Counsel, 125 East 11th Street, Austin, Texas 78701-2483.
The deadline for receipt of comments will be 5:00 p.m. on August 3, 1998. 
STATUTORY AUTHORITY

The new sections are proposed under Transportation Code, sec.201.101,
which provides the Texas Transportation Commission with the authority to 
establish
rules for the conduct of the work of the Texas Department of Transportation.
No statutes, articles, or codes are affected by the proposed new sections.
sec.29.21. Purpose. 
It is the policy of the Texas Transportation Commission to protect
the health, welfare, and safety of the traveling public and the state's 
substantial
investment in its system of state highways, by ensuring that only responsible
contractors are eligible to bid on, enter, or subcontract under highway 
maintenance
contracts awarded by the commission, and further to ensure that those contracts
are fully performed in an efficient and timely manner. 

sec.29.22. Definitions.
The following words and terms, when used in the sections under this
subchapter, shall have the following meanings, unless the context clearly
indicates otherwise. 

(1) Affiliate - A contractor is said to be an affiliate of
another contractor if they are so closely connected or associated that one
of them, either directly or indirectly, controls or has power to control the
other; if a third party controls or has the power to control both of them;
if the owner of one is a spouse or a member of the immediate family of the
owner of the other; or if they are or have been so closely allied through
an established course of dealings, including but not limited to the lending
of financial assistance, engaging in joint ventures, etc., as to create a
public perception that the two contractors are a single entity. 

(2) Commission - The Texas Transportation Commission. 
(3) Contract - A maintenance contract. 

(4) Contractor - A maintenance contractor. 

(5) Debar, debarment - To disqualify (the disqualification
of) a contractor from bidding on, entering, and/or participating as a 
subcontractor
under a maintenance contract. 

(6) Department - The Texas Department of Transportation. 
(7) Executive director - The executive director of the
Texas Department of Transportation or his designee not below the level of
deputy or assistant executive director. 

(8) Maintenance contract - A contract let by the Texas
Department of Transportation, through either its Maintenance Division or one
of its district offices, for maintenance work on a segment of the state highway
system. 

(9) Maintenance contractor - An individual, partnership,
corporation, or other business entity which bids on a maintenance contract,
or which functions, or seeks to function, as a subcontractor under any such
contract. 

(10) Subcontractor - An individual, partnership, corporation,
or other business entity to which the prime contractor sublets, or proposes
to sublet, any portion of a highway maintenance contract. sec.29.23. Debarment. 
sec.29.23. Debarment.
(a) The executive director, or his designee, may debar a contractor,
and/or a contractor's affiliate or successor, from bidding on, entering, and/or
participating as a subcontractor under a maintenance contract, if that 
contractor: 
(1) fails to enter a maintenance contract duly awarded by
the commission; 

(2) performs a maintenance contract in an unsatisfactory
manner by: 

(A) failing to begin work within the specified time; 

(B) failing to perform the work with sufficient workmen, equipment
and/or materials to ensure completion of the work within the specified time; 
(C) neglecting or refusing to remove materials or to perform
anew work rejected by the department as being defective or not meeting 
specifications; 
(D) discontinuing prosecution of the work without the express
approval of the department; 

(E) committing any act of insolvency, including seeking protection
or being declared bankrupt under applicable federal law; 

(F) assigning any interest in a maintenance contract for any
purpose without express approval by the executive director; 

(G) subletting any work under that contract without express
approval by the department; or 

(H) failing for any other reason to perform the work in an
acceptable and workmanlike manner; 

(3) is declared in default on a contract; or 

(4) commits an act or offense, or engages in conduct
which is a basis for debarment of a contractor pursuant to sec.9.6 of this
title (relating to Procedure for Debarment of a Contractor) or sec.9.8 of
this title (relating to Supplemental Procedures for Suspension or Debarment
of a Contractor). 

(b) The existence of a cause for debarment under this section
does not necessarily require that the contractor be debarred; the seriousness
of the contractor's acts or omissions and any mitigating circumstances should
be considered in making any debarment decision. 

(c) Failure to perform, unsatisfactory performance, or default
caused by acts beyond the control of the contractor shall not be considered
as a basis for debarment.

sec.29.24. Notice and Appeal.
(a) Upon a determination that a contractor should be debarred,
the department shall mail a notice of the proposed debarment to the last known
address of the contractor by certified mail. 

(b) The notice shall clearly state: 

(1) the facts and circumstances underlying the proposed debarment; 
(2) the effective date and period of debarment; and 
(3) the right of the contractor to request an administrative
hearing on the question of the proposed debarment. 

(c) A request for administrative hearing under this section
must be made in writing to the executive director, or his designee, within
10 days of the receipt of the notice of proposed debarment. 

(d) An administrative hearing requested pursuant to this section
shall be conducted in accordance with sec.sec.1.21-1.61 of this title
(relating to Contested Case Procedure), and shall serve to abate the proposed
debarment unless and until that debarment is affirmed by order of the 
commission.
sec.29.25. Effective Date of Debarment. 
Except as provided in sec.29.24 of this title (relating to Notice
and Appeal), debarment shall be effective on the date specified in the notice
of proposed debarment.

sec.29.26. Period of Debarment.
(a) The period of a single debarment imposed under sec.29.23
of this title (relating to Debarment), shall be for a period commensurate
with the seriousness of the cause, but shall not exceed 12 months duration. 
(b) The executive director, or his designee, may consider
terminating the debarment or reducing the period, upon the contractor's 
application,
supported by documentation, for reasons deemed appropriate by that official. 
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
June 18, 1998.
TRD-9809814
Bob Jackson

Acting General Counsel

Texas Department of Transportation

Proposed date of adoption: August 2, 1998

For further information, please call: (512) 463-8630