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

TITLE 1. ADMINISTRATION
PART III. Office of the Attorney General
CHAPTER 55.Child Support Enforcement
SUBCHAPTER F.Collections and Distributions
1 TAC sec.55.140
(Editor's note: The text of the following section proposed for repeal will not 
be published.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 the 
Attorney General or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Office of the Attorney General proposes the repeal of sec.55.140, concerning 
child support enforcement because it will be replaced by a new 1 TAC sec.55.140 
and sec.55.141, which will include additional provisions relating to disputing 
the distribution of child support collections.
David Vela, IV-D Director, Child Support Division, has determined that for the 
first five- year period this repeal is in effect there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the repeal. 
Mr. Vela also has determined that for each year of the first five years this 
repeal is in effect the public benefit anticipated as a result of the repeal of 
the section as proposed will be the elimination of a duplicative section. There 
will be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the repeal as proposed. 
Comments may be submitted to Tod L. Adamson, Child Support Division, 
Administrative Law Section, Office of the Attorney General, 5500 East Oltorf, 
Room 355, Austin, Texas 78741, or P.O. Box 12017, mailcode 073, Austin, Texas 
78711-2017, (512) 460-6000. 
The repeal of this section is proposed under the Family Code, Section 231.002 
and the Government Code, Section 2107.002. 
The Family Code, Chapter 231, is affected by the repealed section.
sec.55.140. Contesting Distribution of Collections on Child Support Obligations 
Applied to Unreimbursed Public Assistance Payments. 
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 July 20, 1998.
TRD-9811420
Sarah Shirley
Assistant Attorney General
Office of the Attorney General
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 475-4499

1 TAC sec.55.140, sec.55.141
The Office of the Attorney General proposes a new sec.55.140, relating to the 
collection of money distributed by the Child Support Division from the custodial 
parent or other person entitled to receive the support when the collection is 
reversed after it has been distributed, and a new sec.55.141 providing custodial 
parents and others affected by sec.55.140 the opportunity for a hearing to 
contest the action by the agency. 
David Vela, IV-D Director, Child Support Division, has determined that for the 
first five- year period these sections are in effect the State will realize net 
savings/cost avoidance of $14,145,620.
Mr. Vela also has determined that the public benefit anticipated as a result of 
enforcing the sections is the efficient collection of sums owed to the State. 
The Texas IV-D program is required to distribute child support collected within 
federal time frames. It does this by issuing a State Warrant in the amount of 
the collection it has made. When a collection is reversed, because of the 
dishonor of a check, the adjustment of the collection by the IRS, a posting 
error, or otherwise, it creates a debt owed by the recipient of the State 
Warrant to the State which the Office of the Attorney General has an obligation 
to collect. 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. 
A public hearing on this regulation will be held on August 14, 1998 at 1:30 
p.m., at the William P. Clements Building, 300 W. 15th Street, Austin, Texas 
78701, in Committee Room 5. Written comments may be submitted to Tod L. Adamson, 
Child Support Division, Administrative Law Section, Office of the Attorney 
General, 5500 East Oltorf, Room 355, Austin, Texas 78741, or P.O. Box 12017, 
mailcode 073, Austin, Texas 78711-2017, (512) 460-6000. 
The new sections are proposed under the Family Code, Section 231.002 and the 
Government Code, Section 2107.002. 
The Family Code, Chapter 231, is affected by the new rules.

sec.55.140. Recoupment of Collections Reversed after Distribution. 
(a) By receiving and negotiating a warrant for child support from the State of 
Texas, all custodial parents or other persons entitled to receive child support 
consent to the Office of the Attorney General's policy for recovering payments 
which have been reversed after they have been disbursed. 
(b) Any person receiving Child Support Collection services from the Office of 
the Attorney General, who receives and negotiates a State Warrant for child 
support, must repay the amount of that warrant if the Office of the Attorney 
General subsequently notifies them that the collection has been reversed. Full 
payment must be received within 30 days of the Office of the Attorney General 
sending notice of the reversal. Failure to make timely payment will result in 
all future child support collections being withheld and applied to the debt 
until it is fully satisfied.

sec.55.141. Contesting Distribution of Collections on Child Support Obligations. 
(a) A custodial parent or other person entitled to receive child support; 
(1) whose family has received public assistance under the Texas Human Resources 
Code, Chapter 31, may contest the amounts withheld from collections on child 
support obligations and retained by the State to be applied to unreimbursed 
assistance to the family; or 
(2) may contest the amounts retained from collections on child support 
obligations and recouped by the State to offset payments improperly disbursed to 
a custodial parent or other person entitled to receive child support. 
(b) When notified of a contest, the Office of the Attorney General shall provide 
a report showing the support collected on the obligation, how the collection was 
allocated between the contestant and the State, and the basis for that 
allocation. This report is not required if the contestant has previously 
received a monthly notice of collection report from the Office of the Attorney 
General covering the same time period. The Office of the Attorney General shall 
provide a form for requesting an administrative hearing to the contestant with 
the report or upon request. 
(c) A hearing shall be conducted by the Office of the Attorney General upon the 
contestant's submission of a completed request for administrative review form. 
The request for administrative review must be submitted in writing no later than 
30 days after the date that the report in subsection (b) was prepared for the 
contestant. If the dispute is resolved informally before the hearing, the formal 
request shall be dismissed. 
(d) The custodial parent may participate in the hearing, with or without a 
licensed representative. The custodial parent may submit any contentions and 
evidence in the form of an affidavit properly acknowledged, thereby making his 
or her participation in the hearing unnecessary. 
(e) The request for hearing shall be in the form that follows:
Figure 1 TAC sec.55.141(e) 
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 July 20, 1998.
TRD-9811421
Sarah Shirley
Assistant Attorney General
Office of the Attorney General
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 475-4499

SUBCHAPTER I. State Directory of New Hires
1 TAC sec.sec.55.301-55.308
The Office of the Attorney General proposes new Subchapter I, sec.sec.55.301-
55.308, concerning Employer New Hire Reporting to the State Directory of New 
Hires. This new subchapter establishes the procedures for reporting employee 
information to the State Directory of New Hires meeting the requirements of 
federal law at sec.313(b) of the Personal Responsibility and Work Opportunity 
Reconciliation Act of 1996 and sec.453A of the Social Security Act (42 U.S.C. 
sec.653A). 
David Vela, IV-D Director, Child Support Division, has determined that for the 
first five-year period the rules are in effect there will be no fiscal 
implications to state or local government as a result of enforcing these rules.
Mr. Vela 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 efficient location of absent parents who owe child support for 
the efficient establishment and collection of child support, and the prevention 
of fraud in the welfare, workers' compensation, and unemployment insurance 
programs. Furthermore, Mark Hughes, Director of Labor Market Information for the 
Texas Workforce Commission, has determined that the rules as proposed will have 
no significant overall impact upon employment conditions in the state. There 
will be no effect on small businesses, and no anticipated economic cost to 
persons who are required to comply with the rules as proposed. 
Comments may be submitted to Patricia Matthews, Child Support Division, Office 
of the Attorney General, 5500 East Oltorf, Austin, Texas 78741, or P.O. Box 
12017, mailcode 046, Austin, Texas 78711-2017, (512) 460-6353. 
The new rules are proposed under the Family Code sec.234.104 which provides the 
Office of the Attorney General with the authority to establish by rule 
procedures for reporting employee information and for operating a state 
directory of new hires meeting the requirements of federal law at sec.313(b) of 
the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 and 
sec.453A of the Social Security Act (42 U.S.C. sec.653A). 
Chapters 231 and 234 of the Family Code are affected by this new subchapter. 

sec.55.301. Scope. 
Section 453A of the Social Security Act, found at 42 U.S.C. sec.653A, as amended 
by Personal Responsibility and Work Opportunity Reconciliation Act of 1996 
(PRWORA), requires each state to establish and maintain a State Directory of New 
Hires to provide a means for employers to assist in the state's efforts to 
prevent fraud in the welfare, workers' compensation, unemployment insurance 
programs, and locate and/or collect from absent parents who owe child support by 
reporting information concerning newly hired and rehired employees directly to a 
centralized state database. This subchapter establishes within the Office of the 
Attorney General (Title IV-D agency) a centralized employee registry called the 
State Directory of New Hires and establishes procedures for employers to report 
employee information to the state directory of new hires pursuant to chapter 
234, subchapter B of the Texas Family Code.

sec.55.302. Definitions. 
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise: 
(1) Common paymaster- has the meaning as described in IRS Rev. Proc. 70-6, 1970-
1 
(2) New hire- The term new hire shall have the meaning of any employee required 
to be reported to the state directory of new hires under 453A of the Social 
Security Act within twenty days of the employees first day on the job. 
(3) Date of hire- The date of hire for a new employee is considered to be the 
first day services are performed for wages by an individual. 
(4) Employee- the term employee means an individual who is an employee as 
defined in Chapter 24 of the Internal Revenue Code of 1986; and does not include 
an employee of a federal or state agency performing counter intelligence 
functions, if the head of such agency has determined that reporting pursuant to 
section 453A of the Social Security Act with respect to the employee could 
endanger the safety of the employee or compromise an ongoing investigation or 
intelligence mission. Chapter 24 of the IRC and the regulations promulgated 
thereunder define an "employee" as every individual performing services if the 
relationship between the individual and the person for whom the services are 
performed is the legal relationship of employer and employee (see IRC section 
3401(c) and 26 CFR 31.3401(c)-1). Generally, the legal relationship of employer 
and employee exists when the person for whom the services are performed has the 
right to control and direct the individual who performs the services not only as 
to the result to be accomplished, but also as to the details and means by which 
that result is to be accomplished. 
(5) Employer- In General. The term employer has the meaning given such term in 
section 3401(d) of the Internal Revenue Code of 1986 and includes any 
governmental entity and any labor organization. At a minimum, in any case where 
an employer is required to give an employee a Form W-2 showing the amount of 
taxes withheld, the employer must meet the new hire reporting requirements. 
Section 3401(d) goes on to provide in part that "if the person for whom the 
individual performs or performed the services does not have control of the 
payment of the wages for such services, the term employer' means the person 
having control of the payment of such wages." Thus, every entity (including 
governmental entities and labor organizations) is an employer if the entity 
exercises or has the right to exercise control and direction over an individual 
who performs or has performed any service for the entity unless the entity does 
not have control of the payment of the employee's wages. In these cases, the 
entity having control of the payment of such wages is the "employer." All 
entities satisfying 3401 (d) of the IRC must meet the new hire reporting 
requirements set forth in section 453(b)(1) of the Social Security Act, as 
amended. 
(6) Illegible record- A record containing indecipherable writing or print. 
(7) Incomplete record- A record that does not contain all six required data 
elements (employee name, address, social security number and employer name, 
address and federal identification number). 
(8) Labor organization- The term labor organization shall have the meaning given 
such term in section 2(5) of the National Labor Relations Act, and includes any 
entity (also known as Hiring Hall) which is used by the organization and an 
employer to carry out requirements described in section 8(f)(3) of such Act of 
an agreement between the organization and the employer. 
(9) Payroll reporting agent- Has the meaning as described in IRS Rev. Proc. 70-
6, 9170-1, C.B.420. 

sec.55.303. New Hire Reporting Requirements.
(a) Except as provided in sec.sec.55.304 - 55.306 of this title (relating to 
Common Paymaster, Multi-State Employers, and Federal Government Employers), each 
Texas employer shall furnish to the State Directory of New Hires in the state in 
which a newly hired employee works a report of all new hires that contains the 
following six required data elements found on the employee's W-4 form: 
(1) the employee name, 
(2) the employee address, 
(3) the employee social security number, 
(4) the employer name, 
(5) the employer address, and
(6) the Federal Employer Identification Number (FEIN). 
(b) Employers, at their option may also provide the following additional 
information in the report: 
(1) the employee's date of hire, 
(2) the employee's date of birth, and
(3) the employee's expected salary or wages, 
(4) Employer payroll address for mailing of notice to withhold child support. 
(c) All employers shall report new hire information on a Form W-4 or an 
equivalent form by first class mail, telephonically, electronically or magnetic 
media as determined by the employer and in a format acceptable to the Title IV-D 
agency. The Title IV-D agency reserves the right to decline any type of form 
that it deems as illegible or inappropriate for new hire report processing and 
requests employers who elect to submit new hire reports via hardcopy to adopt 
the new Hire Reporting Form supplied by the IV-D agency. 
(1) Formats available to employers include: 
(A) Fully and accurately completed copy of the new employee's W-4 form with all 
mandatory information, as specified by New Hire Reporting requirements, typed or 
written using large, capitalized lettering (cursive writing is not permitted); 
(B) New Hire Report Form supplied by the IV-D agency:
Figure: 1 TAC sec.55.303(c)(1)(B) 
(C) Existing employer report or printout; 
(D) Magnetic tape or cartridge (see Electronic Reporting Specification Table); 
(E) Diskette (see Electronic Reporting Specification Table); 
(F) E-mail (see Electronic Reporting Specification Table); 
(G) Facsimile; or 
(H) Any other means authorized by the Title IV-D agency for conveying 
information which includes electronic transmission or delivery of data tapes. 
(2) All printed lists must be provided in 10 point font, or larger. 
(3) All new hire reports submitted using diskette, magnetic tape, magnetic 
cartridge, or e-mail must be provided in accordance with the following New Hire 
reporting specifications for electronic reporting:
Figure: 1 TAC sec.55.303(c)(3) 
(4) All new hire reports submitted using e-mail must be provided as an "e-mail 
attachment." All employers reporting via e-mail must use the following 
submission e-mail address for transmitting new hire reports electronically via 
e-mail: txhires@flash.net. Employers who wish to correspond with the Texas New 
Hire Operations Center for questions, technical assistance or problems, may use 
the following correspondence e-mail address: txenh@flash.net. 
(d) To ensure timely receipt of information, Texas employers shall be required 
to report the hiring or rehiring of persons to the Title IV-D agency. New Hire 
reports shall be considered timely if postmarked by the due date or if filed 
electronically, upon receipt by the agency. New Hire reports are due: 
(1) not later than the twenty calendar days after the date the employer hires 
the employee; or 
(2) in the case of an employer transmitting reports magnetically or 
electronically, by 2 monthly transmissions (if necessary) not less than 12 days 
nor more than 16 days apart. 
(e) Employers shall send reports for newly hired or rehired employees to Texas 
Employer New Hire Reporting Operations Center, Post Office Box 149224, Austin, 
Texas 78714-9224 Telephone Number : 1-888-839-4473 Fax Number: 1-800-732-5015 
(f) Questions regarding the Employer New Hire Program should be directed to the 
Texas Employer New Hire Reporting Operations Center at 1-888-TEX-Hire (1-888-
839-4473) or access Texas New Hire Reporting on the World wide Web Home Page. 
The Internet address is: http//www.TexasNewHire.state.tx.us 
(g) Each employer submitting an incomplete or illegible report, upon request, 
shall resubmit the incomplete or illegible data within 10 days after receiving 
notice. 

sec.55.304. Common Paymaster.
A report filed by the common paymaster or payroll reporting agent of an employer 
is sufficient to meet the new hire reporting requirements for each of the 
related employees for which the common paymaster or payroll reporting agent 
provides new hire information. 

sec.55.305. Multi-State Employers.
(a) An employer that has employees who are employed in Texas and one or more 
other states may choose to report to a state other than Texas provided the 
employer designates only one state in which such employer has employees; 
transmits the required reports using magnetic or electronic media authorized by 
the Title IV-D agency for conveying information; and notifies the Secretary of 
Health and Human services, in writing, prior to reporting. 
(b) When submitting written notification to the Secretary about the designation 
of the single State for new hire reporting, an employer should include the 
following information: 
(1) Federal Employer Identification Number (FEIN), 
(2) Employer's name, address, telephone number related to the FEIN, 
(3) State selected for reporting purposes, 
(4) Other States in which the company has employees, 
(5) Corporate point of contact. 
(c) If the company will be reporting new hires on behalf of subsidiaries who 
operate under different names and FEINs, the employer should also list the 
names, FEINs and states where they have employees working. 
(d) An employer can notify the Secretary of the Department of Health and Human 
Services in one of three ways: 
(1) Notify the Secretary in writing at the following address: Department of 
Health and Human Services, Administration for Children and Families, Office of 
Child Support Enforcement Multi State Employer Registration, P.O. Box 509, 
Randallstown, MD 21133; 
(2) Notify the Secretary in writing by facsimile: Department of Health and Human 
Services Administration for children and Families, Office of child Support 
Enforcement, Multistate Employer Notification, 1-410-277-9325; or 
(3) Notify the Secretary via the Internet by accessing the Multistate Employer 
option on the OCSE World Wide Web home Page. The Internet address is: 
http://www.acf.dhhs.gov/programs/cse/newhire/index.html. 

sec.55.306. Federal Government Employers. 
Any department, agency, or instrumentality of the United States must report 
directly to the National Directory of New Hires established pursuant to both 
sections 313(b) of PRWORA and 453A of the Social Security Act. 

sec.55.307. Civil Money Penalties on Noncomplying Employers.
The Title IV-D agency may assess a $500 penalty against a noncomplying employer 
if the failure to report information required by these rules and federal 
regulations is the result of a conspiracy between the employer and the employee 
to not supply the required report or to supply a false or incomplete report. 

sec.55.308. Confidentiality And Security.
(a) Confidentiality of Records. The records contained in the new hire directory 
shall be confidential and may be accessed for the following purposes only: 
(1) Location of Child Support Obligors. The Title IV-D Agency shall use the 
Employer New Hire Reporting (ENHR) information to locate individuals for 
purposes of establishing paternity and establishing, modifying, and enforcing 
child support obligations, and may disclose such information to any agent of the 
agency that is under contract with the agency to carry out such purposes. 
(2) Verification of Eligibility for Certain Programs. A State agency responsible 
for administering a program specified in section 1137(b) of the Social Security 
Act shall have access to information reported by employers for purposes of 
verifying eligibility for the program. 
(3) Administration of Employment Security and Workers' Compensation. State 
agencies operating employment security (the Texas Workforce Commission) and 
workers' compensation (the Texas Workers' Compensation Commission) programs 
shall have access to ENHR information reported by employers for the purposes of 
administering such programs. 
(b) Security. The State IV-D agency shall have in effect safeguards on the 
integrity, accuracy and completeness of , access to, and use of data in the 
automated system required by 453A of the Social Security Act. 
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 July 13, 1998.
TRD-9810980
Sarah Shirley
Assistant Attorney General
Office of the Attorney General
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 475-4499

TITLE 4. AGRICULTURE
PART I. Texas Department of Agriculture
CHAPTER 5.Fuel Quality
4 TAC sec.sec.5.1-5.5
The Texas Department of Agriculture (the department) proposes new sec.sec.5.1-
5.5, concerning automotive fuel quality rating and monitoring. The new sections 
are proposed to implement an automotive fuel quality monitoring program 
authorized under Article 8614, Vernon's Texas Civil Statutes (1997) as amended 
by Senate Bill 665, 75th Legislature, 1997. Proposed sec.5.1 defines terms used 
in these regulations. Proposed sec.5.2 specifies an expiration provision for 
Chapter 5. Proposed sec.5.3 requires the automotive fuel rating of gasoline to 
be the same or higher than the automotive fuel rating posted on the dispenser 
and certified by the distributor or supplier. Also, sec.5.3 establishes testing 
methods, standards and specifications utilized in the determination of the 
automotive fuel rating. Proposed sec.5.4 provides for submission of records to 
the department. Proposed sec.5.5 establishes equipment requirements for 
distributors, suppliers and dealers of gasoline to aid the department in the 
inspection and investigation of automotive fuel ratings. 
Damon Slaydon, Deputy Director for Consumer and Commodity Programs, has 
determined that for the first five-year period the proposed new sections are in 
effect, there will be no fiscal implications for state government as a result of 
administering and enforcing the sections. Article 8614 provides that the costs 
of the program will be funded by a statutorily required fee paid to the state 
comptroller by distributors, suppliers, wholesalers and jobbers who deal in 
motor fuel. There will be no fiscal implications for local government. 
Mr. Slaydon also has determined that for each of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
the sections will be that a greater amount of gasoline will be sold that is 
properly labeled. The effect on small and large businesses and the anticipated 
economic cost to those who are required to comply with the sections as proposed 
will be minimal because federal regulations currently in place require that the 
majority of information and equipment required by the new sections be 
maintained. There will be no effect on retailers over the five-year period, 
except where administrative penalties are imposed for violations. 
Comments may be submitted to Damon Slaydon, Deputy Director for Consumer and 
Commodity Programs, Texas Department of Agriculture, P.O. Box 12847, Austin, 
Texas 78711. Comments must be received no later than 30 days from the date of 
publication in the Texas Register. The new sections are proposed under Article 
8614, Vernon's Texas Civil Statutes (1997), as amended by Senate Bill 665, 75th 
Legislature, 1997 which provides the Texas Department of Agriculture with the 
authority to adopt rules to regulate the distributors, suppliers and dealers who 
sell motor fuel within the state. 
The statute affected by this proposal is Article 8614, Vernon's Texas Civil 
Statutes (1997).

sec.5.1. Definitions.
In addition to the definitions set out in Article 8614, Vernon's Texas Civil 
Statutes (1997), as amended by Senate Bill 665, 75th Legislature, 1997, and the 
standards set by the American Society for Testing and Materials (ASTM), the 
following words and terms shall have the following meanings, unless the context 
clearly indicates otherwise.
(1) ASTM--The American Society for Testing and Materials; the national voluntary 
consensus standards organization formed for the development of standards on 
characteristics and performance of materials, products, systems and services and 
the promotion of related knowledge. 
(2) Department--Texas Department of Agriculture 
(3) Gasoline--That term as defined in sec.153.001 of the Texas Tax Code 
Annotated (Vernon 1992).

sec.5.2. Expiration Provision.
Unless specifically acted upon by amendment or repeal and substitution of a new 
section or sections in accordance with the Texas Government Code Annotated, 
sec.sec.2001.021-2001.038 (Vernon 1997) or specific reactivation by the 
department, all of the sections in this chapter shall expire August 31, 2002. 

sec.5.3. Automotive Fuel Rating.
(a) The automotive fuel rating of gasoline sold or offered for sale from a motor 
fuel dispenser shall not be less than the automotive fuel rating posted on the 
dispenser. 
(b) The automotive fuel rating of gasoline delivered or transferred by a 
distributor or a supplier to a motor fuel dealer in this state shall be no less 
than the automotive fuel rating stated in the certification provided by the 
distributor or supplier to the dealer pursuant to federal law, 16 Code of 
Federal Regulations Part 306. 
(c) The testing methods, standards and specifications employed by the department 
to determine the automotive fuel rating of gasoline shall be those prescribed by 
the ASTM D-2699, ASTM D-2700, and ASTM D-5599, as applicable. Copies of the ASTM 
testing standards may be obtained by writing the American Society for Testing 
and Materials at 1916 Race Street, Philadelphia, PA 19103. 
(d) For purposes of the assessment of administrative or civil penalties for 
violations of subsection (a) of this section, each incorrect posting of an 
automotive fuel rating on a motor fuel dispenser shall be considered a separate 
violation. 

sec. 5.4. Records.
In addition to the right of inspection, the department may require that any 
records or other documents required to be maintained under Article 8614, 
Vernon's Texas Civil Statutes (1997) be submitted to the department upon 
request.

sec.5.5. Inspections. 
The fill pipe box cover for any automotive fuel storage tank or vessel supplying 
gasoline shall be permanently, plainly, and visibly marked in such a manner as 
to identify what type of gasoline each storage tank delivers to a particular 
motor fuel dispenser. For example, the markings may include the words, or 
abbreviation of the words, regular unleaded, unleaded plus, super unleaded, or a 
related color code scheme, such as white, blue and red. If the fill pipe box 
covers are marked by means of a color code scheme, a color code legend shall be 
conspicuously displayed at the place of business.
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 July 20, 1998.
TRD-9811423
Dolores Alvarado Hibbs
Deputy General Counsel
Texas Department of Agriculture
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-7541

TITLE 16. ECONOMIC REGULATION
PART I. Railroad Commission of Texas
CHAPTER 3.Oil and Gas Division
16 TAC sec.3.28
The Railroad Commission of Texas proposes an amendment to sec.3.28, relating to 
Potential and Deliverability of Gas Wells to be Ascertained and Reported. The 
commission proposes the amendments in order to exempt certain wells from 
testing, which will reduce the regulatory burden on industry without 
compromising the integrity of commission records. 
The proposed amendments revise the language in sec.3.28 to eliminate testing 
requirements for non-commingled wells with deliverabilities greater than 100 and 
less than 250 MCF a day in all types of gas fields with no special rules. 
Rita E. Percival, Oil and Gas Division planner, has determined that for each 
year of the first five years the rule as proposed will be in effect, the fiscal 
implications as a result of enforcing or administering the amended rule will be 
a net cost to the state of $10,834 in fiscal year 1998, resulting in a savings 
of $620 annually thereafter. In fiscal year 1998, forms revision will cost $874 
and computer reprogramming $10,580. An annual savings of $620 is based on 
reduced keyentry requirements. 
Currently 816 wells would be exempt from semi-annual testing under the proposed 
revisions. Because multiple wells scheduled for testing within a county are 
listed on a Form G-10, the effect of this proposed exemption on the number of G-
10 test report forms will be minimal. There will, however, be fewer records 
(each well's line of data is considered a "record") to be keyentered from the G-
10 reports by commission staff. At $0.38 keyentry cost per individual record, 
the annual savings in key entry is estimated at a maximum of $620 ($0.38/record 
X 816 records x 2 tests a year). 
There will be no effect on local government. 
There will be a potential savings to operators of the gas wells (those producing 
more than 100 but less than 250 Mcf/day in fields without special rules) that 
will no longer be required to report semi-annual tests. There will be no cost of 
compliance with the proposed rule amendment for the affected operators but there 
will be a potential savings to operators of gas wells for which semi-annual 
tests are no longer required. A small producer having a lower overhead may 
experience a greater relative savings than a larger producer with a higher 
overhead. 
Producers of eligible wells will save an estimated $1,000 annually if they no 
longer test those wells (two tests at an average of $500 each). Actual test 
costs may vary from $200 for a well in the Panhandle fields to as high as $5,000 
per well for a high-pressure, high-volume well where an operator opts for 24-
hour supervision of the test. However, depending on the reservoir in question, 
an operator may choose to test a well whether or not the commission requires a 
test. Consequently, there will not necessarily be a one-to-one relationship 
between the number of wells eligible for exemption and the number of wells not 
being tested. 
While the producer may save the cost of a foregone test, the well servicing 
company which would ordinarily have conducted the test will experience a lower 
demand for its services. For the average well test foregone by an operator who 
contracts out for testing, there will be an estimated reduction of $500 income 
for the well servicing contractor. 
Daniel W. Ortman, hearings examiner, Office of General Counsel, has determined 
that, for each year that the amendments are in effect, the public benefit 
anticipated as a result of adopting the amendments will be the economic benefit 
associated with reduced reporting to the commission and the lowered cost of 
recording the periodic testing of wells. 
The commission has not requested a local employment impact statement, pursuant 
to Texas Government Code, sec.2001.022(h). 
Comments may be submitted to Richard A. Varela, Assistant Director, 
Permitting/Production Services, Railroad Commission of Texas, P.O. Box 12967, 
Austin, Texas 78711-2967. The commission has determined that a 15 day comment 
period is reasonable due to the potential cost saving to operators. Comments 
will be accepted for 15 days after publication in the Texas Register. All 
comments should refer to Oil and Gas Docket Number 20-0219105. For further 
information, please call Richard A. Varela at (512) 463-6838. 
The commission proposes the amendments pursuant to Texas Natural Resources Code 
sec.sec.85.042(b), 85.202(b), 86.041, 86.042(1) which authorize the commission 
to prevent waste of oil and gas and to protect correlative rights. 
The Texas Natural Resources Code sec.sec.86.141, 86.142, 86.143 and 86.144 are 
affected by the proposed amendments. 

sec.3.28. Potential and Deliverability of Gas Wells To Be Ascertained and 
Reported. 
(a) (No change.) 
(b) After conducting the test required by subsection (a) of this section each 
operator of a gas well shall conduct an initial deliverability test not later 
than 10 days after the start of production for one or more legal purposes and 
shall report such initial deliverability test on the prescribed form. If a 72-
hour one-point back pressure test on a well connected to a sales line was 
conducted as provided in subsection (a) of this section, the same test may be 
used to determine initial deliverability, provided the test was conducted in 
accordance with subsection (c) of this section. After the initial deliverability 
test has been conducted, the following schedule for well testing applies. 
Nonassociated gas wells shall be tested semiannually. Associated 49(b) gas wells 
shall be tested annually. Wells with current reported deliverability of 100 Mcf 
a day or less are not required to test as long as deliverability and production 
remain at or below 100 Mcf a day but are required to file Form G-10 according to 
the instructions on the form. <nl>Wells with a deliverability greater than 100 
Mcf a day and less than or equal to 250 Mcf a day in fields without special 
field rules are not required to be tested as long as deliverability and 
production remain equal to or less than 250 Mcf a day.<ol> Wells operating under 
special field rules which conflict with this subsection shall test in accordance 
with the special field rules. Notwithstanding the above provisions on frequency 
of testing, gas wells commingling liquid hydrocarbons before metering must 
comply with the testing provisions applicable to such wells. All deliverability 
tests shall be conducted in accordance with subsection (c) of this section and 
the instructions printed on the Form G-10. The results of each test shall be 
attested to by the operator or his appointed agent. The first purchaser or its 
representative upon request to the operator shall have the right to witness such 
tests. Gas meter charts, printouts, or other documents showing the actual 
measurement of the gas produced or other data required to be recorded during any 
deliverability test conducted under this subsection shall be preserved as 
required by sec.3.1 of this title (relating to Organization Name To Be Filed and 
Records To Be Kept) (Statewide Rule 1). In the event that the first purchaser 
and the operator cannot agree upon the validity of the test results, then either 
party may request a retest of the well. The first purchaser upon request to the 
operator shall have the right to witness the retest. If either party requests a 
representative from the commission to witness a retest of the well, the results 
of a commission-witnessed test shall be conclusive for the purposes of this 
section until the next regularly scheduled test of the well. In the event a 
retest is witnessed by the commission, the retest shall be signed by the 
representative of the commission. In the event that downhole remedial work or 
other substantial production enhancement work is performed, or if a pumping 
unit, compressor, or other equipment is installed to increase deliverability of 
a well subject to the commission-witnessed testing procedure described in this 
subsection, a new test may be requested and shall be performed according to the 
procedure outlined in this subsection. 
(c)-(f) (No change.) 
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 17, 1998.
TRD-9811283
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas 
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-7008

16 TAC sec.3.107
The Railroad Commission of Texas proposes new sec.3.107, concerning the Texas 
Experimental Research and Recovery Activity Program (TERRA). The proposed new 
rule implements statutory provisions in Texas Natural Resources Code, Chapter 
93, enacted by the 74th legislature and effective January 1, 1996, for placement 
of oil or gas wells in the TERRA program, monitoring of TERRA wells, licensing 
of TERRA wells for research or production tests, and the plugging of TERRA 
wells. The proposed new rule also provides standards for estimating the cost of 
plugging TERRA wells. Participation in the TERRA program will be voluntary. 
Robert E. (Bobby) Heith, deputy assistant director of Well Plugging/TERRA, Oil 
and Gas Division, has determined that for each year of the first five years the 
rule as proposed will be in effect, there will be fiscal implications for state 
government in the form of revenue from fees required to be paid to the 
commission. The net amount of the impact will be zero, because the fees, 
specified in subsections (d)(2)(G) and (g), will be used by the commission to 
fund the activities of the TERRA program. There will be no fiscal implications 
to local government. 
Mr. Heith also has determined that the public benefit will consist of keeping 
non-polluting, mechanically sound wells from being plugged prematurely so that 
they might be brought back into production as the technological and economic 
environments change. There is some anticipated economic cost to small businesses 
or to individuals who choose to participate in this voluntary program in the 
form of fees which participants are required to pay to the commission. In 
particular, subsection (d)(2)(H) requires a payment from the mineral interest 
owner; the exact amount will be determined by the commission at the time of 
application but will not exceed 75% of the current estimated plugging cost. 
Subsection (d)(5) states the application fee will be forfeited if the commission 
takes action against the applicant for materially misstating the condition of a 
wellbore or wellsite and its compliance. 
For persons wishing to obtain a TERRA license, subsection (e) requires a 
nonrefundable fee of $50 per well or $500 per tract. The impact will therefore 
vary depending on the number of wells and/or tracts for which the person 
applies. Subsection (e)(1)(C) requires repayment of these fees if the license 
holder wishes to renew an existing license. Subsection (e)(2)(C) allows the 
license holder to retain one-half of the proceeds from well production and 
apportion the other half among the mineral interest ownership, unless otherwise 
stated in a lease or other legal document. 
The Commission has not requested a local employment impact statement, pursuant 
to Texas Government Code sec.2001.022(h). 
Comments on the proposal may be submitted to John Pierce Griffin, Office of 
General Counsel, Railroad Commission of Texas, P.O. Box 12967, Austin, Texas 
78711-2967. Comments will be accepted for 30 days after publication in the Texas 
Register and should refer to docket number 20-0216753. For more information, 
call Mr. Heith at (512) 463-7070.
The new rule is proposed under Texas Government Code, sec.2001.004(1), which 
requires the commission to adopt rules of practice stating the nature of all 
available formal and informal procedures, and Texas Natural Resources Code, 
Chapter 93, which creates the TERRA program and authorizes the commission to 
adopt all necessary rules for its implementation. 
The Texas Government Code, sec.2001.004(1), and the Texas Natural Resources 
Code, Chapter 93, are affected by the proposed new rule.

sec.3.107. Texas Experimental Research and Recovery Activity (TERRA).
(a) In enacting the Texas Experimental Research and Recovery Activity ("TERRA") 
Act (Acts 1995, 74th Legislature, Chapter 989, effective January 1, 1996; 
codified at Texas Natural Resources Code, Chapter 93), the legislature found 
that: 
(1) current oil and gas production practices will leave unrecovered much of the 
hydrocarbons originally in place under public and private land and that the 
economic activity flowing from the recovery of a significant portion of those 
hydrocarbons would be of great benefit to the future well-being of the people of 
this state; 
(2) the incentives and opportunities provided by the TERRA act, codified at 
Texas Natural Resources Code, Chapter 93, will enhance and encourage development 
of new technologies needed to identify and recover those hydrocarbons. The 
development of those technologies within the state would be of benefit to the 
state's economy; 
(3) mechanically sound, nonpolluting wells that would otherwise be plugged and 
abandoned are a valuable asset useful in the development of previously 
overlooked hydrocarbon deposits and new recovery technologies that may lead to a 
return of the wells to commercial production. Mineral interest owners should be 
encouraged voluntarily to preserve and use wells toward those ends by agreement 
with the state under the act; and 
(4) the activities provided by this act serve a governmental purpose and benefit 
the people of this state. 
(b) The purposes of the TERRA program are to: 
(1) acquire and hold an inventory of mechanically sound and nonpolluting 
wellbores to be licensed by the commission for use in gathering data, performing 
production tests, and developing and testing enhanced or advanced recovery 
techniques; 
(2) enable mineral interest owners to realize any commercial potential that may 
be found in the wellbores as technology and circumstances change; and 
(3) protect the environment by ensuring that TERRA wellbores posing a pollution 
threat or determined to be without economic value are properly plugged in 
accordance with state law and rules of the commission. 
(c) The following words and terms when used in this section shall have the 
following meanings, unless the context clearly indicates otherwise: 
(1) Hydrocarbons--Any oil, gas, condensate, or other liquid hydrocarbons 
produced from a well. 
(2) License holder--A person licensed by the commission to use a TERRA wellbore. 
(3) Mineral interest owner--An owner of a present possessory mineral interest or 
vested mineral interest that may become present and possessory. 
(4) Present possessory mineral interest--A mineral interest that includes the 
present right to use the land surface for exploration and production of 
minerals. 
(5) Production test--A test to determine whether a recovery technique will yield 
production in paying quantities. 
(6) Responsible person--A license holder or a person required by law, commission 
rules, or order to control or clean up wastes associated with oilfield 
operations. 
(7) Surface owner--An owner of an interest in the surface or top estate. 
(8) TERRA--Texas Experimental Research and Recovery Activity. 
(9) TERRA agreement--A written agreement between a present possessory mineral 
interest owner and the commission in which the present possessory mineral 
interest owner: 
(A) grants the commission an easement for wellbore access; 
(B) designates the commission as the agent of the present possessory mineral 
interest owner for the purposes of well maintenance and usage licensing; and 
(C) allows use of wellsite equipment for the purposes set forth in subsection 
(b) of this section. 
(10) Tract--The land area covered by either an oil lease or a gas proration unit 
established under commission rules. 
(11) Wellbore--A hole in the ground drilled in connection with the exploration, 
development, or production of oil, gas, or geothermal resources, including any 
tubular goods cemented in the well. 
(12) Wellsite equipment--Any production-related equipment or materials specific 
to a wellbore, including but not limited to motors, pumps, pumpjacks, fluid 
storage tanks, separators, compressors, wellheads casing, tubing, and rods. 
(d) The procedures to place a wellbore in the TERRA program are as follows: 
(1) A mineral interest owner may apply to place a wellbore in the TERRA program 
by completing and filing the TERRA application (Form W-8(a)) and attendant TERRA 
agreement and easement forms approved by the commission. The mineral interest 
owner thereby designates the commission as its agent and grants to the 
commission an easement for the sole purpose of maintaining and licensing a 
wellbore. The commission may also place wells scheduled for plugging with state 
funds into the TERRA program without first obtaining TERRA agreements, provided, 
however, that all required agreements are secured from the owners of the mineral 
interests prior to the issuance of any TERRA license. An application to place a 
wellbore in TERRA may be accepted by the commission if: 
(A) The TERRA agreement and easement is executed by the owner or owners of at 
least 50% of the present possessory mineral interest in all horizons penetrated 
by the wellbore; 
(B) The well and wellsite are in compliance with commission rules; 
(C) The wellbore is free of obstructions to the top most plug depth or total 
depth, whichever is applicable, and is of sound mechanical integrity. 
(2) At the time of application the applicant shall conduct a fluid level test 
and wireline gauge ring run. If the wellbore is at least 25 years old and has 
been inactive at least 10 years, a mechanical integrity test (MIT) must be 
conducted in accordance with the procedures specified on commission form H-15. 
The MIT shall be substituted for the fluid level test. The commission may 
require an MIT on any well listed in a TERRA application. In lieu of current 
tests, the commission may accept a successful MIT test conducted within the 
previous five years, or two consecutive successful fluid level tests, the most 
recent of which must have been conducted within the previous year, provided the 
results are on file with the commission. Any current test conducted to satisfy 
these conditions requires: 
(A) 24-hour prior notice to the commission's district office in the district in 
which the well is located; 
(B) a commission witness in attendance; 
(C) the test results properly documented on an applicable form; 
(D) all tubing and rods have been removed from the well and all annuli not 
circulated to ground surface with cement are plumbed to the ground surface and 
equipped with two-inch operable valves; 
(E) the applicant to file with his application copies of all wellbore records in 
his possession together with such records of the last operator of record; 
(F) the applicant to file with his application documentation demonstrating that 
the wellsite equipment and leasehold are free of any outstanding charges, liens, 
or obligations; and 
(G) the applicant to deposit with his application an amount equal to 75% of the 
current estimated plugging cost as calculated from the TERRA Estimated Plugging 
Cost Tables published by the commission. 
(3) The commission may consider factors for the approval or disapproval of a 
TERRA application, including but not limited to the following factors: 
(A) geographical location of wellsite or wellbore; 
(B) wellsite or wellbore accessibility; and 
(C) historical production problems inherent to the area. 
(4) The commission shall notify the applicant by written notice within 10 days 
of the date the application is received in the commission's Austin, Texas, 
stating; 
(A) the application is complete and is accepted for filing; or 
(B) the application is incomplete and more information is needed; or 
(C) the application has been denied according to criteria as described in 
subsection (d)(3). 
(e) While a well is in the TERRA program, the commission shall assume all well 
plugging duties for the well and, with the exception of the compliance 
requirements of a valid TERRA license holder, all pollution prevention and 
control responsibilities. The commission shall conduct annual inspections and 
appropriate tests to ensure the continuing integrity of the wellbore. The 
commission shall retain the necessary records to prove compliance with this 
requirement. 
(f) No person or entity shall conduct operations for the purposes of data 
collection, production testing, or research and recovery technique development 
on a TERRA wellbore without first obtaining a TERRA license, as described in 
this section, prior to the initiation of operations. The license holder shall 
conduct only those operations specifically approved and addressed in a valid 
license. All persons or entities applying for such a license shall possess a 
valid commission organization report of good standing and comply with all 
commission rules pertaining to pollution prevention and control. 
(g) A separate license application shall be submitted to the commission's Austin 
office for each oil lease or gas wellbore. The application shall be on a fully 
completed form W-8(b) and shall include the lesser of $50 per well or $500 per 
tract. At the discretion of the commission, additional information and/or 
material may be required of the applicant. 
(1) Upon approval of the application, the commission shall issue a license 
setting forth the items listed in sec.93.034(d) of the Natural Resources Code. 
The license will not be granted unless the applicant is in full compliance with 
all applicable commission rules. The license holder shall be considered the 
responsible person for the licensed wellbores for the duration of the license 
and until such time as any violations of commission rules or orders committed by 
the license holder during the term of the license are corrected. 
(2) The commission shall hold a hearing on a proposed use in accordance with 
commission rules, such as sec.3.37 (relating to statewide spacing rule) and 
sec.3.38 (relating to well densities). Such a hearing shall be conducted as a 
contested case pursuant to commission rules. 
(3) Applications to renew existing licenses shall be filed at the commission's 
Austin office at least 15 days before the expiration date of the current 
license. Renewal application shall be filed on Form W-8 (B) and shall be 
accompanied by the fees required in sec.93.033 of the Texas Natural Resources 
Code for licenses. 
(4) All licenses shall expire 60 days from the date of approval unless properly 
renewed. Unless awaiting renewal application approval, all operations governed 
by the license shall terminate upon license expiration. 
(5) After notice and opportunity for hearing, the commission may revoke the 
license of any license holder who violates any provisions of the license or a 
commission rule or order. The commission may seek administrative penalties and 
reimbursement of any costs incurred as a result of actions initiated to gain 
compliance. 
(6) Prior to production under a TERRA license, the license holder shall conduct 
a potential test on any licensed wellbores and submit a letter of request and 
completed well status report form for oil or gas, whichever is applicable, to 
the commission's Austin office within 15 days of test completion. Potential 
tests conducted to satisfy this requirement shall be initiated within 48 hours 
of initial production and conducted in accordance with standard commission test 
procedures. 
(7) A license holder may use, or may remove and safeguard, wellsite equipment in 
which it does not have a legal interest. Any person who is not a TERRA license 
holder and who removes wellsite equipment from a TERRA wellbore shall be subject 
to the regulatory jurisdiction of the Commission.
(8) Each license filed with the commission shall be considered public 
information and shall be available for public viewing during regular business 
hours. Pursuant to the Public Information Act, Texas Government Code, Chapter 
552, and Texas Natural Resources Code sec.93.032 (f). 
(9) Prior to the movement of produced oil, gas, or condensate from the lease, 
the license holder shall file an application for movement authority with and 
secure the required authorization from the commission. All hydrocarbons produced 
during the license period may be sold without the filing of a Producer's 
Certificate of Compliance and Authorization to Transport Oil or Gas From Lease 
form provided the production is properly reported on all appropriate commission 
forms. 
(10) Unless otherwise provided by a lease or other legal document, the license 
holder may retain one-half of the proceeds from the sale of production and shall 
apportion the remainder of the proceeds to the mineral interest ownership. 
Payments shall be promptly distributed as required under Texas Natural Resources 
Code, Chapter 91, Subchapter J. Acceptance of the proceeds by a mineral interest 
owner not bound by a TERRA agreement serves as a ratification and consent of the 
agreement and binds that owner to and for the remainder of the agreement. 
(h) Produced hydrocarbons that meet the criteria of this section and gain 
concurrent certification from the commission and the Texas State Comptroller's 
Office may qualify for an exemption from the severance tax imposed under Texas 
Tax Code, Chapter 201. The commission may grant certification administratively 
or after the acceptance and approval of a proper application. 
(1) The hydrocarbon production shall be established from wellbores under an 
active TERRA agreement and corresponding license, or from wellbores resuming 
production after formerly participating for a period of two or more years in the 
TERRA program to qualify for commission certification for severance tax 
exemption. 
(2) An application for a severance tax exemption shall be made only by the 
operator of a well and shall be submitted to the commission's Austin office. The 
application shall be in the form of a letter of request and shall include 
certified copies of all commission production reports verifying the qualifying 
production periods and any other documents the commission may require for 
qualification determination. 
(3) A commission designee may administratively approve or deny any application 
for severance tax exemption. If approved, the commission shall issue a 
certificate to the operator of the well. Such certificates are valid only with 
Comptroller approval of the exemption. The commission shall provide the 
Comptroller a copy of each certificate issued for a qualifying well. 
(4) A commission designee may administratively revoke any certification based on 
information attesting to non-eligibility of the well or the revocation of the 
TERRA license at the time certification is sought. 
(5) The commission may impose penalties against a person for: 
(A) submitting any document in support of a certificate, tax exemption, or tax 
credit that the person knows contains a material misstatement; and 
(B) submitting an application for tax exemption under a revoked certificate 
after receiving notice from the commission of the revocation. 
(i) A wellbore may be released from the TERRA program upon plugging and 
abandonment, with prior commission permission, or upon application for and 
commission approval of release. 
(1) A present possessory mineral interest owner of the tract in which the 
wellbore is located may submit a written request with a copy of the TERRA 
agreement covering the subject well or wells to the commission's Austin office 
requesting release of the wellbore from the TERRA program. The applicant shall 
state whether it is bound by a TERRA agreement or not. If approved, the 
effective date of release shall be no earlier than the day after any current 
TERRA license expires unless the applicant submits a written release from the 
license holder approving an earlier release date. An application by a mineral 
interest owner for release of a wellbore from the TERRA program shall have 
priority over new, amended, or renewed existing licenses. Such release is 
contingent upon: 
(A) the applicant being in compliance with all commission rules and permits 
required for the operation or plugging of the subject well; 
(B) the applicant assumes all plugging responsibility, including financial, for 
the well and cleanup of the site with the exception of the equipment 
reinstallation and land restoration responsibilities required of any valid TERRA 
license holder; and 
(C) if the applicant is a present possessory mineral interest owner bound by a 
TERRA agreement, the commission may either impose financial obligations not to 
exceed twice the estimated plugging costs as determined by the commission at the 
time the release is sought on the applicant to facilitate the release, or if the 
applicant agrees to plug the well and complies with all commission plugging 
rules, the commission may not require any payment upon application approval. 
(2) The owner or owners of at least 50% of the surface estate of wellbores that 
have been in the TERRA program in excess of seven years may request in writing 
that the commission plug the wells. Upon receipt of the request and, if required 
of the surface owners by the commission, any instrument verifying the legal 
ownership claimed as the basis of their standing from which to compel the 
plugging of the wellbore, the commission shall 
(A) notify all license holders and present possessory mineral interest owners 
who have signed a TERRA agreement of the request and potential commission 
action; and 
(B) if, within the latter of 90 days from the date of notice or the expiration 
of any existing license, the notified individuals fail to effect a release of 
the wellbore from the TERRA program, the commission shall schedule the wellbore 
for plugging. 
(3) At such time as the release of the last TERRA wellbore from a tract of land 
covered by a TERRA agreement, the commission shall file a release of all TERRA 
easements for that tract in the office of the clerk of the county in which that 
tract is located. 
(j) The commission shall estimate the anticipated plugging costs biannually, or 
at such time as conditions or information warrant adjustment. The costs shall be 
established using the most current information available from state-funded 
pluggings, and shall be established on a depth interval per commission district 
basis. Fees imposed by this section and per these estimated plugging costs shall 
be based on similar well depths in the corresponding commission district in 
which the well is located. 
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 17, 1998.
TRD-9811284
Mary Ross McDonald
Deputy General Counsel
Railroad Commission of Texas
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-7008

PART II. Public Utility Commission of Texas
CHAPTER 23.Substantive Rules
SUBCHAPTER H.Telephone
16 TAC sec.23.96
(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 Public Utility 
Commission of Texas or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Public Utility Commission of Texas (PUC) proposes the repeal of sec.23.96, 
relating to Telephone Directories. Project Number 19431 has been assigned to 
this proceeding. The Appropriations Act of 1997, HB 1, Article IX, Section 167 
(Section 167) requires that each state agency review and consider for readoption 
each rule adopted by that agency pursuant to the Government Code, Chapter 2001 
(Administrative Procedure Act). Such reviews shall include, at a minimum, an 
assessment by the agency as to whether the reason for adopting or readopting the 
rule continues to exist. The PUC held three workshops to conduct a preliminary 
review of its rules. As a result of these workshops, the PUC is reorganizing its 
current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 
23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer 
needed; (3) update existing rules to reflect changes in the industries regulated 
by the commission; (4) do clean-up amendments made necessary by changes in law 
and commission organizational structure and practices; (5) reorganize rules into 
new chapters to facilitate future amendments and provide room for expansion; and 
(6) reorganize the rules according to the industry to which they apply. As a 
result of this reorganization, sec.23.96 will be duplicative of proposed new 
sec.26.128 of this title (relating to Telephone Directories) in Chapter 26 
(Substantive Rules Applicable to Telecommunications Service Providers). 
Martin Wilson, assistant general counsel, Office of Regulatory Affairs, has 
determined that for each year of the first five-year period the repeal is in 
effect there will be no fiscal implications for state or local government as a 
result of enforcing or administering the repeal. 
Mr. Wilson also has determined that for each year of the first five years the 
repeal is in effect, the public benefit anticipated as a result of the repeal 
will be the elimination of a duplicative rule. There will be no effect on small 
businesses as a result of repealing this section. There is no anticipated 
economic cost to persons as a result of repealing this section. 
Mr. Wilson also has determined that for each year of the first five years the 
repeal is in effect there will be no impact on employment in the geographic area 
affected by the repeal of this section. 
Comments on the proposed repeal (16 copies) may be submitted to the Filing 
Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 
13326, Austin, Texas 78711- 3326, within 30 days after publication. All comments 
should refer to Project Number 19431, repeal of sec.23.96. 
This repeal is proposed under the Public Utility Regulatory Act, Texas Utilities 
Code Annotated sec.14.002 (Vernon 1998) (PURA), which provides the Public 
Utility Commission with the authority to make and enforce rules reasonably 
required in the exercise of its powers and jurisdiction. 
Cross Reference to Statutes: Public Utility Regulatory Act sec.14.002. 
sec.23.96.Telephone Directories.
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811380
Rhonda Dempsey
Rule Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: August 9, 1998
For further information, please call: (512) 936-7308

CHAPTER 26.Substantive Rules Applicable to Teleconnumincations Service Providers
SUBCHAPTER F.Regulation of Telecommunications Services
16 TAC sec.26.128
The Public Utility Commission of Texas (PUC or commission) proposes new 
sec.26.128, relating to Telephone Directories. The proposed new rule will 
address directory requirements applicable to dominant certificated 
telecommunications utilities or their affiliates, telecommunications utilities 
or their affiliates, and private for-profit publishers of residential telephone 
directories. Project Number 19431 has been assigned to this proceeding.
The Appropriations Act of 1997, HB 1, Article IX, Section 167 (Section 167) 
requires that each state agency review and consider for readoption each rule 
adopted by that agency pursuant to the Government Code, Chapter 2001 
(Administrative Procedure Act). Such reviews shall include, at a minimum, an 
assessment by the agency as to whether the reason for adopting or readopting the 
rule continues to exist. The PUC held three workshops to conduct a preliminary 
review of its rules. As a result of these workshops, the PUC is reorganizing its 
current substantive rules located in 16 Texas Administrative Code (TAC) Chapter 
23 to (1) satisfy the requirements of Section 167; (2) repeal rules no longer 
needed; (3) update existing rules to reflect changes in the industries regulated 
by the commission; (4) do clean-up amendments made necessary by changes in law 
and commission organizational structure and practices; (5) reorganize rules into 
new chapters to facilitate future amendments and provide room for expansion; and 
(6) reorganize the rules according to the industry to which they apply. Chapter 
26 has been established for all commission substantive rules applicable to 
telecommunications service providers. The duplicative sections of Chapter 23 
will be proposed for repeal as each new section is proposed for publication in 
the new chapter. 
This section is intended to replace sec.23.61(b) of this title, and sec.23.96 of 
this title (relating to Telephone Directories). The repeal of sec.23.96 is filed 
simultaneously with proposed new sec.26.128. The repeal of sec.23.61 is 
forthcoming, once its subsections are absorbed by new rules in Chapter 26. Until 
sec.23.61 is repealed, to the extent that sec.23.61(b) may be inconsistent with 
sec.26.128, proposed new sec.26.128 will control. 
The commission proposes making the telephone directory rule more user-friendly 
by adding catchlines to each subsection of sec.26.128, and each paragraph of 
subsection (b). Section 23.96(b)(4) has been divided into two paragraphs and 
subparagraphs in sec.26.128. 
The proposed new section reflects different section, subsection, and paragraph 
designations due to the reorganization of the rules. The Texas Register will 
publish these sections as all new text. Persons who desire a copy of the 
proposed new section as it reflects changes to the existing section in Chapter 
23 may obtain a redlined version from the commission's Central Records under 
Project Number 19431. 
New sec.26.128(a) defines the term private for-profit publisher. Section 
26.128(b) and (c) apply to telecommunication utilities or their affiliates.
Section 26.128(b) sets forth the requirements for publication of telephone 
directories. As mandated by the Public Utility Regulatory Act, Texas Utilities 
Code Annotated sec.55.202 and sec.55.203 (Vernon 1998) (PURA), proposed 
sec.26.128(c) requires that directories published by a telecommunications 
utility or affiliate of that utility must include names, addresses and telephone 
numbers of state senators and representatives who represent all or part of the 
geographical area for which the directory contains listings. Proposed sec.26.128 
primarily changes sec.23.96(d). As required by Act of May 28, 1997, 75th 
Legislature, Regular Session, Chapter 1186, sec.2, 1997 Texas General Laws 4574 
(SB 897), proposed sec.26.128(d) mandates new requirements regarding state 
agency, service and officials' listings. Private for-profit directory publishers 
are now mandated to conform with state telephone number listings developed by 
the Records Management Interagency Coordinating Council.
Martin Wilson, assistant general counsel, has determined that for each year of 
the first five-year period the proposed section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the section. 
Mr. Wilson also has determined that for each year of the first five years the 
proposed section is in effect the public benefit anticipated as a result of 
enforcing the section will be providing reliable, consistent and user-friendly 
telephone directories, particularly including the form of reference to state 
telephone number listings. There will be no effect on small businesses as a 
result of enforcing this section. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. 
Mr. Wilson also has determined that for each year of the first five years the 
proposed section is in effect there will be no impact on employment in the 
geographic area affected by implementing the requirements of the section. The 
commission staff will conduct a public hearing on this rulemaking under 
Government Code sec.2001.029 at the commission's offices on September 21, 1998 
at 9:30 a.m. in the Commissioners Hearing Room. 
Comments on the proposed new section (16 copies) may be submitted to the Filing 
Clerk, Public Utility Commission of Texas, 1701 North Congress Avenue, P.O. Box 
13326, Austin, Texas 78711-3326, within 30 days after publication. The 
commission invites specific comments regarding whether this rule, in combination 
with P.U.C. Substantive Rule sec.23.97(e)(1)(D) relating to interconnection, 
provides clear and adequate guidance to parties regarding the availability of 
directory listings to all Texas telephone customers. The commission also 
solicits comments on how directory assistance and listings may enhance or impede 
telecommunications competition. 
The commission invites specific comments regarding the costs associated with, 
and benefits that will be gained by, implementation of the proposed section. The 
commission will consider the costs and benefits in deciding whether to adopt the 
section. The commission also invites specific comments regarding the Section 167 
requirement as to whether the reason for adopting or readopting the rule 
continues to exist. All comments should refer to Project Number 19431.
This new section is proposed under PURA sec.14.002, which provides the Public 
Utility Commission with the authority to make and enforce rules reasonably 
required in the exercise of its powers and jurisdiction; and specifically, 
sec.55.202, sec.55.203 and Senate Bill 897. PURA sec.55.202 requires that 
directories published by a telecommunications utility or affiliate of that 
utility must include names, addresses and telephone numbers of state senators 
and representatives who represent all or part of the geographical area for which 
the directory contains listings. PURA sec.55.203 requires that private for-
profit publishers of residential telephone directories include toll-free and 
local telephone numbers of state agencies, state public services and state 
elected officials who represent all or part of the geographical area for which 
the directory contains listings in a clearly identified manner. Senate Bill 897 
requires that private for-profit publishers follow guidelines developed by the 
Records Management Interagency Coordinating Council for state telephone number 
listings. 
Cross Index to Statutes: Public Utility Regulatory Act sec.sec.14.002, 55.202, 
55.203, and Act of May 28, 1997, 75th Legislature, Regular Session, Chapter 
1186, sec. 2, 1997 Texas Gen. Laws 4574 (Senate Bill 897).

sec.26.128. Telephone Directories.
(a) Definition. In this section, the term "private for profit-publisher" shall 
mean a publisher, other than a telecommunications utility or its affiliate, of a 
telephone directory that contains residential listings and that is distributed 
to the public at minimal or no cost. 
(b) Requirements. This subsection applies to any telecommunications utility 
found to be dominant as to local exchange telephone service or its affiliate 
which publishes a directory on behalf of such telecommunications utility. 
(1) Annual Publication. Telephone directories shall be published annually. 
Except for customers who request that information be unlisted, directories shall 
list the names, addresses, and telephone numbers of all customers receiving 
local phone service, including customers of other certificated 
telecommunications utilities in the geographic area covered by that directory. 
Numbers of pay telephones need not be listed. 
(2) Distribution. Upon issuance, a copy of each directory shall be distributed 
at no charge for each customer access line served by the telecommunications 
utility in the geographic area covered by that directory and, if requested, one 
extra copy per customer access line shall be provided at no charge. A 
telecommunications utility shall also distribute copies of directories pursuant 
to any agreement reached with another certificated telecommunications utility. A 
copy of each directory shall be furnished to the commission. 
(3) Front cover requirements. The name of the telecommunications utility, an 
indication of the area included in the directory, and the month and the year of 
issue shall appear on the front cover. Information pertaining to emergency calls 
such as for the police and fire departments shall appear conspicuously in the 
front part of the directory pages. 
(4) Required instructions. The directory shall contain instructions concerning: 
(A) placing local and long distance calls on the network of the 
telecommunications utility for which the directory is issued; 
(B) calls to the telecommunications utility's repair and directory assistance 
services, and locations; and 
(C) telephone numbers of the business offices of the telecommunications utility 
as may be appropriate to the area served by the directory. 
(5) Sample long distance rates. It shall also contain a section setting out 
sample long distance rates within the long distance service area, if any, on the 
network of the telecommunications utility for which the directory is issued, 
applicable at the time the directory is compiled for publication, with a clear 
statement that the published rates are effective as of the date of compilation. 
(6) Directory assistance. Each telecommunications utility shall list each 
customer with its directory assistance within 72 hours after service connection 
(except those numbers excluded from listing in paragraph (1) of this subsection) 
in order that the directory assistance operators can provide the requested 
telephone numbers based on customer names and addresses. 
(7) Non-assigned numbers. All non-assigned telephone numbers in central offices 
serving more than 300 customer access lines shall be intercepted unless 
otherwise approved by the commission. 
(8) Disconnected numbers. Disconnected residence telephone numbers shall not be 
reassigned for 30 days and disconnected business numbers shall not be 
reassigned, unless requested by the customer, for 30 days or the life of the 
directory, whichever is longer, unless no other numbers are available to provide 
service to new customers. 
(9) Incorrect listings. If a customer's number is incorrectly listed in the 
directory and if the incorrect number is a working number and if the customer to 
whom the incorrect number is assigned requests, the number of the customer to 
whom the incorrect number is assigned shall be changed at no charge. If the 
incorrect number is not a working number and is a usable number, the customer's 
number shall be changed to the listed number at no charge if requested. 
(10) Changing telephone numbers to a group of customers. When additions or 
changes in plant or changes to any other certificated telecommunications 
utility's operations necessitate changing telephone numbers to a group of 
customers, at least 30 days' written notice shall be given to all customers so 
affected even though the addition or changes may be coincident with a directory 
issue. 
(11) Customer addresses. At the customer's option the directory shall list 
either the customer's street address or post office box number. A charge can be 
imposed upon those customers who desire both listings.
(c) Listings for government representatives. A telecommunications utility or an 
affiliate of that utility that publishes a residential or business telephone 
directory that is distributed to the public shall publish the name, address, and 
telephone number of each state senator or representative who represents all or 
part of the geographical area for which the directory contains listings. 
(d) State listing requirements. Any private for-profit publisher and any 
telecommunications utility or its affiliate that publishes a residential 
telephone directory shall comply with the following requirements: 
(1) A telephone directory shall contain a listing of each toll-free and local 
telephone number for each of the following: 
(A) state agencies; 
(B) state public services; and 
(C) elected state officials who represent all or part of the geographical area 
for which the directory contains listings. 
(2) The directory shall include the information required in paragraph (1) of 
this subsection from the most current edition of the State of Texas Telephone 
Directory prepared and issued by the General Services Commission of the State of 
Texas and those modifications to the State of Texas Telephone Directory that are 
available upon request from the General Services Commission of Texas. 
(3) Private for-profit publishers shall contact the General Services Commission 
of Texas in writing to determine which issue of the State of Texas Telephone 
Directory is most current and to obtain the modifications referred to in 
paragraph (2) of this subsection. The General Services Commission shall respond 
within 30 days of receiving the request. 
(4) The listings required by paragraph (1) of this subsection: 
(A) may be located at the front of the directory or, if not located at the front 
of the directory, shall be referenced clearly on the inside page of the cover or 
on the first page following the cover before the main listing of residential and 
business telephone numbers; 
(B) shall be labeled "GOVERNMENT OFFICES - STATE" in 24 point type; 
(C) shall be bordered or shaded in such a way (on the three unbound sides with a 
border) that will distinguish the state listings from the other listings; 
(D) shall be included in the directory at no cost to the agency or official; 
(E) shall be in compliance with the categorization developed by the Records 
Management Interagency Coordinating Council. The categorization shall be 
available upon request from the General Services Commission. The listings shall 
be arranged in two ways: 
(i) alphabetically by subject matter of state agencies; and 
(ii) alphabetically by agency and public service name. 
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811381
Rhonda Dempsey
Rules Coordinator
Public Utility Commission of Texas
Earliest possible date of adoption: August 9, 1998
For further information, please call: (512) 936-7308

PART IX. Texas Lottery Commission
CHAPTER 401.Administration of State Lottery Act
SUBCHAPTER C.Practice and Procedure
16 TAC sec.401.229
The Texas Lottery Commission proposes new sec.401.229, concerning Administration 
of State Lottery Act. The proposed new section allows the Commission to enter 
default judgments in cases where the applicant or licensee fails to appear for a 
hearing. 
Richard Sookiasian, Budget Analyst, has determined that, for each of the first 
five years that the rule will be in effect, there will be no foreseeable fiscal 
implication for state or local government as a result of enforcing or 
administering the rule. 
Mr. Sookiasian, also has determined that, for each year of the first five years 
that the rule will be in effect, there will not be a foreseeable economic costs 
to person or small businesses required to comply with the rule. In addition, the 
proposed amendment should not adversely affect any local economy. 
Kimberly L. Kiplin, General Counsel, has determined that the public benefits 
expected as a result of the adoption of the rule is more efficient 
administration of the Commission's rules in hearings.
Written comments on the proposal may be submitted to Katherine Minter Cary, 
Assistant General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, 
Texas 78761-6630 or may be faxed to (512) 344-5189. 
The amendment is proposed under Texas Revised Civil Statutes, Article 179d, sec. 
24 and sec. 16, subsections (a) and (d) which authorize the Texas Lottery 
Commission to adopt rules for the enforcement and administration of the Bingo 
Enabling Act and the Texas Government Code, sec. 467.102 which authorizes the 
Texas Lottery Commission to adopt rules for the enforcement and administration 
of Texas Government Code Chapter 467 and the laws under the Commission's 
jurisdiction. 
The following statutes are effected by the proposed amendment: Texas Revised 
Civil Statutes, Article 179d and Texas Government Code, Chapter 466.

sec.401.229. Default Hearings. 
(a) If an applicant or licensee fails to appear in person or by authorized 
representative on the day and at the time set for hearing, the Administrative 
Law Judge, upon motion by the Commission, shall enter a default judgment in the 
matter adverse to the applicant or licensee who has failed to attend the 
hearing. 
(b) For purposes of this section, default judgment shall mean the issuance of a 
proposal for decision against the applicant or licensee in which the factual 
allegations against the applicant or licensee contained in the Notice of Hearing 
shall be admitted as prima facie evidence, and deemed admitted as true, without 
any requirements for additional proof to be submitted by the Commission. 
(c) Any default judgment granted under this section will be entered on the basis 
of the factual allegations contained in the Notice of Hearing, and upon the 
proof of proper notice to the defaulting party opponent. For purposes of this 
section proper notice means notice sufficient to meet the provisions of the 
Government Code sec.sec.2001.051, 2001.052, 2001.054. Such notice also shall 
include the following language in capital letters in boldface type: FAILURE TO 
APPEAR AT THE HEARING WILL RESULT IN THE ALLEGATIONS AGAINST YOU SET OUT IN THE 
NOTICE OF HEARING BEING ADMITTED AS TRUE AND THE RELIEF REQUESTED MAY BE GRANTED 
BY DEFAULT. 
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 13, 1998.
TRD-9811071
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 344-5113

CHAPTER 402.Bingo Regulation and Tax
16 TAC sec.402.567
The Texas Lottery Commission proposes an amendment to sec.402.567, concerning 
Bingo Regulation and Tax. The proposed new subsection will establish by rule the 
abolition date of the Bingo Advisory Committee. 
Richard Sookiasian, Budget Analyst, has determined that, for each of the first 
five years that the rule will be in effect, there will be no foreseeable 
additional fiscal implication for state or local government as a result of 
enforcing or administering the amendment to the rule. 
Mr. Sookiasian, also has determined that, for each year of the first five years 
that the rule will be in effect, there will not be a foreseeable economic cost 
to persons or small businesses required to comply with the rule. In addition, 
the proposed amendment should not adversely affect any local economy. 
William L. Atkins, Acting Charitable Bingo Operations Director, has determined 
that the public benefits expected as a result of the adoption of the amendment 
to the rule is a continuation of efficient regulation and administration of 
Charitable Bingo in the state based on the input provided by the Bingo Advisory 
Committee. 
Written comments on the proposal may be submitted to Katherine Minter Cary, 
Assistant General Counsel, Texas Lottery Commission, P.O. Box 16630, Austin, 
Texas 78761-6630 or may be faxed to (512) 344-5189. 
The amendment is proposed under Texas Government Code, sec.2110.008, Texas 
Revised Civil Statutes, Article 179d, sec.43 and sec.16(a) which authorize the 
Texas Lottery Commission to adopt rules for a Bingo Advisory Committee and for 
the enforcement and administration of the Bingo Enabling Act and the Texas 
Government Code, sec. 467.102 which authorizes the Texas Lottery Commission to 
adopt rules for the enforcement and administration of Texas Government Code 
Chapter 467 and the laws under the Commission's jurisdiction. The following 
statutes are effected by the proposed amendment: Texas Revised Civil Statutes, 
Article 179d. 

sec.402.567. Bingo Advisory Committee. 
(a)-(h) (No change.) 
<nl>(i)<ol> <nl> Duration. The Bingo Advisory Committee will automatically 
abolish and cease to exist on March 6, 2003. The Bingo Advisory Committee shall 
only remain in existence beyond March 6, 2003, if the Commission affirmatively 
votes to continue the Bingo Advisory Committee in existence. This proposed 
amendment to the rules has been reviewed by legal counsel and has been found to 
be within the Texas Lottery Commission's statutory authority to adopt. <ol>
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 13, 1998.
TRD-9811073
Kimberly L. Kiplin
General Counsel
Texas Lottery Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 344-5113

TITLE 19. EDUCATION
PART II. Texas Education Agency
CHAPTER 92.Interagency Coordination
SUBCHAPTER AA. Memoranda of Understanding
19 TAC sec.92.1001
The Texas Education Agency (TEA) proposes new sec.92.1001, concerning memorandum 
of understanding for coordinated services to children and youth. Section 92.1001 
provides for a memorandum of understanding (MOU) among various state agencies, 
including the TEA, to establish a system of community resource coordination 
groups. The intent of the MOU is to ensure coordination between agencies to 
serve children and youth. Proposed new 19 TAC sec.92.1001 adopts by reference 
the MOU adopted by the Texas Department of Protective and Regulatory Services in 
40 TAC sec.736.701. 
The State Board of Education adopted 19 TAC sec.75.196, Memorandum of 
Understanding for Multiproblem Children and Youth, in April 1989. Section 75.196 
was effective May 3, 1989, and repealed during the 1995-96 sunset review of 
board rules. Proposed new 19 TAC sec.92.1001 adopts the MOU by rule as required 
under the Family Code, sec.264.003, as added by Acts 1995, 74th Texas 
Legislature. The MOU provides a definition of children and youth with multi-
agency needs and addresses the areas of financial and statutory responsibilities 
of each agency, interagency cost-sharing, elimination of duplicative services, 
interagency dispute resolution, and composition of the local level groups 
designated to facilitate coordination. 
Pat Pringle, associate commissioner for school support and continuing education, 
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 new section. 
Mr. Pringle and Criss Cloudt, associate commissioner for policy planning and 
research, have 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 ensuring that school districts can access other agencies for assistance 
in serving children and youth. The MOU will also increase the accountability for 
services to children and youth, resulting in more equitable distribution of 
responsibility among agencies. There will not be an 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 Criss Cloudt, Policy Planning and 
Research, 1701 North Congress Avenue, Austin, Texas 78701, (512) 463-9701. 
Comments may also be submitted electronically to rules@tmail.tea.state.tx.us. 
All requests for a public hearing on the proposed section submitted under the 
Administrative Procedure Act must be received by the commissioner of education 
not more than 15 calendar days after notice of a proposed change in the section 
has been published in the Texas Register. 
The new section is proposed under the Family Code, sec.264.003, as added by Acts 
1995, 74th Texas Legislature, Chapter 20, sec.1, which authorizes the adoption 
by rule of a joint memorandum of understanding with various agencies to 
implement a system of local level interagency staffing groups to coordinate 
services for multiproblem children and youth. 
The new section implements the Family Code, sec.264.003. 

sec.92.1001. Memorandum of Understanding for Coordinated Services to Children 
and Youth. 
Implementation of a system of community resource coordination groups to 
coordinate services for children and youth among the Texas Department of 
Protective and Regulatory Services, Texas Commission for the Blind, Texas 
Department of Health, Texas Department of Human Services, Texas Department of 
Mental Health and Mental Retardation, Texas Education Agency, Texas Interagency 
Council on Early Childhood Intervention, Texas Juvenile Probation Commission, 
Texas Rehabilitation Commission, and Texas Youth Commission is contained in the 
memorandum of understanding for coordinated services to children and youth, 
which is adopted by reference as a rule of the Texas Education Agency. The 
complete text of the memorandum of understanding may be found in the rules of 
the Texas Department of Protective and Regulatory Services, 40 TAC sec.736.701, 
concerning memorandum of understanding for coordinated services to children and 
youth. A copy of the memorandum of understanding is available for examination 
during regular office hours, 8 a.m. to 5 p.m., except holidays, Saturdays, and 
Sundays, at the Texas Education Agency, 1701 North Congress Avenue, Austin, 
Texas 78701. 
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 July 20, 1998.
TRD-9811414
Criss Cloudt
Associate Commissioner, Policy Planning and Research
Texas Education Agency
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-9701

TITLE 22. EXAMINING BOARDS
PART XIV. Texas Optometry Board
CHAPTER 277.Practice and Procedure
22 TAC sec.277.1
The Texas Optometry Board proposes an amendment to sec.277.1, to reference a 
complaint form, rather than printing the form in its entirety within the rule. 
This will allow housekeeping changes to be made to the complaint form without 
formal notice. 
Lois Ewald, executive director of the Texas Optometry Board, has determined that 
for the first five-year period the amended rule is in effect, there will be no 
fiscal implications for state and local governments as a result of enforcing or 
administering the rule. 
Lois Ewald also has determined that for each of the first five years the amended 
rule is in effect, the public benefit anticipated as a result of enforcing the 
amended rule is that the general public will receive current and efficient 
information for filing complaints against optometrists. It has also been 
determined that there will be no cost to the public over the first five years as 
a result of enforcing or administering the rule. Since the amendment imposes no 
duties on small businesses, there will be no adverse economic effects on small 
businesses.
Comments on the proposal may be submitted to Lois Ewald, Executive Director, 
Texas Optometry Board, 333 Guadalupe Street, Suite 2-420, Austin, Texas 78701-
3942. The deadline for furnishing comments is September 1, 1998. 
The amendment is proposed under the Texas Optometry Act, Texas Civil Statutes, 
Article 4552, sec.sec.2.14, 4.06, and 4.07. 
The Texas Optometry Board interprets sec.2.14 as authorizing the adoption of 
procedural and substantive rules for the regulation of the optometric 
profession. The Board interprets sec.4.06 as authorizing the interpretation of 
how the Board should handle complaints in general, and the Board interprets 
sec.4.07 as authorizing the investigation and disposition of complaints 
received.

sec.277.1. Complaint Procedures. 
(a) Filing complaints. Complaints may be filed with the agency in person at the 
board's office, or in any written form, including submission of a completed 
complaint form. The board shall adopt <nl>a<ol> [the following] form as its 
official complaint form which shall be maintained at the board's office for use 
at the request of any complainant. At a minimum, all complaints shall contain 
information necessary for the proper processing of the complaint by the board, 
including, but not limited to:
(1) complainant's name, address, and phone number; 
(2) name, address , and phone number of the optometrist, therapeutic 
optometrist, or other person, firm, or corporation, if known; 
(3) date, time, and place of occurrence of alleged violation; and 
(4) complete description of incident giving rise to the complaint. 
[Figure:22TAC277.1(a)(4)]
(b)-(c) (No change.) 
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 16, 1998.
TRD-9811254
Lois Ewald
Executive Director
Texas Optometry Board
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-8502

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 97. Communicable Diseases
The Texas Department of Health (department) proposes repeal of existing 
sec.sec.97.131 - 97.134, amendments to sec.sec.97.1 - 97.4, 97.6, 97.139, and 
proposes new sec.sec.97.131 - 97.134, and 97.145 - 97.146 concerning reporting 
requirements for sexually transmitted diseases (STD), which include Acquired 
Immune Deficiency Syndrome (AIDS), chancroid, Chlamydia trachomatis infection, 
gonorrhea, Human Immunodeficiency Virus (HIV) infection, and syphilis. The 
proposed repeal, amendments, and new sections involve major revisions in the 
format and content of the sections. The proposed sections will enable the 
reporting sources to more clearly identify the conditions and diseases which 
must be reported, define the minimal reportable information on these conditions 
and diseases, and describe the procedures for reporting to the local health 
authority or the department. 
Specifically, the amendments to sec.sec.97.1 - 97.4, 97.139 remove the 
definitions of HIV and AIDS from the general communicable disease definition 
section to eliminate redundancy, consistently define STD to include HIV and 
AIDS, and consistently list all the reportable STD together and alphabetically 
as AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, HIV infection, 
and syphilis. All definitions are numbered in new Texas Register format to 
comply with the 1 Texas Administrative Code sec.91.1, effective February 17, 
1998. An amendment to sec.97.139 deletes a reference to an obsolete phone 
number. The proposed new sec.97.131 combines and modifies the definitions of HIV 
and AIDS, adds a definition of other reportable STD which is consistent with the 
definition of these diseases by the Centers for Disease Control and Prevention, 
and allows for the definitions to reflect changes in testing technologies and 
disease knowledge when they occur in the future. The proposed new sec.sec.97.132 
- 97.134 combines all reportable STD, eliminating separate sections for HIV and 
AIDS. The proposed changes allow for similar information to be reported on all 
STD, reducing the need for required reporters to submit different information 
for each STD. Specifically, all reportable STD including HIV and AIDS will be 
reported by name along with other minimally required information, regardless of 
the age of the patient. The proposed changes would eliminate HIV infection 
reporting by a numerical code for persons aged 13 and older. The proposed 
changes require reporting of all CD4+ T lymphocyte counts instead of the 
previous requirement for reporting only CD4 + T lymphocyte counts of less than 
200 cells/microliter or CD4+ T lymphocyte percentages of less than 14%. This 
expanded reporting requirement for CD4+ T lymphocyte counts beyond the use of 
these counts just as an indicator of AIDS, will allow for better monitoring of 
disease trends at all stages of HIV infection not just when the CD4+ T 
lymphocyte count is indicative of AIDS. 
The proposed amended sec.97.134 and the proposed new sec.97.146 add language on 
the confidentiality of all case reports and test results and sec.97.146 adds 
references to the penalties for release or disclosure of a confidential test 
result. The proposed new sec.97.145 provides for certain state-funded clinics to 
offer voluntary and affordable counseling and testing programs for HIV infection 
or refer clients to such programs. This section also stipulates that all HIV 
testing sites funded by the department shall offer confidential and anonymous 
HIV testing on site. 
Martin Powel, Chief of Staff Services, Associateship for Disease Control and 
Prevention, has determined that for the first five-year period the sections are 
in effect there will be no fiscal implications for state and local government as 
a result of enforcing or administering the sections. 
Mr. Powel 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 enforcing 
the sections will be improved reporting of these STD including AIDS and HIV 
infection, leading to better and more timely treatment of these serious health 
conditions. In addition, improved reporting of these diseases will produce data 
which will be more uniform, accurate, reliable, and complete and will enable 
improved planning for and targeting of disease prevention activities and the 
provision of clinical and social services. There is no anticipated additional 
cost to small businesses nor to persons who may be required to comply with the 
sections as proposed. There is no anticipated effect on local employment. 
Comments on the proposal may be submitted to Sharilyn K. Stanley, M.D., Acting 
Chief, Bureau of HIV and STD Prevention, Texas Department of Health, 1100 West 
49th Street, Austin, Texas, 78756, (512) 490-2505. Comments will be accepted for 
30 days after publication in the Texas Register. 

SUBCHAPTER A. Control of Communicable Diseases
25 TAC sec.sec.97.1-97.4, 97.6
The amendments are proposed under the Communicable Disease Prevention and 
Control Act, Health and Safety Code, Chapter 81, which provides the Board of 
Health with the authority to adopt rules concerning the reporting of 
communicable diseases; new sections are also proposed under the Human 
Immunodeficiency Virus Services Act, and sec.12.001, which provides the Texas 
Board of Health with the authority to adopt rules for the performance of every 
duty imposed by law on the Texas Board of Health, the Texas Department of 
Health, and the Commissioner of Health. 
The amendments affect Chapters 81 of the Health and Safety Code. 

sec.97.1. Definitions. 
The following words and terms, when used in <nl>this chapter<ol> [these 
sections], shall have the following meanings, unless the context clearly 
indicates otherwise. 
<nl>(1)<ol> Act - Communicable Disease Prevention and Control Act, Health and 
Safety Code, Chapter 81. 
[AIDS - Acquired immune deficiency syndrome as defined by the Centers for 
Disease Control and Prevention of the United States Public Health Service. The 
publication designating the most current definition may be requested from: Texas 
Department of Health, HIV/STD Epidemiology Division, 1100 West 49th Street, 
Austin, Texas 78756, (512) 490-2555 or 1-800-299-2973.] 
<nl>(2)<ol> Carrier - An infected person or animal that harbors a specific 
infectious agent in the absence of discernible clinical disease and serves as a 
potential source or reservoir for the infection of man. 
<nl>(3)<ol> Case - As distinct from a carrier, the term "case" is used to mean a 
person in whose tissues the etiological agent of a communicable disease is 
lodged and which usually produces signs or symptoms of disease. Evidence of the 
presence of a communicable disease may also be revealed by laboratory findings. 
<nl>(4)<ol> Commissioner - Commissioner of Health.
<nl>(5)<ol> Communicable disease - An illness due to an infectious agent or its 
toxic products which is transmitted directly to a well person from an infected 
person or animal, or indirectly through an intermediate plant or animal host, 
vector, or the inanimate environment.
<nl>(6)<ol> Contact - A person or animal that has been in such association with 
an infected person or a contaminated environment so as to have had opportunity 
to acquire the infection. 
<nl>(7)<ol> Department - Texas Department of Health.
<nl>(8)<ol> Disinfection - Destruction of infectious agents outside the body by 
chemical or physical means directly applied.
<nl>(9)<ol> Epidemic or outbreak - The occurrence in a community or region of a 
group of illnesses of similar nature, clearly in excess of normal expectancy, 
and derived from a common or a propagated source. 
<nl>(10)<ol> Exposure--A situation or circumstance in which there is significant 
risk of becoming infected with the etiologic agent for the disease involved. 
<nl>(11)<ol> Health authority - A physician designated to administer state and 
local laws relating to public health under the Local Public Health 
Reorganization Act, Health and Safety Code, Chapter 121. The health authority, 
for purposes of these sections, may be: 
(A) a local health authority: 
(i) director of a local health department; or 
(ii) physician as appointed by the Commissioner of Health if there is no 
director of a local health department. 
(B) a regional director of the Texas Department of Health if no physician has 
been appointed by the Commissioner of Health as a local health authority. 
[HIV - Human immunodeficiency virus.] 
[HIV infection - Infection with HIV confirmed by one of the following laboratory 
procedures:] 
[(A) a serum specimen that is repeatedly reactive for HIV antibody by a licensed 
screening test (e.g. enzyme-linked immunosorbent assay (ELISA)) and the same or 
an additional serum specimen that is positive by a subsequent test (e.g. Western 
blot, immunofluorescence assay); or] 
[(B) a positive test for serum HIV antigen; or]
[(C) a positive lymphocyte culture confirmed by an HIV specific antigen test 
(not just reverse transcriptase detection); or]
[(D) by in situ hybridization technique using a Deoxyribonucleic acid (DNA) 
probe (e.g. polymerase chain replication (PCR)).]
<nl>(12)<ol> Hospital laboratory - Any laboratory that performs laboratory test 
procedures for a patient of a hospital either as a part of the hospital or 
through contract with the hospital. 
<nl>(13)<ol> Outbreak - See definition of epidemic in this section. 
<nl>(14)<ol> Penicillin resistant Streptococcus pneumoniae - Streptococcus 
pneumoniae with a penicillin minimum inhibitory concentration (MIC) of 2 
&micro;g/mL or greater (high level), and an intermediate level resistance of 
0.1- 1 &micro;g/mL. 
<nl>(15)<ol> Physician - A person licensed by the Texas State Board of Medical 
Examiners to practice medicine in Texas. 
<nl>(16)<ol> Regional director - The physician who is the chief administrative 
officer of a region as designated by the department under the Local Public 
Health Reorganization Act, Health and Safety Code, Chapter 121. 
<nl>(17)<ol> Report - Information that is required to be provided to the 
department. 
<nl>(18)<ol> Report of a disease - The notification to the appropriate authority 
of the occurrence of a specific communicable disease in man or animals, 
including all information required by the procedures established by the 
department. 
<nl>(19)<ol> Reportable disease - Any disease or condition that is required to 
be reported under the Act or by these sections. See sec.97.3 of this title 
(relating to What Condition To Report and What Isolates To Report or Submit). 
Any outbreak, exotic disease, or unusual group expression of illness which may 
be of public health concern, whether or not the disease involved is listed in 
sec.97.3 of this title, shall be considered a "reportable disease."
<nl>(20)<ol> Significant risk - A determination relating to a human exposure to 
an etiologic agent for a particular disease, based on reasonable medical 
judgements given the state of medical knowledge, relating to the following: 
(A) nature of the risk (how the disease is transmitted); 
(B) duration of the risk (how long an infected person may be infectious); 
(C) severity of the risk (what is the potential harm to others); and 
(D) probability the disease will be transmitted and will cause varying degrees 
of harm. 
<nl>(21)<ol> School administrator - The city or county superintendent of 
schools, or the principal of any school not under the jurisdiction of a city or 
county board of education. 
<nl>(22)<ol> Specimen Submission Form G-1 - A multipurpose specimen submission 
form available from the Texas Department of Health, Bureau of Laboratories, 1100 
West 49th Street, Austin, Texas, 78756-3199. 
<nl>(23)<ol> Vancomycin resistant Enterococcus species - Enterococcus species 
with a vancomycin MIC greater than 16 micrograms per milliliter (&micro;g/mL) or 
a disk diffusion zone of 14 millimeters or less. Vancomycin intermediate 
Enterococcus (eg, Enterococcus casseliflavis and Enterococcus gallinarum ) with 
a vancomycin MIC of 8 &micro;g/mL - 16 &micro;g/mL do not need to be reported. 
<nl>(24)<ol> Vancomycin resistant Staphylococcus aureus and vancomycin resistant 
coagulase negative Staphylococcus species - For the purposes of reporting, 
Staphylococcus aureus or a coagulase negative Staphylococcus species with a 
vancomycin MIC of 8 &micro;g/mL or greater. 

sec.97.2. Who Shall Report.
(a)-(c) (No change.) 
(d) School authorities, including a superintendent, principal, teacher, school 
health official, or counselor of a public or private school and the 
administrator or health official of a public or private institution of higher 
learning should report as required by these sections those students attending 
school who are suspected of having a reportable disease. School authorities are 
exempt from reporting sexually transmitted diseases, <nl> including acquired 
immune deficiency syndrome (AIDS) and human immunodeficiency virus (HIV) 
infection<ol>, in accordance with sec.97.132[(b)](5) (relating to Who Shall 
Report Sexually Transmitted Diseases.) 
(e)-(g) (No change.) 

sec.97.3. What Condition To Report and What Isolates To Report or Submit. 
(a) Identification of reportable conditions. 
(1) (No change.) 
(2) Repetitive test results from the same patient do not need to be reported 
except for mycobacterial infections <nl>and sexually transmitted diseases, 
including AIDS and HIV infection<ol>. 
(b) (No change.) 
(c) Minimal reportable information requirements. The minimal information that 
shall be reported for each disease is as follows: 
(1) (No change.) 
<nl>(2)<ol> AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, HIV 
infection, and syphilis shall be reported in accordance with sec.sec.97.132 - 
97.135 of this title (relating to Sexually Transmitted Diseases, including AIDS 
and HIV infection);
[(2) for AIDS and HIV infection - shall be reported in accordance with 
sec.sec.97.132 - 97.134 of this title (relating to Sexually Transmitted Diseases 
including AIDS and HIV infection);]
[(3) for chancroid, Chlamydia trachomatis infection, gonorrhea, and syphilis 
shall be reported in accordance with sec.sec.97.132 - 97.135 of this title 
(relating to Sexually Transmitted Diseases including AIDS and HIV);] 
<nl>(3)<ol> [(4)] for tuberculosis - name, present address, present telephone 
number, age, date of birth, sex, race and ethnicity, physician, disease, type of 
diagnosis, date of onset, antibiotic susceptibility results, initial antibiotic 
therapy, and any change in antibiotic therapy; 
<nl>(4)<ol> [(5)] for all other reportable conditions listed in subsection 
(b)(1) of this section -name, present address, present telephone number, age, 
date of birth, sex, race and ethnicity, physician, disease, type of diagnosis, 
date of onset, address, and telephone number;
<nl>(5)<ol> [(6)] for all isolates of Enterococcus species and all isolates of 
Streptococcus pneumoniae regardless of resistance patterns - numeric totals at 
least quarterly; and 
<nl>(6)<ol> [(7)] for vancomycin resistant Enterococcus species; penicillin 
resistant Streptococcus pneumoniae; vancomycin resistant Staphylococcus aureus; 
vancomycin resistant coagulase negative Staphylococcus species, - name, city of 
submitter, date of birth or age, sex, anatomic site of culture, and date of 
culture. 
(d) (No change.) 

sec.97.4. When to Report a Condition or Isolate; When to Submit an Isolate.
(a)-(b) (No change.) 
<nl>(c)<ol> AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, HIV 
infection, and syphilis shall be reported in accordance with sec.sec.97.132 - 
97.135 of this title (relating to Sexually Transmitted Diseases including AIDS 
and HIV infection);
[(c) Chancroid, chlamydia trachomatis infection, gonorrhea, and syphilis shall 
be reported in accordance sec.sec.97.132 - 97.135 of this title (relating to 
Sexually Transmitted Diseases including AIDS and HIV.]
[(d) AIDS and HIV infection shall be reported in accordance with sec.sec.97.132 
- 97.134 of this title.]
<nl>(d)<ol> [(e)] Tuberculosis antibiotic susceptibility results should be 
reported by laboratories no later than one week after they first become 
available. 
<nl>(e)<ol> [(f)] For all other reportable diseases not listed in subsections 
(a)-(c) of this section, reports of disease shall be made no later than one week 
after a case or suspected case is identified.
<nl>(f)<ol> [(g)] For Enterococcus species; vancomycin resistant Enterococcus 
species; Streptococcus pneumoniae; and penicillin - resistant Streptococcus 
pneumoniae - reports shall be made no later than the last working day of March, 
June, September, and December.
<nl>(g)<ol> [(h)] All Neisseria meningitidis from normally sterile sites, all 
vancomycin resistant Staphylococcus aureus, and all vancomycin resistant 
coagulase negative Staphylococcus species shall be submitted as pure cultures to 
the Texas Department of Health, Bureau of Laboratories, 1100 West 49th Street, 
Austin, Texas 78756-3199 as they become available. 

sec.97.6. Reporting and Other Duties of Local Health Authorities and Regional 
Directors. 
(a) (No change.) 
(b) Those reportable conditions identified as public health emergencies in 
sec.97.4(a) of this title (relating to When to Report <nl> a Condition or 
Isolate; When to Submit an Isolate<ol>) shall be reported immediately to the 
department by telephone. 
<nl>(c)<ol> AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, HIV 
infection and syphilis shall be reported in accordance with sec.sec.97.132 - 
97.135 of this title (relating to Sexually Transmitted Diseases including AIDS 
and HIV infection). 
[(c) Chancroid, chlamydia trachomatis infection, gonorrhea, and syphilis shall 
be reported in accordance with sec.sec.97.132, - 97.135 of this title (relating 
to Sexually Transmitted Diseases including AIDS and HIV infection).] 
[(d) AIDS and HIV infection shall be reported in accordance with sec.sec.97.132 
- 97.134 of this title]
<nl>(d)<ol> [e] The local health authority or the department's regional director 
shall collect reports of disease and transmit the following information at 
weekly intervals as directed by the department:
(1) for chickenpox - numerical totals by age group; and 
(2) for [all other] reportable diseases <nl> not listed in subsection (c) or 
(d)(1) of this section<ol> - by name, city, age, date of birth, sex, race and 
ethnicity, physician, disease, type of diagnosis, date of onset, address, and 
telephone number. 
<nl>(e)<ol> [f] Transmittal may be by telephone, mail, courier, or electronic 
transmission. 
(1) If by mail or courier, the reports shall be on a form provided by the 
department and placed in a sealed envelope addressed to the attention of the 
appropriate receiving source and marked "Confidential." 
(2) If by electronic transmission, including facsimile transmission by 
telephone, the local health authority or the department's regional director must 
obtain prior approval of the manner and form of the transmission from the 
commissioner of health (commissioner) or his/her designee. Any electronic 
transmission of the reports must provide at least the same degree of protection 
against unauthorized disclosure as those of mail or courier transmittal. 
<nl>(f)<ol> [g] The health authority shall notify health authorities in other 
jurisdictions of a case or outbreak of a communicable disease that has been 
reported if the case resides in another jurisdiction or there is cause to 
believe transmission of a disease may have occurred in another jurisdiction. The 
department shall assist the health authority in providing such notifications 
upon request. The health authority of the area where the case or outbreak is 
diagnosed shall report the case or outbreak to the department on the same basis 
as other reports. 
<nl>(g)<ol> [h] The health authority upon identification of a case or upon 
receipt of notification or report of disease shall take such action and measures 
as may be necessary to conform with the appropriate control measure standards. 
The health authority may upon identification of a case or upon report of a 
communicable disease in a child attending a public or private child-care 
facility or a school notify the owner or operator of the child-care facility or 
the school administrator. The commissioner is authorized to amend, revise, or 
revoke any control measure or action taken by the health authority if necessary 
or desirable in the administration of a regional or statewide public health 
program or policy. 
<nl>(h)<ol> [i] The health authority is empowered to close any public or private 
child-care facility, school or other place of public or private assembly when in 
his or her opinion such closing is necessary to protect the public health; and 
such school or other place of public or private assembly shall not reopen until 
permitted by the health authority who caused its closure. 
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 July 17, 1998.
TRD-9811341
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

SUBCHAPTER F. Sexually Transmitted Diseases Including Acquired Immune Deficiency 
Syndrome (AIDS) and Human Immunodeficiency Virus (HIV)
25 TAC sec.sec.97.131-97.134
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Health or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the Communicable Disease Prevention and Control 
Act, Health and Safety Code, Chapter 81, which provides the Board of Health with 
the authority to adopt rules concerning the reporting of communicable diseases; 
new sections are also proposed under the Human Immunodeficiency Virus Services 
Act; and sec.12.001, which provides the Texas Board of Health with the authority 
to adopt rules for the performance of every duty imposed by law on the Texas 
Board of Health, the Texas Department of Health, and the Commissioner of Health. 
The repeal affects Chapters 81 of the Health and Safety Code. 
sec.97.131. Definitions. 
sec.97.132. Who Shall Report Sexually Transmitted Diseases. 
sec.97.133. Reporting Information for Sexually Transmitted Diseases. 
sec.97.134. How to Report Sexually Transmitted Disease.
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 July 17, 1998.
TRD-9811342
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

25 TAC sec.sec.97.131-97.134, 97.139, 97.145, 97.146
The amendment and new sections are proposed under the Communicable Disease 
Prevention and Control Act, Health and Safety Code, Chapter 81, which provides 
the Board of Health with the authority to adopt rules concerning the reporting 
of communicable diseases; new sections are also proposed under the Human 
Immunodeficiency Virus Services Act, Health and Safety Code, Chapter 85, which 
provides the Board of Health with the authority to adopt rules concerning HIV 
grants; and sec.12.001, which provides the Texas Board of Health with the 
authority to adopt rules for the performance of every duty imposed by law on the 
Texas Board of Health, the Texas Department of Health, and the Commissioner of 
Health. 
The amendment and new sections affect Chapters 81 and 85 of the Health and 
Safety Code. 

sec.97.131. Definitions. 
The following words and terms when used in this chapter shall have the following 
meanings unless the context clearly indicates otherwise. 
(1) AIDS and HIV Infection - Acquired Immune Deficiency Syndrome (AIDS) and 
Human Immunodeficiency Virus (HIV) infection are as defined by the Centers for 
Disease Control and Prevention of the United States Public Health Service and in 
accordance with the Health and Safety Code sec.81.101. The publication 
designating the most current definition may be requested from: Texas Department 
of Health, HIV/STD Epidemiology Division, 1100 West 49th Street, Austin, Texas 
78756.
(2) Chancroid, Chlamydia trachomatis infection, gonorrhea and syphilis - These 
diseases are as defined by the Centers for Disease Control and Prevention of the 
United States Public Health Service. The publication designating the most 
current definition may be requested from: Texas Department of Health, HIV/STD 
Epidemiology Division, 1100 West 49th Street, Austin, Texas 78756. 
(3) Sexually transmitted disease - An infection, with or without symptoms or 
clinical manifestations, that is or may be transmitted from one person to 
another during or as a result of sexual relations, and that produces or might 
produce a disease in, or otherwise impair, the health of either person, or might 
cause an infection or disease in a fetus in utero or a newborn. Acquired Immune 
Deficiency Syndrome (AIDS), chancroid, Chlamydia trachomatis infection, 
gonorrhea, HIV infection, and syphilis are sexually transmitted diseases 
reportable under these rules. 

sec.97.132. Who Shall Report Sexually Transmitted Diseases. 
The following shall provide information on cases of AIDS, chancroid, Chlamydia 
trachomatis infection, gonorrhea, HIV infection, or syphilis: 
(1) A physician or dentist shall report each patient that is diagnosed or 
treated for AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, HIV 
infection, or syphilis. A physician or dentist may designate an employee of the 
clinic, including a school based clinic or physician's/dentist's office to serve 
as the reporting officer. A physician or dentist who can assure that a 
designated or appointed person in their clinic or office is regularly reporting 
every occurrence of these diseases does not have to submit a duplicate report. 
(2) The chief administrative officer of a hospital, a medical facility or a 
penal institution shall report each patient who is medically attended at the 
facility and is diagnosed with AIDS, chancroid, Chlamydia trachomatis infection, 
gonorrhea, HIV infection, or syphilis. The chief administrative officer may 
designate an employee of their institution to serve as the reporting officer. A 
chief administrative officer who can assure that a designated or appointed 
person in their institution is regularly reporting every occurrence of these 
diseases does not have to submit a duplicate report. Hospital laboratories may 
report through the reporting officer or independently in accordance with the 
hospital's policies and procedures. 
(3) Any person in charge of a clinical laboratory, blood bank, mobile unit, or 
other facility in which a laboratory examination of a blood specimen or any 
specimen derived from a human body that yields microscopic, cultural, 
serological or any other evidence of AIDS, chancroid, Chlamydia trachomatis 
infection, gonorrhea, HIV infection, or syphilis, including a CD4+ T lymphocyte 
cell count, shall report according to sec.97.133 of this title (relating to 
Reporting Information for Sexually Transmitted Diseases). 
(4) The medical director or other physician responsible for the medical 
oversight of a counseling and testing site or a community-based organization 
shall report each patient that is diagnosed with AIDS, chancroid, Chlamydia 
trachomatis infection, gonorrhea, HIV infection, or syphilis. The medical 
director or clinic physician may designate an employee of the counseling and 
testing site or community-based organization to serve as the reporting officer. 
A medical director or clinic physician who can assure that a designated or 
appointed person from their counseling and testing site or community-based 
organization is regularly reporting according to sec.97.133 of this title every 
occurrence of these diseases does not have to submit a duplicate report. 
(5) School administrators, as defined in sec.97.1 of this title (relating to 
Definitions), who are not medical directors meeting the criteria described in 
this section, are exempt from reporting AIDS, chancroid, Chlamydia trachomatis 
infection, gonorrhea, HIV infection or syphilis. 
(6) Failure to report a reportable disease is a Class B misdemeanor under the 
Texas Health and Safety Code, sec.81.049. 

sec.97.133. Reporting Information for Sexually Transmitted Diseases. 
The following information, at a minimum, shall be reported for any specimen 
derived from a human body that yields microscopic, cultural, serological or any 
other evidence of AIDS, chancroid, Chlamydia trachomatis infection, gonorrhea, 
HIV infection or syphilis, including a CD4+ T cell count: 
(1) laboratories: name, address, city, county and zip code of residence, date of 
birth (month, day, year), sex, race/ethnicity, date test(s) performed, type(s) 
of test(s) performed, result of the test(s) or CD4+ T cell count, physician's 
name, physician's/clinic's address and telephone number. Positive tests and all 
CD4+ T cell counts shall be reported and; 
(2) others as described in sec.97.132 of this title (relating to Who Shall 
Report Sexually Transmitted Diseases): name, address, city, county and zip code 
of residence, date of birth (month, day, year), sex, race/ethnicity, diagnosis, 
stage of diagnosis for syphilis only, date test(s) performed, type(s) of test(s) 
performed, and result(s) of test(s) or CD4+ T cell count, treatment provided, 
physician's name, physician's/clinic's address and telephone number. 

sec.97.134. How to Report Sexually Transmitted Disease. 
(a) All case reports received by the health authority or the department are 
confidential records and not public records. 
(b) Reporting forms and/or information from all entities required to report 
should be sent to the local health department director where the physician's 
office, hospital, laboratory or medical facility is located or, if there is no 
such facility, the reports should be forwarded to the regional director in the 
region where the physician's office, hospital, laboratory, or medical facility 
is located. 
(c) If any individual or entity is unsure where to report any of the diseases 
mentioned in this title, the reports shall be placed in a sealed envelope 
addressed as follows: Texas Department of Health, HIV/STD Epidemiology Division, 
1100 West 49th Street, Austin, Texas 78756 and the envelope shall be marked 
"Confidential." The envelope shall be delivered with the seal unbroken to the 
HIV/STD Epidemiology Division office for opening and processing of the contents. 
Postage paid envelopes may be obtained by contacting the HIV/STD Epidemiology 
Division and are provided without charge.
(d) Reporting forms can be obtained from local health departments, regional 
offices, and the Texas Department of Health, HIV/STD Epidemiology Division, 1100 
West 49th Street, Austin Texas, 78756. Forms shall be provided without charge to 
individuals required to report. 
(e) Reports of confirmed or suspected sexually transmitted diseases including 
AIDS and HIV infection must be submitted within seven days of the determination 
of the existence of a reportable condition. 
(f) Laboratories shall submit information weekly. If, during any calendar 
quarter, tests for chancroid, Chlamydia trachomatis infection, gonorrhea, HIV 
infection and syphilis are performed and all test results are negative, the 
person in charge of reporting for the laboratory shall submit a statement to 
this effect on or before January 5, April 5, July 5, and October 5 following 
that calendar quarter.
(g) A local health director or regional director may authorize one or more 
employees under his/her supervision to receive the report from the physician by 
telephone and to physically complete the form; use of this alternative, if 
authorized, is at the option of the reporting physician. The local health 
department director or regional director shall implement a method for verifying 
the identity of the telephone caller when that person is unfamiliar to the 
employee. 
(h) A local health department director or regional director shall forward to the 
department at least weekly all reports of cases received by him/her. Transmittal 
may be by mail, courier or electronic transmission.
(i) If reporting by electronic transmission, including facsimile transmission by 
telephone, the same degree of protection of the information against unauthorized 
disclosure shall be provided as those of reporting by mail or courier 
transmittal. The department shall, before authorizing such transmittal, 
establish guidelines for establishing and conducting such transmission.

sec.97.139. Fee for Providing Written Notice of a Positive Human 
Immunodeficiency Virus.
(HIV)-Related Test Result to an Applicant for Insurance. An applicant for 
insurance must be given written notice of a positive HIV-related test result by 
a physician designated by the applicant, or in the absence of that designation, 
by the Texas Department of Health (department). If the department is requested 
to make this notification: 
(1) the form designated by the department for this purpose must be used. Copies 
of the form and other information concerning notification by the department may 
be requested from: Bureau of HIV and STD Prevention, 1100 West 49th Street, 
Austin, Texas 78756-3199, [(512) 458-7463]; and 
(2) (No Change.) 

sec.97.145. Anonymous and Confidential HIV Testing.
(a) State-funded primary health, women's reproductive health, and sexually 
transmitted disease clinics shall provide voluntary, and affordable counseling 
and testing programs, both anonymous and confidential concerning HIV infection 
or provide referrals to those programs. 
(b) All HIV testing sites funded by the Texas Department of Health shall offer 
the option of confidential or anonymous HIV testing on site. 

sec.97.146. Confidentiality of HIV/STD Test Results. 
A test result is confidential. A person that possesses or has knowledge of a 
test result may not release or disclose the test result or allow the test result 
to become known except as provided by Health and Safety Code, sec.81.103 
Confidentiality; Criminal Penalty. A person commits an offense if, with criminal 
negligence and in violation of this section, the person releases or discloses a 
test result or other information or allows a test result or other information to 
become known. An offense under this section is a Class A misdemeanor. 
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 July 17, 1998.
TRD-9811343
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

CHAPTER 127. Registry for Providers of Health-Related Services
25 TAC sec.127.1, sec.127.4
The Texas Department of Health (department) proposes amendments to sec.127.1 and 
sec.127.4, concerning the voluntary registry for providers of health-related 
services. Specifically, the sections cover request for placement of an 
occupation on the registry, and fees. The amendment to sec.127.1 allows the 
department to require a request fee be paid by state-wide health-related 
professional organizations with members whom it officially recognizes as 
providers of a specific health-related service, or at least 200 persons employed 
or used as providers of a specific health-related service at the time the 
request is filed. The amendment to sec.127.4 sets forth the request fee and 
increases the fees for the initial application and annual reapplication. 
Bernie Underwood, C.P.A., Chief of Staff, Associateship for Health Care Quality 
and Standards, has determined that for the first five-year period the sections 
are in effect, there will be fiscal implications as a result of administering 
the sections as proposed. The fees are projected to generate revenues of $13,000 
per year for state government. There will be no fiscal implications for state or 
local governments. 
Ms. Underwood has also determined that for each of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
or administering the sections will be to identify health-related service 
providers who should be listed on a registry, and to generate fees sufficient to 
administer the program. There will be no effect on small businesses. The 
anticipated economic cost to persons who are required to comply with the rules 
as proposed will be the increase in fees for registrants and addition of the 
request fee to be paid by health-related professional organizations or groups of 
persons requesting placement on the registry. There will be no impact on local 
employment. 
Comments on the proposal may be submitted to Kathy Craft, Director of Programs, 
Professional Licensing and Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3189, telephone (512) 834-6602. 
Comments will be accepted for 30 days following publication of this proposal in 
the Texas Register. 
The amendments are proposed under Texas Health and Safety Code, sec.12.014, 
which provides the department with the authority to adopt reasonable fees to 
cover the cost of establishing and maintaining a registry; and sec.12.001, which 
provides the Texas Board of Health (board) with the authority to adopt rules for 
the performance of every duty imposed by law on the board, the department, and 
the commissioner of health. 
The proposed amendments affect the Texas Health and Safety Code, sec.12.014.

sec.127.1. Request for Placement of an Occupation on the Registry. 
(a)-(d) (No change.) 
<nl>(e)<ol> A request under this section must be accompanied by the fee set out 
in sec.127.4 of this title (relating to Fees). 

sec.127.4. Fees.
(a) The schedule of fees shall be as follows: 
(1) <nl>request fee - $500;<ol> [medical laboratory practitioner (initial 
application) - $30; and] 
<nl>(2)<ol> initial application - $120; and 
<nl>(3)<ol> [(2)] annual reapplication (any category) - <nl>$120<ol> [$30]. 
(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 July 17, 1998.
TRD-9811309
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

CHAPTER 129. Opticians' Registry
25 TAC sec.sec.129.1-129.5, 129.8-129.13
The Texas Department of Health (department) proposes amendments to 
sec.sec.129.1-129.5 and 129.8-129.13 concerning the voluntary registration and 
regulation of dispensing opticians. The sections cover purpose and construction; 
definitions; Opticians' Registry Advisory Committee; fees; application 
procedures and requirements for registration; renewal of registration; 
requirements for continuing education; change of name or address; violations, 
complaints, investigation of complaints, and disciplinary actions; registration 
of applicants with criminal backgrounds; and professional and ethical standards. 
Specifically, the proposed amendments change the term advisory council to 
advisory committee; define advisory committee and all definitions are listed 
with numbers in new Texas Register format as required by 1 Texas Administrative 
Code sec.91.1 effective February 17, 1998; require that an official copy of the 
minutes be provided to the advisory committee within 30 days after approval; 
eliminate language regarding reimbursement for expenses because it is not 
applicable; allow the department to accept personal checks; eliminate references 
to an examination administered by the department; reduce the number of hours 
required for single registration from 7 to 5 and dual registration from 14 to 
10; change the term license to registration; add language concerning the non-
renewal of a registration if the registration has been suspended for failure to 
pay child support; allow the department to accept address changes via phone, 
mail, fax, e-mail or in person; delete the requirement of a duly executed 
affidavit; add language to reference the procedure for assessing administrative 
penalties; delete unnecessary language related to procedures for revocation, 
suspension, or denial of an application; and add language requiring registrants 
to comply with the Texas Contact Lens Prescription Act, Texas Civil Statutes, 
Article 4552-A, unless exempt. 
Bernie Underwood, C.P.A., Chief of Staff, Associateship for Health Care Quality 
and Standards, has determined that for the first five-year period the sections 
are in effect, there will be no fiscal implications as a result of administering 
the sections as proposed. There will be no fiscal implications for state or 
local governments. 
Ms. Underwood has also determined that for each of the first five years the 
sections are in effect, the public benefit anticipated as a result of enforcing 
or administering the sections will be to protect the public by regulating 
opticians who choose to register with the department. There will be no effect on 
small businesses. There may be a minor reduction in costs to some persons who 
are required to comply with the rules as proposed due to a decrease in the 
number of classroom hours required for registration. There will be no impact on 
local employment. 
Comments on the proposal may be submitted to Kathy Craft, Director of Programs, 
Professional Licensing and Certification Division, Texas Department of Health, 
1100 West 49th Street, Austin, Texas 78756-3189, telephone (512) 834-6661. 
Comments will be accepted for 30 days following publication of this proposal in 
the Texas Register. 
The amendments are proposed under Texas Civil Statutes, Article 4551-1, sec.5 
which provides the Board of Health (board) with the authority to adopt rules to 
implement registration procedures; and Texas Health and Safety Code sec.12.001, 
which provides the board with the authority to adopt rules for the performance 
of each duty imposed by law on the board, the department, and the commissioner 
of health. 
The proposed amendments affect the Opticians' Registry Act, Texas Civil 
Statutes, Article 4551-1. 

sec.129.1. Purpose and Construction.
(a) (No change.) 
(b) Construction. These sections cover definitions; organization, administration 
and operation of the <nl>committee<ol> [advisory council]; fees; application 
procedures and requirements; applicant eligibility and registration; 
examination; renewal of registration certificates; requirements for continuing 
education; name or address changes; procedures for violations, complaints, 
investigation of complaints, and disciplinary actions; registration of 
applicants with criminal backgrounds; and professional and ethical standards.

sec.129.2. 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> Act-The Opticians' Registry Act (Act), Texas Civil Statutes, Article 
4551-1. 
<nl>(2)<ol> Administrator-The department employee designated as the 
administrator of registration activities authorized by the Act. 
<nl>(3)<ol> Applicant-A person who applies for registration under the Act. 
<nl>(4)<ol> Board-The Texas Board of Health. 
<nl>(5)<ol> Commissioner-The commissioner of the Texas Department of Health. 
<nl>(6)<ol> Consumer-An individual receiving services or obtaining a product 
from a registered dispensing optician. 
<nl>(7)<ol> Contact lens dispensing-The fabrication, ordering, mechanical 
adjustment, dispensing, sale, and delivery to the consumer of contact lenses 
prescribed by and dispensed in accordance with a prescription from a licensed 
physician or optometrist, together with appropriate instructions for the care 
and handling of the lenses. The term does not include the taking of any 
measurements of the eye or the cornea or evaluating the physical fit of the 
contact lenses, unless that action is directed or approved by a licensed 
physician. 
<nl>(8)<ol> Contact lens prescription-A written specification by a licensed 
physician or optometrist for therapeutic, corrective, or cosmetic contact lenses 
that states the refractive power of the product and other information as 
required by: 
(A) the physician or the Texas State Board of Medical Examiners; or 
(B) the optometrist or the Texas Optometry Board. 
<nl>(9)<ol> <nl>Committee - The nine member Opticians' Registry Advisory 
Committee.<ol> 
<nl>(10)<ol> Department-The Texas Department of Health.
<nl>(11)<ol> Dispensing optician-A person who provides or offers to provide 
spectacle or contact lens dispensing services or products to the public. 
<nl>(12)<ol> Dual application-An application by one person as both a registered 
spectacle dispensing optician and a registered contact lens dispenser. 
<nl>(13)<ol> Examination-A qualifying test administered to eligible applicants 
by the department or its designee. 
<nl>(14)<ol> Registered contact lens dispenser-A person properly registered 
under the Act as a contact lens dispenser. 
<nl>(15)<ol> Registered spectacle dispensing optician-A person properly 
registered under the Act as a spectacle dispensing optician.
<nl>(16)<ol> Registration certificate-A document issued by the department to a 
qualified person authorizing that person to represent that he or she is 
registered under the Act. 
<nl>(17)<ol> Spectacle dispensing-The design, verification, fitting, adjustment, 
sale, and delivery to the consumer of fabricated and finished spectacle lenses, 
frames, or other ophthalmic devices, other than contact lenses, prescribed by 
and dispensed in accordance with a prescription from a licensed physician or 
optometrist. The term includes: 
(A) prescription analysis and interpretation; 
(B) the taking of measurements of the face, including interpupillary distances, 
to determine the size, shape, and specification of the spectacle lenses or 
frames best suited to the wearer's needs; 
(C) the preparation and delivery of work orders to laboratory technicians 
engaged in grinding lenses and fabricating spectacles; 
(D) the verification of the quality of finished spectacle lenses; 
(E) the adjustment of spectacle lenses or frames to the intended wearer's face; 
and 
(F) the adjustment, repair, replacement, reproduction, or duplication of 
previously prepared spectacle lenses, frames, or other specially fabricated 
optical devices, other than contact lenses. 
<nl>(18)<ol> Spectacle prescription-A written specification by a licensed 
physician or optometrist for therapeutic or corrective lenses that states the 
refractive power of the product and other information as required by the 
physician or optometrist. 
[Council - The nine member Advisory Council of the Opticians' Registry.] 

sec.129.3. Opticians' Registry Advisory Committee.
(a) The committee. <nl>The Opticians' Registry Advisory Committee <ol> [An 
advisory committee] shall be appointed under and governed by this section. 
[(1) The name of the committee shall be the Opticians' Registry Advisory 
Committee (committee).] 
[(2) The committee is required to be established by the Texas Board of Health 
(board) by Texas Civil Statutes, Article 4551-1.] 
(b)-(k) (No change.) 
(l) Procedures. Roberts Rules of Order, Newly Revised, shall be the basis of 
parliamentary decisions except where otherwise provided by law or rule. 
(1)-(4) (No change.) 
(5) Minutes of each committee meeting shall be taken by department staff. 
[(A) A draft of the minutes approved by the presiding officer shall be provided 
to the board and each member of the committee within 30 days of each meeting.] 
<nl>(A)<ol> [(B)] After approval by the committee, the minutes shall be signed 
by the presiding officer. 
<nl>(B)<ol> An official copy of the minutes shall be provided to the committee 
within 30 days after approval. 
(m) Subcommittees. The committee may establish subcommittees as necessary to 
assist the committee in carrying out its duties. 
(1)-(2) (No change.) 
(3) A subcommittee chairperson shall make regular reports to the advisory 
committee at each committee meeting or in interim written reports as needed. 
[The reports shall include an executive summary or minutes of each subcommittee 
meeting.] 
(n)-(o) (No change.) 
[(p) Reimbursement for expenses. In accordance with the requirements set forth 
in Texas Civil Statutes, Article 6252-33, a committee member may receive 
reimbursement for the member's expenses incurred for each day the member engages 
in official committee business.]
[(1) No compensatory per diem shall be paid to committee members unless required 
by law.] 
[(2) A committee member who is an employee of a state agency, other than the 
department, may not receive reimbursement for expenses from the department.] 
[(3) A nonmember of the committee who is appointed to serve on a subcommittee 
may not receive reimbursement for expenses from the department.] 
[(4) Each member who is to be reimbursed for expenses shall submit to staff the 
member's receipts for expenses and any required official forms no later than 14 
days after each committee meeting.]
[(5) Requests for reimbursement of expenses shall be made on official state 
travel vouchers prepared by department staff.]

sec.129.4. Fees. 
(a) (No change.) 
(b) Payment of fees. If paid by mail, all fees shall be submitted in the form of 
a <nl>personal check,<ol> certified check for guaranteed funds or a money order 
made payable to the Texas Department of Health. If submitted in person, cash may 
be accepted by the department's cashier. 
(c) (No change.) 

sec.129.5. Application Procedures and Requirements for Registration.
(a) Purpose. The purpose of this section is to set out the application 
procedures and [registration] requirements [of applicants] for [examination and] 
registration. 
(b) (No change.) 
(c) Required application materials. 
(1)-(2) (No change.) 
(3) An applicant shall submit documentation satisfactory to the department, that 
he or she has completed <nl>five<ol> [seven] classroom hours. 
(A)-(B) (No change.) 
(C) If applying for dual registration, the applicant must have completed 
<nl>10<ol> [14] classroom hours offered or approved by the American Board of 
Opticianry or the National Contact Lens Examiners.
(D) (No change.) 
(4) Proof of having passed the prescribed examination shall be attached to the 
application form [if the applicant has already completed the examination]. 
(d) Examinations. 
[(1) Purpose. The purpose of this subsection is to establish rules governing the 
procedures for examination of applicants for registration as a spectacle 
dispensing optician or contact lens dispenser.] 
[(2) Frequency. Examinations will be administered for the department at least 
once each year by a designee of the department.] 
[(3) Requirements.] 
[(A) The administrator shall notify an applicant when all requirements for 
registration have been met except the taking and passing of the required 
examination. The department shall forward an examination registration form to 
each approved applicant as soon as the application has been approved.] 
[(B) An applicant who wishes to take a scheduled examination must complete the 
examination registration form which must be received by the department with the 
required fee at least 80 days prior to the date of the examination. All fees 
shall be paid to the department if the applicant is taking the examination 
solely for registration purposes. The fee shall be paid to the designee of the 
department if the applicant is taking the examination for registration purposes 
and to obtain private certification.]
[(C) The examination for registration shall be a written examination approved by 
the department. A designee of the department shall administer and grade 
examinations and report to the department if the applicant has passed or failed 
the examination.] 
[(D) If an applicant has already successfully completed the required 
examination, the applicant shall not be required to be reexamined, provided the 
applicant furnishes the department a copy of the test results indicating that 
the applicant passed the examination.] 
[(E) An applicant who fails two successive examinations may not reapply until 
the applicant completes all remedial work as prescribed by the department.] 
[(4) Required examination.]
<nl>(1)<ol> [(A)] The examination administered by the American Board of 
Opticianry, or its successor, is the examination for registered spectacle 
dispensing opticians. 
<nl>(2)<ol> [(B)] The examination administered by the National Contact Lens 
Examiners, or its successor, is the examination for registered contact lens 
dispensers. 
(e) Determining eligibility. The department shall receive and approve or 
disapprove all applications for registration as registered spectacle dispensing 
opticians or registered contact lens dispensers or both. The administrator shall 
be responsible for reviewing all applications. 
(1) (No change.) 
(2) An application for a registration shall be disapproved if the applicant has: 
(A) (No change.) 
[(B) failed to pass the examination prescribed by the department as set out in 
subsection (d) of this section;]
<nl>(B)<ol> [(C)] failed to or refused to properly complete or submit any 
application form, endorsement, or fee or deliberately presented false 
information on any form or document required by the department;
<nl>(C)<ol> [(D)] violated any provision of the Act or this chapter; 
<nl>(D)<ol> [(E)] been convicted of a felony or misdemeanor as set out in 
sec.129.12 of this title (relating to Registration of Applicants With Criminal 
Backgrounds); or 
<nl>(E)<ol> [(F)] violated any provision of state law relating to the practice 
of dispensing opticians. 
(3) (No change.) 
(f) (No change.) 

sec.129.8. Renewal of Registration. 
(a) (No change.) 
(b) General. 
(1)-(4) (No change.) 
(5) The department shall not renew a <nl>registration <ol> [license] if renewal 
is prohibited by the Education Code, sec.57.491. 
<nl>(6)<ol> The department shall not renew a registration if renewal is 
prohibited by a court order or attorney general's order issued pursuant to the 
Family Code, Chapter 232 (relating to Suspension of License for Failure to Pay 
Child Support), as set out in sec.1.301 of this title (relating to Suspension of 
License for Failure to Pay Child Support. 
<nl>(7)<ol> [(6)] Notices of renewal approval, disapproval, or deficiency shall 
be in accordance with sec.129.5(f) of this title (relating to Application 
Procedures and Requirements for Registration).
(c) Registration renewal. 
(1)-(3) (No change.) 
(4) The department shall issue to a registrant who has met all requirements for 
renewal a renewed registration <nl>certificate<ol> [card] and identification 
card. 
(5) (No change.) 
(d) (No change.) 
(e) Expiration of registration. 
[(1)] A person whose registration has expired may not refer to himself or 
herself by any of the titles listed in sec.129.7(g) of this title (relating to 
Issuance of Certificate of Registration). 
[(2) A person who fails to renew a registration is required to surrender the 
registration certificate and identification card to the department after 180 
days from expiration of the registration or upon demand.] 

sec.129.9. Requirements for Continuing Education. 
(a)-(d) (No change.) 
(e) Accrual carryover. Earned continuing education hours exceeding the minimum 
requirements in a previous renewal period shall first be applied to the 
continuing education requirements for the current renewal period. A maximum of 
five additional clock hours may be accrued during a registration period to be 
applied to the next consecutive renewal period<nl>.<ol> [provided; however, a] 
<nl>A<ol> maximum of 10 additional clock hours may be accrued for dual 
registrants during a registration period to be applied to the next consecutive 
renewal period. 

sec.129.10. Change of Name or Address.
(a)-(b) (No change.) 
[(c) Any change shall be submitted in writing to the administrator and include 
the name, old address, and new address.] 
<nl>(c)<ol> [(d)] Before any new registration certificate or identification card 
will be issued by the department, notification of a name change must be 
forwarded to the administrator and shall include [a duly executed affidavit and] 
a copy of a marriage certificate, court decree evidencing such change, or a 
social security card reflecting the new name. 
<nl>(d)<ol> [(e)] The registrant shall return any previously issued certificate 
or identification card and remit the appropriate replacement fee as set out in 
sec.129.4 of this title (relating to Fees).

sec.129.11. Violations, Complaints, Investigation of Complaints, and 
Disciplinary Actions. 
(a) Purpose. The purpose of this section is to set out: 
[(1) violations and prohibited actions under the Optician's Registry Act (Act) 
and this chapter;] 
<nl>(1)<ol> [(2)] procedures concerning complaints alleging violations of the 
Act or this chapter; and 
<nl>(2)<ol> [(3)] Texas Department of Health (department) actions against a 
person when violations have occurred. 
(b)-(c) (No change.) 
(d) Investigation of complaints. 
(1)-(4) (No change.) 
(5) If the administrator determines that there are sufficient grounds to support 
the complaint, the administrator may propose to deny, suspend, revoke, probate, 
or not renew a registration <nl>with the concurrence or ratification of the 
Complaints Subcommittee, if such subcommittee exists<ol>.
[(6) The program administrator shall determine whether the complaint fits within 
the category of a serious complaint affecting health or safety of clients or 
other persons.] 
<nl>(6)<ol> [(7)] If an investigation is done, the investigator shall always 
attempt to contact the complainant to discuss the complaint. 
(e) Disciplinary actions. 
(1) The department may deny an application or registration renewal or suspend or 
revoke a registration or impose probation <nl>or administrative penalties<ol> 
for any violation of the Act or this chapter. 
(2)-(7) (No change.) 
<nl>(8)<ol> Administrative penalties shall be assessed in accordance with the 
procedures set forth in the Act, sec.10A. 
(f) (No change.) 

sec.129.12. Registration of Applicants with Criminal Backgrounds. 
(a) (No change.) 
(b) Criminal convictions which directly relate to the occupation of dispensing 
opticians shall be considered by the Texas Department of Health (department) as 
follows. 
(1) The department may suspend or revoke an existing registration <nl> or<ol> 
[,] disqualify a person from receiving a registration [, or deny to a person the 
opportunity to be examined for a registration] because of a person's conviction 
of a felony or misdemeanor if the crime directly relates to the duties and 
responsibilities under that registration.
(2) (No change.) 
(c) The following felonies and misdemeanors directly relate because these 
criminal offenses indicate an inability or <nl>an unwillingness <ol> [a 
tendency] for the person to be <nl>able<ol> [unable] to perform or to be 
<nl>fit<ol> [unfit] for registration:
(1)-(5) (No change.) 
(6) other misdemeanors and felonies [which indicate an inability or tendency for 
the person to be unable to perform as a registrant or to be unfit for 
registration] if <nl>disciplinary<ol> action by the department will promote the 
intent of the Act, this chapter, and Texas Civil Statutes, Article 6252-13c; 
[(d) Procedures for revoking, suspending, or denying a registration to a person 
with a criminal background shall be as follows.] 
[(1) The administrator shall give written notice to the person that the 
department proposes to deny the application or suspend or revoke the 
registration in accordance with the provisions of sec.129.11(e) of this title 
(relating to Violations, Complaints, Investigations of Complaints, and 
Disciplinary Actions).] 
[(2) If the department denies, suspends, or revokes an application or 
registration under this section, the administrator shall give the person written 
notice:] 
[(A) of the reasons for the decision;] 
[(B) that the person, after exhausting administrative appeals, may file an 
action in a district court of Travis County for review of the evidence presented 
to the department and its decision;] 
[(C) that the person must begin the judicial review by filing a petition with 
the court within 30 days after the department's action is final and appealable; 
and] 
[(D) of the earliest date that the person may appeal.]

sec.129.13. Professional and Ethical Standards. 
(a)-(c) (No change.) 
(d) <nl>A registrant shall cooperate with the department by furnishing required 
documents or information and by responding to a request for information.<ol> [A 
registrant shall provide all information required by the Opticians' Registry Act 
(Act) or this chapter to be submitted to the department.] 
(e)-(j) (No change.) 
<nl>(k)<ol> Unless exempt, a registrant shall comply with the Texas Contact Lens 
Prescription Act, Texas Civil Statutes, Article 4552-A. 
<nl>(l)<ol> A registrant may not sell, deliver, or dispense contact lenses to a 
patient or other consumer in this state unless the registrant receives a 
prescription that conforms to the requirements of the Texas Contact Lens 
Prescription Act, Texas Civil Statutes, Article 4552-A. The registrant must fill 
the prescription accurately without modification.
<nl>(m)<ol> Spectacles may be dispensed only in accordance with a spectacle 
prescription from a licensed physician or optometrist. This subsection does not 
prohibit a registrant from duplicating lenses. 
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 July 17, 1998.
TRD-9811312
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

CHAPTER 157. Emergency Medical Services
SUBCHAPTER G. Emergency Medical Services Trauma Systems
25 TAC sec.157.131
The Texas Department of Health (department) proposes new sec.157.131 concerning 
the requirements for designation of trauma stabilization (Level V) facilities. 
This section delineates the process for application and the essential criteria 
which must be met for a facility to be designated as a Level V trauma facility 
by the department. 
House Bill 1407, 75th Legislature, 1997, amended Health and Safety Code, Chapter 
773 and, as a result, allows the department to designate Level V trauma 
facilities according to rules adopted by the Texas Board of Health. Injuries are 
the major cause of death in ages birth to 44. Legislation was passed in 1989 
directing the department to develop an emergency medical services (EMS)/trauma 
system, to include the designation of trauma facilities, to reduce injury 
morbidity and mortality. The department has been designating trauma facilities 
at four levels since 1993. The Level V facility will be integrated into the 
current Texas trauma system structure to provide quality care to injury victims 
in areas where no other resources are available. 
Gene Weatherall, Chief, Bureau of Emergency Management, has determined that for 
each year of the first five years the section as proposed is in effect, there 
will be no fiscal implications to local governments as a result of administering 
and enforcing this section as proposed. There will be a fiscal impact on 
applicants in that a proposed fee will be charged, however the amount proposed 
will cover the department costs of designating the facilities, therefore, the 
net effect on state government will be zero. 
Mr. Weatherall has also determined that for each year of the first five years 
the section as proposed is in effect, the public benefit anticipated is the 
assurance that adequate trauma care is available to the citizens of Texas. There 
will be no effect on small businesses, are no anticipated economic costs to 
persons who are required to comply with the section as proposed, and there is no 
impact on local employment. 
Comments on the proposal may be submitted to Gene Weatherall, Chief, Bureau of 
Emergency Management, Texas Department of Health, 1100 West 49th Street, Austin, 
Texas, 78756-3199, 512/834-6740. Comments will be accepted for 30 days following 
publication of the proposal in the Texas Register. 
The new section is proposed under the Health and Safety Code, sec.773.115, which 
provides the Texas Board of Health (board) with the authority to adopt rules for 
the development of an EMS and trauma care system; and Health and Safety Code 
sec.12.001, which provides the board with the authority to adopt rules for the 
performance of every duty imposed by law on the board, the department, and the 
commissioner of health. 
The new section affects the Health and Safety Code, Chapter 773. 

sec.157.131. Requirements for Designation of Trauma Stabilization Facilities. 
(a) The Bureau of Emergency Management (bureau) shall recommend to the 
commissioner of health (commissioner) the designation of trauma stabilization 
(level V) facilities. 
(1) Level V facilities provide resuscitation and prompt transport of all major 
and severe trauma patients to a higher level trauma facility.
(2) Level V facilities have no in-patient or observation beds. 
(3) Level V facilities are not located within 30 miles or 30 minutes ground 
transport time of a higher designated trauma facility unless such a facility 
would improve appropriate access to and quality of trauma patient care as 
confirmed by the regional advisory council (RAC). 
(b) The designation process shall consist of three phases.
(1) The first phase is the application phase which begins with completing and 
submitting to the bureau an application and nonrefundable fee for designation as 
a trauma facility and ends when the bureau recommends a site survey (survey) or 
recommends designation to the commissioner. 
(2) The second phase is the review phase which begins with the survey, if 
required, and ends with a bureau recommendation to the commissioner to designate 
the facility. 
(3) The third phase begins with the commissioner reviewing the recommendation 
and ends with his/her final decision. This phase also includes an appeal 
procedure for the denial of designation in accordance with the Texas Department 
of Health (department) formal hearing procedures as described in Chapter 1 of 
this title (relating to Texas Board of Health). 
(c) A secondary review may be requested by an applicant if it does not agree 
with a bureau request for specific corrective action(s) prior to recommending 
designation. 
(d) The bureau may provide technical assistance to all applicants throughout the 
three phases of the designation process for the purpose of answering questions 
and clarifying the process. 
(e) The bureau's analysis of submitted application materials, which may result 
in recommendations for corrective action when deficiencies are noted, shall 
include a review of: 
(1) the evidence of participation in system planning; 
(2) the completeness of the application materials submitted; and 
(3) the applicant's self-study for comparison with the criteria. 
(f) When the application phase results in a bureau requirement for a survey, the 
bureau shall notify the applicant as follows. 
(1) The applicant shall contract with an approved non-department surveyor. 
(2) The applicant shall notify the bureau of the date of the planned survey and 
composition of the survey team. 
(3) The applicant shall be responsible for any costs associated with the survey. 
(4) The bureau may appoint an observer to accompany the survey team. In this 
event, the cost for the observer shall be borne by the bureau. 
(g) Applicants shall be surveyed by a department representative, registered 
nurse or licensed physician. A second surveyor may be requested by the applicant 
or the bureau. Non-department surveyors must meet the following criteria: 
(1) have at least three years experience in the care of trauma patients; 
(2) be currently employed in the coordination of care for trauma patients; 
(3) have direct experience in the preparation for and successful completion of 
trauma facility verification/designation; 
(4) have successfully completed the department Trauma Facility Site Surveyor 
Course; 
(5) have current credentials of Trauma Nurse Core Course (TNCC) for nurses or 
Advanced Trauma Life Support (ATLS) for physicians; 
(6) have successfully completed a site survey internship with department staff; 
and 
(7) except department staff, come from a public health region outside the 
applicant's location and at least 100 miles from the applicant.
(h) The survey team shall evaluate the quality of an applicant's compliance with 
the requirements set forth in the criteria, by: 
(1) reviewing medical records, staff rosters and schedules, performance 
improvement committee meeting minutes and other documents relevant to trauma 
care; 
(2) reviewing equipment and the physical plant; and 
(3) conducting interviews with applicant personnel. 
(i) Findings of the survey team shall be forwarded to the bureau within 90 days. 
(1) The bureau shall review the findings for compliance with the criteria. 
(2) A recommendation for designation shall be made to the commissioner based on 
compliance with the criteria. 
(3) In the event there is a problem area in which an applicant does not comply 
with the criteria, the bureau shall notify the applicant of deficiencies and 
outline corrective action. 
(A) The applicant shall submit a report to the bureau which outlines the 
corrective action taken. The bureau may require a second survey to insure 
compliance with the criteria. If the applicant and/or bureau report 
substantiates action that brings the applicant into compliance with the 
criteria, the bureau shall recommend designation to the commissioner. 
(B) If the applicant disagrees that there is need for corrective action, the 
bureau shall refer the complete file to the trauma subcommittee of the emergency 
health care advisory committee for review. 
(C) If the trauma subcommittee disagrees with the bureau recommendation for 
corrective action, the records shall be referred to the deputy commissioner of 
health for review. 
(j) The bureau shall provide a copy of the survey report, for surveys conducted 
by department staff, and results to the applicant. 
(k) At the end of the secondary review and final phases of the designation 
process, if an applicant disagrees with the bureau recommendations, opportunity 
for an appeal in accordance with the department formal hearing procedures as 
described in Chapter 1 of this title shall be offered. 
(l) The department may grant an exception to this section if it finds that 
compliance with this section would not be in the best interests of the persons 
served in the affected local system. 
(m) The applicant shall have the right to withdraw its application at any time 
prior to being awarded trauma facility designation by the department.
(n) If the commissioner concurs with the bureau recommendation, the applicant 
shall receive a certificate of designation for three years.
(o) Designation is granted for a period of up to three years and it shall be 
necessary to repeat the designation process as described in this section before 
the expiration date in order to prevent a lapse of designation.
(p) A designated trauma facility shall: 
(1) notify the department and the RAC within five days if temporarily unable to 
comply with designation standards; 
(2) notify the department and the RAC if it chooses to no longer provide trauma 
services commensurate with its designation level with at least 30 days notice; 
(3) comply with the provisions within sec.sec.157.121 - 157.131 (relating to 
Emergency Medical Services Trauma Systems), all current state and system 
standards as described in this chapter, and all policies, protocols, and 
procedures as set forth in the system plan; 
(4) continue its commitment to provide the resources, personnel, equipment, and 
response as required by its designation level; and
(5) participate in the state trauma registry as described in sec.157.129 of this 
title (relating to State Trauma Registry). 
(q) A facility may not use the terms "trauma facility", "trauma center", or 
similar terminology in its signs or advertisements or in the printed materials 
and information it provides to the public unless the facility has been 
designated as a trauma facility according to the process described in this 
section. This subsection of this section also applies to facilities whose 
designation has lapsed. 
(r) A trauma facility shall not advertise or publicly assert in any manner that 
its trauma facility designation affects its care capabilities for non-trauma 
patients or that its trauma facility designation should influence the referral 
of non-trauma patients. 
(s) The bureau shall have the right to review, inspect, evaluate, and audit all 
trauma patient records, trauma performance improvement committee minutes, and 
other documents relevant to trauma care in any designated trauma facility at any 
time to verify compliance with criteria. The bureau shall maintain 
confidentiality of such records to the extent authorized by the Open Records 
Act, Texas Civil Statutes, Article 6252-17a. Such inspections shall be scheduled 
by the bureau when appropriate. 
(t) The fee for application as a Level V trauma facility shall be $750. 
(u) Trauma stabilization (Level V) facility criteria. 
Figure: 25 TAC sec.157.131(u) 
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 July 17, 1998.
TRD-9811344
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

CHAPTER 229. Food and Drug
SUBCHAPTER X. Licensure of Device Distributors and Manufacturers
25 TAC sec.sec.229.432-229.433, 229.441, 229.443
The Texas Department of Health (department) proposes amendments to 
sec.sec.229.432 - 229.433, 229.441, and 229.443, concerning the licensure of 
device distributors and manufacturers. Specifically, the sections cover 
applicable laws and regulations; definitions; minimum standards for licensure; 
and enforcement and penalties. Section 229.432 will adopt by reference the U.S. 
Food and Drug Administration's amended 21 Code of Federal Regulations (CFR), 
Part 820, entitled "Quality System Regulation", as well as new 21 CFR, Part 897, 
entitled "Cigarettes and Smokeless Tobacco". Section 229.433 will amend the 
definitions of "distributor" and "manufacturer" to provide clarification of 
statutory intent and all definitions are numbered in new Texas Register format 
to comply with 1 Texas Administrative Code, sec.91.1, effective February 17, 
1998. Section 229.441 will clarify and define minimum standards for licensure of 
device distributors and manufacturers. Section 229.443 will clarify the 
department's inspection authority with respect to access to records. 
Cynthia T. Culmo, R.Ph., Director, Drugs and Medical Devices Division, 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. 
Ms. Culmo has also determined that for each year of the first five years the 
sections as proposed are in effect, the public benefit will be clarification of 
minimum standards for licensure of device distributors and manufacturers. There 
is no effect on small businesses. There is no anticipated cost to persons who 
may be required to comply with the sections as proposed. There is no anticipated 
impact on local government. 
Comments on the proposed amendments may be submitted to Thomas E. Brinck, Drugs 
and Medical Devices Division, Texas Department of Health, 1100 West 49th Street, 
Austin, Texas 78756, (512) 719-0237. Comments will be accepted for 30 days from 
the date of publication of this proposal in the Texas Register. 
The amendments are proposed under the Health and Safety Code, sec.431.241, which 
provides the department with the authority to adopt necessary regulations 
pursuant to the enforcement of Chapter 431; and sec.12.001, which provides the 
Texas Board of Health (board) with the authority to adopt rules for the 
performance of every duty imposed by law on the board, the department, and the 
commissioner of health. 
The amendments affect Health and Safety Code, Chapter 431. 

sec.229.432. Applicable Laws and Regulations. 
(a) The Texas Department of Health (department) adopts by reference the 
following laws and regulations: 
(1)-(5) (No change.) 
<nl>(6)<ol> [(7)] 21 CFR, Part 814, Premarket Approval of Medical Devices, as 
amended; [and] 
<nl>(7)<ol> [(6)] 21 CFR, Part 820, <nl> Quality System Regulation<ol> [Good 
Manufacturing Practice for Medical Devices: General], as amended; 
<nl>(8)<ol> 21 CFR, Part 897, Cigarettes and Smokeless Tobacco, as amended; and
<nl>(9)<ol> [(8)] 21 CFR, Subchapter J - Radiological Health, as amended. 
(b)-(c) (No change.) 

sec.229.433. Definitions. 
The following words and terms, when used in these sections, shall have the 
following meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> Act - The Texas Food, Drug, and Cosmetic Act, Health and Safety 
Code, Chapter 431. 
<nl>(2)<ol> <nl>Adulterated Device<ol> [Adulteration] - Has the meaning 
<nl>specified<ol> [given] in the Texas Food, Drug, and Cosmetic Act, Health and 
Safety Code, Chapter 431, <nl>sec.431.111 <ol> [as interpreted in the rules of 
the Texas Board of Health (board) and judicial decision]. 
<nl>(3)<ol> Advertising - All representations disseminated in any manner or by 
any means, other than by labeling, for the purpose of inducing, or that are 
likely to induce, directly or indirectly, the purchase of food, drugs, devices, 
or cosmetics. 
<nl>(4)<ol> Authorized agent - An employee of the department who is designated 
by the commissioner to enforce the provisions of this chapter. 
<nl>(5)<ol> Board - The Texas Board of Health. 
<nl>(6)<ol> Commissioner - The Commissioner of Health.
<nl>(7)<ol> Department - The Texas Department of Health.
<nl>(8)<ol> Device - An instrument, apparatus, implement, machine, contrivance, 
implant, in vitro reagent, or other similar or related article, including any 
component, part, or accessory, that is: 
(A) recognized in the official United States Pharmacopoeia National Formulary or 
any supplement to it; 
(B) intended for use in the diagnosis of disease or other conditions, or in the 
cure, mitigation, treatment, or prevention of disease in man or other animals; 
or 
(C) intended to affect the structure or any function of the body of man or other 
animals and that does not achieve any of its principal intended purposes through 
chemical action within or on the body of man or other animals and is not 
dependent on metabolization for the achievement of any of its principal intended 
purposes. 
<nl>(9)<ol> Distributor - A person who furthers the marketing of a finished 
domestic or imported device from the original place of manufacture to the person 
who makes final delivery or sale to the ultimate user. The term includes an 
importer or an own-label distributor. The term does not include[:] 
[(A)] a person who repackages a finished device or who otherwise changes the 
container, wrapper, or labeling of the finished device or the finished device 
package<nl>.<ol>[;]
[(B) the purchase or acquisition by a hospital or other health care entity that 
is a member of a group purchasing organization of a device for its own use from 
the group purchasing organization or from other hospitals or health care 
entities that are members of such organizations;]
[(C) the sale, purchase, or trade of a device or an offer to sell, purchase, or 
trade a device among hospitals or other health care entities that are under 
common control. For the purpose of this subsection, "common control" means the 
power to direct or cause the direction of the management and policies of a 
person or an organization, whether by ownership of stock, voting rights, 
contract, or otherwise;] 
[(D) the sale, purchase, or trade of a device or an offer to sell, purchase, or 
trade a device for emergency medical reasons. For purposes of this definition, 
"emergency medical reasons" includes transfers of prescription devices by a 
retail pharmacy to another retail pharmacy to alleviate a temporary shortage;] 
[(E) the sale, purchase, or trade of a device, an offer to sell, purchase, or 
trade a device, or the dispensing of a device pursuant to a prescription; or] 
[(F) the distribution of device samples by manufacturers' representatives or 
distributors' representatives.]
<nl>(10)<ol> Electronic product radiation - Any ionizing or nonionizing 
electromagnetic or particulate radiation, or any sonic, infrasonic, or 
ultrasonic wave, which is emitted from an electronic product as the result of 
the operation of an electronic circuit in such product. 
<nl>(11)<ol> Finished device - A device, or any accessory to a device, which is 
suitable for use, whether or not packaged or labeled for commercial 
distribution. 
<nl>(12)<ol> Health authority - A physician designated to administer state and 
local laws relating to public health. 
<nl>(13)<ol> Importer - Any person who initially distributes a device imported 
into the United States. 
<nl>(14)<ol> Ionizing radiation - Any electromagnetic or particulate radiation 
capable of producing ions, directly or indirectly, in its passage through 
matter. Ionizing radiation includes gamma rays and x-rays, alpha and beta 
particles, high speed electrons, neutrons, and other nuclear particles. 
<nl>(15)<ol> Labeling - All labels and other written, printed, or graphic 
matter:
(A) upon any article or any of its containers or wrappers; or 
(B) accompanying such article. 
<nl>(16)<ol> Manufacture - The making by chemical, physical, biological, or 
other procedures of any article that meets the definition of device. The term 
includes the following activities: 
(A) repackaging or otherwise changing the container, wrapper, or labeling of any 
device package in furtherance of the distribution of the device from the 
original place of manufacture to the person who makes final delivery or sale to 
the ultimate consumer; <nl>or<ol> 
[(B) initial distribution of imported devices; or] 
<nl>(B)<ol> [(C)] initiation of specifications for devices that are manufactured 
by a second party for subsequent commercial distribution by the person 
initiating specifications. 
<nl>(17)<ol> Manufacturer - A person who manufactures, fabricates, assembles, or 
processes a finished device. The term includes a person who repackages or 
relabels a finished device. The term does not include[
[(A)] a person who only distributes a finished device<nl>.<ol>[;] 
[(B) the manufacture of raw materials or components to be used in the 
manufacture or assembly of a device who would otherwise not be required to 
license under the provisions of these sections;]
[(C) the manufacture of general purpose articles such as chemical reagents or 
laboratory equipment whose uses are generally known by persons trained in their 
use and which are not labeled or promoted for medical uses;] 
[(D) the manufacture or otherwise altering of devices by licensed practitioners, 
including physicians, dentists, and optometrists solely for use in their 
practice; or] 
[(E) the manufacture, preparation, propagation, compounding, or processing of 
devices used solely in research, teaching, or analysis and which are not 
introduced into commercial distribution.]
<nl>(18)<ol> <nl>Misbranded Device<ol> [Misbranding] - Has the meaning 
<nl>specified<ol> [given] in the Texas Food, Drug, and Cosmetic Act, Health and 
Safety Code, Chapter 431, <nl>sec.431.112<ol> [as interpreted in the rules of 
the board and judicial decision]. 
<nl>(19)<ol> Person - Includes individual, partnership, corporation, and 
association. 
<nl>(20)<ol> Place of business - Each location at which a device is manufactured 
or held for distribution. 
<nl>(21)<ol> Radiation machine - Any device capable of producing ionizing 
radiation except those devices with radioactive material as the only source of 
radiation. 
<nl>(22)<ol> Radioactive material - Any material (solid, liquid, or gas) that 
emits radiation spontaneously. 
<nl>(23)<ol> Reconditioning - <nl>Any appropriate process or procedure by which 
distressed merchandise can be brought into compliance with departmental 
standards as specified<ol> [Has the meaning given] in the Texas Food, Drug, 
Device, and Cosmetic Salvage Act, Health and Safety Code, Chapter 432, 
<nl>sec.432.003,<ol> as interpreted in the rules of the board in sec.229.192 of 
this title (relating to Definitions) [and judicial decision]. 
<nl>(24)<ol> Restricted device - <nl>A device subject to certain controls 
related to sale, distribution, or use as specified<ol> [Has the meaning given] 
in the Federal Food, Drug, and Cosmetic Act, as amended, sec.520(e)(1). 

sec.229.441. Minimum Standards for Licensure. 
(a) Minimum requirements. All distributors or manufacturers of devices engaged 
in <nl>the design, manufacture, packaging, labeling, storage, installation, and 
servicing<ol> [manufacturing, packing, storage, or installation] of devices must 
comply with the minimum standards of this section in addition to the statutory 
requirements contained in the Texas Food, Drug, and Cosmetic Act, Health and 
Safety Code, Chapter 431 (Act). For the purpose of this section, the policies 
described in the United States Food and Drug Administration's (FDA's) Compliance 
Policy Guides as they apply to devices shall be the policies of the Texas 
Department of Health (department).
(b) (No change.) 
(c) Good manufacturing practices. Device distributors or manufacturers engaged 
in the <nl>design, manufacture, packaging, labeling, storage, installation, and 
servicing<ol> [manufacturing, packing, storage, or installation] of finished 
devices shall be in compliance with the applicable requirements of 21 CFR, Part 
820, titled "<nl>Quality System Regulation<ol> [Good Manufacturing Practice For 
Medical Devices: General]." <nl>The requirements in this part govern the methods 
used in, and the facilities and controls used for, the design, manufacture, 
packaging, labeling, storage, installation, and servicing<ol> [This regulation 
sets forth the current good manufacturing practices for methods used in, and the 
facilities and controls used for, the manufacture, packing, storage, and 
installation] of all finished devices intended for human use. 
(d) Buildings and facilities. 
<nl>(1)<ol> All manufacturing, assembling, packaging, packing, holding, testing, 
or labeling of devices <nl>by manufacturers<ol> shall take place in buildings 
and facilities described in 21 CFR, Part 820, Subpart <nl> L<ol> [C], titled 
"<nl>Handling, Storage, Distribution, and Installation<ol> [Buildings]." 
<nl>(2)<ol> No manufacturing, assembling, packaging, packing, holding, testing, 
or labeling operations of devices by <nl>manufacturers or distributors<ol> shall 
be conducted in any personal residence. 
<nl>(3)<ol> Any place of business used by a distributor to store, warehouse, 
hold, offer, transport, or display devices shall: 
<nl>(A)<ol> be of suitable size and construction to facilitate cleaning, 
<nl>maintenance, and proper operations;<ol> 
<nl>(B)<ol> have storage areas designed to provide adequate lighting, 
ventilation, temperature, sanitation, humidity, and space; 
<nl>(C)<ol> have a quarantine area for storage of devices that are outdated, 
damaged, deteriorated, misbranded, or adulterated; 
<nl>(D)<ol> be maintained in a clean and orderly condition; and 
<nl>(E)<ol> be free from infestation by insects, rodents, birds, or vermin of 
any kind. 
<nl>(e)<ol> Storage of devices. All devices stored by distributors shall be held 
at appropriate temperatures and under appropriate conditions in accordance with 
requirements, if any, in the labeling of such devices. 
<nl>(f)<ol> [(e)] Device labeling. Devices distributed by device distributors or 
manufacturers shall meet the labeling requirements of the Act and 21 CFR, Part 
801, titled "Labeling." 
<nl>(g)<ol> [(f)] Device labeling exemptions. Device labeling or packaging 
exemptions adopted under the Federal Food, Drug, and Cosmetic Act, as amended, 
shall apply to devices in Texas except insofar as modified or rejected by rules 
of the Texas Board of Health (board).
<nl>(h)<ol> [(g)] Reconditioned devices. Reconditioned devices must comply with 
the provisions of the Act and these sections and are subject to the provisions 
of the Texas Food, Drug, Device and Cosmetic Salvage Act, Health and Safety 
Code, Chapter 432. 
<nl>(i)<ol> [(h)] Medical device reporting. Device distributors or manufacturers 
shall meet the <nl>applicable<ol> medical device reporting requirements of 21 
CFR, Part 803, titled "Medical Device Reporting" or 21 CFR, Part 804, titled 
"Medical Device Distributor Reporting." 
<nl>(j)<ol> [(i)] Radiation emitting devices. Devices which emit electronic 
product radiation and are distributed by device distributors or manufacturers 
shall meet the applicable requirements of the Act and 21 CFR, Subchapter J, 
titled "Radiological Health." 

sec.229.443. Enforcement and Penalties.
(a)-(b) (No change.) 
(c) Access to records. A person who is required to maintain records 
<nl>referenced in these sections or<ol> under the Texas Food, Drug, and Cosmetic 
Act, Health and Safety Code, Chapter 431 (Act) or sec.519 or sec.520(g) of the 
Federal Food, Drug, and Cosmetic Act or a person who is in charge or custody of 
those records shall, at the request of an authorized agent or health authority, 
permit the authorized agent or health authority at all reasonable times access 
to and to copy and verify the records. 
(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 July 17, 1998.
TRD-9811311
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

CHAPTER 289. Radiation Control
SUBCHAPTER C. Texas Regulations for Control of Radiation
25 TAC sec.289.101
The Texas Department of Health (department) proposes an amendment to sec.289.101 
concerning a memorandum of understanding between the Texas Department of Health 
(TDH) and the Texas Natural Resource Conservation Commission (TNRCC) regarding 
radiation control functions. The amendment to sec.289.101 defines the respective 
duties of the agencies in the regulation of these activities, provides a 
consistent approach to avoid duplication, delineates areas of separate 
jurisdiction, and provides for dispute resolution. The revision reflects the 
transfer of jurisdiction for the regulation of uranium activities from the TNRCC 
to the TDH. 
Mrs. Ruth E. McBurney, C.H.P., Director, Division of Licensing, Registration and 
Standards, Bureau of Radiation Control, has determined that for each year of the 
first five-year period the section will be in effect, there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the section as proposed. 
Mrs. McBurney also has determined that for each year of the first five years the 
proposed section will be in effect, the public benefit anticipated as a result 
of enforcing the section will be to clarify each agency's responsibilities in 
the regulation of radioactive substances. There will be no effect on small 
businesses. There are no anticipated economic costs to persons who are required 
to comply with the section as proposed. There is no anticipated impact on local 
employment. 
Comments on the proposal may be presented to Ruth E. McBurney, C.H.P., Director, 
Division of Licensing, Registration and Standards, Bureau of Radiation Control, 
Texas Department of Health, 1100 West 49th Street, Austin, Texas 78756-3189, 
Telephone (512) 834-6688 or electronic mail at Ruth.McBurney@tdh.state.tx.us. 
Public comments will be accepted for 30 days following publication of this 
proposal in the Texas Register. In addition, a public hearing to accept oral 
comments will be held at 9:30 a.m., Wednesday, August 19, 1998, in Conference 
Room N218, Texas Department of Health, Bureau of Radiation Control, located at 
the Exchange Building, 8407 Wall Street, Austin, Texas. 
The amendment is proposed under the Health and Safety Code, Chapter 401, which 
provides the Texas Board of Health (board) with authority to adopt rules and 
guidelines relating to the control of radiation; and sec.12.001, which 
authorizes the board to adopt rules for the performance of every duty imposed by 
law on the board, the department and the commissioner of health. The amendment 
affects Health and Safety Code, Chapter 401. 

sec.289.101. Memorandum of Understanding Between the Texas Department of Health 
and the Texas Natural Resource Conservation Commission Regarding Radiation 
Control Functions. 
(a) (No change.)
<nl>(b)<ol> Definitions. The words and terms used in this chapter shall have the 
same meaning as defined in the code, sec.401.003, unless the context clearly 
indicates otherwise. 
<nl>(c)<ol> [(b)] Jurisdiction. 
(1) In accordance with sec.401.412 of the code, the Texas Natural Resource 
Conservation Commission (TNRCC) has primary jurisdiction to regulate and issue 
licenses for the disposal of radioactive substances, except <nl>for by-product 
material, as defined in the code, sec.401.003 and<ol> for naturally occurring 
radioactive material (NORM) originating from oil and gas production and 
exploration activities, defined as "oil and gas NORM waste" in <nl>the code,<ol> 
sec.401.003 [(27) of the code. For purposes of this MOU, disposal means 
isolation or removal of radioactive substances from mankind's environment 
without intent to retrieve those radioactive substances later. The term does not 
include emissions and discharges in accordance with sec.289.202 of this title 
(relating to Standards for Protection Against Radiation) of the Texas Department 
of Health (TDH). "Radioactive substance" includes by-product material, 
radioactive material, radioactive waste, source material, sources of radiation, 
and special nuclear material as are defined by sec.401.003 of the code. In 
accordance with sec.401.412 of the code, the TNRCC also has primary jurisdiction 
to regulate and issue licenses for source material recovery and processing, 
including the disposal of by-product material, as defined in sec.401.003(3)(B) 
of the code]. 
(2) The TDH has jurisdiction to regulate and license the possession, receipt, 
use, handling, transfer, transport, and storage of all radioactive material, 
<nl>including<ol> [excluding] the recovery and processing of source material, 
<nl>and<ol> processing <nl> and disposal<ol> of by-product material as defined 
in <nl>the code,<ol> sec.401.003 [(3)(B) of the code, and the disposal of 
radioactive substances]. The TDH has sole jurisdiction to regulate and register 
or license the use or service of electronic products as defined in <nl>the 
code,<ol> sec.401.003[(9) of the code]. <nl>The code,<ol> [Section] 
<nl>sec.<ol>401.106<nl>,<ol> [of the code] gives the TDH the authority, through 
rulemaking by the Texas Board of Health, to exempt a source of radiation or a 
kind of use or user from licensing or registration requirements. 
[(3) The receipt, storage, and/or processing of radioactive substances received 
by a TNRCC licensee at a radioactive substance disposal facility for the 
explicit purpose of disposal at that facility shall be regulated by the TNRCC. 
All other uses of radioactive material (e.g., well logging, industrial 
radiography, gauging devices, etc.) at a TNRCC-licensed radioactive substance 
disposal facility shall be regulated by the TDH.] 
[(4) Processing of radioactive substances at a TNRCC-licensed radioactive 
substance disposal facility by persons other than the TNRCC licensee shall be 
authorized only by the TDH under a license or under reciprocal recognition of an 
out-of-state license and shall be in accordance with the jurisdiction of the 
TDH.] 
[(5) The receipt, storage,and processing of radioactive material at TDH-licensed 
facilities whose primary activity is not disposal of radioactive substances but 
which are also licensed by the TNRCC for disposal of radioactive substances 
shall be regulated by the TDH.] 
<nl>(d)<ol> Responsibilities. 
<nl>(1)<ol> The receipt, storage, and/or processing of radioactive substances 
received by a TNRCC licensee at a commercial radioactive substance disposal 
facility for the explicit purpose of disposal at that facility shall be 
regulated by the TNRCC. All other uses of radioactive material (e.g., well 
logging, industrial radiography, gauging devices, etc.) at a TNRCC-licensed 
radioactive substance disposal facility shall be regulated by the TDH. 
<nl>(2)<ol> Processing of radioactive substances at a TNRCC-licensed commercial 
radioactive substance disposal facility by persons other than the TNRCC licensee 
shall be authorized only by the TDH under a license or under reciprocal 
recognition of an out-of-state license and shall be in accordance with the 
jurisdiction of the TDH. 
<nl>(3)<ol> The receipt, storage, and processing of radioactive material at TDH-
licensed facilities whose primary activity is not disposal of radioactive 
substances but which are also licensed by the TNRCC for on-site non-commercial 
disposal of radioactive substances shall be regulated by the TDH. 
<nl>(e)<ol> [(c)] Relationship with the United States Nuclear Regulatory 
Commission (NRC) and the Texas Radiation Advisory Board (TRAB) regarding 
rulemaking. The TNRCC and the TDH agree to work together to ensure that complete 
regulation is maintained for sources, uses, and users of radiation. As 
appropriate, the TDH and the TNRCC agree to coordinate rulemaking activities 
between the two agencies and the TRAB to ensure consistency of regulation. Each 
agency agrees to coordinate rulemaking activities which pertain to the 
requirements of the Agreement between the State of Texas and the NRC, as 
amended, and to ensure the compatibility of rules and guidelines with federal 
regulatory programs. Each agency agrees to coordinate on providing information 
on any proposed legislation relating to the regulation of radioactive 
substances.
<nl>(f)<ol> In situ uranium mining. 
<nl>(1)<ol> The TDH has primary responsibility for licensing and enforcement 
activities for above ground process plant facilities excluding wellhead 
assemblies, well monitoring equipment, and preinjection equipment associated 
with waste disposal wells. The TDH will review the applicant's design, 
construction, operation, record keeping, maintenance, and decommissioning and 
closure plans to ensure that they meet TDH requirements. The TDH has primary 
responsibility for regulation of surface reclamation, decontamination, and 
decommissioning. 
<nl>(2)<ol> The TNRCC has primary responsibility for permitting and enforcement 
activities for all wells permitted by the TNRCC underground injection control 
program, wellhead assemblies, and groundwater monitoring equipment. The TNRCC 
will review the applicant's design, construction, operation, record keeping, 
maintenance, and closure plans to ensure that they meet the TNRCC requirements. 
The TNRCC is also responsible for reviewing the design and operations plans for 
groundwater monitoring, and excursion detection and response, in consultation 
with the TDH. The TNRCC is responsible for regulation of groundwater monitoring, 
excursion detection and response, and groundwater restoration. Preinjection 
equipment associated with waste disposal wells (tanks, filters, pumping 
stations, etc.) is the primary permitting and enforcement responsibility of the 
TNRCC. 
<nl>(3)<ol> The TDH and the TNRCC are responsible for the review, permitting, 
licensing, and enforcement activities for fluid holding ponds. The TDH and the 
TNRCC will review the applicant's design, construction, operation, record 
keeping, maintenance, and closure plans to ensure that they meet the respective 
agency requirements and license or permit conditions. The TDH and the TNRCC may 
coordinate inspections, sampling programs, and enforcement actions. Once a TNRCC 
permit for waste disposal wells associated with fluid holding ponds has been 
revoked, the TDH is responsible for enforcement activities for fluid holding 
ponds. 
<nl>(4)<ol> Each agency will encourage applicants to attend a preapplication 
meeting with representatives from each agency in attendance. 
<nl>(5)<ol> Applications and other information required by the TNRCC will be 
accepted as part of the application to the TDH. The TDH will inform the TNRCC in 
writing of any application for a radioactive material license for in situ 
uranium mining. A copy of the application and subsequent information bearing on 
the technical merit of the applications or other substantive issues received by 
either agency will be forwarded to the other agency, if requested. 
<nl>(6)<ol> TDH licenses will contain a provision that licensees must comply 
with TNRCC permit requirements. TNRCC permits will contain a provision that 
permittees must comply with TDH license requirements.
<nl>(7)<ol> The TNRCC will require reporting of all spills. The TDH will require 
reporting of spills in accordance with sec.289.260(h) of this title (relating to 
Licensing of Uranium Recovery and Byproduct Material Disposal Facilities). 
<nl>(8)<ol> The TNRCC regulates discharges into waters in the state. 
<nl>(9)<ol> The TDH has primary responsibility for enforcement of the conditions 
of its license and rules. The TNRCC has primary responsibility for enforcement 
of the conditions of its permits and rules. Each agency will refer to the other 
agency any complaints received that are the primary responsibility of the other 
agency. When deemed appropriate by both agencies, the TNRCC and the TDH may 
jointly enforce permit and license terms and conditions, and may make joint 
inspections and cooperate on enforcement actions. Nothing herein shall preclude 
either agency from undertaking individual enforcement or legal actions. 
<nl>(10)<ol> Requirements for financial security for decontamination, 
decommissioning, stabilization, reclamation, maintenance, surveillance, control, 
storage, and disposal of radioactive materials of the below and above ground 
site to specified radiological and chemical levels will be established jointly 
by the TNRCC and the TDH. Posting of financial security with the TDH will 
include funds for groundwater restoration as agreed with the TNRCC. The TNRCC 
will require financial assurance for plugging and abandonment of injection and 
monitor wells associated with TNRCC underground injection control permits. 
<nl>(11)<ol> In the event that financial security or assurances deposited in the 
Radiation and Perpetual Care Fund as provided herein are required to complete 
decontamination, decommissioning, stabilization, reclamation, maintenance, 
surveillance, control, storage, groundwater restoration, and disposal of 
radiation material, the TDH, in agreement with the TNRCC, may enter into 
contracts to accomplish these activities. Payment for such contract services may 
be made from the Radiation and Perpetual Care Fund upon order of the TDH when 
the contract terms are satisfactorily completed. 
<nl>(12)<ol> The TDH will specify in its licenses the parameters to be met in 
surface reclamation, decontamination, and decommissioning.
<nl>(g)<ol> [(d)] Emergency preparedness. 
(1) The State of Texas is required by federal laws and regulations to have 
trained personnel always available for emergency response training, drills, 
exercises, and actual emergency response at fixed nuclear facilities. <nl> The 
code,<ol> [Section] <nl>sec.<ol>401.066<nl>,<ol> [of the code] requires the TDH 
to implement these activities. 
(2) The TDH and the TNRCC will coordinate personnel availability for emergency 
planning and response activities. Each agency is authorized to collect an annual 
fee from the operators of fixed nuclear facilities in the state for expenses 
arising from emergency response activities, including training. 
(3) The TDH will inform the TNRCC in a timely manner of all required exercises, 
drills, and training. <nl>All<ol> [The TNRCC will ensure that all] technical 
personnel who work in the radiation program <nl>and are assigned to the 
emergency response team shall<ol> attend <nl> appropriate<ol> [the] emergency 
response training coordinated by the TDH. The TNRCC shall notify the TDH of 
changes in the employment status of all [the appropriate] radiation personnel 
<nl>assigned to the emergency response team<ol>. In the event of an emergency, 
the appropriate TDH and TNRCC radiation staff will be available for emergency 
response under the direction of the TDH staff and in accordance with Annex D of 
the State of Texas Emergency Management Plan. 
<nl>(h)<ol> [(e)] Management of radioactive wastewaters. 
(1) The TNRCC is the state agency having the jurisdiction in accordance with the 
Texas Water Code, Chapter 26, for the discharge of any waste or wastewaters, 
including radioactive wastewaters, into or adjacent to waters in the state, 
except for those wastes regulated by the Railroad Commission of Texas. No such 
discharge is allowed unless authorized by the TNRCC or by another state agency 
having jurisdiction over the activity. The TNRCC has responsibility for issuance 
of permits and for enforcement of the terms and conditions of permits, rules, 
and/or orders which concern the treatment and discharge of radioactive 
wastewaters. 
(2) The TNRCC shall consult with the TDH with regard to regulation and 
management of radioactive wastewaters and may not adopt any rules or engage in 
any management activities that are in conflict with state or federal laws and 
rules relating to regulation of radioactive wastewaters. The TNRCC shall notify 
the TDH, Bureau of Radiation Control, <nl>within 90 days of receipt of an 
administratively complete application,<ol> [when an application is received] for 
a treatment and/or disposal permit for radioactive wastewaters. The TNRCC shall 
provide the TDH with a copy of the wastewater treatment and/or disposal permit 
application <nl>within 90 days of receipt of an administratively complete 
application<ol> [during the technical review]. <nl>Within 30 days of receipt of 
a proposed permit, the<ol> [The] TDH shall provide the TNRCC with the 
appropriate permit limits for the radioactive component of wastewater discharges 
and cumulative limits for disposal sites, if land application is contemplated by 
the application. No separate license from the TDH shall be required to authorize 
that discharge. The TDH may provide the TNRCC with other suggestions related to 
management of radioactive wastewaters. 
(3) <nl>TDH-licensed<ol> [TDH licenses regarding] facilities requiring a 
wastewater permit shall contain a provision that licensees must comply with the 
TNRCC permit requirements. TNRCC permits governing facilities requiring a 
radioactive materials license from the TDH shall contain a provision that 
permittees must comply with TDH license requirements.
<nl>(i)<ol> [(f)] Financial security instruments. The TNRCC will <nl>perform 
periodic reviews<ol> [review] and evaluate the financial security instruments 
for <nl>licensed<ol> radioactive <nl> waste<ol> [substance] disposal sites and 
<nl>non-oil and gas NORM waste disposal<ol> [uranium recovery] facilities in 
accordance with its jurisdiction. The TDH will <nl>perform periodic reviews<ol> 
[review] and evaluate the financial security instruments for licenses in 
accordance with its jurisdiction. The radiation and perpetual care fund will be 
available for use by both agencies for <nl>use<ol> [receipt] of financial 
security as appropriate. 
<nl>(j)<ol> [(g)] Low-level waste health surveillance survey. In accordance with 
<nl>the code,<ol> sec.402.058 [of the code], the TDH and the TNRCC agree to 
coordinate efforts, <nl>as needed, <ol> in conjunction with the Texas Low-Level 
Radioactive Waste Disposal Authority and the local public health officials, in 
the development of a health surveillance survey for the population in the 
vicinity of a radioactive waste disposal site. 
<nl>(k)<ol> [(h)] Dosimetry program and meter calibration. The TDH may provide 
personnel monitoring services, thermoluminescent dosimeters for environmental 
monitoring, and radiation survey instrument calibration for TNRCC personnel in 
the radiation program in accordance with an approved contract for those 
services. [The TDH and the TNRCC may renegotiate this contract each biennium.] 
<nl>(l)<ol> [(i)] Mutual assistance. Each agency may request from the other 
agency short-term assistance of personnel or resources when there is need for 
such assistance, such as for performing close-out surveys, training, 
environmental monitoring, technical reviews, <nl>financial assurance 
information,<ol> and technical support at contested hearings <nl>or other 
project information<ol>. Each agency will provide the requested assistance to 
the extent possible without disrupting its own required activities<nl> , in 
accordance with an approved interagency contract when applicable<ol>.
<nl>(m)<ol> [(j)] Maintenance of files on known disposal sites and contaminated 
facilities. The TDH agrees to assist the TNRCC in maintaining files on known 
locations in the <nl>state<ol> [State] at which radioactive material has been 
disposed of and at which soil and facilities are contaminated<nl>,<ol> and in 
maintaining <nl>files that contain<ol> information on inspection reports related 
to these locations. Each agency agrees to maintain files <nl>referred to in this 
subsection at the location of the jurisdictional agency<ol> [of sites and 
facilities regulated in accordance with its respective jurisdictions]. 
<nl>(n)<ol> [(k)] Relationship with other <nl> Memoranda of Understanding<ol> 
[memoranda of understanding]. This MOU supersedes those found at [sec.289.123 of 
this title (relating to Licensing of Uranium Recovery Facilities),] sec.289.125 
of this title (relating to Licensing Requirements for Near-Surface Land Disposal 
of Radioactive Waste), <nl>sec.289.81 of this title (relating to Memorandum of 
Understanding on In Situ Uranium Mining between the Texas Department of Health 
and the Texas Department of Water Resources), 30 Texas Administrative Code 
sec.336.11, relating to Appendix A, and the Memorandum of Understanding Between 
the Texas Department of Health and the Texas Natural Resource Conservation 
Commission Regarding Radiation Control<ol> [, and 30 TAC sec.305.521(2) 
(Adoption of Memoranda of Understanding by Reference)]. 
<nl>(o)<ol> [(l)] Radioactive substances exempted or <nl>authorized for 
release<ol> [released] for unrestricted use. <nl>When proposing an exemption, 
the TDH will coordinate with the TNRCC, so that the TNRCC may develop a 
compatible disposal requirement, if applicable. The TNRCC, in cooperation with 
the TDH, will analyze the long-term aspects of disposal to ensure that the doses 
are maintained as low as reasonably achievable (ALARA) and below the dose limits 
for unrestricted release.<ol> Once a source of radiation is exempted from 
regulation by the Texas Board of Health in accordance with <nl>the code,<ol> 
sec.401.106 [of the code], or meets release criteria for unrestricted use in 
accordance with the provisions of the Texas Regulations for Control of 
Radiation, its disposal <nl>as a radioactive substance<ol> is not subject to 
further regulation [as a radioactive substance] by the TNRCC. 
<nl>(p)<ol> [(m)] Miscellaneous. 
(1) The TNRCC and the TDH agree to revise their respective rules and procedures 
as needed to implement this MOU. 
(2) Agency representatives shall meet as needed to discuss possible changes in 
this MOU and to encourage increased communication between the agencies. 
(3) Nothing in this MOU shall be construed to reduce the statutory jurisdiction 
of either agency. 
(4) If any provision of this MOU is held to be invalid, the remaining provisions 
shall not be affected thereby. 
<nl>(q)<ol> [(n)] Effective date. This amended MOU will take effect when signed 
by both agencies and remain in effect until rescinded by [formal action of] 
either agency <nl>by board or commission action taken in accordance with the 
terminating agency's procedures <ol>. 
<nl>(r)<ol> Dispute resolution. The parties to this MOU agree to submit any 
disputes and other matters in question between the TNRCC and TDH that arise out 
of or are related to this MOU to mediation before commencement of any suit. The 
parties further hereby agree that this provision is not a waiver of either of 
the sovereign immunity of the TNRCC or the TDH. 
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 July 17, 1998.
TRD-9811308
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 458-7236

TITLE 28. INSURANCE
PART I. Texas Department of Insurance
CHAPTER 21. Trade Practices
SUBCHAPTER C. Unfair Claims Settlement Practices
28 TAC sec.21.202, sec.21.203
The Texas Department of Insurance proposes amendments to sec.21.202 and 
sec.21.203, relating to unfair claims settlement practices. The amendments are 
necessary to provide clear definitions of terms, and to provide clarification 
and conformity with provisions and requirements of Subchapter Q, Chapter 21, of 
this title, relating to complaint records to be maintained by insurers for all 
complaints received. Amendments to sec.21.202 provide amended definitions for 
"complaint" and "insurer," and a new definition for "written communication." The 
definition for "insurer " is changed to remove the reference to health 
maintenance organizations. The HMO reference is removed because the Insurance 
Code, Article 20A.12, as amended by the 75th Legislature, ch. 1026, sec.11, as 
well as sec.11.205 of this title (relating to Documents to be Available During 
Examinations), expressly and specifically provide for complaint record 
maintenance by HMOs. Amendments to sec.21.203 provide that failure to maintain a 
complete record of complaints relating to claims in substantial compliance with 
the provisions of new sec.21.2504 is an unfair claim settlement practice. 
Provisions of new sec.sec.21.2501 -- 21.2507, published elsewhere in this issue 
of the Texas Register, address maintenance requirements for the comprehensive 
complaint record to be maintained by all insurers.
Mary Keller, senior associate commissioner for the legal and compliance activity 
of the Texas Department of Insurance, has determined that for each year of the 
first five years the amendments are in effect, there will be no fiscal impact on 
state or local government as a result of enforcing or administering the 
amendments. Ms. Keller also has determined that there will be no effect on local 
employment or the local economy.
Ms. Keller also has determined that for each year of the first five years the 
amendments are in effect, the public benefit anticipated as a result of 
administration and enforcement of the proposed amendments will be the more 
efficient administrative regulation of insurance licensees, and the more 
effective utilization of public resources in obtaining data that is essential to 
regulation with respect to claims processing and complaints resolution. The 
amendments will help assure that complaints relating to claim settlement are 
maintained consistent with requirements for all complaints and that the 
maintenance record captures minimum required information for adequate complaint 
record maintenance. Such maintenance will provide the additional benefit that 
insurers will be better able to evaluate customer satisfaction and thereby 
improve the services provided to persons who are benefit recipients under 
contracts issued by insurers.
Ms. Keller also has determined that for the first year the proposed amendments 
are in effect, there is no compliance cost resulting from the amendment to these 
sections to an insurer complying with the amended sections. Rather, the cost of 
complying with the complaint record maintenance provisions referenced in the 
amendment to sec.21.203 is determined by provisions of proposed new 
sec.sec.21.2501-21.2507 of this title, and set out in the cost benefit note for 
those proposed new sections. Provisions of proposed new sec.sec.21.2501-21.2507 
are published elsewhere in this issue of the Texas Register. Those provisions 
address record maintenance for all complaints, including complaints relating to 
claims and claims settlement.
Comments on the proposal must be submitted in writing within 30 days after 
publication of the proposal in the Texas Register to Lynda H. Nesenholtz, 
General Counsel and Chief Clerk, MC 113-2A, P.O. Box 149104, Austin, Texas 
78714-9104. An additional copy of the comment should be submitted to Mary 
Keller, Senior Associate Commissioner for Legal and Compliance, MC 110-1A, P.O. 
Box 149104, Austin, Texas 78714-9104. A request for public hearing on the 
proposed sections should be submitted separately to the Office of the Chief 
Clerk.
The proposed clarifying and conforming amendments are proposed pursuant to the 
Insurance Code, Articles 21.21-2 and 1.03A, and the Government Code, 
sec.2001.004. The Insurance Code, Article 21.21-2, Sec. 8, provides that the 
commissioner is authorized and directed to issue such reasonable rules and 
regulations as may be necessary to carry out the various purposes and provisions 
of the article, and in augmentation of the article. Article 1.03A provides that 
the commissioner may adopt rules for the conduct and execution of the duties and 
function of the department only as authorized by a statute.
The Government Code, sec.2001.004 authorizes and requires each state agency to 
adopt rules of practice setting forth the nature and requirements of available 
procedures, and prescribes the procedure for adoption of rules by a state 
administrative agency.
The proposed amendments affect regulation pursuant to the following statutes: 
Insurance Code, Article 21.21-2.

sec.21.202. Definitions. 
The following words or phrases, as used in these regulations, shall have the 
meanings placed opposite them unless the explicit wording of a regulation shall 
otherwise direct.
<nl>(1)<ol> Business day-A day other than a Saturday, Sunday, or holiday 
recognized by this state.
<nl>(2)<ol> Claim-A request or demand reduced to writing and filed by a Texas 
resident with an insurer for payment of funds or the providing of services under 
the terms of a policy, certificate, or binder of insurance.
<nl>(3)<ol> Claimant-A person making or having made a claim.
<nl>(4)<ol> Complaint-Any written communication, not solicited by an insurer, 
primarily expressing a grievance relating to an unfair claims settlement 
practice as defined in sec.21.203 of this title (relating to Unfair Claims 
Settlement Practices). <nl>For purposes of this subchapter, any written 
communication to an insurer by the same person which relates to the same claim, 
issue or question and requests or demands the same kind of relief and which 
arises out of the same transaction or transactions is considered to be part of 
the same complaint. A complaint is not a misunderstanding or a problem of 
misinformation that is resolved promptly by clearing up the misunderstanding 
and/or supplying the appropriate information to the satisfaction of the person 
submitting the written communication, as applicable.<ol>
<nl>(5)<ol> First-party coverage-Benefits and other rights provided by an 
insurance contract to an insured.
<nl>(6)<ol> Insurer-Stock and mutual life, health, accident, fire, casualty, 
fire and casualty, hail, storm, title, and mortgage guarantee companies; mutual 
assessment companies; local mutual aid associations; local mutual burial 
associations; statewide mutual assessment companies; stipulated premium 
companies; fraternal benefit societies; group hospital service organizations; 
county mutual insurance companies; Lloyds; reciprocal or interinsurance 
exchanges; [health maintenance organizations operating under the Insurance Code, 
Chapter 20A, for claims made by enrollees for reimbursement of payments for 
emergency and out-of-area covered services]; and farm mutual insurance 
companies.
<nl>(7)<ol> Policyholder-The owner of a policy, certificate, or binder of 
insurance, and any insured, named insured, or obligee under a bond.
<nl>(8)<ol> Third-party coverage-Benefits and other rights provided by an 
insurance contract to any person other than the insured.
<nl>(9)<ol> <nl>Written communication-Any communication that is documented by 
publication or otherwise being written onto a medium which is capable at the 
point of receipt of being viewed, stored, retrieved and reproduced by the 
recipient without any transcription. Such communication expressly includes, but 
is not limited to, facsimile transmissions and electronic mail 
transmissions.<ol>

sec.21.203. Unfair Claim Settlement Practices. 
No insurer shall engage in unfair claim settlement practices. Unfair claim 
settlement practices means committing or performing any of the following: 
(1)-(5) (No change)
(6) failure of any insurer to maintain <nl>, in substantial compliance with 
sec.21.2504 of this title (relating to Complaint Record; Required Elements; 
Explanation and Instructions),<ol> a complete record of all complaints <nl>, as 
that term is defined in sec.21.202(4) of this title (relating to 
Definitions),<ol> which it has received during the preceding three years or 
since the date of its <nl>most recent financial<ol> [last] examination by the 
commissioner of insurance, whichever time is shorter. <nl>For purposes of this 
section, "substantial compliance" has the meaning set out in sec.21.2503 of this 
title (relating to Declaration of Unfair Trade Practice).<ol> [ This record must 
indicate the total number of complaints, their classification by line of 
insurance, the nature of each complaint, the disposition of these complaints, 
and the time it took to process each complaint. A record of such complaints 
maintained in substantially the form as indicated on consumer complaint record 
will be presumed to be in compliance with this requirement, but consumer 
complaint record shall not be considered as the exclusive method to record such 
complaints. A copy of consumer complaint record may be obtained from the 
Consumer Services Division (111-1A), P.O. Box 149091, Austin, Texas 78714-9091];
(7)-(19) (No change)
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811402
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-6327

SUBCHAPTER Q. Complaint Records to be Maintained
28 TAC sec.sec.21.2501-21.2507
The Texas Department of Insurance proposes new Subchapter Q, sec.sec.21.2501-
21.2507, relating to records which must be maintained by all insurers concerning 
complaints made against such insurers. The new sections are necessary to address 
comprehensive complaint record maintenance by insurers. The sections provide 
definitions of terms, prescribe minimum information items to be maintained by 
insurers in the complaint record, set out a recommended uniform method of 
complaint record maintenance by insurers, and prescribe a presentation format 
for such information. Comprehensive maintenance of complaint information will 
provide benefits to both insurers and the department. A properly maintained 
record of the type addressed in the sections will assist insurers to quickly 
determine the level of consumer satisfaction with the company in its dealings 
with policyholders and benefit recipients. Moreover, the sections will help 
assure more effective and economical availability to the department the 
information which insurers are required to maintain about claims processing and 
complaints resolution. Clarifying and conforming amendments to Subchapter C of 
this chapter, relating to unfair claim settlement practices, are published 
elsewhere in this issue of the Texas Register. The requirements set out in this 
subchapter are based on the Model Regulation for Complaint Records to be 
Maintained adopted by the National Association of Insurance Commissioners 
(NAIC). Proposed sec.21.2501 sets out the purpose and applicability of the 
sections. Proposed sec.21.2502 provides definitions for the terms "complainant," 
"complaint," "complaint record," "insurer," "person," and "written 
communication." Proposed sec.21.2503 provides it is an unfair trade practice for 
an insurer to fail to maintain a complete record of all complaints in 
substantial compliance with the sections. Proposed sec.21.2504 provides for 
minimum items of information required to be maintained by insurers in the 
complaint record. Proposed sec.21.2505 provides for a complaint record form. 
Proposed sec.21.2506 provides for the maintenance basis and compilation 
frequency of the complaint record. Proposed sec.21.2507 provides for the 
effective date of the sections.
Mary Keller, senior associate commissioner for the legal and compliance activity 
of the Texas Department of Insurance, has determined that for each year of the 
first five years the proposed new sections are in effect, there will be no 
fiscal impact on state or local government as a result of enforcing or 
administering the new sections. Ms. Keller also has determined that there will 
be no effect on local employment or the local economy.
Ms. Keller 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 
administration and enforcement of new sections will be the more efficient 
administrative regulation of insurance licensees, and the more effective 
utilization of public resources by obtaining for use data that is essential to 
such regulation with respect to claims processing and complaints resolution.
Ms. Keller also has determined that for the first year the new sections are in 
effect, the cost to each insurer complying with the sections will depend on 
several factors, some of which result from options chosen by an insurer in order 
to comply with the sections.
The proposed new sections represent a purposeful effort by the department to 
mitigate maintenance compliance costs to all insurers, including those which 
qualify as small businesses under the Government Code, sec.2006.001, while at 
the same time assuring maintenance of minimum required information items 
determined to be necessary by the NAIC in its Model Regulation for Complaint 
Records to be Maintained.
All insurers currently are required by statute and rule to maintain a complete 
record of all complaints for the preceding three years or since the date of the 
most recent examination by the commissioner, whichever time period is shorter, 
for all complaints relating to the claims process or claims practices. The new 
sections do not materially change the items of information that must be 
maintained currently by all insurers for all complaints relating to the claims 
process and claims practices. Therefore, compliance cost for all insurers for 
maintenance of a complaint record resulting from these new sections is 
incremental, and relates primarily to those complaints to be maintained by 
insurers which do not result from the claims process or claims practices. 
Another factor determining ultimate compliance cost under the new sections is 
whether an insurer is already maintaining a complaint record which captures all 
required items of information and whether that complaint record is maintained in 
substantially the format for presentation which is set out in the proposal. For 
insurers authorized to issue insurance coverage in any of the several states 
that have adopted the NAIC Model Regulation for Complaint Records to be 
Maintained, or insurers whose complaint record systems already capture all 
information required in the new sections, compliance costs relating to 
maintenance should be minimal, since the maintenance requirements of proposed 
new sections are identical to those of the NAIC Model. Like the NAIC Model, the 
proposed new sections do not prescribe a format for maintenance of the complaint 
record, but recommend one patterned on the NAIC Model. For these reasons, any 
insurer complying with the maintenance provisions of the Model also will be 
complying with maintenance provisions of the proposed new sections. The first 
year compliance cost also will depend on whether the insurer chooses to make any 
changes to the manner or type of media in which it maintains its complaint 
record, and whether such a choice results in or reflects a change from the 
insurer's previous media format for complaint record maintenance. Other cost 
containment features of the proposed new sections include their prospective 
application only to complaints received on or after the effective date of the 
sections, an effective date of January 1, 1999 to provide a compliance window, 
and the absence of a complaint record maintenance requirement as a single 
comprehensive register of complaints.
Unlike the NAIC Model, however, the proposed new sections prescribe a form for 
presentation of complaint information to the department at the time of 
examination or upon departmental request.
For reasons set out in this note, a one-time upgrade-or-conversion cost 
associated with complaint-information inclusion and format revision, or a 
periodic presentation conversion cost, is estimated to be no greater than 
$15,000 for larger insurers, and for those utilizing electronic record 
maintenance systems currently capturing all required information items which are 
subsequently converted to the recommended maintenance format set out in these 
sections. The compliance cost estimate for insurers using electronic record 
maintenance systems is based on a TDI Information Systems (IS) division review 
of complaint record requirements in the proposal. The $15,000 estimate is based 
on IS experience in the current department network environment and the previous 
mainframe environment. The first-year estimate includes incremental costs for 
additional programming for insurers with electronic systems having current 
capability to capture all required information items and choosing to maintain 
the record in the recommended format. It also includes incremental costs for 
additional programming for insurers with electronic systems lacking current 
capability to capture all required elements but with the capacity to do so if 
reprogrammed.
It also includes hardware/software acquisition costs and programming costs for 
insurers choosing to convert to electronic record maintenance systems from hard-
copy systems or from electronic systems lacking current capability to capture 
all required information items where reprogramming might not be an option.
The ultimate amount of any upgrade-or-conversion costs to insurers which 
maintain the record electronically also will vary, as indicated in four 
illustrative examples developed by the IS division, as follows:
(1) For smaller insurers converting from hard copy systems to electronic 
systems, the conversion cost is estimated to be no more than $2,500, based on 
the assumption that the insurer acquires personal computer hardware and a 
software package similar to MS Excel for data maintenance and reports which 
would not require programming.
(2) For insurers with electronic systems having current capability to capture 
all required elements, the upgrade cost is estimated to be no more than $5,000, 
assuming the programming is necessary only to provide a presentation/reporting 
format as set out in the proposed new sections for items of complaint record 
information already captured.
(3) For smaller insurers choosing to convert to alternative electronic 
maintenance systems from systems lacking current capability to capture all 
required information items, the conversion cost is estimated to be no more than 
$2,500, based on the assumptions that the insurer acquires personal computer 
hardware and a software package similar to MS Excel for data maintenance and 
reports which would not require programming, and that such a system is 
sufficient to meet the insurer's needs.
(4) For insurers choosing to upgrade an electronic maintenance system lacking 
current capability to capture all required information items, compliance cost 
associated with the upgrade is estimated to be no more than $15,000, assuming 
programming is necessary for new files, data entry screens, and 
presentation/report capability.
This first-year cost for smaller insurers could be materially lower, since 
insurers may choose either electronic or hard-copy complaint maintenance 
systems, and because on average smaller insurers will have fewer complaints to 
maintain. Costs of upgrading for smaller insurers also will vary but overall 
should be lower, based on assumed smaller system requirements for such insurers. 
Insurers qualifying as small businesses under the Government Code, sec.2006.001, 
might experience economic impact under the proposal, depending on how they 
choose to maintain the complaint record. For example, an insurer qualifying as a 
small business under sec.2006.001 choosing the option set out in representative 
example Number (1) with gross premium receipts of $900,000 would have conversion 
costs of 28 cents per $100 premium receipts. A similarly situated insurer having 
gross premium receipts of $1,100,000 choosing the same option would have 
conversion costs of 23 cents per $100 premium receipts.
Though the proposed new sections might have an economic impact on insurers 
qualifying as small businesses, the department has sought to mitigate compliance 
costs to insurers qualifying as small businesses as previously set out in this 
note by: (1) permitting various maintenance formats rather than prescribing a 
single format; (2) requiring no greater complaint information maintenance than 
provided in the NAIC Model; (3) providing that the maintenance and presentation 
provisions set out in the proposed new sections are prospective only; and (4) 
providing insurers maintaining hard-copy complaint records the opportunity to 
continue doing so.
For the second through the fifth years the proposed new sections are in effect, 
there is no anticipated difference in cost of compliance between small and large 
businesses on a per-complaint maintenance cost basis, or on a per-hour labor 
cost basis. Moreover, costs associated with maintaining the complaint record 
during the second and subsequent years of the administration and enforcement of 
the new sections are anticipated to be no more per complaint than the current 
per-complaint maintenance cost.
Comments on the proposal must be submitted in writing within 30 days after 
publication of the proposal in the Texas Register to Lynda H. Nesenholtz, 
General Counsel and Chief Clerk, MC 113-2A, P.O. Box 149104, Austin, Texas 
78714-9104. An additional copy of the comment should be submitted to Mary 
Keller, Senior Associate Commissioner for Legal and Compliance, MC 110-1A, P.O. 
Box 149104, Austin, Texas 78714-9104. A request for public hearing on the 
proposed sections should be submitted separately to the Office of the Chief 
Clerk.
The new sections are proposed pursuant to the Insurance Code, Articles 21.21 and 
1.03A, and the Government Code, sec.2001.004. The Insurance Code, Article 21.21, 
sec.13, provides that the department is authorized to promulgate and enforce 
reasonable rules and regulations and order such provision as is necessary in the 
accomplishment of the purposes of Article 21.21, relating to unfair competition 
and unfair practices. Article 1.03A provides that the commissioner may adopt 
rules for the conduct and execution of the duties and function of the department 
only as authorized by a statute. The Government Code, sec.2001.004 authorizes 
and requires each state agency to adopt rules of practice setting forth the 
nature and requirements of available procedures, and prescribes the procedure 
for adoption of rules by a state administrative agency.
The proposed new sections affect regulation pursuant to the following statutes: 
Insurance Code, Article 21.21.

sec.21.2501. Applicability and Purpose. 
This subchapter applies to all insurers as defined in sec.21.2502 of this title 
(relating to Definitions). The purpose of this subchapter is to prescribe the 
minimum information required to be maintained in the complaint record of an 
insurer, to provide a recommended format for the maintenance of such a record by 
insurers, and to prescribe a presentation format for such information at the 
time of examination of insurers or upon other request for complaint record 
information by the department. Complaint record maintenance provisions of this 
subchapter apply to all complaints of an insurer not specifically excepted by 
this subchapter, including complaints relating to the claims settlement 
practices of an insurer.
(1) This subchapter does not apply to complaints received and maintained by 
Health Maintenance Organizations. The Insurance Code, Article 20A.12, as 
amended, as well as sec.11.205 of this title (Documents to be Available During 
Examinations), expressly and specifically provide for complaint record 
maintenance by HMOs.
(2) This subchapter does not apply to the complaints received by an insurer in 
its capacity as a utilization review agent. Complaint record maintenance and 
reporting for such complaints are addressed in sec.19.1716 of this title 
(relating to Complaints and Information).

sec.21.2502. Definitions
The following words or phrases, as used in these sections, shall have the 
meanings placed opposite them unless the explicit wording of a section or part 
of a section shall otherwise direct.
(1) Complainant-A person making or having made a complaint.
(2) Complaint-Any written communication, not solicited by an insurer, primarily 
expressing a grievance. For purposes of this subchapter, any written 
communication to an insurer by the same person which relates to the same claim, 
issue or question and requests or demands the same kind of relief and which 
arises out of the same transaction or transactions is considered to be part of 
the same complaint. A complaint is not a misunderstanding or a problem of 
misinformation that is resolved promptly by clearing up the misunderstanding 
and/or supplying the appropriate information to the satisfaction of the person 
submitting the written communication, as applicable.
(3) Complaint record-An electronic or hard copy record maintained by an insurer 
on a calendar-year basis and consisting of all complaints it has received during 
the preceding three years or since the date of its most recent financial 
examination, whichever time period is shorter.
(4) Insurer-Stock and mutual life, health, accident, fire, casualty, fire and 
casualty, hail, storm, title, and mortgage guarantee companies; mutual 
assessment companies; local mutual aid associations; local mutual burial 
associations; statewide mutual assessment companies; stipulated premium 
companies; fraternal benefit societies; group hospital service organizations; 
county mutual insurance companies; Lloyds; reciprocal or interinsurance 
exchanges; and farm mutual insurance companies.
(5) Person-Any natural or artificial entity, including but not limited to, an 
individual, an association, or a partnership, trust or corporation.
(6) Written communication-Any communication that is documented by publication or 
otherwise being written onto a medium which is capable at the point of receipt 
of being viewed, stored, retrieved and reproduced by the recipient without any 
transcription. Such communication expressly includes, but is not limited to, 
facsimile transmissions and electronic mail transmissions.

sec.21.2503. Declaration of Unfair Trade Practice. 
The failure of any insurer to maintain a complete record of all complaints which 
it has received during the preceding three years or since the date of its most 
recent financial examination by the commissioner of insurance, whichever time 
period is shorter, shall constitute unfair competition and unfair practices 
pursuant to the Insurance Code, Article 21.21, and shall be subject to the 
provisions of that article. An insurer must maintain its complaint record in 
substantial compliance with the provisions of this subchapter. For purposes of 
this subchapter, "substantial compliance" shall mean that the record maintained 
by the insurer must capture the prescribed minimum complaint information items 
set out in this subchapter, and must be provided to the department upon 
examination of the insurer or pursuant to a request from the department for such 
complaint information. Substantial compliance includes presenting such 
information to the department so that, if requested, a complete record of all 
complaints in the form set out in sec.21.2505 of this title (relating to 
Complaint Record Form) is provided upon examination or pursuant to a request for 
such complaint information by the department.

sec.21.2504. Complaint Record; Required Elements; Explanation and Instructions. 
(a) Complaint record: general information. The complaint record provided for in 
this subchapter shall be maintained by all insurers. The complaint record is 
based on the Model Regulation for Complaint Records to be Maintained adopted by 
the National Association of Insurance Commissioners (NAIC), and incorporates the 
prescribed minimum information required to be maintained in a complaint record 
complying with all maintenance provisions of the NAIC Model regulation. The 
complaint record is intended and recommended to be maintained as a single, 
comprehensive record. The complaint record presented to the department at time 
of examination or in response to department request must indicate the total 
number of complaints received for the applicable time interval as set out in 
this subchapter.
(1) The complaint record may be maintained at the option of the insurer in 
either an electronic format or a hard-copy format.
(2) The format set out in sec.21.2505 of this title (relating to Complaint 
Record Form) is preferred and recommended.
(3) If the complaint record is maintained in a format other than the recommended 
form or as a decentralized record, the insurer must nonetheless be capable of 
providing the department a complete complaint record upon examination or request 
in the form set out in sec.21.2505 of this title (relating to Complaint Record 
Form). Moreover, utilization of NAIC Complaint Database System Standard 
Complaint Data Form classification coding conventions for the classifications 
and categories set out in subsections (b)-(h) of this section, as applicable, is 
preferred as a maintenance option. An insurer will be required to convert 
information items in columns (2) and (3) as set out in subsections (c) and (d) 
of this section so that presentation to the department will be in a format using 
NAIC Complaint Database System Standard Complaint Data Form classification 
coding conventions. Subsections (b)-(i) of this section set out information 
items to be included in the complaint record and refer to the recommended 
documentary format.
(b) Complaint identification information. The complaint record must include, as 
indicated in Column (1) of the Complaint Record Form, entry of the unique 
complaint identification number assigned by the insurer to the underlying 
originally-submitted complaint. For any complaint involving an agent, the 
complaint record must also include an identification number for the placing or 
servicing agent.
(c) Function and reason categories for the complaint. The complaint record must 
include, as indicated in Column (2) of the Complaint Record Form, an entry for 
both the function code category, and the reason code category applicable to the 
complaint. Each complaint is to be classified hierarchically so that each is 
first assigned a function code category, followed by a reason code category. The 
function code categories set out in this subsection relate to particular kinds 
of company activities. The reason code categories relate to the more specific 
transactions entered into or actions taken by the insurer and contributing to 
the complaint. It is recommended but not required that the four-digit reason 
codes set out by the NAIC in its Complaint Database System Standard Complaint 
Data Form be utilized in maintenance of reasons for complaints addressed in this 
subsection. The function categories are set out with descriptive specificity in 
paragraphs (1)-(5) of this subsection, with particular reason categories 
similarly set out as subparagraphs within those paragraphs, as follows:
(1) Underwriting
(A) Company underwriting
(B) Individual application underwriting (applicable to complaints where 
misrepresentations or declarations in an application results in insurer action 
that is the subject of the complaint)
(C) Cancellation
(D) Rescission
(E) Nonrenewal
(F) Premiums and rating
(G) Delays
(H) Refusal to insure
(I) Miscellaneous (any reason not specified in subparagraphs
(A)-(H) of this paragraph)
(2) Marketing and Sales
(A) General Advertising
(B) Mass marketing advertising (any advertising essentially directed to reach 
more people than in a one-to-one relationship)
(C) Agent handling
(D) Replacement
(E) Dividend illustration
(F) Delays
(G) Misleading statement or misrepresentation
(H) Miscellaneous (any reason not specified in subparagraphs
(A)-(G) of this paragraph)
(3) Claims
(A) Claims procedure
(B) Delays
(C) Unsatisfactory settlements
(D) Natural disaster adjusting (situations producing a large number of claims)
(E) Unsatisfactory settlement offers
(F) Denial of claim
(G) Miscellaneous (any reason not specified in subparagraphs (A)-(F) of this 
paragraph)
(4) Policyholder service
(A) Failure to respond
(B) Delays
(C) Miscellaneous (any reason not specified in subparagraphs (A) or (B) of this 
paragraph)
(5) Miscellaneous
(d) Line type. The complaint record must include, as indicated in Column (3) of 
the Complaint Record Form, an entry which indicates the line of insurance 
involved, utilizing the classification categories set out in paragraphs (1)-(14) 
of this subsection. It is recommended but not required that the four-digit 
reason codes set out by the NAIC in its Complaint Database System Standard 
Complaint Data Form be utilized in maintenance of line type indication addressed 
in this subsection. The line type categories are as follows:
(1) Automobile
(2) Fire
(3) Homeowners - Farmowners
(4) Crop
(5) Inland Marine
(6) Individual Life
(7) Group Life
(8) Annuities
(9) Individual Health - Accident and Sickness
(10) Group Health - Accident and Sickness
(11) Workers' Compensation
(12) Liability Insurance other than Automobile
(13) Mobile Homeowners
(14) Miscellaneous (any line not specified in paragraphs (1)-(13) of this 
subsection)
(e) Company disposition after receipt. The complaint record must include, as 
indicated in Column (4) of the Complaint Record Form, an entry indicating manner 
of final disposition of the complaint. The department prefers and recommends, 
but does not require, that the disposition codes or reasons set out in 
paragraphs (1)-(15) of this subsection be utilized by insurers in categorizing 
the manner in which a complaint is disposed of or resolved. The department 
recommends use of such reason categories because, although the NAIC Model 
Regulation for Complaint Records to be Maintained does not include specific 
categories, the NAIC Complaints Database System includes such disposition 
categories, along with four-digit numeric identifiers, as standard complaint 
coding conventions. Although not intended to be exhaustive of all disposition 
descriptions, the recommended disposition reasons in paragraphs (1)-(15) of this 
subsection are as follows:
(1) Policy issued/restored.
(2) Claim settled
(3) Additional claim payment made
(4) Refund of premium
(5) Advertising withdrawn/amended
(6) Underwriting practice resolved
(7) Cancellation notice withdrawn
(8) Nonrenewal notice rescinded
(9) Premium or rate problem resolved
(10) Question of fact
(11) Contract provision/legal issue
(12) Company position upheld
(13) Insufficient information
(14) Claim resolved through arbitration or mediation
(15) Other (Any disposition not addressed in paragraphs (1)-(14) of this 
subsection.)
(f) Date received. The complaint record must include, as indicated in Column (5) 
of the Complaint Record Form, entry of the date the complaint was received. The 
date received is the date the insurer originally received the complaint.
(g) Date closed. The complaint record must include, as indicated in Column (6) 
of the Complaint Record Form, entry of the date the complaint was closed. The 
date closed is the date on which the complaint was finally disposed of, either 
by a single action or by the final in series of actions as might be necessary 
for some complaints.
(h) Source of complaint. The complaint record must include, as indicated in 
Column (7) of the Complaint Record Form, an entry classifying origin of the 
complaint. At a minimum, the entry must clearly indicate any complaint 
originating from TDI or another insurance department. It is recommended but not 
required that the NAIC Complaints Database System standard complaint coding 
conventions for "complainant type" be utilized for classifying the origin of 
complaints other than those from insurance departments.
(i) State of origin. The complaint record must include, as indicated in Column 
(8) of the Complaint Record Form, an entry classifying origin of the complaint 
by state.

sec.21.2505. Complaint Record Form. 
(a) Recommended maintenance form. The recommended form for complaint record 
maintenance is included in subsection (b) of this section in its entirety and 
has been filed with the Office of the Secretary of State. The form is available 
from the Texas Department of Insurance, Consumer Protection Division (111-1A), 
P.O. Box 149104, Austin, Texas, 78714-9104.
(b) Texas Department of Insurance Complaint Record Form.
Figure: 28 TAC sec.21.2505(b)

sec.21.2506. Maintenance Basis and Compilation Frequency of the Complaint 
Record. 
The complaint record shall be maintained on a calendar-year basis. All 
information items required to be maintained, including the number of complaints 
by line of insurance, function, reasons, disposition, complaint origin, and 
dates received and closed, shall be compiled not less frequently than once a 
year.

sec.21.2507. Effective Date. 
Provisions of this subchapter addressing complaint record maintenance and 
presentation apply to all complaints of an insurer received on or after January 
1, 1999.
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811403
Lynda H. Nesenholtz
General Counsel and Chief Clerk
Texas Department of Insurance
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-6327

TITLE 31. NATURAL RESOURCES AND CONSERVATION
PART IV. School Land Board
CHAPTER 151. General Rules of Practice and Procedure
31 TAC sec.sec.151.1-151.5
(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 School Land 
Board or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Texas General Land Office (GLO) and the School Land Board (SLB) propose the 
repeal of sec.sec.151.1-151.5, relating to General Rules of Practice and 
Procedure. This chapter and Chapter 153 and the rules they contain will be 
replaced by a new Chapter 151, relating to Operations of the School Land Board. 
These actions have been undertaken as part of the comprehensive review of the 
agency's rules mandated by the 1997 General Appropriations Act, Article X, 
sec.167, and will ensure that the SLB operates according to administrative rules 
that are clear, necessary and up-to-date. 
Fiscal implications for state or local government, public benefit, costs and 
other effects on individuals or small businesses will be addressed in the 
published proposal of the new Chapter 151. 
Comments on the proposal may be submitted to Carol Milner, Texas Register 
Liaison, General Land Office, 1700 North Congress, Room 626, Austin, Texas 
78701-1495. The deadline for comments is 5:00 p.m. on August 31, 1998. 
These actions are proposed under Texas Natural Resources Code sec.31.051, which 
gives the commissioner the authority to make and enforce rules consistent with 
the law, and Texas Natural Resources Code sec.32.062 which grants rulemaking 
authority to the SLB. 
Texas Natural Resources Code, sec.sec.32.001, 32.012, 32.014, 32.016, 32.020, 
32.021, 32.022, 32.061, 32.105, 32.107, 32.109, 32.110, 32.111, 33.205, 52.015, 
and 52.016 are affected by this action. 
sec.151.1. Land and Mineral Estate Affected. 
sec.151.2. School and Land Board Members. 
sec.151.3. Meetings; Minutes; Agenda. 
sec.151.4. Lease or Sale; Date; Advertisement; Rejections; Awards. 
sec.151.5. Appraisal Fees: Vacancies and Excess Acreage.
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 July 20, 1998.
TRD-9811362
Garry Mauro
Chairman
School Land Board
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-9129

CHAPTER 151. Operations of the School Land Board
31 TAC sec.sec.151.1-151.4
The General Land Office (GLO) and the School Land Board (SLB) propose new 
Chapter 151, sec.sec.151.1-151.4, concerning Operations of the School Land 
Board. This new chapter will be adopted concurrently with the repeal of the 
existing chapter. These actions have been undertaken as part of the 
comprehensive review of the agency's rules mandated by the 1997 General 
Appropriations Act, Article X, sec.167, and will ensure that the SLB operates 
according to administrative rules that are clear, necessary and up-to-date. 
Spencer Reid, General Counsel, has determined that for the first five-year 
period the rules are in effect, there will be no negative fiscal implications 
for state or local government. 
Mr. Reid also has determined that for each year of the first five-year period 
the rules are in effect, the public will benefit from the resulting simplified 
regulatory scheme regarding state-owned land and also from the increased 
flexibility provided to the SLB with respect to leasing. More specifically, the 
new rules will not limit lease sales to only the first Tuesday of a given month 
but instead will allow them on the third Tuesday of a given month as well. 
Additionally, fees charged for the nomination of tracts for the lease sale will 
now only be refunded if the commissioner of the GLO determines that it is in the 
best interest of the state. Since all nominated tracts must be researched for 
eligibility by the SLB staff, refunds will not, as a general rule, be allowed. 
Finally, nominators for special lease sales must share the costs of any required 
advertising. 
Mr. Reid also has determined that there may be fiscal implications for small 
businesses and individuals as a result of enforcing or administering the rules 
regarding the nonrefundability of the $100 nomination fee, but the agency is 
unable to determine the total amount of such costs because that figure will 
depend on the presently unknown number of tracts which might be nominated yet 
found to be ineligible for lease. 
Mr. Reid also has determined that there may be fiscal implications for small 
businesses and individuals as a result of enforcing or administering the rules 
regarding charging nominators for the cost of advertising special lease sales. 
The amount of such costs cannot be determined because that figure will depend on 
the presently unknown cost of the required newspaper advertising as well as the 
number of nominators participating in a given special lease sale. Finally, there 
may be minor fiscal implications as a result of any fees which may be charged 
for Notice for Bids packets. This impact is also not quantifiable because it 
will vary with each lease sale. The GLO does not intend to charge any such fee 
for the lease sale to be held in October of 1998. 
In accordance with the 1997 General Appropriations Act, Article IX, sec.77, 
payors are hereby notified that any fee increases generated by these amendments 
are the result of decisions made by the GLO, and were not mandated the 
Legislature. This new chapter is primarily operational in nature and, to the 
extent it adds new requirements that impact leasehold interests, will only apply 
to leases issued after the effective date of the new chapter, as well as any 
other leases that refer to or otherwise contemplate being controlled by 
administrative rules. Therefore, the GLO has determined that this action has no 
impact on private real property. A Takings Impact Analysis restating that 
conclusion is on file at the GLO. 
This action is not a rulemaking subject to the Coastal Management Plan under 
Chapter 505 of this title, relating to Council Procedures for State Consistency 
with Coastal Program Goals and Policies. 
Comments on any aspect of the proposed rules, including their consistency with 
the goals and policies of the Coastal Management Program, may be submitted to 
Carol Milner, Texas Register Liaison, General Land Office, 1700 North Congress, 
Room 626, Austin, Texas 78701-1495. The deadline for comments is 5:00 p.m., 
August 31 1998. 
These actions are proposed under Texas Natural Resources Code sec.31.051, which 
gives the commissioner the authority to make and enforce rules consistent with 
the law, and Texas Natural Resources Code sec.32.062 which grants rulemaking 
authority to the SLB. 
Texas Natural Resources Codes sec.sec. 32.026, 32.107, 32.110, 33.205, 52.016, 
and 52.020 are affected by these rules. 

sec.151.1. School Land Board Meeting Administration. 
(a) The secretary of the School Land Board (SLB) shall keep as records at the 
General Land Office, the minutes and the docket of each meeting. 
(b) The secretary of the SLB shall prepare the docket for the meeting and file 
and post notice of the meeting in compliance with the Open Meetings Act. Notice 
of the board meeting will include: 
(1) the time, date, and location of the meeting; and 
(2) those items to be considered by the SLB. 
(c) Members of the public may make personal statements of their views on a 
matter before the SLB provided that they identify themselves for the record. 
Members of the public making only such statements will not be considered parties 
to the meeting. 
(d) Any person requesting a formal action by the SLB must notify the secretary 
prior to the meeting, providing in writing the person's name, address, and 
interest in the meeting. Any such participant will be considered a party to the 
meeting. 
(e) All persons appearing before the SLB and any evidence they present will be 
subject to full examination by the members of the SLB. 
(f) Parties may be represented by an attorney. Upon notification of the 
secretary, the attorney will receive all correspondence directed to the party on 
behalf of the SLB. 
(g) Any applicant before the SLB and any other person filing their name, 
address, and a request for notification with the secretary, will be notified in 
writing of the date, time, and place of the board meeting at which the 
application will be considered. However, failure to mail the notice does not 
invalidate any action taken by the SLB. 
(h) An applicant and those persons who have properly requested notification will 
be informed in writing of any action taken by the SLB concerning that person's 
application as expeditiously as possible following the meeting. 
(i) The SLB shall adopt, amend, and repeal rules in accordance with the Texas 
Register and Administrative Code, Government Code, Chapter 2002. Any interested 
person may petition the SLB in writing to request adoption of a rule. The SLB 
shall consider the request at the next scheduled meeting and shall either grant 
or deny the request. Rulemaking procedures shall be initiated within 60 days of 
the receipt of the request if granted. If denied, the SLB shall state its 
reasons in writing and mail them to the petitioner within 60 days of receipt of 
the request.
(j) The SLB's policy is to encourage and ensure maximum public participation in 
all matters it considers. The SLB shall conduct all meetings in accordance with 
the Open Meetings Act. 

sec.151.2. Energy Lease Sales. 
(a) Written requests that designated tracts of state land be offered for lease 
of oil, gas, and other minerals may be submitted to the commissioner of the 
General Land Office (GLO) at any time. 
(b) When the School Land Board (SLB) schedules a lease sale, it shall also set a 
final date for submitting nominations for that sale. This date shall be included 
in the notice of the sale. A list of tracts offered for lease at a particular 
lease sale may be obtained from the GLO. The GLO reserves the right to assess a 
fee for this service. For more information please contact the Minerals Leasing 
Division of the GLO. 
(c) A $100 fee made payable to the GLO shall be submitted for each tract 
nominated. Nomination fees are nonrefundable. However, a refund of a nomination 
fee may be granted at the commissioner's discretion, if the commissioner 
determines that it is in the best interest of the state. 
(d) After a bid has been received by the GLO it may not be revoked or withdrawn 
by the bidder. All bids must include a separate check in an amount equal to one 
and one-half percent of the bid payable to the commissioner as a special fee. 
Checks submitted by unsuccessful bidders shall be returned to the bidders. 
Failure to pay the special fee does not render a bid void, but the commissioner 
shall demand payment of the fee before issuing a lease to the successful bidder. 
If the successful bidder fails or refuses to make the payment within 30 days 
after demand by the commissioner, the bidder is not entitled to a sale of or 
lease on the tract covered by that bid and the cash bonus shall be automatically 
forfeited to be deposited by the commissioner in the state treasury to the 
credit of the appropriate special mineral fund for the agency involved. The SLB, 
at its option, may offer the tract for sale or lease to the next best bidder 
under the same terms as submitted by and as would have been granted to the best 
bidder. 
(e) Interested state and federal agencies will be requested to submit 
recommendations on tracts nominated in submerged areas so that a prospective 
bidder is informed in advance as to any drilling or development restrictions 
which might be expected. 
(f) All bonuses and special fees required by Texas Natural Resources Code 
sec.32.110 shall be returned to the makers of unsuccessful bids. Executed leases 
will be delivered to the successful bidders. 
(g) Nominators of tracts shall pay all required advertising costs associated 
with lease sales other than those sales regularly scheduled for April and 
October of each year. Nominators of tracts in such a sale shall be billed by the 
GLO for their portion of those costs. 

sec.151.3. Appraisal Fees: Vacancies and Excess Acreage. 
(a) All successful applicants for the purchase of a vacancy shall pay a fee of 
$300 to cover the expense of the appraisal required by the School Land Board 
(SLB) to establish the purchase price for the vacancy. 
(b) All applicants for the purchase of excess acreage shall pay a fee of $300 
for the first section or survey to be appraised and $50 for each additional 
section or survey to be appraised to cover the expense of the appraisal required 
by the SLB to establish the purchase price for the excess acreage. 

sec.151.4. Consistency with Coastal Management Program.
Except as otherwise provided in sec.16.1(c) of this title (relating to 
Definitions and Scope), an action listed in sec.16.1(b) of this title taken or 
authorized by the General Land Office or School Land Board pursuant to this 
chapter that may adversely affect a coastal natural resource area, as defined in 
sec.16.1 of this title is subject to and must be consistent with the goals and 
policies identified in Chapter 16 of this title (relating to Coastal Protection) 
in addition to any goals, policies, and procedures applicable under this 
chapter. If the provisions of this chapter conflict with and can not be 
harmonized with certain provisions of Chapter 16, such conflicting provisions of 
Chapter 16 will control. 
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 July 20, 1998.
TRD-9811364
Garry Mauro
Chairman
School Land Board
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-9129

CHAPTER 153. Exploration and Development
31 TAC sec.sec.153.1-153.4
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the School Land 
Board or in the Texas Register office, Room 245, James Earl Rudder Building, 
1019 Brazos Street, Austin.)
The Texas General Land Office (GLO) and the School Land Board (SLB) propose to 
repeal Chapter 153, sec.sec.153.1-153.4 relating to Exploration and Development. 
This chapter and Chapter 151 and the rules they contain will be replaced by a 
new Chapter 151, relating to Operations of the School Land Board. 
These actions have been undertaken as part of the comprehensive review of the 
agency's rules mandated by the 1997 General Appropriations Act, Article X, 
sec.167, and will ensure that the SLB operates according to administrative rules 
that are clear, necessary and up-to-date. 
Fiscal implications for state or local government, public benefit, costs and 
other effects on individuals or small businesses will be addressed in the 
published proposal of the new Chapter 151. 
Comments on the proposal may be submitted to Carol Milner, Texas Register 
Liaison, General Land Office, 1700 North Congress, Room 626, Austin, Texas 
78701-1495. The deadline for comments is 5:00 p.m. on August 31, 1998. 
These actions are proposed under sec.31.051, which gives the commissioner the 
authority to make and enforce rules consistent with the law, and sec.32.062 
which grants rulemaking authority to the SLB. 
Texas Natural Resources Code, sec.sec.32.001, 32.012, 32.014, 32.016, 32.020, 
32.021, 32.022, 32.061, 32.105, 32.107, 32.109, 32.110, 32.111, 33.205, 52.015, 
and 52.016 are affected by this action. 
sec.153.1. Nominations of Tracts for Lease.
sec.153.2. Land Offered for Lease.
sec.153.3. Lease Approval.
sec.153.4. Consistency with Coastal Management 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 July 20, 1998.
TRD-9811363
Garry Mauro
Chairman
School Land Board
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-9129

PART V. Board for Lease of State-Owned Lands
CHAPTER 201. General Rules
31 TAC sec.sec.201.1-201.16
(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 Boards for 
Lease of State-Owned Lands or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The General Land Office (GLO) and the Texas Parks and Wildlife Department and 
the Texas Department of Criminal Justice Boards for Lease propose the repeal of 
sec.201.1-201.16, relating to General Rules. This chapter and the rules it 
contained will be replaced by a new Chapter 201, relating to Operations of the 
Texas Parks and Wildlife Department and Texas Department of Criminal Justice 
Boards for Lease. 
These actions have been undertaken as part of the comprehensive review of the 
agency's rules mandated by the 1997 General Appropriations Act, Article X, 
sec.167, and will ensure that these boards for lease operate according to 
administrative rules that are clear, necessary and up-to-date. 
Fiscal implications for state or local government, public benefit, and any 
effects on individuals or small businesses will be addressed in the published 
proposal of the new Chapter 201. 
Comments on the proposal may be submitted to Carol Milner, Texas Register 
Liaison, General Land Office, 1700 North Congress, Room 626, Austin, Texas 
78701-1495. The deadline for comments is 5:00 p.m. on August 31, 1998. 
This action is proposed under Texas Natural Resources Code, sec.34.065 which 
grants the Texas Department of Criminal Justice and Texas Parks and Wildlife 
Department boards for lease rulemaking authority. 
Texas Natural Resources Code sec.sec.32.110, 34.002, 34.011, 34.012, 34.013, 
34.014, 34.055, 34.057, and 34.064 are affected by this action. 
sec.201.1. Boards for Lease. 
sec.201.2. Board Members. 
sec.201.3. Minutes. 
sec.201.4. Agenda. 
sec.201.5. Land for Lease. 
sec.201.6. Excluded Lands. 
sec.201.7. Lease Sale. 
sec.201.8. Nominations of Tracts, for Lease. 
sec.201.9. Filing in General Land Office. 
sec.201.10. Deposits. 
sec.201.11. Assignment of Lease. 
sec.201.12. Forfeiture of Lease. 
sec.201.13. Permits. 
sec.201.14. Easements. 
sec.201.15. Lessee Responsibility. 
sec.201.16. Pollution & Restoration. 
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 July 20, 1998.
TRD-9811392
Garry Mauro
Commissioner
General Land Office
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-9129

CHAPTER 201. Operations of the Texas Parks & Wildlife Department and Texas 
Department of Criminal Justice Board for Lease
31 TAC sec.sec.201.1-201.7
The General Land Office (GLO), the Texas Parks and Wildlife Department (TPWD), 
and Texas Department of Criminal Justice Boards for Lease propose new Chapter 
201, sec.sec.201.1-201.7, concerning Operations of the Texas Parks and Wildlife 
Department and Texas Department of Criminal Justice Boards for Lease. This new 
chapter will be adopted concurrently with the repeal of the existing chapter. 
These actions have been undertaken as part of the comprehensive review of the 
agency's rules mandated by the 1997 General Appropriations Act, Article IX, 
sec.167, and will ensure that these boards for lease operate according to 
administrative rules that are clear, necessary and up-to-date. Spencer Reid, 
General Counsel, has determined that for the first five-year period the rules 
are in effect there will be no negative fiscal implications for state or local 
government. 
Mr. Reid also has determined that for each year of the first five-year period 
the rules are in effect, the public will benefit from the resulting simplified 
regulatory scheme regarding state-owned land. Additionally, fees charged for the 
nomination of tracts for the lease sale will now only be refunded if the 
commissioner of the GLO determines that it is in the best interest of the state. 
Since all nominated tracts must be researched for eligibility by the School Land 
Board staff, refunds will not, as a general rule, be allowed.
Mr. Reid also has determined that there may be fiscal implications for small 
businesses and individuals as a result of enforcing or administering the new 
chapter and rules regarding the nonrefundability of the $100 nomination fee, but 
the agency is unable to determine the total amount of such costs because that 
figure will depend on the presently unknown number of tracts which might be 
nominated yet found to be ineligible for lease. 
Mr. Reid also has determined that because these new rules incorporate the 
concurrently proposed sec.151.2(g) of this title, (relating to Energy Lease 
Sales), there may be fiscal implications for small businesses and individuals as 
a result of enforcing or administering that portion of the new chapter and rules 
regarding charging nominators for the cost of advertising special lease sales. 
The amount of such costs cannot be determined because that figure will depend on 
the presently unknown cost of the required newspaper advertising as well as the 
number of nominators participating in a given special lease sale. 
Mr. Reid also has determined that there may be fiscal implications for small 
businesses and individuals as a result of administering portions of new 
sec.201.6 of this title, (relating to Lessee Responsibility). However, because 
some of the provisions of this section generally reflect standard industry 
practice and the typically expected actions of a reasonably prudent operator, as 
already required of any lessee by the common law of this state, the fiscal 
implications of those provisions will not result in new costs being imposed on 
lessees. Certain requirements concerning a lessee's responsibilities, contained 
in sec.201.6, may impose some costs on small businesses and individuals. Because 
the exact number of state lessees will inevitably vary, and due to other 
variables particular to each individual lessee, the fiscal impact of such costs 
is not quantifiable. 
In accordance with the 1997 General Appropriations Act, Article IX, sec.77, 
payors are hereby notified that any fee increases generated by these rules are 
the result of decisions made by the GLO, and were not mandated by the 
legislature. 
This new chapter is primarily operational in nature and, to the extent it adds 
new requirements that impact leasehold interests, will only apply to leases 
issued after the effective date of the new chapter, as well as any other leases 
that refer to or otherwise contemplate being controlled by administrative rules. 
Therefore, the GLO has determined that this action has no impact on private real 
property. A Takings Impact Analysis restating that conclusion is on file at the 
GLO. 
This action is not a rulemaking subject to the Coastal Management Plan under 
Chapter 505 of this title, relating to Council Procedures for State Consistency 
with Coastal Management Program Goals and Policies. 
Comments on any aspect of the proposed rules, including its consistency with the 
goals and policies of the Coastal Management Program, may be submitted to Carol 
Milner, Texas Register Liaison, General Land Office, 1700 North Congress, Room 
626, Austin, Texas 78701-1495. The deadline for comments is 5:00 P.M. on August 
31, 1998. 
This action is proposed under Texas Natural Resources Code, sec.34.065 which 
grants the Texas Department of Criminal Justice and Texas Parks and Wildlife 
Department Boards for Lease rulemaking authority. 
Texas Natural Resources Codes sec.sec.32.152, 32.155, 32.156, 32.157, 33.205, 
33.2052, 33.2053, 34.018, 34.020, 34.051, 34.057, 34.0135, 52.029, 52.085, 
52.131, 52.132, 52.135, 52.176, and 89.011 are affected by this rule.

sec.201.1. Boards for Lease Meeting Administration.
(a) The secretary of a Board for Lease (Board) shall keep as records at the 
General Land Office, the minutes and the docket of each meeting. 
(b) The secretary of the Board shall prepare the docket for the meeting and file 
and post notice of the meeting in compliance with the Open Meetings Act. Notice 
of the board meeting will include: 
(1) the time, date, and location of the meeting; and 
(2) those items to be considered by the Board. 
(c) Members of the public may make personal statements of their views on a 
matter before the Board provided that they identify themselves for the record. 
Members of the public making only such statements will not be considered parties 
to the meeting. 
(d) Any person intending to present evidence before the Board or participate in 
the meeting other than by personal statement must notify the secretary prior to 
the meeting, providing in writing the person's name, address, and interest in 
the meeting. Any such participant and their witnesses will be considered parties 
to the meeting. 
(e) All persons appearing before the Board, and any evidence they present, will 
be subject to full examination by the members of the Board. 
(f) Parties may be represented by an attorney. Upon notification of the 
secretary, the attorney will receive all correspondence directed to the party on 
behalf of the Board. 
(g) Any applicant before the Board and any other person filing their name, 
address, and a request for notification with the secretary, will be notified in 
writing of the date, time, and place of the board meeting at which the 
application will be considered. However, failure to mail the notice does not 
invalidate any action taken by the Board. 
(h) An applicant and those persons who have properly requested notification will 
be informed in writing of any action taken by the Board concerning that person's 
application as expeditiously as possible following the meeting. 
(i) The Board shall adopt, amend, and repeal rules in accordance with the Texas 
Register and Administrative Code, Government Code, Chapter 2002. Any interested 
person may petition the Board in writing to request adoption of a rule. The 
Board shall consider the request at the next scheduled meeting and shall either 
grant or deny the request. Rulemaking procedures shall be initiated within 60 
days of the receipt of the request if granted. If denied, the Board shall state 
its reasons in writing and mail them to the petitioner within 60 days of the 
request. 
(j) The Board's policy is to encourage and ensure maximum public participation 
in all matters it considers. The Board shall conduct all meetings in accordance 
with the Open Meetings Act. 

sec.201.2. Lease Sale.
(a) A Board for Lease (Board) may schedule a lease sale at any time. Leases of 
land owned by the Texas Parks and Wildlife Department or the Texas Department of 
Corrections shall be advertised and sold in the same manner as leases issued by 
the School Land Board (SLB) under Texas Natural Resources Code, Chapter 32. The 
procedures, fees, and cost sharing set out in Chapter 151 of this title 
(relating to Operations of the School Land Board) shall also apply to the 
Board's lease sales. 
(b) The lease shall contain the same terms and conditions as leases issued by 
the SLB under Texas Natural Resources Code, Chapter 32 and Chapter 151. However, 
a Board may place any other terms and conditions in the lease it determines to 
be in the best interest of the state. 

sec.201.3. Filing in General Land Office. 
Records pertaining to leases by a Board for Lease are to be filed in the records 
of the General Land Office accompanied by any filing fee prescribed by sec.1.3 
of this title (relating to Fees). 

sec.201.4. Deposits. 
Payments received by a Board for Lease are payable to the commissioner of the 
General Land Office, who will deposit receipts with the state treasurer to the 
credit of the appropriate special mineral fund for the agency involved.

sec.201.5. Provisions. 
The provisions of Texas Natural Resources Code, Chapters 32 and 52, and sec.9.7 
of this title (relating to Royalty and Reporting Obligation to the State), and 
sec.9.8 of this title (relating to Discontinuing the Leasehold Relationship) 
shall apply to leases issued by a Board for Lease.

sec.201.6. Lessee Responsibility.
(a) Applicable Laws. All drilling, producing, gathering, transporting, 
processing and other operations on state lands shall be subject to applicable 
state and federal laws. 
(b) Conflict between this chapter and other rules and statutes. Operations on 
state lands are subject to all valid applicable state and federal regulatory 
authorities. This chapter supplements the regulatory powers of such authorities. 
(c) General policy. These rules are not intended to unlawfully impair any 
existing contract. 
(d) Exceptions to this chapter. A Board for Lease (Board) may if authorized by 
law and upon proper written request, grant exceptions to the provisions of this 
chapter if the Board deems the exceptions to be in the best interest of the 
state. No such exception shall be effective until a written request by the 
lessee and a written explanation, approved by the Board and signed by the 
commissioner, as chairman of the Board, is placed in the appropriate mineral 
file or other General Land Office file. 
(e) Compliance. Lessee shall comply with the provisions of the lease. Nothing in 
this chapter shall be construed as relieving a lessee of this duty or as 
impairing any remedies available to the state. If a lessee or operator fails to 
comply with this chapter, the Board may seek any remedy allowed by law, 
including forfeiture of the lease. Lessee shall be liable for the damages caused 
by such failure and any costs and expenses incurred while enforcing this chapter 
and cleaning areas affected by any pollution or discharged waste. A lessee is 
also responsible for the actions or omissions of its operator as well as for the 
actions or omissions of lessee's employees, agents, servants, contractors, 
subcontractors, trustees, receivers, and any other agent in control of any or 
all of the leasehold interest. 
(f) Identification. All well locations and other structures shall be marked so 
as to identify the state tract number, well number, and the company operating 
the lease Additionally, any well drilled on property leased under this chapter 
must be identified as a state well in Railroad Commission records by using 
"state" as the first word in its designated Railroad Commission name. 
(g) Inspections. The commissioner of the GLO, the attorney general, the 
governor, and their representatives, shall at all times have access to the 
premises upon which wells are being drilled or produced for oil, gas, or other 
minerals to make inspections of all drilling, producing, gathering, and 
processing operations, or for any other reason deemed necessary. 
(h) Records. The General Land Office may from time to time require any records 
not otherwise required relating to any aspect of lease operations and 
accounting. Such records shall be provided to the General Land Office within 30 
days of the agency's request for their production. 
(i) Commingling production. Requests to commingle production from state leases 
should be sent with supporting data to the following address: Commissioner of 
the General Land Office, Attention: Mineral Leasing Division, Stephen F. Austin 
Building, 1700 North Congress Avenue, Austin, Texas 78701-1495. 
(j) Surface Use and Hole Abandonment. Any hole or holes drilled by any 
exploration party under the terms of a lease issued by the state under this 
chapter shall be drilled in such manner as to interfere as little as possible 
with the current use of the surface. Upon the abandonment of such holes, all of 
the rigging and material shall be removed, and the surface where said hole was 
drilled shall be restored to its former condition as nearly as possible. Upon 
abandonment of a well site, all wells shall be plugged and all structures 
removed in compliance with Railroad Commission and United States Army Corps of 
Engineer regulations. All fills for roads and drill sites shall be removed if 
requested by the commissioner. 
(k) Degree of care. Lessee shall use the highest degree of care in conducting 
operations on tracts leased under this chapter and shall take all proper 
safeguards to prevent the discharge of any pollutant, including solid waste, and 
of any hazardous substances. To satisfy these requirements, lessee, at a 
minimum, must conduct operations as a reasonably prudent operator using standard 
industry practices and procedures, must satisfy express lease provisions, and 
must comply with all valid, applicable federal and state regulations. 
(l) Reporting Pollution. In the event that any pollution, whether cumulative or 
the result of an isolated event, occurring on a leased tract reaches a level at 
which it becomes a violation of state and/or federal law, notice of all relevant 
facts related to such pollution shall be filed by lessee with the General Land 
Office within 10 business days of lessee's receipt of notification of the 
violation from the appropriate state and/or federal authorities. 
(m) Separator required. All wells producing liquids must be produced through an 
oil and gas separator of ample capacity and in good working order. 

sec.201.7. Consistency with Coastal Management Program.
Except as otherwise provided in sec.16.1(c) of this title (relating to 
Definitions and Scope), an action listed in sec.16.1(b) taken or authorized by 
the Texas Parks and Wildlife Department or Texas Department of Corrections Board 
for Lease pursuant to this chapter that may adversely affect a coastal natural 
resource area, as defined in sec.16.1 is subject to and must be consistent with 
the goals and policies identified in Chapter 16 in addition to any goals, 
policies, and procedures applicable under this chapter. If the provisions of 
this chapter conflict with and can not be harmonized with certain provisions of 
Chapter 16, such conflicting provisions of Chapter 16 will control.
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 July 20, 1998.
TRD-9811393
Garry Mauro
Commissioner
General Land Office
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 305-9129

CHAPTER 363.Financial Assistance Programs
SUBCHAPTER E.Economically Distressed Areas Program
31 TAC sec.363.502, sec.363.505
The Texas Water Development Board (board) proposes amendments to sec.363.502 and 
sec.363.505, concerning Financial Assistance Programs. Amendments to sec.363.502 
and sec.363.505 amend definitions and amend provisions for the calculation of 
financial assistance in the Economically Distressed Areas Program. 
Proposed amendments to sec.363.502 would amend the definition for "Living unit 
equivalents or LUE" to be an annual average of residential water usage rather 
than a monthly average, to differentiate between existing provider utilities and 
a new utility services, and for existing provider utilities, insure that the 
number of LUE's is not less than the existing number of service connections. The 
definitions for "Regional capital component benchmark" and "Regional Payment 
benchmark" are amended to rely on comparable service providers rather than an a 
geographic proximity. A definition of "Comparable service provider" is added to 
identify comparable service providers as providing similar service to similarly 
sized population, with a similar treatment capacity, and with customers of the 
similar per capita income. The section is further amended to number definitions 
in accordance with new Texas Register requirements.
Proposed amendment to sec.363.505 would revise the methodology for determining 
the amount and form of financial assistance on applications requesting an 
increase in the amount of financial assistance previously provided by the board 
for projects under the Economically Distressed Areas Program. The current method 
for determining the amount of the loan for project increases would be to 
determine a grant to loan ratio based on the current board methodology for 
determining the amount and form of financial assistance for the project increase 
only, to also determine the amount of the loan for the increase based on the 
grant to loan ratio originally given for the project, and for the board to 
accept the larger of the two amounts as the amount of financial assistance to be 
added to the original loan for the project. The remainder of the requested 
increase would be in the form of a grant. The proposed method for determining 
the amount of the loan for project increases would be to determine a loan amount 
using the current capital component methodology for the total project including 
the increase and then deducting any amounts previously provided loan amounts, to 
also determine the amount of the loan for the increase based on the grant to 
loan ratio originally given for the project and apply that ratio to the 
requested increase only, and for the board to accept the larger of the two 
amounts as the amount of financial assistance to be added to the original loan 
for the project. The remainder of the requested increase would still be in the 
form of a grant. 
Patricia Todd, Director of Accounting & Finance, has determined that for each 
year of the first five years that the sections are in effect, there may be 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. There may be increases or decreases in the amount of 
funds local governments may have to borrow as a result of the application of 
this new methodology. These increases or decreases in loans cannot be forecasted 
as the conditions will vary on a case-by-case basis. 
Ms. Todd also has determined that for each year of the first five years that the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be greater clarity in determining the amount of financial 
assistance provided in the form of loans as well as to insure that the 
applicants requesting increases will be able to participate in the loan portion 
of the program to the full extent of their ability to repay such loan. There 
will not be an effect on small businesses. There may be an anticipated economic 
cost to persons who are required to comply with the amendments as proposed. 
There may be an effect on individuals in the event that the application of the 
new methodology causes a local government to otherwise increase the amount of 
funds borrowed, in that the increase debt may raise the service rates for water 
and/or wastewater, however, it cannot be quantified at this time. 
Comments on the proposed amendments will be accepted for 30 days following 
publication and may be submitted to Jonathan Steinberg, 512/475-2051, Texas 
Water Development Board, P.O. Box 13231, Austin, Texas, 78711-3231. 
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.16.342 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State and the authority to adopt rules that are 
necessary to carry out the program provided by Subchapter K, Chapter 17, of the 
Water Code. 
The statutory provisions affected by the proposed amendments are Texas Water 
Code, Chapter 17, Subchapter K, sec.17.933. 

sec.363.502. Definitions of Terms.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise.
<nl>(1)<ol> Capital component - That component of the existing rate of a 
provider utility for the applicable utility service used to retire the long term 
capital debt of the system determined by calculating a monthly average of the 
existing annual long term capital debt payments of the utility service provider 
divided by the total number of living unit equivalents (LUE). 
<nl>(2)<ol> <nl>Comparable service provider - A service provider that provides 
the same type of service as the provider utility for the proposed project to a 
similarly sized population, with a similar treatment capacity, and serving a 
population that has a similar per capita income based on available census data 
adjusted pursuant to the calculation set forth in the sec.371.24(b)(7) for 
adjusted median household income. <ol>
<nl>(3)<ol> Default rate - The average monthly number of residential customers 
that are delinquent in payment in excess of six months for the service provided 
divided by the average monthly total number of residential customers. 
<nl>(4)<ol> Living unit equivalents or LUE - [The total volume of water provided 
or wastewater treated annually by a provider utility divided by the annual use 
of a typical single family residence of the provider utility divided by twelve 
months.] The number of existing or projected residential rate payer equivalents 
for the provider utility in the area to be served by a proposed project which is 
calculated by dividing: 
<nl>(A)<ol> <nl> for existing provider utilities, the total historical annual 
water use of the provider utility, which includes the residential, commercial 
and institutional water use, by the historical average annual water use of an 
average residential connection of the provider utility, provided however, that 
in no event shall the number of LUE's for the project area be less than the 
number of service connections of the provider utility for the project area; or 
<ol>
<nl>(B)<ol> <nl> for new provider utilities, the total estimated annual water 
use of the provider utility, which includes the residential, commercial and 
institutional water use, by the estimated average annual water use of an average 
residential connection of the provider utility, provided however, that in no 
event shall the number of LUE's for the project area be less than the estimated 
number of service connections of the provider utility for the project area. <ol>
<nl>(5)<ol> Long term capital debt - The total amount of outstanding 
indebtedness of an applicant that at the time the debt was incurred was intended 
to be repaid over a period longer than one year, the proceeds of such 
indebtedness being used for the purpose of acquiring, constructing, or improving 
a water or sewer system or a necessary component to the service, operation, or 
maintenance of such system, including long term capital leases of real property 
and provided that leases for personal property are excluded. 
<nl>(6)<ol> Payment rate - One minus the default rate of a service utility. 
<nl>(7)<ol> Provider Utility - the entity which will provide water supply or 
wastewater service to the economically distressed area. 
<nl>(8)<ol> Regional capital component benchmark - The average capital component 
of all customers of no less than three <nl> comparable<ol> [water or wastewater] 
service providers [located in Texas within a 100 mile radius of the project 
area]. 
<nl>(9)<ol> Regional payment benchmark - The average of the payment rates of no 
less than three <nl>comparable<ol> [water or wastewater] service providers 
[located in Texas within a 100 mile radius of the project area]. 

sec.363.505. Calculation of Financial Assistance.
(a) The board's financial assistance will be determined by the provisions of 
this section, including calculating: 
(1)-(2) (No change.) 
(3) for applications requesting an increase in the amount of financial 
assistance previously provided by the board for the project under this program, 
the amount of the increase for which repayment will be required will be the 
greater of: 
(A) an amount equal to the amount of the loan of the financial assistance 
provided by the board in its first commitment for the project divided by the 
total amount of the financial assistance provided by the board in its first 
commitment for the project multiplied by the amount of the additional financial 
assistance request under consideration by the board; or 
(B) an amount equal to the amount of the loan that would have resulted by 
<nl>applying<ol> [implementing] the provisions of subsection (a)(2) of this 
section to the total [financial assistance for the] project <nl>area, less the 
amount of the loan portion of the financial assistance provided by the board in 
its previous commitments for the project under this subchapter<ol> [including 
the increase, divided by the total project cost of the project, including the 
increase, multiplied by the amount of the additional financial assistance 
request under consideration by the board]. 
(b)-(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 July 17, 1998.
TRD-9811295
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

CHAPTER 367.Agricultural Water Conservation Program
SUBCHAPTER A.Introductory Provisions
31 TAC sec.367.1
(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 Water 
Development Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The Texas Water Development Board (the board) proposes the repeal of 
sec.sec.367.1, 367.41-367.50 and 367.70-367.79 and new sec.sec.367.1 and 367.40-
367.51, concerning the Agricultural Water Conservation Program. Repealed 
sec.sec.367.41-367.50 are obsolete as funding is no longer available for the 
pilot program for low interest loans for agricultural water conservation 
equipment. Sections 367.70-367.79 will be repealed and incorporated into new 
sec.sec.367.40-367.51 in order to renumber the sections, incorporate an expanded 
list of eligible projects pursuant to Texas Water Code, sec.17.895, and add 
provisions for engineering and environmental reviews for projects that involve 
construction activities. New sec.367.1 is proposed to eliminate references to 
the repealed sections. 
In order to comply with new Texas Register structuring requirements, 
sec.sec.367.1-367.3 and 367.21- 367.30 will be known as Subchapter A, Grants for 
Equipment Purchases. New sec.sec.367.40 - 367.51 will be known as Subchapter B, 
Agricultural Water Conservation Loan Program.
The substantive changes made in sec.sec.367.40-367.51 from the repealed 
sec.sec.367.70-367.79 are as follows: 
The definition of executive administrator has been amended to indicate that the 
term includes a designated representative of the executive administrator. This 
is consistent with provisions of the Texas Water Code which allow the executive 
administrator to delegate certain duties to deputy administrators and other 
staff. 
In new sec.367.43, previously sec.367.73, two new purposes for making 
conservation loans have been specified, consistent with changes to the Texas 
Water Code: loans for preparing and maintaining land for brush control 
activities, and precipitation enhancement activities in areas of the state where 
such activities would be, in the board's judgement, most effective. Subsection 
(c) has been added in new sec.367.43 to conform to changes made during the 75th 
legislative session, and specifies that the board may make conservation loans to 
borrower districts for the cost of purchasing and installing devices on public 
or private property designed to indicate the amount of water withdrawn for 
irrigation purposes. Prior to this change board loans to borrower districts 
could only be used on district facilities. 
New sec.367.44, previously sec.367.74, includes new subsection (c) specifying 
that the board establishes the rate of interest it charges for loans to lender 
districts for conservation loans to borrower districts. New subsection (d) 
specifies that the lender district may charge individual borrowers an interest 
rate not to exceed the interest rate the lender district is charged by the board 
plus one percent for administrative expenses. Subsection (e) specifies that the 
lender district may charge an individual borrower a one time application fee in 
an amount determined by the board to cover costs of processing loan 
applications. 
New sec.367.45, previously sec.367.75, includes a requirement to provide a 
certified copy of a resolution adopted by the governing body approving the 
application and authorizing representatives for executing the application. 
New sec.367.46, previously sec.367.76, specifies the statutory requirements that 
the board must consider and find in approving an application for a loan. 
New sec.367.48 requires borrower districts to obtain executive administrator 
approval of contract documents and engineering plans and specifications prior to 
receiving bids and awarding the contract. It specifies the provision that the 
contract documents must contain, including compliance with the board's rules and 
statutes, retainage requirements of 5% and a contractor's act of assurance. It 
requires borrower districts to provide for adequate inspection of projects by 
registered professional engineers and to require engineers' assurance that work 
is performed in a satisfactory manner. It provides for the executive 
administrator's inspection of the project. It specifies that substantial 
alterations in the purpose of the project or increases in the loan commitment 
will require board approval. It specifies the conditions upon which the 
certificate of completion will be provided from the executive administrator 
after which final release of retainage may be made. 
New sec.367.49 provides for borrower districts to conduct environmental 
assessments upon projects which require erecting, building, altering, 
remodeling, improving, or extending a water supply project, and which require 
surface or subsurface soil disturbance or alteration of existing vegetation. 
New sec.367.51(b) requires that lender districts provide a report on loans made 
to borrowers during the preceding state fiscal year. 
Patricia Todd, Director of Accounting & Finance, has determined that for each 
year of the first five years that the sections are in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the sections. 
Ms. Todd also has determined that for each year of the first five years that the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to fund cost-effective measure to promote agricultural soil 
and water conservation for the State. There will be an effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the amendments as proposed. 
Comments on the repeals and new sections will be accepted for 30 days following 
publication and may be submitted to Gail Allan, Texas Water Development Board, 
P.O. Box 13231, Austin, Texas 78711-3231, 512/463-7804. 
The repeal is proposed under the authority of the Texas Water Code, sec.6.101 
which provides the Texas Water Development Board with the authority to adopt 
rules necessary to carry out the powers and duties in the Water Code and other 
laws of the State, sec.17.903 related to Rules and Contracts for the 
Agricultural Water Conservation Bond Program, and sec.15.435 related to 
Guidelines for the Agricultural Soil and Water Conservation Program. 
Chapter 17, Subchapter J and Chapter 15, Subchapter G are the statutory 
provisions affected by the proposed repeal. 
sec.367.1 Policy Statement 
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 July 17, 1998.
TRD-9811290
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER A.Grants for Equipment Purchases
31 TAC sec.367.1
The new section is proposed under the authority of the Texas Water Code, 
sec.6.101 which provides the Texas Water Development Board with the authority to 
adopt rules necessary to carry out the powers and duties in the Water Code and 
other laws of the State, sec.17.903 related to Rules and Contracts for the 
Agricultural Water Conservation Bond Program, and sec.15.435 related to 
Guidelines for the Agricultural Soil and Water Conservation Program.
Chapter 17, Subchapter J and Chapter 15, Subchapter G are the statutory 
provisions affected by the proposed new section.

sec.367.1. Policy Statement. 
It is the policy of the board to provide grants for equipment purchases to 
provide for agricultural water conservation to conserve the state's water 
resources and provide resulting benefits to all of the state's citizens. This 
subchapter implements the Texas Water Code, Subchapter H.
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 July 17, 1998.
TRD-9811292
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER B.Agricultural Water Conservation Loan Program
31 TAC sec.sec.367.40-367.51
The new sections are proposed under the authority of the Texas Water Code, 
sec.6.101 which provides the Texas Water Development Board with the authority to 
adopt rules necessary to carry out the powers and duties in the Water Code and 
other laws of the State, sec.17.903 related to Rules and Contracts for the 
Agricultural Water Conservation Bond Program, and sec.15.435 related to 
Guidelines for the Agricultural Soil and Water Conservation Program. 
Chapter 17, Subchapter J and Chapter 15, Subchapter G are the statutory 
provisions affected by the proposed new sections. 

sec.367.40. Policy Statement. 
It is the policy of the board to implement an agricultural water conservation 
loan program in order to conserve the state's water resources and provide 
resulting benefits to all of the state's citizens. 

sec.367.41. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) Ag trust fund - The agricultural trust fund, a special fund created in the 
state treasury pursuant to the Texas Water Code, sec.15.431. 
(2) Board - The Texas Water Development Board. 
(3) Borrower district - A district or authority created under the Texas 
Constitution, Article III, sec.sec.52(b)(1) and (2), or Article XVI, sec.59, 
that receives or is eligible to receive a conservation loan from the board for 
improvement to district facilities.
(4) Conservation loan - A loan from the board to a borrower district or from a 
lender district to an individual borrower. 
(5) Development fund manager - The development fund manager of the Texas Water 
Development Board. 
(6) Executive administrator - The executive administrator of the Texas Water 
Development Board or a designated representative. 
(7) Fund - The agricultural water conservation fund. 
(8) Individual borrower - A person who receives or is eligible to receive a 
conservation loan from a lender district. 
(9) Lender district - A soil and water conservation district under the 
Agriculture Code, Chapter 201, an underground water conservation district 
created under the Texas Constitution, Article XVI, sec.59, or a district or 
authority created under the Texas Constitution, Article III, sec.52(b)(1), or 
Article XVI, sec.59, authorized to supply water for irrigation purposes, that is 
eligible to receive or that receives a loan from the board for the purpose of 
making conservation loans to individual borrowers. 
(10) Loan - A loan from the board to a lender district.

sec.367.42. Use of Fund. 
In accordance with the Texas Water Code, sec.17.894 and sec.15.431, the board 
may use money in the fund or money maintained as principal in the ag trust fund 
to make conservation loans directly to borrower districts, to make loans to 
lender districts, and to pay the cost of bond issuance. 

sec.367.43. Conservation Loans.
(a) The board or lender districts may make conservation loansfor capital 
equipment or materials, labor, preparation costs, and installation costs: 
(1) To improve water use efficiency of water delivery and application on 
existing irrigation systems; 
(2) for preparing irrigated land to be converted to dryland conditions; 
(3) for preparing dryland for more efficient use of natural precipitation; 
(4) for preparing and maintaining land to be used for brush control activities, 
including but not limited to activities conducted pursuant to the Agriculture 
Code, Chapter 203; or 
(5) for implementing precipitation enhancement activities in areas of the state 
where such activities would be, in the board's judgment, most effective. 
(b) Conservation loans for the purposes listed in subsection (a) of this section 
may be made by lender districts to individual borrowers for use on private 
property or by the board to borrower districts for use on district facilities. 
(c) The board may make conservation loans to borrower districts for the cost of 
purchasing and installing devices, on public or private property, designed to 
indicate the amount of water withdrawn for irrigation purposes.

sec.367.44. Procedure and Method for Setting Interest Rates. 
(a) For loans and conservation loans from the ag trust fund, the development 
fund manager will set fixed interest rates on a date that is five business days 
prior to the effective date of the contract between the board and the lender 
district or borrower district, or the lender district or borrower district's 
adoption of the ordinance or resolution authorizing its bonds and not more than 
45 days before the anticipated closing of the loan from the board. After 45 days 
from the establishment of the interest rate of a loan, rates will be 
reconsidered, and may be extended only with the approval of the development fund 
manager. The fixed interest rate shall be the same as the asking yield of the 
twelve month maturity U.S. Treasury note on the date that rates are set. 
(b) For loans and conservation loans from the fund, the development fund manager 
will set the interest rates at the weighted rate of the lending rates for 
principal payments received in the previous fiscal year into the fund. 
(c) The board shall establish the rate of interest it charges for loans to 
lender districts or for conservation loans to borrower districts.
(d) A lender district may charge individual borrowers an interest rate not to 
exceed the interest rate the lender district is charged by the board, plus 1.0% 
for administrative expenses. 
(e) A lender district may charge individual borrowers a one-time application fee 
in an amount determined by the board to cover costs of processing loan 
applications.

sec.367.45. Applications.
A lender district that desires to obtain loans or a borrower district that 
desires to obtain conservation loans shall file an application with the 
executive administrator. The application shall be consistent with the 
application guidelines which are available from the development fund manager. An 
application shall include information on the following: 
(1) origination and description of the district; 
(2) fiscal information with a plan for repayment to the board of the loan, 
including a plan for repayment in the event of default; 
(3) the district shall specify the amount, period, and intended use of the loan;
(4) the district's rules or procedures for approving borrower's loan 
applications and for approving and managing lender-borrower agreements; 
(5) for lender districts, rules or procedures for identifying the methods to be 
used by the lender district to ensure the financial integrity of a loan to an 
individual borrower. Such methods may include, but not be limited to, an 
irrevocable letter of credit or a lien on property in excess of value of 
improvements; and 
(6) the executive administrator may request additional information necessary to 
evaluate the loan application. 
(7) a certified copy of the resolution adopted by the governing body approving 
the application with the board for a loan or conservation loan, authorizing the 
submission of the application and designating the authorized representative for 
executing the application. 

sec.367.46. Approval of Applications. 
The board may approve an application if, after considering the factors in Texas 
Water Code, sec.17.898, and other relevant factors, the board finds that: 
(1) the public interest would be served in granting the application; 
(2) a lender district has the ability to make conservation loans, manage a 
conservation loan program, and repay the loan to the board; 
(3) a borrower district has the ability to repay the conservation loan; and 
(4) approving the application will further water conservation in the state. 

sec.367.47. Priority in Expenditure of Funds. 
When applications for conservation loans or loans exceed available funds, 
priority will be given to those areas of the state that have the most critical 
water conservation needs and to the activities that will be most likely to 
produce substantial agricultural soil and water conservation.

sec.367.48. Engineering Requirements. 
For all projects for borrower districts which will receive financial assistance 
from the proceeds of bonds under the Agricultural Water Conservation Bond 
Program, for which the district will enter into construction contracts, the 
following requirements will apply. 
(1) Prior to receiving a loan commitment, the applicant shall submit an 
engineering feasibility report signed and sealed by a professional engineer 
registered in the State of Texas. The report, based on guidelines provided by 
the executive administrator, shall provide: 
(A) description and purpose of the project; 
(B) the cost of the project; 
(C) a description of alternatives considered and reasons for the selection of 
the project proposed; 
(D) sufficient information to evaluate the engineering feasibility; and 
(E) maps and drawings as necessary to locate and describe the project area. The 
executive administrator may request additional information or data as necessary 
to evaluate the project. 
(2) A borrower district shall obtain executive administrator approval of 
contract documents, including engineering plans and specifications, prior to 
receiving bids and awarding the contract. The district shall submit three copies 
of contract documents; which shall be as detailed as would be required for 
submission to contractors bidding on the work, and which shall be consistent 
with the engineering feasibility information submitted with the application. The 
contract documents must contain the following: 
(A) provisions assuring compliance with the board's rules and all relevant 
statutes; 
(B) provisions providing for the district to retain a minimum of 5.0% of the 
progress payments otherwise due to the contractor until the building of the 
project is substantially complete and a reduction in the retainage as authorized 
by the executive administrator; 
(C) a contractor's act of assurance form to be executed by the contractor which 
shall warrant compliance by the contractor with all laws of the State of Texas 
and all rules and published poli- cies of the board; and 
(D) any additional conditions that may be requested by the executive 
administrator. 
(3) After the construction contract is awarded, the borrower district shall 
provide for adequate inspection of the project by a registered professional 
engineer and require the engineer's assurance that the work is being performed 
in a satisfactory manner in accordance with the approved plans and 
specifications, other engineering design or permit documents, approved 
alterations, and in accordance with sound engineering principles and 
construction practices. The executive administrator is authorized to inspect the 
construction and materials of any project at any time, but such inspection shall 
never subject the State of Texas to any action for damages. The borrower 
district shall take corrective action as necessary to complete the project in 
accordance with approved plans and specifications. 
(4) Any substantial alteration which involves a change in the basic purpose of a 
project, or which involves an increase in the loan commitment of the board for 
the project, must be approved and authorized by the board. All other changes 
must be approved by the executive administration. 
(5) Upon notice from the borrower district and project engineer that the project 
was completed in accordance with approved plans and specifications, the 
executive administrator shall issue a certificate of completion. This 
certificate shall be called a certificate of approval. 
(6) After issuance of a certificate of approval the final release of retainage 
may be made. 

sec.367.49. Environmental Assessment. 
(a) Environmental requirements for borrower districts. For any borrower district 
project which will require erecting, building, altering, remodeling, improving 
or extending a water supply project and which will require surface or subsurface 
disturbance of the soil or alter the existing vegetation, the district will 
conduct an environmental assessment in accordance the following provisions. 
(b) Definition of terms. The following words and terms, when used in this 
section, shall have the following meanings, unless the context clearly indicates 
otherwise. 
(1) Environmental regulation - The acts, statutes, or policies listed in 
subsection (d)(1) of this section and the acts, statutes, or policies identified 
by the executive administrator pursuant to subsection (d)(2) of this section. 
(2) Regulatory agency - The governmental agency with the jurisdiction to review 
compliance with or to enforce an environmental regulation. 
(3) Preliminary project information - The information submitted by an applicant 
to the executive administrator pursuant to subsection (f) of this section. 
(4) Affected environmental regulation - An environmental regulation with which a 
proposed project potentially may not conform as determined by the executive 
administrator under this section after reviewing the preliminary project 
information or the environmental assessment document, if any. 
(5) Unaffected environmental regulation - An environmental regulation with which 
a proposed project will likely conform as determined by the executive 
administrator under this section after reviewing the preliminary project 
information or the environmental assessment document, if any. 
(c) Applicability and purpose. This section applies to projects funded by the 
board under this title. The purpose of this section is to provide the executive 
administrator with sufficient information to inform the board whether a proposed 
project has been adequately reviewed by the regulatory agencies and whether such 
review provides a reasonable level of certainty that the project will comply 
with the environmental regulations. 
(d) Applicable environmental regulations. 
(1) Uniform requirements. Prior to commitment of funds, the proposed project 
shall be coordinated, to the extent appropriate under the three-level review of 
subsection (g) of this section, with the regulatory agencies to determine the 
degree of compliance with the following: 
(A) Texas Antiquities Code as administered by the Texas Historical Commission; 
(B) Federal Endangered Species Act as administered by the United States Fish and 
Wildlife Service; 
(C) resource protection under the Texas Parks and Wildlife Code and 31 TAC 
Chapter 57, as administered by the Texas Parks and Wildlife Department; and 
(D) Clean Water Act, sec.404 and Rivers and Harbors Act, sec.10 as administered 
by the United States Department of the Army, Corps of Engineers. 
(2) Conditional requirements. Proposed projects under certain circumstances may 
impact other environmental acts, statutes, or policies requiring additional 
coordination, to the extent appropriate under subsection (g) of this section. 
The executive administrator may require an applicant to perform such additional 
coordination for the following environmental regulations: 
(A) Migratory Bird Treaty Act as administered by the United States Fish and 
Wildlife Service; 
(B) National Flood Insurance Act of 1968 as administered by the local floodplain 
protection manager. 
(C) state land easements under Texas Natural Resources Code, Chapter 51, as 
administered by the Texas General Land Office; 
(D) parks and recreational lands pursuant to the Texas Parks and Wildlife Code, 
Chapter 26; 
(E) marl, sand, gravel, shell, and mudshell permits under the Texas Parks and 
Wildlife Code, Chapter 86, and 31 TAC Chapter 57 as administered by the Texas 
Parks and Wildlife Department; and 
(F) any other act, statute, or policies deemed applicable by the executive 
administrator. 
(e) Filing of assessment or statement. If an agency of the state or federal 
government prepares or requires an environmental assessment or an environmental 
impact statement to be prepared for substantially the same project proposed for 
board financial assistance, then the applicant shall file with the executive 
administrator the assessment or the statement prepared or required by the state 
or federal government, and a copy of the state or federal agency's issued 
decision document or permit in lieu of the information or environmental 
assessment prepared in accordance with subsections (f) or (g) of this section. 
Nothing herein shall be construed to require an applicant to prepare an 
environmental assessment when the information required under this section is 
currently available in an environmental assessment, environmental impact 
statement, or other documents prepared in connection with the same project. 
(f) Preliminary project information. Prior to or concurrently with the 
submission of an application, the applicant shall submit the following 
information: 
(1) a written description of the proposed project; 
(2) a map of sufficient detail to accurately depict the location of each project 
element; and 
(3) preliminary data on any known environmental, social, and permitting issues 
which may affect the alternatives considered for implementation of the project 
or which may impact the existing environment in a manner that is the subject of 
any environmental regulation. 
(g) Environmental review. Based on the preliminary project information and any 
information readily available to the executive administrator, the executive 
administrator shall require the applicant to comply with the provisions of this 
subsection for either categorical exclusion review, mid-level review, or full 
review depending on the complexity of the project and its environmental impacts. 
Upon submission by the applicant of the information required by this subsection, 
the executive administrator shall summarize all relevant environmental data and 
any regulatory agency comments and public comments received regarding the 
proposed project in a memorandum. Such memorandum shall include a finding 
regarding the proposed project's compliance with the environmental regulations 
and may include a recommendation on any avoidance, minimization, or mitigation 
measures recommended by an regulatory agency through this review process. Such 
memorandum shall be submitted to and considered by the board with the 
application for financial assistance. 
(1) Categorical exclusion. If the executive administrator determines from the 
preliminary project information that the proposed project would not appear to 
cause significant environmental impacts under any environmental regulation, the 
executive administrator shall notify all regulatory agencies of the executive 
administrator's intent to exclude the proposed project from further 
environmental review. Unless an objection is received from any regulatory agency 
within 30 days after such notification is sent by the executive administrator, 
the executive administrator shall notify the applicant that the proposed project 
is categorically excluded from further environmental review requirements. 
(2) Mid-level review. If the executive administrator determines from the 
proposed project information that the proposed project would appear to cause 
only significant environmental impacts which are limited in number or scope or 
which may be readily avoided, minimized, or mitigated, the proposed project 
shall be excluded from further review of unaffected environmental regulations 
while additional information for adequate review of affected environmental 
regulations shall be required in accordance with the following procedures. 
(A) The executive administrator shall: 
(i) notify the regulatory agencies administering the unaffected environmental 
regulations of the executive administrator's intent to exclude the proposed 
project from further review of the unaffected environmental regulations. Unless 
the executive administrator receives objections to the intent to exclude the 
project from review by such agency within 30 days after such notification is 
sent, the executive administrator shall deem the proposed project as excluded 
from further review of such unaffected environmental regulation; and 
(ii) promptly notify the applicant of the unaffected environmental regulations 
which shall be excluded from further environmental review, the affected 
environmental regulations which shall require further environmental review, and 
any further information required by statute or the regulatory agencies 
administering the affected environmental regulations for adequate environmental 
review. 
(B) The applicant shall then choose between one of the two following options and 
promptly notify the executive administrator of the option selected: 
(i) the applicant shall coordinate with the regulatory agencies administering 
the affected environmental regulations as identified pursuant to subsection 
(g)(2)(A)(ii) of this section, provide to the executive administrator copies of 
all information submitted by the applicant to such regulatory agencies, provide 
to the executive administrator copies of all documents received by the applicant 
from such regulatory agencies regarding the proposed project and, if the 
executive administrator has determined that it is an affected environmental 
regulation, documentation establishing compliance with Texas Parks and Wildlife 
Code, Chapter 26; or 
(ii) the applicant shall provide to the executive administrator the information 
required by the regulatory agencies administering the affected environmental 
regulations for their review and, if the executive administrator has determined 
that it is an affected environmental regulation, documentation establishing 
compliance with Texas Parks and Wildlife Code, Chapter 26 whereupon the 
executive administrator shall coordinate the project review with such regulatory 
agencies and provide to the applicant copies of all documents received from such 
regulatory agencies regarding the proposed project. 
(3) Full review. If the executive administrator determines from the proposed 
project information that the proposed project would appear to cause extensive 
significant impacts that are not readily avoided, minimized, or mitigated or 
would appear to involve a probable or known significant public controversy 
relating to environmental or social impacts, the following procedure shall 
apply: 
(A) the applicant shall prepare an environmental assessment document which shall 
include all the information required by the regulatory agencies for adequate 
review by such agencies, a technical description of all the alternatives to the 
proposed project considered by the applicant, and a discussion of the proposed 
project's impact on environmental, social, and economic issues compared to such 
impacts of the alternatives considered; 
(B) upon approval by the executive administrator of the environmental assessment 
document, the executive administrator will provide notification regarding the 
unaffected environmental regulations in accordance with the procedures under 
subsection (g)(2)(A) of this section; and 
(C) the applicant shall submit the approved environmental assessment document to 
the regulatory agencies administering the affected environmental regulations for 
review and comment and provide to the executive administrator copies of all the 
documents received by the applicant from the regulatory agencies regarding the 
proposed project and, if the executive administrator has determined that it is 
an affected environmental regulation, documentation establishing compliance with 
Texas Parks and Wildlife Code, Chapter 26. Alternatively, the applicant may 
request that the executive administrator submit the environmental assessment 
document to such agencies and, upon completion of such coordination, the 
executive administrator shall provide to the applicant copies of all documents 
received from such regulatory agencies regarding the proposed project. 
(4) Project change. If the project is changed to include areas or issues that 
were previously unassessed, then the environmental review process identified in 
this section shall be employed for such unassessed areas or issues and the 
executive administrator shall determine the appropriate level of review for such 
changed project. 
(5) Review change. If, at any time prior to the submission of an application to 
the board and upon reliable information, the executive administrator determines 
that the level of review being performed for a proposed project is inappropriate 
or that the determination that an environmental regulation was an unaffected 
environmental regulation was incorrect, the executive administrator shall 
promptly notify the applicant of the required level of review under this section 
or of the affected environmental regulation for which additional review is 
required. 

sec. 367.50. Default and Foreclosure by Lender Districts. 
(a) In the event of a default in payment of a conservation loan made by a lender 
district or the failure of an individual borrower to perform any of the terms or 
conditions of the conservation loan agreement, the lender district shall pursue 
all remedies available under law, including without limitation foreclosure under 
the conservation loan agreement and liquidation of any collateral provided under 
the conservation loan agreement. The lender district shall sell the collateral 
on terms and subject to procedures that it follows in liquidating other 
collateral. 
(b) Foreclosure under a conservation loan agreement shall be accomplished in the 
manner provided by law for foreclosure of similar loan agreements made by 
private lending institutions and by the conservation loan agreement. 
(c) The state guarantees to each lender district that in the event an individual 
borrower defaults on a conservation loan made by the lender district with money 
from this program, the state will assume 50% of the amount that remains due and 
payable under the default after all collateral for the conservation loan is 
liquidated. 
(d) The state is entitled to recover its pro rata share of any money recovered 
on a defaulted conservation loan on which the state has assumed liability under 
subsection (c) of this section.

sec.367.51. Reporting Requirements.
(a) The executive administrator may request certified copies of all minutes, 
operating budgets, monthly operating statements, contracts with borrowers, audit 
reports and other documents concerning the operation of the district's financial 
programs and this loan program. 
(b) At the end of each state fiscal year, the lender shall provide to the 
executive administrator a report on the loans made to borrowers during the 
preceding state fiscal year, in a format specified by the executive 
administrator. The executive administrator may request and the lender shall 
supply similar reports at other times as necessary.
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 July 17, 1998.
TRD-9811293
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER C.Pilot Program for Low Interest Loans for Agricultural Water 
Conservation Equipment
31 TAC sec.sec.367.41-367.50
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Water 
Developoment Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the authority of the Texas Water Code, sec.6.101 
which provides the Texas Water Development Board with the authority to adopt 
rules necessary to carry out the powers and duties in the Water Code and other 
laws of the State, sec.17.903 related to Rules and Contracts for the 
Agricultural Water Conservation Bond Program, and sec.15.435 related to 
Guidelines for the Agricultural Soil and Water Conservation Program.
Chapter 17, Subchapter J and Chapter 15, Subchapter G are the statutory 
provisions affected by the proposed repeals.
sec.367.41. Purpose.
sec.367.42. Applicants Eligible for Loans. 
sec.367.43. Borrowers.
sec. 367.44. Equipment and Costs Eligible for Loans. 
sec.367.45. Applications. 
sec.367.46. Review and Approval of Application. 
sec.367.47. Priority on Approval of Loans.
sec. 367.48. Lender Loan Limits. 
sec.367.49. Terms of Lender Contract. 
sec.367.50. Audits.
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 July 17, 1998.
TRD-9811302
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER D.Agricultural Water Conservation Loan Program
31 TAC sec.sec.367.70-367.79
(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 Water 
Developoment Board or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The repeals are proposed under the authority of the Texas Water Code, sec.6.101 
which provides the Texas Water Development Board with the authority to adopt 
rules necessary to carry out the powers and duties in the Water Code and other 
laws of the State, sec.17.903 related to Rules and Contracts for the 
Agricultural Water Conservation Bond Program, and sec.15.435 related to 
Guidelines for the Agricultural Soil and Water Conservation Program.
Chapter 17, Subchapter J and Chapter 15, Subchapter G are the statutory 
provisions affected by the proposed repeals.
sec.367.70. Policy Statement. 
sec.367.71. Definitions.
sec. 367.72. Purpose. 
sec.367.73. Guidelines.
sec. 367.74. Procedure and Method for Setting Interest Rates.
sec.367.75. Applications.
sec.367.76. Review and Approval of Applications. 
sec.367.77. Priority in Expenditure of Funds. 
sec.367.78. Default and Foreclosure by Lender Districts. 
sec.367.79. Audits.
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 July 17, 1998.
TRD-9811291
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

CHAPTER 371.Drinking Water State Revolving Fund
SUBCHAPTER A.Introductory Provisions
31 TAC sec.371.2
The Texas Water Development Board (board) proposes amendments to sec.sec.371.2, 
371.18, 371.20, 371.21, 371.23-371.26, 371.32, 371.35, 371.38, 371.40, 371.52, 
371.71, 371.72 and 371.101. The amendments implement the board's Drinking Water 
State Revolving Fund Program (DWSRF) and establish procedures for borrowers to 
follow in providing Minority Business Enterprises (MBE), Women's Business 
Enterprises (WBE), Small Business Enterprises (SBE), and Small Business 
Enterprises in a Rural Area (SBRA) with opportunities to participate in 
contracts and procurements that are funded in whole or part with federal monies. 
Additionally, the amendments provide clarification to existing provisions of 
Chapter 371 that include deadlines for submittal of applications for assistance, 
information to be provided for establishing loan subsidies for disadvantages 
communities, and lending rates for certain borrowers. The amendments also 
correct grammatical errors and amend references to sections which have been 
repealed. 
Section 371.2, Definition of Terms, is proposed for amendment to replace "a" 
with "an" and to correct the form of a verb. Section 371.18, Capitalization 
Grant Requirements for Applicants, proposes a new subsection which defines terms 
of the affirmative action program, including MBE, WBE, SBE and SBRA, and 
Affirmative Action Steps. The subsection further establishes the requirements 
that applicants for federal assistance must meet in order to afford MBE's, 
WBE's, SBE's and SBRA's the maximum practicable opportunity to participate in 
the DWSRF program. financial assistance programs establishing requirements for 
Minority Business. The amendments to sec.371.18 are proposed to conform to the 
standards and requirements of the U.S. Environmental Protection Agency (EPA) 
that have been set for contracts and procurements funded from capitalization 
grant award. 
Section 371.20, Intended Use Plan, is proposed for amendment to make a 
grammatical correction. Section 371.21, Criteria and Methods for Distribution of 
Funds for Water System Improvements, is proposed for amendment to clarify that 
although applicants have six months to receive a commitment for assistance, 
applications must be complete and ready for consideration within four months of 
being asked to submit an application. The section further clarifies that these 
time lines apply during subsequent funding cycles, after projects are re-ranked 
and new applications are solicited. The section is further amended to clarify 
that the executive administrator will notify the potential applicants and that 
remaining funds will be made available to other population classes.
Section 371.23, Criteria and Methods for Distribution of Funds for Source Water 
Protection, is proposed for amendment to correct "applicants" with the word 
"applications." Section 371.24, Disadvantaged Community Program through Loan 
Subsidies, is proposed for amendment to clarify the formula for calculating the 
adjusted median household income. Further, the section informs applicants that 
the necessary information in the calculation will be provided by the board 
during the solicitation for applications process. The section also corrects 
cites to rule subsections and headings. 
Section 371.25, Criteria and Methods for Distribution of Funds for Disadvantaged 
Communities, is proposed for amendment to clarify that funds are to be "made 
available" rather than "reserved" and that the funds will be "distributed" 
rather than "reserved." The section is further amended to clarify deadlines for 
the submission of applications during each of the funding cycles. The section 
further clarifies that applications which have not received a commitment within 
the prescribed time will be returned to the applicant. 
Section 371.26, Criteria and Methods for Distribution of Funds from Community/ 
Noncommunity Water Systems Financial Assistance Account, is proposed for 
amendment to correct grammatical errors and to clarify time lines that 
applicants must follow to submit an application and receive a commitment for 
financial assistance during the initial and subsequent funding cycles. 
Section 371.32, Required Application Information, is proposed for amendment to 
clarify application requirements for "eligible nonprofit noncommunity" 
applicants that are also eligible public applicants and for "eligible nonprofit 
noncommunity" applicants that are not eligible public applicants. The section 
also clarifies "consultant services" as financial advisory, engineering, and 
bond counsel. Section 371.35, Required Environmental Review and Determinations, 
corrects the term "loan agreement" by replacing it with "loan commitment." 
Section 371.38, Pre-Design Funding Option, is proposed for amendment to correct 
a cite to a section of the rules. 
Section 371.40, Promissory Notes and Loan Agreements with Nonprofit Water Supply 
Corporations, Eligible Nonprofit Noncommunity Water Systems, and Eligible 
Private Applicants, is proposed for amendment to state that only nonprofit 
noncommunity water systems that are not eligible public applicants may issue a 
promissory note and enter into a loan agreement. The section clarifies that a 
governmental applicant that is authorized to issue bonds may not enter into a 
loan agreement. The section further restates to clarify that the executive 
administrator may waive the requirement of a financial advisor for applicants 
that use the promissory note and loan agreement method of financing. 
Section 371.52, Lending Rates, is proposed for amendment to refer Nonprofit 
noncommunity borrowers that issue tax-exempt obligations and that operate 
community/noncommunity water systems to the subsections that address their 
lending rates. 
Section 371.71, Loan Closing, is proposed for amendment to clarify that 
refinancing of construction loans pertains for a constructed project. The 
section further adds that the applicant shall submit any additional information 
deemed necessary by the executive administrator. 
Section 371.72, Release of Funds, simplifies required application materials by 
decreasing the required number of copies of each construction contract. 
Section 371.101, Responsibilities of Applicant, is proposed for amendment to 
clarify the time period (adoption to 3 years after project completion) from 
which implementation and status of the water conservation program must be 
reported. 
Patricia Todd, Director of Accounting & Finance, has determined that for each 
year of the first five years that the sections are in effect there will be no 
additional cost to State government for 1998 and 1999. If the legislature grants 
an additional FTE to the board to administer the new sections, the additional 
cost to State government for each of the years 2000, 2001, and 2002 will be 
$45,000. The additional costs are for direct payroll costs and do not include 
indirect costs such as telephone, supplies, training, and computer supplies 
estimated to be about $4,000 per year. Additional fringe benefits at about 24% 
of direct costs would be incurred. There will be no fiscal implications for 
local government as a result of enforcing or administering the sections.
Ms. Todd also has determined that for each year of the first five years that the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be to ensure that the Drinking Water SRF program complies with 
the U.S. Environmental Protection Agency's guidelines on procurement practices 
relating to opportunities for minority and women's businesses and small 
businesses. A further public benefit is to provide additional information on the 
Drinking Water SRF program to prospective applicants for financial assistance. 
There will not be an effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the amendments as 
proposed. 
Comments on the proposed amendments will be accepted for 30 days following 
publication and may be submitted to Gail Allan, 512/463-7804, Texas Water 
Development Board, P.O. Box 13231, Austin, Texas, 78711-3231. 
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.2. Definitions of Terms. 
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 Texas Water Code, Chapter 15 and not defined here shall have the 
meanings provided by Chapter 15. 
(1)-(3) (No change.) 
(4) Affiliated interest or affiliate - 
(A) any person or corporation owning or holding directly or indirectly 5.0% or 
more of the voting securities of <nl>an<ol> [a] eligible private applicant; 
(B) any person or corporation in any chain of successive ownership of 5.0% or 
more of the voting securities of <nl>an<ol> [a] eligible private applicant; 
(C) any corporation 5.0% or more of the voting securities of which is owned or 
controlled directly or indirectly by<nl>an<ol> [a] eligible private applicant; 
(D) (No change.) 
(E) any person who is an officer or director of <nl>an<ol> [a] eligible private 
applicant or of any corporation in any chain of successive ownership of 5.0% or 
more of voting securities of <nl>an<ol> [a] eligible private applicant; 
(F) any person or corporation that the commission, after notice and hearing, 
determines actually exercises any substantial influence or control over the 
policies and actions of <nl>an<ol> [a] eligible private applicant or over which 
<nl>an<ol> [a] eligible private applicant exercises such control or that is 
under common control with <nl>an<ol> [a] eligible private applicant, such 
control being the possession directly or indirectly of the power to direct or 
cause the direction of the management and policies of another, whether that 
power is established through ownership or voting of securities or by any other 
direct or indirect means; or 
(G) (No change.) 
(5)-(45) (No change.) 
(46) Nonprofit noncommunity (NPNC) water system - A public water system that is 
not a community water system and that <nl>is <ol>owned and operated by a 
nonprofit organization. 
(47)-(59) (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 July 17, 1998.
TRD-9811296
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER B.Program Requirements
31 TAC sec.sec.371.18, 371.20, 371.21, 371.23-371.26
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.18. Capitalization Grant Requirements for Applicants. 
<nl>(a)<ol> All projects which receive assistance from the fund under this 
chapter shall satisfy the following federal requirements as they apply: 
(1) National Environmental Policy Act of 1969, PL 91-190; 
(2) Archeological and Historic Preservation Act of 1974, PL 93-291; 
(3) Clean Air Act, 42 U.S.C. 7506(c); 
(4) Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq.; 
(5) Coastal Zone Management Act of 1972, PL 92-583, as amended; 
(6) Endangered Species Act, 16 U.S.C. 1531, et seq.; 
(7) Executive Order 11593, Protection and Enhancement of the Cultural 
Environment; 
(8) Executive Order 11988, Floodplain Management; 
(9) Executive Order 11990, Protection of Wetlands; 
(10) Farmland Protection Policy Act, 7 U.S.C. 4201 et seq; 
(11) Fish and Wildlife Coordination Act, PL 85-624, as amended; 
(12) National Historic Preservation Act of 1966, PL 89-665, as amended; 
(13) Safe Drinking Water Act, sec.1424(e), PL 92-523, as amended; 
(14) Wild and Scenic Rivers Act, PL 90-542, as amended; 
(15) Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, 
as amended; 
(16) Section 306 of the Clean Air Act and sec.508 of the Clean Water Act, 
including Executive Order 11738, Administration of the Clean Air Act and the 
Federal Water Pollution Control Act with Respect to Federal Contracts, Grants, 
or Loans; 
(17) Age Discrimination Act, PL 94-135; 
(18) Civil Rights Act of 1964, PL 88-352; 
(19) Section 13 of PL 92-500; Prohibition against sex discrimination under the 
Federal Water Pollution Control Act; 
(20) Executive Order 11246, Equal Employment Opportunity; 
(21) Executive Orders 11625 and 12138, Women's and Minority Business Enterprise; 
(22) Rehabilitation Act of 1973, PL 93-112 (including Executive Orders 11914 and 
11250); 
(23) Uniform Relocation and Real Property Acquisition Policies Act of 1970, PL 
91-646; 
(24) Executive Order 12549, Debarment and Suspension; and 
(25) The Wilderness Act, 16 U.S.C. 1131 et seq.
<nl>(b) <ol> <nl>Requirements for Minority Business Enterprise/Women's Business 
Enterprise/Small Business Enterprise/Small Business Enterprise in a Rural Area. 
<ol>
<nl>(1)<ol> Definitions. For the purposes of this subsection the following 
definitions shall apply. 
<nl>(A)<ol> Construction - Notwithstanding the provisions of sec.371.2 of this 
title (relating to Definition of Terms), any contract or agreement to provide 
the building, erection, alteration, remodeling, improvement or extension of a 
DWSRF funded project. 
<nl>(B)<ol> Contract - A written agreement between an EPA recipient and another 
party and any lower tier agreement for equipment, supplies, or construction 
necessary to complete the project. Includes personal and professional services , 
agreements with consultants, and purchase orders. 
<nl>(C)<ol> Equipment - Tangible, nonexpendable personal property having a 
useful life of more than one year and an acquisition cost of $5,000 or more per 
unit. 
<nl>(D)<ol> MBE - A Minority Business Enterprise, a business concern that is: 
<nl>(i)<ol> at least 51% owned by one or more minority individuals who are U. S. 
Citizens, or in the case of a publicly owned business, at least 51% of the stock 
is owned by one or more minority individuals who are U. S. Citizens; and 
<nl>(ii)<ol> whose daily business operations are managed and directed by one or 
more of the minority owners. Minority individuals include Black Americans, 
Hispanic Americans, Native Americans, Asian Pacific Americans or other groups 
whose members have been found to be disadvantaged by the Small Business Act or 
by the Secretary of Commerce under Executive Order 11625, sec.5. 
<nl>(E)<ol> Prime contract - Any contract, agreement or other action entered 
into by a DWSRF applicant to procure construction, services, equipment or 
supplies. 
<nl>(F)<ol> SBE - A Small Business Enterprise, a business concern, including its 
affiliate, that is independently owned and operated, not dominant in the field 
of operation in which it operates, and that is qualified as a small business by 
the Small Business Administration. 
<nl>(G)<ol> SBRA - A Small Business Enterprise in a Rural Area, a small business 
concern that is located and conducts its principal operations in a "non-
metropolitan county" as delineated by the Small Business Administration. 
<nl>(H)<ol> Services - A contractor's time and efforts which do not involve 
delivery of a specific end item other than documents (e.g. reports, design 
drawings, specifications, etc.). 
<nl>(I)<ol> Subcontract - Any contract, agreement or other action to procure 
construction, services, equipment or supplies between a prime contractor and any 
other business to supply such goods or services for a DWSRF financial assistance 
action. 
<nl>(J)<ol> Supplies - All tangible personal property other than equipment. 
<nl>(K)<ol> WBE - A Women's Business Enterprise, a business concern that is: 
<nl>(i)<ol> at least 51% owned by one or more women, or in the case of a 
publicly owned business, at least 51% of the stock is owned by one or more 
women; and 
<nl>(ii)<ol> whose daily business operations are managed and directed by one or 
more of the women owners. 
<nl>(2)<ol> Affirmative action steps - Those steps necessary by the applicant 
and the prime contractor to ensure that MBEs , WBEs, SBEs and SBRAs are utilized 
when possible including:
<nl>(A)<ol> placing qualified MBEs, WBEs, SBEs and SBRAs on solicitation lists; 
<nl>(B)<ol> assuring that MBEs, WBEs, SBEs and SBRAs are solicited whenever they 
are potential sources; 
<nl>(C)<ol> dividing total requirements, when economically feasible, into 
smaller tasks or quantities to permit maximum participation by MBEs, WBEs, SBEs 
and SBRAs; 
<nl>(D)<ol> establishing delivery schedules, where the requirement permits, 
which encourage participation by MBEs, WBEs, SBEs and SBRAs; 
<nl>(E)<ol> using the services and assistance of the Small Business 
Administration and the Minority Business Development Agency of the Department of 
Commerce; and 
<nl>(F)<ol> requiring the prime contractor, if subcontracts are to be let, to 
take the affirmative action steps listed in subparagraphs (A) thru (E) of this 
paragraph. 
<nl>(3)<ol> Requirements for Applicants. 
<nl>(A)<ol> Pursuant to EPA policy a goal oriented system has been established 
to promote MBE and WBE participation on all projects receiving funds from the 
DWSRF. In addition, it is the intent that SBEs and SBRAs be afforded the maximum 
practicable opportunity to participate in EPA awarded financial assistance 
programs. 
<nl>(B)<ol> Prior to receiving a loan commitment the applicant will submit an 
affirmative action plan on forms provided by the board. The plan shall be signed 
by the authorized representative of the applicant and shall contain estimates 
and/or actual amounts of MBE and WBE participation in the categories of 
construction, services, equipment, or supplies. Copies of any existing or 
proposed MBE and WBE contracts should be attached. 
<nl>(C)<ol> In all procurements, the applicant will undertake a good faith 
effort to attract and utilize MBE, WBE, SBE and SBRA participation. This may 
include, but not be limited to taking the six affirmative action steps. 
<nl>(D)<ol> In all procurements, the applicant will include provisions in prime 
contracts requiring the prime contractors to submit an affirmative action plan, 
and to undertake a good faith effort to attract and utilize MBEs, WBEs, SBEs and 
SBRAs, through subcontracts. This may include but not be limited to taking the 
affirmative action steps described in paragraphs (2)(A) through (2)(E) of this 
subsection. 
<nl>(E)<ol> As a condition to the release of funds or at any other time 
contracts or subcontracts are entered into, the applicant will report MBE and 
WBE participation and will provide documentation of good faith efforts on forms 
provided by board staff. 
<nl>(F)<ol> The applicant and the prime contractor(s) will maintain all records 
documenting required good faith efforts. 

sec.371.20. Intended Use Plan.
(a) (No change.) 
(b) The process for listing projects in the intended use plan, will be as 
follows. 
(1) On or before 1 April <nl>of <ol>each year the executive administrator will 
solicit project information from eligible applicants desiring to have their 
projects placed on the subsequent year's intended use plan. The required 
information will consist of: 
(A)-(F) (No change.) 
(2)-(4) (No change.) 

sec.371.21. Criteria and Methods for Distribution of Funds for Water System 
Improvements.
(a)-(c) (No change.) 
<nl>(d)<ol> Applicants must submit complete applications within four months of 
being invited to submit. 
<nl>(e)<ol> [(d)] If, after six months <nl> from the date of invitation to 
submit applications<ol>, all available funds are not committed, the executive 
administrator will return any [incomplete] applications <nl>which have not 
received a commitment<ol> and move all projects for which no 
applications<nl>,<ol>[ or] incomplete applications <nl>or complete 
applications<ol> were submitted to the bottom of the prioritized list, where 
they will be placed in priority order. 
<nl>(f)<ol> [(e)] Following the re-ranking of the list a line will again be 
drawn not to exceed the amount of remaining funds available in accordance with 
subsection (b) of this section. 
<nl>(g)<ol> [(f)] Projects above the line shall be eligible for assistance. 
After the funding line is re-drawn, the executive administrator shall notify, in 
writing, all potential applicants of the availability of funds and will invite 
the submittal of applications. 
<nl>(h)<ol> Applicants must submit complete applications within four months of 
being invited to submit. 
<nl>(i)<ol> [(g)] If, after six months <nl> from the second date of invitation 
to submit applications<ol>, the remaining funds are not committed the executive 
administrator will return any [incomplete] applications <nl>which have not 
received a commitment<ol>. Except for funds for disadvantaged communities 
projects, any funds remaining that exceed the amount needed to fund complete 
applications will be made available for the next fiscal year. Funds for 
disadvantaged communities projects shall remain available for commitment in 
accordance with sec.371.25 of this title, (relating to Criteria and Methods for 
Distribution of Funds for Disadvantaged Communities). 
<nl>(j)<ol> [(h)] If, at any time during either six month period of availability 
of funds, a potential applicant above the funding line submits written 
notification that it does not intend to submit an application or if additional 
funds become available for assistance, the line may be moved downward in 
priority order to accommodate projects which would utilize the funds that would 
otherwise not be committed during the particular six month period. The executive 
<nl>administrator <ol>will notify such additional potential applicants in 
writing and will invite the submittal of applications. Potential applicants 
receiving such notice will be given <nl> four<ol> [six] months to submit an 
application and <nl>six months from the date of notification to <ol>receive a 
loan commitment. 
<nl>(k)<ol> [(i)] Applications for assistance may be submitted at any time 
<nl>within four months<ol> after notification by the executive administrator of 
the availability of funds and will be funded on a first come, first served 
basis. Funds shall be committed to a project designated to receive assistance 
upon board approval of the application.
<nl>(l)<ol> [(j)] If funds are available after the executive administrator is 
able to make a determination that all applicants in a population class have had 
the opportunity to be funded, the remaining funds will be made available to the 
other population <nl>classes<ol> [class]. 

sec.371.23. Criteria and Methods for Distribution of Funds for Source Water 
Protection.
(a)-(d) (No change.) 
(e) <nl>Applications<ol> [Applicants] for assistance may be submitted at any 
time after notification by the executive administrator of the availability of 
funds and will be funded on a first-come, first-served basis. Funds shall be 
committed to a project designated to receive assistance upon board approval of 
the application. 
(f)-(g) (No change.)

sec.371.24. Disadvantaged Community Program through Loan Subsidies.
(a) (No change.) 
(b) Definition of Disadvantaged Community. 
(1)-(6) (No change.) 
(7) The adjusted median household income is calculated as the 1990 annual median 
household income multiplied by the Texas Consumer Price Index [for the month 
preceding the month that project information is solicited for the intended use 
plan] divided by the 1990 Texas Consumer Price Index.<nl> The necessary 
information will be provided by the board to the applicant during the 
solicitation process.<ol> 
(8) (No change.) 
(c)-(d) (No change.) 
(e) Term of Loan. Notwithstanding the provisions of <nl> sec.371.12 (1)(B)<ol> 
[sec.371.12] this title (relating to <nl> Uses of the Fund<ol> [Definition of 
Terms]), the board may extend the term of a loan made through the Disadvantaged 
Community Account of the DWSRF if the extended term terminates not later than 
the date that is 30 years after the date of project completion and does not 
exceed the expected design life of the project. 
(f)-(g) (No change.)

sec.371.25. Criteria and Methods for Distribution of Funds for Disadvantaged 
Communities.
(a) The board will determine annually amount of capitalization grant funds to be 
<nl>made available<ol> [reserved] for projects for disadvantaged communities and 
will include this information in the intended use plan, provided however that no 
more than 30% of any capitalization grant can be so <nl>distributed<ol> 
[reserved]. 
(b) (No change.) 
(c) After projects have been ranked, a funding line will be drawn on the 
priority lists according to the amount of available funds in accordance with 
sec.371.21(b) of this title (relating to Criteria and Methods for Distribution 
of Funds for Water System Improvements). After the funding line is drawn, the 
executive administrator shall notify in writing all potential applicants above 
the funding line of the availability of funds and will invite the submittal of 
applications. In order to receive funding, disadvantaged communities projects 
above the funding line must submit applications for assistance, as defined, 
within <nl>four<ol> [six] months of the date of notification of the availability 
of funds. Upon receipt of an application for assistance, the executive 
administrator shall notify the applicant, in writing, that an application has 
been received. The executive administrator may request additional information 
regarding any portions of an application for funding from the disadvantaged 
community account after the <nl>four<ol> [six] month period has expired without 
affecting the priority status of the application. Applicants for funding from 
the disadvantaged community account will be allowed 12 months after submittal of 
an application to receive a loan commitment. 
(d) Applicants for funding from the disadvantaged community account above the 
funding line which do not submit applications before the <nl> four<ol> [six] 
month deadline will be moved to the bottom of the priority list in priority 
order. 
(e) If after six months <nl>from the date of invitation to submit 
applications<ol>, there are insufficient applications to obligate all of the 
funds <nl>made available<ol> [set aside] for disadvantaged communities, the 
executive administrator will return any [incomplete] applications <nl>which did 
not receive a commitment<ol> and move all projects for which no 
applications<nl>,<ol> [ or] incomplete applications <nl>or complete 
applications<ol> were submitted to the bottom of the priority list, where they 
will be placed in priority order. 
(f) (No change.) 
(g) Projects above the funding line shall be eligible for assistance. After the 
funding line is re-drawn, the executive administrator shall notify, in writing, 
all potential applicants for funding from the disadvantaged community account of 
the availability of funds and will invite the submittal of applications. In 
order to receive funding, disadvantaged communities projects above the funding 
line must submit applications for assistance, as defined, within <nl>four<ol> 
[six] months of the <nl>second<ol> date of notification of the availability of 
funds. Applicants for funding from the disadvantaged community account will be 
allowed 12 months after submittal of an application to receive a loan 
commitment. 
(h) If, after six months <nl>of the second date of invitation to submit 
applications<ol>, there are insufficient applications to obligate the remaining 
funds of the funds <nl>made available <ol> [set aside] for disadvantaged 
communities, the executive administrator will return any [incomplete] 
applications <nl>which did not receive a commitment <ol>. Any funds remaining 
that exceed the amount needed to fund completed applications will be <nl>made 
available for the next fiscal year, subject to the limitations of subsection (a) 
of this section.<ol> [transferred from the fund for disadvantaged communities to 
the fund for large and small communities.] 
(i) If, at any time during either six month period of availability of funds, a 
potential applicant above the funding line submits written notification that it 
does not intend to submit an application or if additional funds become available 
for assistance, the funding line may be moved down the priority list to 
accommodate the additional projects. The executive administrator will notify 
such additional potential applicants for funding from the disadvantaged 
community account in writing and will invite the submittal of applications. 
Potential applicants receiving such notice will be given <nl>four<ol> [six] 
months to submit an application. Applications for funding from the disadvantaged 
community account will be allowed 12 months after submittal of an application to 
receive a loan commitment. 
(j) Should an applicant which has submitted an application in a timely manner be 
unable to receive a loan commitment within 12 months of the date on which the 
application was received, the applicant's project will be placed at the bottom 
of the priority list <nl>and the application returned to the applicant<ol>. 

sec.371.26. Criteria and Methods for Distribution of Funds from Community/ 
Noncommunity Water Systems Financial Assistance Account.
(a)-(b) (No change.) 
(c) After the executive administrator determines the amount of funds available 
for community/noncommunity water systems financial assistance account from 
capitalization grant reserves, state match, or any other sources, the funds 
available from this account will be applied to the list of systems that serve 
fewer than 10,000 persons and the list of systems that serve 10,000 and over 
persons in accordance with sec.371.21(a) of this title (relating to Criteria and 
Methods for Distribution of Funds for Water System Improvements). All projects 
will be listed in priority ranking order as determined by sec.371.19 of this 
title (relating to Rating Process). The projects of eligible private applicants 
or eligible NPNC <nl>applicants<ol> [applicant] assigned identical rating scores 
will be listed in alphabetical order. In the event that one or more projects of 
eligible private applicants or eligible NPNC applicants have rating scores 
identical to the rating scores of applicants that are not disadvantaged 
communities as defined in this chapter, such private or NPNC applicants will be 
listed above the non-disadvantaged communities on the priority list. In the 
event that one or more projects of eligible private applicants or eligible NPNC 
applicants have rating scores identical to the rating scores of applicants that 
are disadvantaged communities as defined in this chapter, such private or NPNC 
applicants will be listed below the disadvantaged communities on the priority 
list. 
(d) After projects have been ranked, a funding line will be drawn on the 
priority lists according to the amount of available funds in accordance with 
sec.371.21(b) of this title (relating to Criteria and Methods for Distribution 
of Funds for Water System Improvements). After the funding line is drawn, the 
executive administrator shall notify in writing all potential applicants above 
the funding line of the availability of funds and will invite the submittal of 
applications. In order to receive funding, eligible private applicants and 
eligible NPNC applicants above the funding line must submit applications for 
assistance, as defined, within <nl>four<ol> [six] months of the date of 
notification of the availability of funds. Upon receipt of an application for 
assistance, the executive administrator shall notify the applicant, in writing, 
that an application has been received. The executive administrator may request 
additional information regarding any portions of an application for funding from 
the community/noncommunity water system financial assistance account after the 
<nl>four<ol> [six] month period has expired without affecting the priority 
status of the application. Applicants for funding from the 
community/noncommunity water system financial assistance account will be allowed 
six months after submittal of an application to receive a loan commitment. 
(e) Applicants for funding from the community/noncommunity water system 
financial assistance account above the funding line which do not submit 
applications before the <nl>four<ol> [six] month deadline will be moved to the 
bottom of the priority list in priority order. 
(f) If after six months <nl>from the date of invitation to submit 
applications<ol>, there are insufficient applications to obligate all of the 
funds <nl>made available<ol> [set aside] for community/noncommunity water 
systems financial assistance account <nl>or all available funds are not 
committed<ol>, the executive administrator will return any [incomplete] 
applications and move all projects for which no applications<nl>,<ol> [or 
]incomplete applications <nl>or complete applications <ol> were submitted to the 
bottom of the priority list, where they will be placed in priority order. 
(g) Following the re-ranking of the priority list, a line will again be drawn 
not to exceed the amount of funds available, in accordance with the criteria of 
subsection (c) of this section. 
(h) Projects above the funding line shall be eligible for assistance. After the 
funding line is re-drawn, the executive administrator shall notify, in writing, 
all potential applicants for funding from the community/noncommunity water 
system financial assistance account of the availability of funds and will invite 
the submittal of applications. In order to receive funding, the eligible private 
applicants or eligible NPNC applicants with projects above the funding line must 
submit applications for assistance, as defined within <nl> four<ol> [six] months 
of the date of notification of the availability of funds. Applicants for funding 
from the community/noncommunity water system financial assistance account will 
be allowed six months after submittal of an application to receive a loan 
commitment. 
(i) If, after six months <nl>from the second date of invitation to submit 
applications<ol>, there are insufficient applications to obligate the remaining 
funds of the funds <nl>made available<ol> [set aside] for community/noncommunity 
water systems <nl>or all available funds are not committed<ol>, the executive 
administrator will return any incomplete <nl> or complete<ol> applications. 
(j) If, at any time during either six month period of availability of funds, a 
potential applicant above the funding line submits written notification that it 
does not intend to submit an application or if additional funds become available 
for assistance, the funding line may be moved down the priority list to 
accommodate the additional projects. The executive administrator will notify 
such additional potential applicants for funding in writing and will invite the 
submittal of applications. Potential applicants receiving such notice will be 
given <nl>four<ol> [six] months to submit an application. 
(k) Should an applicant which has submitted an application in a timely manner be 
unable to receive a loan commitment within six months of the date on which the 
application was received, the applicant's project will be placed at the bottom 
of the priority list <nl>and the application will be returned to the 
applicant<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 July 17, 1998.
TRD-9811297
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER C.Application for Assistance
31 TAC sec.sec.371.32, 371.35, 371.38, 371.40
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.32. Required Application Information.
(a) For eligible public applicants <nl>and eligible NPNC applicants that are 
also eligible public applicants<ol>, an application shall be in the form and 
numbers prescribed by the executive administrator and, in addition to any other 
information that may be required by the executive administrator or the board, 
the applicant shall provide: 
(1)-(2) (No change.) 
(3) copies of any proposed or existing contracts for consultant <nl>financial 
advisory, engineering, and bond counsel<ol> services to be used by the applicant 
in applying for financial assistance or constructing the proposed project. 
Contracts for engineering services should include the scope of services, level 
of effort, costs, schedules, and other information necessary for adequate review 
by the executive administrator; 
(4)-(9) (No change.) 
(b) For eligible private applicants and eligible NPNC applicants <nl> that are 
not also eligible public applicants<ol>, an application shall be in the form and 
numbers prescribed by the executive administrator, and, in addition to any other 
information that may be required by the executive administrator or the board, 
such applicant shall provide: 
(1)-(5) (No change.) 
(6) copies of [any] proposed or existing contracts for consultant <nl>financial 
advisory, engineering, and bond counsel<ol> services to be used by the applicant 
in applying for financial assistance or constructing the proposed project and 
included as part of the total cost of the project. Contracts with consulting 
engineers shall include the scope of services, level of effort, costs, 
schedules, and other information necessary for adequate review by the executive 
administrator; 
(7)-(13) (No change.)

sec.371.35. Required Environmental Review and Determinations.
(a) General. The applicant's preparation of the environmental information and 
the executive administrator's review and issuance of a determination forms an 
integral part of the planning process required of any potential applicant to the 
fund. There are three levels of environmental information required, varying 
according to the nature and scope of the project and the environment in which it 
is proposed. Correspondingly, the appropriate level of review will be conducted 
by the board and formal determinations documenting the review are issued. The 
categorical exclusion (CE) is directed toward those applicants proposing only 
minor rehabilitation or functional replacement of existing equipment. Although 
the environmental information required is small, the proposed project must fit a 
narrow range of criteria defined in paragraph (1)(A) of this subsection. The CE 
must be revoked and an environmental information document (EID) must be prepared 
if the project is subsequently modified so as to exceed the limits of the 
criteria. The majority of applicants will prepare an EID, developed in 
accordance with guidance available from the board. In addition to a greater 
amount of information to be supplied by the applicant, a public hearing must be 
held on the proposed project and the determination, a finding of no significant 
impact (FNSI), is also subject to public comment for a period not less than 30 
days following its issuance. All applicants whose proposed projects do not meet 
the criteria for either a CE or environmental impact statement (EIS) must 
prepare an EID. Although there are other criteria involved, as described in 
paragraph (1)(C) of this subsection and subsection (d)(3) of this section, an 
EIS is usually required of those projects that are so major in scope or involve 
such environmentally sensitive areas (i.e., floodplains, endangered species 
habitat, etc.) that the proposed project may have significant adverse social or 
environmental impacts. An EIS requires close coordination and involvement of the 
board and other agencies in its preparation and results in a record of decision 
(ROD). The board's staff shall endeavor to provide guidance as to the 
appropriate level of environmental information to applicants during the pre-
planning process. All applicants are urged, however, to review the criteria and 
contact the board's staff, particularly if there is doubt as to the level of 
environmental information that is appropriate to the proposed project. Based on 
the environmental information, the executive administrator will conduct an 
independent and interdisciplinary environmental review consistent with the 
National Environmental Policy Act (NEPA) of all projects funded through the 
DWSRF. This review will further insure that the proposed project will comply 
with the applicable local, state, and federal laws and board rules relating to 
the protection and enhancement of the environment. Based upon the staff's 
review, the executive administrator will make formal determinations regarding 
the potential social and environmental impacts of the proposed project. As 
necessary, the determinations will include mitigative provisions recommended to 
be applied as a condition of receiving financial assistance. Funds will not be 
released for building until a final environmental determination has been made. 
Proposed projects using the pre-design funding option will follow the 
environmental review procedures described under paragraph (2)(C) of this 
subsection. 
(1)-(2) (No change.) 
(3) Other determinations that are available to the board.
(A) The executive administrator may adopt previous environmental determinations 
issued by the EPA and other federal agencies whose determinations may be 
considered to be current and applicable under the environmental review 
requirements of this section. In so doing, the executive administrator will 
insure that all mitigative measures specified in the previous determinations are 
applied as conditions of the loan <nl>commitment<ol> [agreement] and that such 
adoption will be consistent with the requirements of these rules. The executive 
administrator will adopt the previous determination by means of a statement of 
findings, when the proposed project and its previous determination are to be 
adopted without substantial modifications, or in a FNSI which will explain 
modifications to the proposed project, potential environmental impacts 
identified during an environmental review, and any mitigative measures proposed 
in addition to those included in the federal environmental determination to be 
adopted. 
(B) (No change.) 
(b)-(d) (No change.) 

sec.371.38. Pre-Design Funding Option.
(a)-(b) (No change.) 
(c) Applications for pre-design funding must include the following information: 
(1)-(3) (No change.) 
(4) all information required in <nl>sec.371.32<ol> [sec.sec.371.32-371.34] of 
this title (relating to Required General Information, Required Fiscal Data, and 
Required Legal Data, respectively), - and 
(5) (No change.) 
(d)-(f) (No change.)

sec.371.40. Promissory Notes and Loan Agreements with Nonprofit Water Supply 
Corporations, Eligible Nonprofit Noncommunity Water Systems, and Eligible 
Private Applicants. 
(a) The board may provide financial assistance to corporations, eligible NPNC 
<nl>applicants that are not also eligible public applicants <ol>, or eligible 
private applicants by either purchasing bonds issued by such applicant<nl>;<ol> 
or by purchasing a promissory note and entering into a loan agreement with such 
applicant. <nl>If, however, an applicant is a governmental entity that is fully 
authorized to issue bonds, the applicant may not enter into a loan agreement as 
provided in this section.<ol> 
(b) If a corporation, eligible NPNC <nl>applicant<ol>, or eligible private 
applicant executes a promissory note and loan agreement with the board, <nl>the 
executive administrator may waive the hiring or employment of a financial 
advisor required pursuant to these rules.<ol> [such applicant is not required to 
engage the services of a bond counsel or a financial advisor.] 
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 July 17, 1998.
TRD-9811298
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER D.Board Action on Application
31 TAC sec.371.52
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.52. Lending Rates. 
(a)-(d) (No change.) 
<nl>(e)<ol> <p<nl> NPNC borrowers. NPNC borrowers that issue tax-exempt 
obligations and that operate community/noncommunity water systems will receive 
interest rates pursuant to subsections (a), (b), and (c) of this section.
<nl>(f)<ol> [(e)] The development fund manager may adjust a borrower's interest 
rate at any time prior to closing as a result of a change in the borrower's 
credit rating.
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 July 17, 1998.
TRD-9811299
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER F.Prerequisites to Release of Funds
31 TAC sec.371.71, sec.371.72
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.71. Loan Closing.
(a)-(b) (No change.) 
(c) Refinancing construction loans. If the project includes the refinancing of a 
loan<nl> for a constructed project<ol>, the applicant shall submit <nl>any 
information deemed necessary by the executive administrator <ol> [all of the 
items specified in subsection (a) of this section and any records, assurances, 
or appraisals] concerning the construction of the project. Additionally, the 
project must pass the executive administrator's inspection of the project. 
(d)-(f) (No change.)

sec.371.72. Release of Funds.
(a)-(b) (No change.) 
(c) Release of funds for building purposes. Prior to the release of funds for 
building purposes, the applicant shall submit for approval to the executive 
administrator the following documents: 
(1) (No change.) 
(2) <nl>one<ol> [two] executed original <nl> copy<ol> [copies] of each 
construction contract the effectiveness and validity of which is contingent upon 
the receipt of board funds; 
(3)-(7) (No change.) 
(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 July 17, 1998.
TRD-9811300
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

SUBCHAPTER H.Post Building Phase
31 TAC sec.371.101
The amendments are proposed under the authority of the Texas Water Code, 
sec.6.101 and sec.15.605 which provide the Texas Water Development Board with 
the authority to adopt rules necessary to carry out the powers and duties in the 
Water Code and other laws of the State. 
The statutory provisions affected by the amendments are Texas Water Code, 
Chapter 15, Subchapter J. 

sec.371.101. Responsibilities of Applicant. 
After the satisfactory completion of the project, the applicant shall be held 
accountable by the board for the continued validity of all representations and 
assurances made to the board. Continuing cooperation with the board is required. 
To facilitate such cooperation and to enable the board to protect the state's 
investment and the public interest, the following provisions shall be observed.
(1)-(3) (No change.) 
(4) Applicants shall maintain an approved water conservation program in effect 
until all financial obligations to the State have been discharged and shall 
report annually to the executive administrator on the implementation and status 
of <nl>the program upon the adoption of the program and<ol> [required water 
conservation programs] for three years after the date of <nl>project 
completion<ol>[loan closing]. If the executive administrator determines that the 
water conservation program is not in compliance with the approved water 
conservation plan, the applicants shall continue to supply annual reports beyond 
the three years until the executive administrator determines that deficiencies 
in the plan have been resolved. Annual reports prepared for the commission 
providing the information required by this subparagraph may be provided to the 
board to fulfill the board's reporting requirements. 
(5) (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 July 17, 1998.
TRD-9811301
Suzanne Schwartz
General Counsel
Texas Water Development Board
Proposed date of adoption: September 17, 1998
For further information, please call: (512) 463-7981

TITLE 37. PUBLIC SAFETY AND CORRECTIONS
PART III. Texas Youth Commission
CHAPTER 97. Security and Control
SUBCHAPTER A. Security and Control
37 TAC sec.97.7
The Texas Youth Commission (TYC) proposes an amendment to sec.97.7, concerning 
custody and supervision rating. The amendments to this section will delete the 
reference to specific staff-to-TYC youth ratios.
Terry Graham, Assistant Deputy Executive Director for Financial Support, has 
determined that for the first five-year period the section is in effect there 
will be no fiscal implications for state or local government as a result of 
enforcing or administering the section. 
Mr. Graham also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be greater security and protection for youth and staff. There will 
be no effect on small businesses. There is no anticipated economic cost to 
persons who are required to comply with the section as proposed. No private real 
property rights are affected by adoption of this rule. 
Comments on the proposal may be submitted to Gail Graham, Policy and Manuals 
Manager, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, Texas 
78765. 
The amendment is proposed under the Human Resources Code, sec.61.075, which 
provides the Texas Youth Commission with the authority to determine the 
appropriate treatment/restriction of youth in custody.
The proposed rule implements the Human Resource Code, sec.61.034.

sec.97.7. Custody and Supervision Rating.
(a) Purpose. The purpose of this rule is to enhance the protection of the public 
by limiting exposure to potential harm caused by a TYC youth by establishing 
specific minimum staff [per youth] supervision requirements for certain youth in 
a TYC operated high restriction facility, both on and off the grounds. Higher 
risk ratings require increased staff supervision, restriction of youth movement, 
and restriction of access to <nl>the general public.<ol> [unauthorized program 
areas and potentially harmful materials.
(b) (No change.)
(c) Ratings.
(1) (No change.)
(2) A youth with a medium risk rating may leave the grounds for routine 
activities under specific conditions recommended by the treatment team. 
<nl>Constant supervision<ol> [Supervision] by staff is required. Activities 
shall not include overnight outings.
(3) (No change.)
(d) (No change.)
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 13, 1998.
TRD-9811041
Steve Robinson
Executive Director
Texas Youth Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 424-6244

PART VI. Texas Department of Criminal Justice
CHAPTER 163. Community Justice Assistance Division Standards
37 TAC sec.163.39, sec.163.40
The Texas Department of Criminal Justice - Community Justice Assistance Division 
proposes an amendment to sec.163.39, concerning Residential Services and new 
sec.163.40, concerning Substance Abuse Treatment Standards. The Substance Abuse 
Treatment Standards for the Community Justice Assistance Division (CJAD) of the 
Texas Department of Criminal Justice (TDCJ) have been developed, pursuant to the 
Government Code, sec.509.003(a)(5), to provide standards for the operation of 
programs and facilities administered or funded by TDCJ-CJAD.
The purpose of the Substance Abuse Program Standards is to establish clear, 
concise, and uniform principles which will be used as a means to measure 
performance for all substance abuse treatment programs that are administered or 
funded by TDCJ-CJAD. This will be accomplished by providing minimum standards to 
ensure consistent and auditable operational procedures for the continuum of 
services.
In the programs administered or funded by TDCJ-CJAD, the goals are to:
1. provide guidelines for quality substance abuse programming throughout the 
continuum of care;
2. provide comprehensive, quality substance abuse treatment services;
3. provide guidelines for evaluating programs and cost-effectiveness of 
substance abuse programs; and
4. promote coordination in the delivery of substance abuse services among the 
community supervision and corrections departments in the state as well as with 
the divisions of the TDCJ and the agencies it funds.
The objectives of the Substance Abuse Standards are to:
1. develop uniform minimum operational standards for substance abuse programs in 
the areas of Facility Management, Treatment Process, Offender Management, 
Program Services, and the Physical Plant;
2. establish a set of terms, definitions, and credentials for staff;
3. develop standards that will provide a framework for measurable outcomes of 
substance abuse programs; and
4. improve communication between service providers, divisions, and departments 
involving substance abuse services for criminal offenders.
David P. McNutt, Deputy Director for Administrative Services, has determined 
that there will be no fiscal implications for state or local government as a 
result of enforcing or administering the sections as proposed.
Mr. McNutt also has determined that the public benefit anticipated as a result 
of enforcing or administering the sections as proposed will be to promote 
consistent, effective, and cost efficient programs of high quality for offenders 
who are under community supervision (probation). There will be no effect on 
small businesses. There is no anticipated economic cost to individuals required 
to comply with the sections as proposed.
Comments should be directed to Susan Cranford, Texas Department of Criminal 
Justice, Community Justice Assistance Division - Program Services, 209 West 14th 
Street, Suite 400, Austin, Texas 78701.
The amendment and new section are proposed under the Government Code, 
sec.509.003 (a)(5), to provide standards for the operation of programs and 
facilities administered or funded by TDCJ-CJAD.
There is no cross reference to statute.

sec.163.39. Residential Services.
(a)-(b) (No change.)
(c) Building and Safety Codes.
(1) (No change.)
(2) Fire, Safety, and Health and Sanitation Codes. The CSCD directors or 
designees shall ensure that the facility complies with the applicable 
<nl>governmental<ol> regulations of the fire, safety, and health and sanitation 
authorities. <nl>Facility personnel shall plan and execute all reasonable 
procedures for the prevention and prompt control of fire so as to ensure the 
safety of staff, offenders, and visitors.<ol> Documentation of fire, safety, and 
health and sanitation inspections shall be provided to TDCJ-CJAD upon request. 
<nl> In the event that no applicable local, city, or county codes exist, state 
codes shall prevail.<ol> The facility shall also maintain compliance with 
minimum guidelines established by the TDCJ-CJAD for physical plants of CCFs. 
<nl> Fire prevention regulations and practices to ensure the safety of staff, 
offenders, and visitors shall include, but are not limited to:<ol>
<nl>(A)<ol> <nl>provision of an adequate fire protection service;<ol>
<nl>(B)<ol> <nl>a system of fire inspections and testing of equipment at least 
quarterly;<ol>
<nl>(C)<ol> <nl>an annual inspection by local or state fire officials or other 
qualified person(s); and<ol>
<nl>(D)<ol> <nl>available fire protection equipment at appropriate locations 
throughout the facility.<ol>
(d) (No change.)
(e) Program and Service Areas.
(1)-(2) (No change.)
<nl>(3)<ol> <nl>Sanitation. There shall be written policy and procedures to 
ensure the following.<ol>
<nl>(A)<ol> <nl>Space shall be provided for janitor closets which are equipped 
with cleaning implements.<ol>
<nl>(B)<ol> <nl>There shall be storage areas in the facility for clothing, 
bedding, and cleaning supplies.<ol>
<nl>(C)<ol> <nl>There shall be clean, usable bedding, linen, and towels for new 
residents with provision for exchange or laundering on at least a weekly 
basis.<ol>
<nl>(D)<ol> <nl>On an emergency or indigent basis, the facility shall provide 
personal hygiene articles.<ol>
<nl>(E)<ol> <nl>There shall be adequate control of vermin and pests.<ol>
<nl>(F)<ol> <nl>There shall be timely trash and garbage removal.<ol>
<nl>(G)<ol> <nl>Sanitation and safety inspections of all internal and external 
areas and equipment shall be performed and documented on a routine basis to 
protect the health and safety of all residents, staff and visitors.<ol>
(f) (No change.)
(g) Safety and Emergency Procedures. <nl>A comprehensive written plan shall be 
formulated and implemented to ensure that offenders, as well as employees, shall 
remain protected in the event of emergencies, including mental/emotional 
aberrations, physical acting out, medical situations, riots, escapes, fires, and 
both natural and civil disasters.<ol>
(1)-(2) (No change.)
(h)-(m) (No change.)
(n) Food Service. <nl>The food preparation and dining area must provide space 
for meal service based on population size and need.<ol>
(1)-(5) (No change.)
(o)-(s) (No change.)

sec.163.40. Substance Abuse Treatment Standards. 
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise.
(1) Admission - The administrative process and procedure performed to accept a 
offender into a treatment program or facility.
(2) Chemical Dependency Counselor - A qualified credentialed counselor or 
counselor intern working under direct supervision.
(3) Continuum of Care - A system which provides for the uninterrupted provision 
of essential services to offenders entering, exiting, and within the system.
(4) Counseling - Face-to-face interactions between offenders and counselors to 
help offenders identify, understand, and resolve their personal issues and 
problems related to their substance abuse or chemical dependency. Counseling may 
take place in groups or in individual meetings.
(5) Counselor Intern - A person pursuing a course of training in chemical 
dependency counseling that leads to licensure by the Texas Commission on Alcohol 
and Drug Abuse.
(6) Detoxification - Chemical dependency treatment designed to systematically 
reduce the amount of alcohol and other toxic chemicals in an offender's body, 
manage withdrawal symptoms, and encourage the offender to continue ongoing 
treatment for chemical dependency.
(7) Direct Care Staff - The staff responsible for providing treatment, care, 
supervision, or other offender services that involve a significant amount of 
direct contact. (Clerical support staff are not considered direct care staff.)
(8) Discharge - The time when an offender leaves a program or facility and will 
no longer be receiving chemical dependency treatment from that program or 
facility.
(9) Discharge Summary - A recapitulation of the offender's progress and 
participation while in either primary, residential, or outpatient treatment.
(10) Education - Educational instruction; a planned, structured presentation of 
information which is related to substance abuse or chemical dependency.
(11) Emergency - A situation requiring immediate attention and action to treat 
or prevent physical, emotional, or mental threat, harm, injury, or illness.
(12) Facility/Program - The physical location or the treatment program offered 
at the location operated by, for, or with funding from the TDCJ-CJAD. Some 
locations may be locked facilities for in-patient treatment; other programs may 
be offered at locations as out-patient treatment.
(13) Grievance - A formal complaint limited to matters affecting the complaining 
offender personally and limited to matters for which the facility/program has 
the authority to remedy through the grievance process.
(14) Primary Counselor - An individual working directly with and being 
responsible for the treatment of the offender.
(15) Qualified Credentialed Counselor (QCC) - A licensed chemical dependency 
counselor (LCDC) or one of the following professionals:
(A) licensed professional counselor (LPC);
(B) licensed master social worker (LMSW);
(C) licensed marriage and family therapist (LMFT);
(D) licensed psychologist;
(E) licensed physician (MD);
(F) certified addictions registered nurse (CARN);
(G) licensed psychological associate; and
(H) advance practice nurse recognized by the Board of Nurse Examiners as a 
clinical nurse specialist or nurse practitioner with specialty in psyche-mental 
health (APN-P/MH).
(16) Senior Counselor/Unit Manager/Unit Supervisor - A supervisory staff member 
who directs, monitors, and oversees the work performance of subordinate staff 
members.
(17) Special Needs Populations - Offenders who have significant problems in the 
areas of mental health, diminished intellectual capacity, or medical needs.
(18) Treatment - Planned, structured interactions between offenders and 
counselors, or among offenders in a therapeutic setting with a counselor as a 
facilitator, in which the goal is to help offenders identify, understand, and 
resolve their personal issues and problems related to their substance abuse or 
chemical dependency. See also subsection (a) of this section relating to 
counseling.
(19) Use of Force - Graduated levels of use of physical strength or weapons 
necessary to gain physical compliance and control of an offender whose actions 
otherwise pose a danger to self or others.
(b) Compliance. Compliance with TDCJ-CJAD substance abuse treatment standards is 
required of all programs that provide substance abuse treatment and are funded 
or managed by TDCJ-CJAD. Programs providing only substance abuse education are 
not subject to these standards.
(c) Personnel and Staff Development/Accreditation. The employer shall ensure 
that employees acquire any credentials, licensing, certifications, or continuing 
education required to perform their duties. Personnel files for employees shall 
be maintained to display copies of required documents. Programs that are not 
clinical training institutions as defined by the Texas Commission on Alcohol and 
Drug Abuse must inform all counselor interns in their employment of this fact.
(d) Admissions. There shall be documentation of specific admission criteria and 
procedures. Offenders are eligible for substance abuse treatment programs:
(1) if the offender's needs are met by the treatment services provided by the 
program;
(2) if a court orders the offender into the program and the subsequent 
assessment indicates the need for treatment services; or 
(3) if the program allows readmissions and the offender meets the admission 
criteria. For offenders who are placed in treatment programs who do not meet 
admission criteria, a mechanism or procedure shall be developed for offender 
removal. A review and justification explaining the reason(s) the offender does 
not meet admission criteria shall be required.
(e) Intake. There shall be written policies and procedures establishing an 
intake process for offenders entering a substance abuse treatment program.
(f) Assessment Procedures. Acceptable and recognized assessment tools (tests and 
measurements) shall be used in all substance abuse treatment programs. 
Assessment policies and procedures shall require the use of approved clinical 
measurements and screening tests. Assessment procedures shall include the 
following listed in paragraphs (1)-(5) of this subsection:
(1) identification of strengths, abilities, needs and preferences of the 
offenders served;
(2) indication of desired outcomes and expectations of offenders served;
(3) summarization and evaluation of each offender to develop individual 
treatment plans.
(4) specified time-frames for initial and on-going assessments;
(5) assessments completed by a Qualified Credentialed Counselor (QCC), or if the 
assessor is not a QCC, then the documentation must be reviewed and signed by a 
QCC or qualified evaluator.
(g) Assessments. The assessment shall include:
(1) a summary of the offender's alcohol or drug abuse history including 
substances used, date of last use, date of first use, patterns and consequences 
of use, types of and responses to previous treatment and periods of sobriety;
(2) family information, including substance use and abuse by family members and 
supportive or dysfunctional relationships;
(3) vocational and employment status, including skills or trades learned, work 
record and current vocational plans;
(4) health information, including medical conditions that present a problem or 
that might interfere with treatment;
(5) emotional or behavioral problems, including a history of psychiatric 
treatment; and
(6) a diagnostic summary signed and dated by the chemical dependency counselor, 
followed by a Licensed Chemical Dependency Counselor (LCDC) or Qualified 
Credentialed Counselor (QCC).
(h) Orientation. Each program shall establish written policies and procedures 
for the orientation process. Orientation shall be provided at the onset of 
treatment and in accordance with the level of treatment to be provided. The 
orientation shall relay information necessary for offenders to be successful in 
treatment.
(i) Offender Rights. The offender's basic rights shall be respected and 
protected, free from abuse, neglect and exploitation. Each provider shall have 
written policy and procedure to ensure protection of the offender's rights 
according to federal and state guidelines.
(j) Release Of Information. There shall be written policies and procedures for 
protecting and releasing offender information that conforms to federal and state 
confidentiality laws. The staff shall follow written policies and procedures for 
responding to oral and written requests for offender-identifying information.
(k) Offender Records. There shall be written policies and procedures regarding 
the content of offender records. Case records shall include, at a minimum, the 
following information listed in paragraphs (1)-(10) of this subsection:
(1) initial intake information form;
(2) referral documentation;
(3) case information from referral source, if applicable;
(4) release of information forms;
(5) relevant medical information;
(6) case history and assessment;
(7) individual treatment plan;
(8) evaluation and progress reports;
(9) discharge summary; and
(10) court order placement of offender into the program, if applicable.
(l) Offender Records Review Policy. There shall be written policy and procedures 
to govern the access of offenders to their own substance abuse treatment records 
in accordance with Texas Health and Safety Code, sec.611.0045. This access does 
not apply to criminal justice records. Restrictions to access to treatment 
records shall be specified and explained to offenders upon request. Exceptions 
must involve the potential for harm to the offender or others.
(m) Treatment Planning and Review. Individual Treatment Plans will be developed 
in accordance with TDCJ-CJAD Standard sec.163.35(c)(5) of this title (relating 
to Supervision) on the Case Supervision or Treatment Plan, or through a similar 
process approved by the CSCD. Substance abuse treatment shall remain focused on 
the offender's success or lack of progress, and shall be reviewed at timely 
intervals at a minimum of once each month or when major changes occur (e.g., 
change in phase) and shall ensure:
(1) that the primary counselor meets with the offender as needed to review the 
treatment plan, evaluating goal progress and revisions; and
(2) that all revised treatment plans be signed and dated by the counselor and 
the offender.
(n) Treatment Progress Notes. There shall be written policies and procedures to 
require all programs to record and maintain progress notes on all offender case 
records, to document counseling sessions, and to summarize significant events 
that occur throughout the treatment process. Progress notes shall be documented 
at a minimum of once per week.
(o) Changes In Treatment Levels. Each treatment program shall develop written 
criteria for an offender to advance or regress from a level of treatment. An 
offender must meet the criteria for a change in the level of treatment before 
such a change or a discharge is implemented.
(p) Discharges From Treatment. Discharge from a program shall be based on the 
following criteria listed in paragraphs (1)-(7) of this subsection:
(1) the offender has made sufficient progress towards meeting the objectives of 
the supervision plan and program requirements;
(2) the offender has satisfied a sentence of confinement;
(3) the offender has satisfied a period of placement as a condition of community 
supervision;
(4) the offender has demonstrated non-compliance with the program criteria or 
court order;
(5) the offender manifests a medical problem that prohibits participation or 
completion of the program requirements;
(6) the offender displays symptoms of a psychological disorder that prohibits 
participation or completion of the program requirements; or
(7) the offender is identified as inappropriate or ineligible for participation 
in the program as defined by facility eligibility criteria, statute, or 
standard.
(q) Discharge Summary. A discharge summary shall be prepared by the primary 
counselor for each offender leaving any substance abuse program. The discharge 
summary shall provide a summation of:
(1) clinical problems at the onset of treatment and original diagnosis;
(2) the problems or needs, strengths or weaknesses identified on the master 
treatment plan;
(3) the goals and objectives established;
(4) the course of treatment;
(5) the outcomes achieved; and
(6) a continuum of care plan/aftercare treatment plan.
(r) General Program Services Provisions. Specific services shall be required of 
all substance abuse treatment programs. Written policy and procedures shall 
ensure the following:
(1) All substance abuse services shall be delivered according to a written 
treatment plan.
(2) All programs shall employ a Qualified Credentialed Counselor as the Program 
Director, Clinical Director, Senior Counselor, or the counselor in a similar 
supervisory position.
(3) The program shall include culturally diverse curriculum applicable to the 
population served. This shall be accomplished through demonstrated, appropriate 
counseling and instructional materials.
(4) Members of the offender treatment team shall demonstrate effective 
communications and coordination, as evidenced in staffing, treatment planning 
and case-management documentation.
(5) There shall be written policies and procedures regarding the delivery and 
administration of prescription and nonprescription medication which provide for:
(A) conformity with state regulations;
(B) documentation of the administration of medications, medication errors, and 
drug reactions.
(6) Chemical dependency education shall follow a course outline that identifies 
lecture topics and major points to be discussed.
(7) The program shall provide education about the health risks of tobacco 
products and nicotine addiction.
(8) The program shall provide HIV education based on the Model Workplace 
Guidelines for Direct Service Providers developed by the Texas Department of 
Health.
(9) Offenders shall have access to HIV counseling and testing services directly 
or through referral.
(A) HIV services shall be voluntary, anonymous, and not limited by ability to 
pay.
(B) Counseling shall be based on the model protocol developed by the Texas 
Department of Health.
(C) In all TDCJ-CJAD funded facilities, testing, as well as pre- and post-test 
counseling, is to be provided by the medical department or contracted medical 
provider. In all facilities, service shall be provided either directly or 
through referral.
(10) The program shall make testing, as well as information, for tuberculosis 
and sexually transmitted diseases available to all offenders, unless the program 
has access to test results obtained during the past year.
(A) Services may be made available directly or through referral.
(B) If an offender tests positive for tuberculosis or a sexually transmitted 
disease, the program shall refer the offender to an appropriate health care 
provider and take appropriate steps to protect offenders and staff.
(C) A community corrections facility shall report to the local health department 
the release of an offender who is receiving treatment for tuberculosis.
(11) The program shall:
(A) refer pregnant offenders who are not receiving prenatal care to an 
appropriate health care provider and monitor follow-through; and
(B) refer offenders to ancillary services necessary to meet treatment goals.
(s) Detoxification. Written policies and procedures shall ensure the following 
listed in paragraphs (1)-(10) of this subsection.
(1) All offenders admitted to Detoxification programs shall need detoxification.
(2) Every offender shall have a completed medical history and physical.
(A) Residential offenders shall have a completed physical and medical history 
and a physical within 24 hours of admission. If the facility cannot meet this 
deadline because of exceptional circumstances, the circumstances shall be 
documented in the offender record. Until an offender's medical history and 
physical is complete, staff shall observe offenders closely (no less than every 
15 minutes) and monitor vital signs (no less than once each hour).
(B) Outpatient offenders shall have the medical history and physical completed 
before admission.
(3) The program shall provide continuous supervision for offenders.
(A) In residential programs, direct care staff shall be awake and on site 24 
hours a day.
(i) During day and evening hours, at least two awake staff shall be on duty for 
the first 12 offenders, with one more person on duty for each additional one to 
16 offenders.
(ii) At night, at least one awake staff member shall be on duty for the first 12 
offenders, with one more person on duty for each additional one to 16 offenders.
(B) In outpatient programs, direct care staff shall be awake and on site 
whenever an offender is on site. Offenders shall have access to on-call staff 24 
hours a day.
(4) If the program accepts offenders with acute detoxification symptoms or a 
history of acute detoxification symptoms, the program shall have:
(A) a licensed vocational nurse or registered nurse on duty during all hours of 
operation;
(B) a physician on-call 24 hours a day.
(5) Level of observation shall be based on medical recommendations and program 
design, or not less than that described in paragraph (2)(A) of this subsection.
(6) A physician shall approve all medical policies, procedures, guidelines, 
tools, and forms, which shall include:
(A) screening instruments (including a medical risk assessment) and procedures;
(B) treatment protocol or standing orders for each chemical the program is 
prepared to address in detoxification; and
(C) emergency procedures.
(7) The clinical supervisor shall be a physician, physician assistant, advanced 
practice nurse, or registered nurse.
(8) The program shall:
(A) ensure continuous access to emergency medical care;
(B) provide offenders access to mental health evaluation and linkage with mental 
health services when indicated;
(C) use written procedures to encourage offenders to seek appropriate treatment 
after detoxification.
(9) Direct care staff shall complete detoxification training provided by a 
physician, physician assistant, advanced practice nurse, or registered nurse 
that includes instruction in the following areas listed in subparagraphs (A)-(E) 
of this paragraph:
(A) signs of withdrawal;
(B) pregnancy-related complications (if the program admits females of child-
bearing age);
(C) observation and monitoring procedures;
(D) appropriate intervention; and
(E) complications requiring transfer.
(10) Staff shall assist each offender in developing an individualized post-
detoxification plan that includes appropriate referrals.
(t) Relapse/Intensive Residential Treatment. Written policies and procedures 
shall ensure the following listed in paragraphs (1)-(11) of this subsection.
(1) All offenders admitted to relapse intensive residential treatment shall be 
medically stable, and able to participate in treatment.
(2) The program shall provide adequate staff for close supervision and 
individualized treatment with counselor caseloads not to exceed ten offenders.
(3) There shall be direct care staff alert and on site during all hours of 
operation. There shall be an appropriate number of direct care staff to provide 
for the safety and security of the offenders, according to the design of the 
facility and with the approval of the funding sources.
(4) Counselors shall complete a comprehensive offender assessment within three 
working days of admission.
(5) An individualized treatment plan shall be completed for all offenders within 
five working days of admission.
(6) The facility shall deliver not less than 20 hours of structured activities 
per week for each offender, including:
(A) ten hours of chemical dependency counseling, with no less than one hour of 
individual counseling;
(B) seven hours additional education, counseling, life skills, or rehabilitation 
activities; and
(C) three hours of structured social or recreational activities.
(7) Counseling and education schedules shall be submitted to the funding entity 
for approval.
(8) Each offender shall have an opportunity to participate in physical 
recreation at least weekly.
(9) Program staff shall offer chemical dependency education or services to 
identified significant others.
(10) The program shall provide each offender with opportunities to apply 
knowledge and practice skills in a structured, supportive environment.
(11) If the program utilizes a Modified Therapeutic Community modality of 
treatment it shall include the following listed in subparagraphs (A)-(E) of this 
paragraph as minimal components:
(A) a Structure Board;
(B) encounter, counseling and family groups;
(C) utilization of a three phase process. (Offenders shall transition from Phase 
1, to Phase 2, to Phase 3, by meeting objectives and program goals);
(D) graduated treatment sanctions for incidents of non-compliance in 
coordination with the Transitional Treatment Team; and
(E) other peer-support groups.
(u) Primary Care/Modified Therapeutic Community Treatment. Written policies and 
procedures shall ensure the following listed in paragraphs (1)-(12) of this 
subsection.
(1) All offenders admitted to modified therapeutic community treatment shall be 
medically stable, and able to participate in treatment.
(2) The program shall provide adequate staff for close supervision and 
individualized treatment with counselor caseloads not to exceed 20 offenders.
(3) There shall be direct care staff alert and on site during all hours of 
operation. There shall be an appropriate number of direct care staff to provide 
for the safety and security of the offenders, according to the design of the 
facility and with the approval of the funding.
(4) Counselors shall complete a comprehensive offender assessment within five 
working days of admission for all offenders admitted to a therapeutic community 
program.
(5) An individualized treatment plan shall be completed for all offenders within 
seven working days of admission.
(6) Length of stay shall be offender-driven based upon:
(A) the offender's successful completion of treatment goals;
(B) medical and psychological appropriateness for the program;
(C) the offender's compliance with the programs rules and regulations.
(7) The facility shall deliver no less than twenty hours of structured 
activities (including therapeutic interventions) per week for each offender, 
including:
(A) ten hours of chemical dependency counseling, with no less than one hour of 
individual counseling;
(B) seven hours additional education, counseling, life skills, or rehabilitation 
activities; and
(C) three hours of structured social or recreational activities.
(8) Counseling and education schedules shall be submitted to the funding entity 
for approval.
(9) Each offender shall have an opportunity to participate in physical 
recreation at least four hours per week.
(10) Program staff shall offer chemical dependency education or services to 
identified significant others.
(11) The program shall provide each offender with opportunities to apply 
knowledge and proactive skills in a structured, supportive environment.
(12) All Therapeutic Communities shall have the following listed in 
subparagraphs (A)-(E) of this paragraph as minimal components:
(A) a Structure Board;
(B) encounter, counseling, and family groups;
(C) Utilization of a three phase process. (Offenders shall transition from Phase 
1, to Phase 2, to Phase 3, by meeting objectives and program goals);
(D) graduated treatment sanctions for incidents of non-compliance in 
coordination with the Transitional Treatment Team; and
(E) other peer-support groups.
(v) Community Residential Treatment. Written policies and procedures shall 
ensure the following listed in paragraphs (1)-(8) of this subsection.
(1) All offenders admitted to intensive residential treatment shall be medically 
stable, able to function with limited supervision and support, and be able to 
participate in work release or community service/restitution programs.
(2) The program shall have adequate staff to meet treatment needs within the 
context of the program description, with counselor caseloads not to exceed 16 
offenders.
(3) There shall be direct care staff alert and on site during all hours of 
operation. There shall be an appropriate number of direct care staff to provide 
for the safety and security of the offenders, according to the design of the 
facility and with the approval of the funding.
(4) Counselors shall complete a comprehensive offender assessment and treatment 
plan within five working days of admission for all offenders.
(5) The facility shall deliver no less than ten hours of structured activities 
per week for each offender, including at least five hours of chemical dependency 
counseling.
(6) Counseling and education schedules shall be submitted to the funding entity 
for approval.
(7) The program design and application shall include increasing levels of 
responsibility for offenders and frequent opportunities for offenders to apply 
knowledge and practice skills in structured and unstructured settings.
(8) If the program utilizes a Modified Therapeutic Community modality of 
treatment, it shall include the following components listed in subparagraphs 
(A)-(G) of this paragraph:
(A) a Structure Board;
(B) encounter, counseling and family groups;
(C) utilization of a three phase process. (Offenders shall transition from Phase 
1, to Phase 2, to Phase 3, by meeting objectives and program goals);
(D) graduated treatment sanctions for incidents of non-compliance in 
coordination with the Transitional Treatment Team;
(E) other peer-support groups;
(F) counselor caseloads not to exceed 20 offenders per counselor; and
(G) programming of no less than four hours of chemical dependency counseling and 
four hours of structured activities per week.
(w) Outpatient Treatment. Written policies and procedures shall ensure the 
following listed in paragraphs (1)-(11) of this subsection:
(1) All offenders admitted to outpatient programs shall be medically stable, and 
have appropriate support systems in the community to live independently with 
minimal structure.
(2) The program shall have adequate staff to provide offenders support and 
guidance to ensure effective service delivery, safety, and security. Staffing 
patterns shall be submitted to the funding entity.
(3) The program shall set limits on counselor caseload size to ensure effective, 
individualized treatment and rehabilitation. Criteria used to set the caseload 
size shall be documented and approved by the funding entity.
(4) Didactic groups shall not exceed 30 offenders in a group.
(5) Therapeutic groups shall not exceed 16 offenders in a group.
(6) For offenders in supportive outpatient programs, counselors shall complete a 
comprehensive offender assessment within 30 calendar days of admission for all 
offenders.
(7) For offenders in intensive outpatient programs, counselors shall complete a 
comprehensive offender assessment within ten calendar days of admission for all 
offenders.
(8) Intensive outpatient programs shall deliver no less than ten hours of 
structured activities per week for each offender, including at least five hours 
of chemical dependency counseling.
(9) Supportive outpatient programs shall deliver no less than two hours of 
structured activities per week for each offender, including at least one hour of 
chemical dependency counseling.
(10) Counseling and education schedules shall be submitted to the funding entity 
for approval.
(11) The program design and application shall include increasing levels of 
responsibility for offenders and frequent opportunities for offenders to apply 
knowledge and practice skills in structured and unstructured settings.
(x) Special Populations. Written policies and procedures shall ensure the 
following listed in paragraphs (1)-(11) of this subsection:
(1) Programs that address the special mental health, intellectual capacity, or 
medical needs of offenders must provide appropriate treatment either by program 
staff or through contracted services.
(2) Admission to a special needs program must be based on a documented mental 
health, intellectual capacity, or medical need.
(3) When the assessment process indicates that the offender has coexisting 
disabilities/disorders, the Treatment Plan shall specifically address those 
issues that might impact treatment, recovery, relapse, and or recidivism.
(4) Personnel shall be available who are qualified in the treatment of 
coexisting disabilities/disorders.
(5) Within 96 hours of admission to a special needs residential program, 
offenders shall be administered a medical and psychological evaluation.
(6) Within ten days of admission to a residential program for special needs 
offenders, the program administrator or designee shall contact the Texas Council 
on Offenders with Mental Impairments (TCOMI) regarding the offender's status and 
plans for a continuum of care after discharge, regardless of whether or not the 
discharge is for successful completion of the program.
(7) Residential facilities providing services for special needs populations 
shall have procedures to provide access to health care services, including 
medical, dental, and mental health services, under the control of a designated 
health authority. When this authority is other than a physician, final medical 
judgments must rest with a single designated responsible physician licensed by 
the state.
(A) Services/treatment shall be directed toward maximizing the functioning and 
reducing the symptoms of offenders.
(B) There shall be written policies and procedures regarding the delivery and 
administration of prescription and nonprescription medication which provide for:
(i) conformity with state regulations;
(ii) documentation of the rationale for use and goals of service/treatment 
consistent with the individual plan of treatment;
(iii) documentation of the administration of medications, medication errors, and 
drug reactions;
(iv) procedures to follow in case of emergencies.
(8) There shall be procedures for documenting the offender has been informed of 
medication management procedures.
(9) Offenders shall be actively involved in decisions related to their 
medications.
(10) Programs for special needs offenders must follow the same staffing for 
treatment levels as the levels for other offenders, except all residential 
programs shall maintain caseloads of no greater than 16 offenders for each 
counselor.
(11) Programs operating in residential facilities shall ensure that offenders 
will have no less than ten days of appropriate medication for use after 
discharge.
(y) Residential Physical Plant Requirements. Facilities (Physical Plants) 
providing substance abuse treatment to offenders shall have written policies and 
procedures to ensure the following listed in paragraphs (1)-(21) of this 
subsection:
(1) The physical plant shall be located either within a mile of public 
transportation or other means of available transportation.
(2) There must be documentation indicating that ventilation conforms with the 
American Society of Heating, Refrigerating and Air Conditioning Engineers 
(ASHRAE) Standard 62 and ASHRAE Standard 55 requiring 20 CFM per person minimum 
outside air and ventilation for each occupant or facility sleeping quarters. The 
facility/sleeping quarters must also meet Smoke Management Standards 92A, 92B 
and 204M established by the National Fire Prevention Association (NFPA). 
Consultation with trade associations specializing in the area of ventilation can 
provide alternative methods of mechanical ventilation if windows are absent or 
not operable. Documentation for meeting proper ventilation requirements can be 
obtained through a local public health agency, an engineering consultant, or a 
trade association such as the American Society of Heating, Refrigeration and 
Air-Conditioning Engineer, Inc.
(3) There must be documentation that all sleeping quarters have lighting of at 
least 20 foot-candles in reading and grooming areas. Sleeping quarters shall be 
safe and provide the resident with adequate lighting which is conducive to 
reading and grooming.
(4) An adequate amount of floor space must be provided per resident in the 
facility(s) sleeping area to meet the safety and security requirements of the 
facility.
(5) In the sleeping area, each resident must be provided at a minimum: a bed, 
mattress and pillow; supply of bed linen; and closet/locker space for the 
storage of personal items.
(6) Private counseling space with adequate furniture must be provided in the 
facility.
(7) Space and furnishings for activities such as group meetings and visits shall 
be provided in the facility.
(8) At a minimum, the facility shall have one operable toilet for every eight 
residents or increment thereof as approved by funding entity. Urinals may be 
substituted for up to one-half of the toilets in male-populated facilities.
(9) At a minimum, the facility shall have one operable wash basin with 
temperature controlled hot and cold running water for every eight residents, or 
as approved by the funding agency.
(10) At a minimum, the facility shall have one operable shower or bathing 
facility with temperature controlled hot and cold running water for every twelve 
residents or as approved by funding entity. The water shall be thermostatically 
controlled to temperatures ranging from 100 to 108 degrees Fahrenheit to ensure 
the safety of residents.
(11) The facility shall have the ability to handle the laundry needs on a daily 
basis for all residents.
(12) Facilities of more than 200 residents shall be subdivided into units of not 
more than 60 residents, each of which are staffed with the number and variety of 
personnel required to provide the program services and custodial supervision 
needed based on contractual requirements. Units with 50 or fewer residents shall 
be permitted to conduct manageable, scaled programs based on decisions by 
facility management and contractual requirements.
(13) Resident population shall not exceed the rated space of the facility. The 
original facility plan shall be examined to determine its rated bed capacity. If 
remodeled since original construction, the latest blueprints or plans for each 
resident housing shall be used.
(14) When males and females are housed in the same facility, there shall be 
separate sleeping quarters with adequate supervision.
(15) There shall be identifiable exits in each housing area and other high 
density areas to permit the prompt evacuation of residents and staff under 
emergency conditions as approved by the local or state fire inspector/Marshall 
having jurisdiction.
(16) Where applicable, there shall be a separate day room (leisure time space) 
for each housing unit, and an outside recreation area shall be provided.
(17) There shall be a visiting room or area for contact visitation which is 
adequate to meet the needs and size of the facility.
(18) Space must be provided for administrative, custodial, professional, and 
clerical staff.
(19) Preventative maintenance of the physical plant which provides for emergency 
repairs or replacements in life threatening situations shall be documented and 
conducted on a timely and routine basis.
(20) There shall be documentation by a qualified source that the interior 
finishing material in resident living areas, exit areas, and places of public 
assembly are in accordance with the local or state fire inspector/marshall 
having jurisdiction.
(21) Exits in the facility must be in compliance with either state or local fire 
safety authorities.
(z) Special Physical Plant Provisions. There shall be written policy and 
procedures to ensure access for handicapped residents in a manner which provides 
for their safety and security. In accordance with the Americans with 
Disabilities Act (ADA), areas of the facility which are accessible to the public 
shall be also accessible to handicapped staff and visitors.
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811349
Carl Reynolds
General Counsel
Texas Department of Criminal Justice
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-9693

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART I. Texas Department of Human Services
CHAPTER 11. Food Distribution and Processing
The Texas Department of Human Services (DHS) proposes amendments to 
sec.sec.11.105 and 11.6009, concerning contractor sanctions, termination, and 
appeal rights, and reimbursement, in its Food Distribution and Processing 
chapter. The United States Department of Agriculture has mandated the reduction 
in the time frames for submitting an audit in accordance with the requirements 
of the Single Audit Act, as amended, from 13 months to nine months from the end 
of the contractor's fiscal year. The revised time frame is effective for 
contractor fiscal years beginning on or after July 1, 1998. The purpose of the 
proposed amendments is to reduce the number of advance notifications to 
contractors reminding them of audits due from three advance notices to two. The 
amendments are necessary to accommodate the mandated reduction in the time frame 
for submitting an audit as contained in the Single Audit Act, as amended.
Eric M. Bost, commissioner, has determined that for the first five-year period 
the proposed sections will be in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the 
sections.
Mr. Bost also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be enhanced program accountability by enabling DHS to expedite 
the collection and resolution of audits required under the Single Audit Act, as 
amended. There will be no effect on small businesses because the change is a 
technical amendment to a current procedure. There is no anticipated economic 
cost to persons who are required to comply with the proposed sections.
Questions about the content of the proposal may be directed to Nancy Hill at 
(512) 467-5852 in DHS's Special Nutrition Programs. Written comments on the 
proposal may be submitted to Supervisor, Rules and Handbooks Unit-274, Texas 
Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, 
within 30 days of publication in the Texas Register

SUBCHAPTER A. Food Distribution Program
40 TAC sec.11.105
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs.
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code.

sec.11.105. Contractor Sanctions, Termination, and Appeal Rights. 
[(a) The information in this subsection applies to recipient agencies 
participating in the Special Nutrition Programs whose required single audit 
falls due before June 1, 1996.]
[(1) An applicant or recipient agency whose contract has been terminated has the 
right to appeal the termination as specified in Chapter 79 of this title 
(relating to Legal Services).]
[(2) The Texas Department of Human Services (DHS) imposes fiscal sanctions on 
recipient agencies for failure to comply with the requirements of the Single 
Audit Act.]
[(A) DHS takes fiscal sanctions against a recipient agency according to the 
procedures specified in subparagraphs (A)-(C) of this paragraph.]
[(i) DHS notifies each recipient agency upon approval of the application for 
program participation of the date by which an acceptable audit must be received 
by DHS, and that failure to comply will result in sanctions up to and including 
contract termination and recovery of overpayments as identified through audit 
findings.]
[(ii) DHS notifies recipient agencies by certified mail within 15 days after a 
required audit is not received, or an audit is determined to be unacceptable, 
that failure to submit an acceptable audit within 60 days of receipt of the 
notification will result in termination.
[(iii) If an acceptable audit is not received within the 60 days specified in 
clause (ii) of this subparagraph, DHS notifies the recipient agency by certified 
mail that the audit has not yet been received and that failure to submit the 
required audit within 30 days of receipt of this notification will result in 
termination in the next allocation period.]
[(iv) If an acceptable audit is not received within the 30 days specified in 
clause (iii) of this subparagraph, DHS notifies the recipient agency that their 
contract is terminated effective upon receipt of this notification.]
[(B) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the recipient agency.]
[(C) If DHS imposes sanctions according to the procedures specified in paragraph 
(2) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a recipient agency submits an audit 
which does not meet the requirements of the Single Audit Act, the sanction 
procedures will be re-initiated as specified in subparagraph (A) of this 
paragraph. DHS may extend the time within which a recipient agency must submit 
an audit if DHS determines such an extension is justified.]
[(b)] The information in this <nl>section <ol> [subsection] applies to recipient 
agencies participating in the Special Nutrition Programs <nl>who are<ol> [whose] 
required <nl> to obtain an audit in accordance with the Single Audit Act, as 
amended<ol> [single audit falls due on June 30, 1996, or later].
(1) An applicant or recipient agency whose contract has been terminated has the 
right to appeal the termination as specified in Chapter 79 of this title 
(relating to Legal Services).
(2) <nl>The Texas Department of Human Services (DHS) <ol> [DHS] imposes fiscal 
sanctions on recipient agencies for failure to comply with the requirements of 
the Single Audit Act <nl>, as amended<ol>.
(A) DHS takes fiscal sanctions against a recipient agency according to the 
procedures specified in subparagraphs (A)-(D) of this paragraph.
(i) DHS notifies each recipient agency upon approval of the application for 
program participation of the date by which an acceptable audit must be received 
by DHS, and that failure to comply will result in contract termination and 
recovery of overpayments as identified through audit findings.
(ii) DHS provides the recipient agency <nl>two<ol> [three] advance notices 
reminding the recipient agency of the specific date that the audit is due.
(I) DHS issues the first notice by regular mail six months after the end of the 
recipient agency's fiscal year for which the audit is due.
[(II) DHS issues the second notice by regular mail nine months after the end of 
the recipient agency's fiscal year for which the audit is due.]
<nl>(II)<ol> [(III)] DHS issues the <nl>second <ol> [third] notice by certified 
and regular mail <nl>eight <ol> [11] months after the end of the recipient 
agency's fiscal year for which the audit is due. DHS notifies the recipient 
agency that:
(-a-) DHS must receive the audit on or before the due date specified in the 
notice;
(-b-) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the recipient agency's contract effective the first day of the 
month following the month in which the audit was due; and
(-c-) the recipient agency has the right to appeal this decision.
(iii) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the recipient agency by certified and regular mail that their contract 
was terminated effective the first day of the month following the month in which 
the audit was due.
(B) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the recipient agency.
(C) If a recipient agency submits an audit which does not meet the requirements 
of the Single Audit Act, <nl>as amended,<ol> then DHS notifies the recipient 
agency in writing that the audit is unacceptable, how it is unacceptable, and 
that the recipient agency has 30 calendar days from the date on the notification 
to submit an acceptable audit to DHS. If DHS does not receive the required audit 
by the specified time frame and has not granted an extension of the due date, 
DHS notifies the recipient agency by certified and regular mail that:
(i) the recipient agency failed to provide an acceptable audit within the 
specified time frames;
(ii) DHS must receive an acceptable audit by the due date specified in this 
notification;
(iii) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(iv) the recipient agency has the right to appeal this decision. DHS may extend 
the time within which a recipient agency must submit an audit if DHS determines 
such an extension is justified.
(D) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the recipient agency by 
certified and regular mail that:
(i) the recipient agency failed to provide an acceptable audit by the specified 
due date; and,
(ii) DHS terminated their contract effective the first day of the month 
following the specified due date.
(E) Once a recipient agency has been terminated for failure to submit an 
acceptable audit, the recipient agency must provide an acceptable audit for any 
outstanding audit year(s) and comply with the requirements of the Single Audit 
Act <nl>, as amended,<ol> in order to be eligible to participate in the Special 
Nutrition Programs.
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811382
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER B. The Texas Commodity Assistance Program (TEXCAP)
40 TAC sec.11.6009
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code.

sec.11.6009. Reimbursement. 
(a)-(f) (No change.)
[(g) Fiscal sanctions on contractor's whose single audit is due before June 1, 
1996. DHS imposes fiscal sanctions specified in this subsection on contractors 
whose required single audit falls due before June 1, 1996, for failure to comply 
with the requirements of the Single Audit Act. The contractor has the right to 
appeal this action as specified in Chapter 79 of this title (relating to Legal 
Services).]
[(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.]
[(A) DHS notifies each contractor upon approval of their application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.]
[(B) DHS notifies contractors by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.]
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the contractor by certified 
mail that payments will be withheld beginning the next claim month, and that 
failure to submit the required audit within 30 days of receipt of this 
notification will result in termination.
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the contractor by certified 
mail that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.]
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the contractor that the 
contract is terminated effective upon receipt of this notification.]
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.]
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a contractor submits an audit which 
does not meet the requirements of the Single Audit Act, the sanction procedures 
will be re-initiated as specified in paragraph (1)(B) of this subsection. DHS 
may extend the time within which a contractor must submit an audit if DHS 
determines such an extension is justified.]
<nl>(g)<ol> [(h)] Fiscal sanctions [on contractors whose single audit is due 
June 30, 1996, or later]. DHS imposes fiscal sanctions specified in this 
subsection on contractors <nl>who are required to obtain an audit in accordance 
with the Single Audit Act, as amended, and who fail<ol> [whose required single 
audit falls due on June 30, 1996, or later for failure] to comply with the 
requirements of <nl>said Act <ol> [the Single Audit Act]. The contractor has the 
right to appeal this action as specified in Chapter 79 of this title (relating 
to Legal Services).
(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in this paragraph and paragraphs (2)-(4) of this subsection.
(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings.
(B) DHS provides the contractor <nl>two<ol> [three] advance notices reminding 
the contractor of the specific date that the audit is due.
(i) DHS issues the first notice by regular mail six months after the end of the 
contractor's fiscal year for which the audit is due.
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the contractor's fiscal year for which the audit is due.]
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol> [third] notice by certified 
and regular mail <nl>eight <ol> [11] months after the end of the contractor's 
fiscal year for which the audit is due. DHS notifies the contractor that:
(I) DHS must receive the audit on or before the due date specified in the 
notice;
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the contractor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the contractor has the right to appeal this decision.
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the contractor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due.
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.
(3) If a contractor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended,<ol> then DHS notifies the contractor in 
writing that the audit is unacceptable, how it is unacceptable, and that the 
contractor has 30 calendar days from the date on the notification to submit an 
acceptable audit to DHS. If DHS does not receive the required audit by the 
specified time frame and has not granted an extension of the due date, DHS 
notifies the contractor by certified and regular mail that:
(A) the contractor failed to provide an acceptable audit within the specified 
time frames;
(B) DHS must receive an acceptable audit by the due date specified in this 
notification;
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and
(D) the contractor has the right to appeal this decision. DHS may extend the 
time within which a contractor must submit an audit if DHS determines such an 
extension is justified.
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the contractor by 
certified and regular mail that:
(A) the contractor failed to provide an acceptable audit by the specified due 
date; and
(B) DHS terminated their contract effective the first day of the month following 
the specified due date.
(5) Once a contractor has been terminated for failure to submit an acceptable 
audit, the contractor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended,<ol> in order to be eligible to participate in the Special Nutrition 
Programs.
The Agency hereby certifies that the proposal has been reviewed by legal counsel 
and found to be within the agency's authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811383
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 438-3765

CHAPTER 12. Special Nutrition Programs
The Texas Department of Human Services (DHS) proposes amendments to 
sec.sec.12.24, 12.121, 12.209, 12.309, and 12.409, concerning sanctions and 
penalties and fiscal action, in its Special Nutrition Programs chapter. The 
United States Department of Agriculture has mandated the reduction in the time 
frames for submitting an audit in accordance with the requirements of the Single 
Audit Act, as amended, from 13 months to nine months from the end of the 
contractor's fiscal year. The revised time frame is effective for contractor 
fiscal years beginning on or after July 1, 1998. The purpose of the proposed 
amendments is to reduce the number of advance notifications to contractors 
reminding them of audits due from three advance notices to two. The amendments 
are necessary to accommodate the mandated reduction in the time frame for 
submitting an audit as contained in the Single Audit Act, as amended. 
Eric M. Bost, commissioner, has determined that for the first five-year period 
the proposed sections will be in effect there will be no fiscal implications for 
state or local government as a result of enforcing or administering the 
sections. 
Mr. Bost also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be enhanced program accountability by enabling DHS to expedite 
the collection and resolution of audits required under the Single Audit Act, as 
amended. There will be no effect on small businesses because the change is a 
technical amendment to a current procedure. There is no anticipated economic 
cost to persons who are required to comply with the proposed sections. 
Questions about the content of the proposal may be directed to Nancy Hill at 
(512) 467-5852 in DHS's Special Nutrition Programs. Written comments on the 
proposal may be submitted to Supervisor, Rules and Handbooks Unit-274, Texas 
Department of Human Services E-205, P.O. Box 149030, Austin, Texas 78714-9030, 
within 30 days of publication in the Texas Register

SUBCHAPTER A. Child and Adult Care Food Program
40 TAC sec.12.24
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.24. Sanctions and Penalties. 
(a)-(j) (No change.) 
[(k) DHS imposes fiscal sanctions specified in this subsection on contractors 
whose required single audit falls due before June 1, 1996, for failure to comply 
with the requirements of the Single Audit Act. The contractor has the right to 
appeal this action as specified in Chapter 79 of this title (relating to Legal 
Services).] 
[(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.] 
[(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.] 
[(B) DHS notifies contractors by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.] 
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the contractor by certified 
mail that payments will be withheld beginning the next claim month, and that 
failure to submit the required audit within 30 days of receipt of this 
notification will result in termination.] 
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the contractor by certified 
mail that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.] 
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the contractor that the 
contract is terminated effective upon receipt of this notification.] 
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.] 
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a contractor submits an audit which 
does not meet the requirements of the Single Audit Act, the sanction procedures 
will be re-initiated as specified in paragraph (1)(B) of this subsection. DHS 
may extend the time within which a contractor must submit an audit if DHS 
determines such an extension is justified.] 
<nl>(k)<ol> [(l)] DHS imposes fiscal sanctions specified in this subsection on 
contractors <nl>who are required to obtain an audit in accordance with the 
Single Audit Act, as amended, and who fail <ol>[whose required single audit 
falls due on June 30, 1996, or later for failure] to comply with the 
requirements of <nl>said Act <ol>[the Single Audit Act]. The contractor has the 
right to appeal this action as specified in Chapter 79 of this title (relating 
to Legal Services). 
(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in paragraphs (1)-(4) of this subsection. 
(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings. 
(B) DHS provides the contractor <nl>two <ol>[three] advance notices reminding 
the contractor of the specific date that the audit is due. 
(i) DHS issues the first notice by regular mail six months after the end of the 
contractor's fiscal year for which the audit is due. 
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the contractor's fiscal year for which the audit is due.] 
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol>[third] notice by certified 
and regular mail <nl>eight <ol>[11] months after the end of the contractor's 
fiscal year for which the audit is due. DHS notifies the contractor that: 
(I) DHS must receive the audit on or before the due date specified in the 
notice; 
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the contractor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the contractor has the right to appeal this decision. 
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the contractor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due. 
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor. 
(3) If a contractor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended, <ol>then DHS notifies the contractor in 
writing that the audit is unacceptable, how it is unacceptable, and that the 
contractor has 30 calendar days from the date on the notification to submit an 
acceptable audit to DHS. If DHS does not receive the required audit by the 
specified time frame and has not granted an extension of the due date, DHS 
notifies the contractor by certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit within the specified 
time frames; 
(B) DHS must receive an acceptable audit by the due date specified in this 
notification; 
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(D) the contractor has the right to appeal this decision. DHS may extend the 
time within which a contractor must submit an audit if DHS determines such an 
extension is justified. 
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the contractor by 
certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit by the specified due 
date; and 
(B) DHS terminated their contract effective the first day of the month following 
the specified due date. 
(5) Once a contractor has been terminated for failure to submit an acceptable 
audit, the contractor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended, <ol>in order to be eligible to participate in the Special Nutrition 
Programs. 
<nl>(l)<ol> [(m)] If a sponsoring organization of day homes determines during a 
monitoring review, or by other means, that a provider has failed to comply with 
program requirements, the sponsor must execute a corrective action plan to 
achieve compliance. If a sponsoring organization conducts two or more 
unannounced monitoring reviews in any 12-month period during which the sponsor 
cannot confirm that children are enrolled for child care and participating in 
the program, the sponsor must execute a corrective action plan to ensure they 
are able to effectively monitor the provider's participation in the program. 
Exception: A sponsor may terminate the participation of a day care home provider 
without a corrective action plan if the safety of the children in care is at 
risk or if the sponsor determines that the program noncompliance is the result 
of intentional program abuse, deficient program operation, or fraudulent 
activities. The corrective action plan must: 
(1) prescribe the actions to be taken by the sponsor and the provider to achieve 
compliance; and 
(2) include the date by which corrective action must be completed. 
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 July 20, 1998.
TRD-9811384
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: October 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER B. Summer Food Service Program
40 TAC sec.12.121
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.121. Sanctions and Penalties. 
(a) (No change.) 
[(b) DHS imposes fiscal sanctions specified in this subsection on sponsors whose 
required single audit falls due before June 1, 1996, for failure to comply with 
the requirements of the Single Audit Act. The sponsor has the right to appeal 
this action as specified in Chapter 79 of this title (relating to Legal 
Services).] 
[(1) DHS takes fiscal sanctions against a sponsor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.] 
[(A) DHS notifies each sponsor upon approval of its application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.] 
[(B) DHS notifies the sponsor by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.] 
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the sponsor by certified mail 
that payments will be withheld beginning the next claim month, and that failure 
to submit the required audit within 30 days of receipt of this notification will 
result in termination.] 
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the sponsor by certified mail 
that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.] 
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the sponsor that the contract 
is terminated effective upon receipt of this notification.] 
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the sponsor.] 
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a sponsor submits an audit which does 
not meet the requirements of the Single Audit Act, the sanction procedures will 
be re-initiated as specified in paragraph (1)(B) of this subsection. DHS may 
extend the time within which a sponsor must submit an audit if DHS determines 
such an extension is justified.] 
<nl>(b)<ol> [(c)] DHS imposes fiscal sanctions specified in this subsection on 
sponsors <nl>who are required to obtain an audit in accordance with the Single 
Audit Act, as amended, and who fail <ol>[whose required single audit falls due 
on June 30, 1996, or later for failure ] to comply with the requirements of the 
<nl>said Act <ol>[Single Audit Act]. The sponsor has the right to appeal this 
action as specified in Chapter 79 of this title (relating to Legal Services).
(1) DHS takes fiscal sanctions against a sponsor according to the procedures 
specified in paragraphs (1)-(4) of this subsection. 
(A) DHS notifies each sponsor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings. 
(B) DHS provides the sponsor <nl>two <ol>[three] advance notices reminding the 
sponsor of the specific date that the audit is due. 
(i) DHS issues the first notice by regular mail six months after the end of the 
sponsor's fiscal year for which the audit is due. 
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the sponsor's fiscal year for which the audit is due.] 
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol>[third] notice by certified 
and regular mail <nl>eight <ol>[11] months after the end of the sponsor's fiscal 
year for which the audit is due. DHS notifies the sponsor that: 
(I) DHS must receive the audit on or before the due date specified in the 
notice; 
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the sponsor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the sponsor has the right to appeal this decision.
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the sponsor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due. 
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the sponsor. 
(3) If a sponsor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended, <ol>then DHS notifies the sponsor in writing 
that the audit is unacceptable, how it is unacceptable, and that the sponsor has 
30 calendar days from the date on the notification to submit an acceptable audit 
to DHS. If DHS does not receive the required audit by the specified time frame 
and has not granted an extension of the due date, DHS notifies the sponsor by 
certified and regular mail that: 
(A) the sponsor failed to provide an acceptable audit within the specified time 
frames; 
(B) DHS must receive an acceptable audit by the due date specified in this 
notification; 
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(D) the sponsor has the right to appeal this decision. DHS may extend the time 
within which a sponsor must submit an audit if DHS determines such an extension 
is justified. 
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the sponsor by certified 
and regular mail that: 
(A) the sponsor failed to provide an acceptable audit by the specified due date; 
and 
(B) DHS terminated their contract effective the first day of the month following 
the specified due date. 
(5) Once a sponsor has been terminated for failure to submit an acceptable 
audit, the sponsor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended, <ol>in order to be eligible to participate in the Special Nutrition 
Programs. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811385
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: October 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER C. Special Milk Program
40 TAC sec.12.209
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.209. Fiscal Action. 
(a) (No change.) 
[(b) DHS imposes fiscal sanctions specified in this subsection on contractors 
whose required single audit falls due before June 1, 1996, for failure to comply 
with the requirements of the Single Audit Act. The contractor has the right to 
appeal this action as specified in Chapter 79 of this title (relating to Legal 
Services).] 
[(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.] 
[(A) DHS notifies each contractor upon approval of its application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.] 
[(B) DHS notifies contractors by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.] 
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the contractor by certified 
mail that payments will be withheld beginning the next claim month, and that 
failure to submit the required audit within 30 days of receipt of this 
notification will result in termination.] 
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the contractor by certified 
mail that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.] 
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the contractor that the 
contract is terminated effective upon receipt of this notification.] 
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.] 
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a contractor submits an audit which 
does not meet the requirements of the Single Audit Act, the sanction procedures 
will be reinitiated as specified in paragraph (1)(B) of this subsection. DHS may 
extend the time within which a contractor must submit an audit if DHS determines 
such an extension is justified.] 
<nl>(b)<ol> [(c)] DHS imposes fiscal sanctions specified in this subsection on 
contractors <nl>who are required to obtain an audit in accordance with the 
Single Audit Act, as amended, and who fail <ol>[whose required single audit 
falls due on June 30, 1996, or later for failure] to comply with the 
requirements of <nl>said Act <ol>[the Single Audit Act]. The contractor has the 
right to appeal this action as specified in Chapter 79 of this title (relating 
to Legal Services). 
(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in paragraphs (1)-(4) of this subsection. 
(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings. 
(B) DHS provides the contractor <nl>two <ol>[three] advance notices reminding 
the contractor of the specific date that the audit is due. 
(i) DHS issues the first notice by regular mail six months after the end of the 
contractor's fiscal year for which the audit is due. 
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the contractor's fiscal year for which the audit is due.] 
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol>[third] notice by certified 
and regular mail <nl>eight <ol>[11] months after the end of the contractor's 
fiscal year for which the audit is due. DHS notifies the contractor that: 
(I) DHS must receive the audit on or before the due date specified in the 
notice; 
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the contractor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the contractor has the right to appeal this decision.
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the contractor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due. 
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor. 
(3) If a contractor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended, <ol>then DHS notifies the contractor in 
writing that the audit is unacceptable, how it is unacceptable, and that the 
contractor has 30 calendar days from the date on the notification to submit an 
acceptable audit to DHS. If DHS does not receive the required audit by the 
specified time frame and has not granted an extension of the due date, DHS 
notifies the contractor by certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit within the specified 
time frames; 
(B) DHS must receive an acceptable audit by the due date specified in this 
notification; 
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(D) the contractor has the right to appeal this decision. DHS may extend the 
time within which a contractor must submit an audit if DHS determines such an 
extension is justified. 
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the contractor by 
certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit by the specified due 
date; and 
(B) DHS terminated their contract effective the first day of the month following 
the specified due date. 
(5) Once a contractor has been terminated for failure to submit an acceptable 
audit, the contractor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended, <ol>in order to be eligible to participate in the Special Nutrition 
Programs.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811386
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: October 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER D. School Breakfast Program
40 TAC sec.12.309
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.309. Fiscal Action. 
(a) (No change.) 
[(b) DHS imposes fiscal sanctions specified in this subsection on contractors 
whose required single audit falls due before June 1, 1996, for failure to comply 
with the requirements of the Single Audit Act. The contractor has the right to 
appeal this action as specified in Chapter 79 of this title (relating to Legal 
Services).] 
[(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.] 
[(A) DHS notifies each contractor upon approval of its application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.] 
[(B) DHS notifies contractors by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.] 
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the contractor by certified 
mail that payments will be withheld beginning the next claim month, and that 
failure to submit the required audit within 30 days of receipt of this 
notification will result in termination.] 
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the contractor by certified 
mail that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.] 
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the contractor that the 
contract is terminated effective upon receipt of this notification.] 
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.] 
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a contractor submits an audit which 
does not meet the requirements of the Single Audit Act, the sanction procedures 
will be reinitiated as specified in paragraph (1)(B) of this subsection. DHS may 
extend the time within which a contractor must submit an audit if DHS determines 
such an extension is justified.] 
<nl>(b)<ol> [(c)] DHS imposes fiscal sanctions specified in this subsection on 
contractors <nl>who are required to obtain an audit in accordance with the 
Single Audit Act, as amended, and who fail <ol> [whose required single audit 
falls due on June 30, 1996, or later for failure] to comply with the 
requirements of <nl>said Act <ol>[the Single Audit Act]. The contractor has the 
right to appeal this action as specified in Chapter 79 of this title (relating 
to Legal Services).
(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in paragraphs (1)-(4) of this subsection. 
(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings. 
(B) DHS provides the contractor <nl>two <ol>[three] advance notices reminding 
the contractor of the specific date that the audit is due. 
(i) DHS issues the first notice by regular mail six months after the end of the 
contractor's fiscal year for which the audit is due. 
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the contractor's fiscal year for which the audit is due.] 
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol>[third] notice by certified 
and regular mail <nl>eight <ol>[11] months after the end of the contractor's 
fiscal year for which the audit is due. DHS notifies the contractor that: 
(I) DHS must receive the audit on or before the due date specified in the 
notice; 
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the contractor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the contractor has the right to appeal this decision.
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the contractor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due. 
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor. 
(3) If a contractor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended, <ol>then DHS notifies the contractor in 
writing that the audit is unacceptable, how it is unacceptable, and that the 
contractor has 30 calendar days from the date on the notification to submit an 
acceptable audit to DHS. If DHS does not receive the required audit by the 
specified time frame and has not granted an extension of the due date, DHS 
notifies the contractor by certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit within the specified 
time frames; 
(B) DHS must receive an acceptable audit by the due date specified in this 
notification; 
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(D) the contractor has the right to appeal this decision. DHS may extend the 
time within which a contractor must submit an audit if DHS determines such an 
extension is justified. 
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the contractor by 
certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit by the specified due 
date; and 
(B) DHS terminated their contract effective the first day of the month following 
the specified due date. 
(5) Once a contractor has been terminated for failure to submit an acceptable 
audit, the contractor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended, <ol>in order to be eligible to participate in the Special Nutrition 
Programs. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811387
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: October 1, 1998
For further information, please call: (512) 438-3765

SUBCHAPTER E. National School Lunch Program
40 TAC sec.12.409
The amendment is proposed under the Human Resources Code, Title 2, Chapters 22 
and 33, which provides the department with the authority to administer public 
and nutritional assistance programs. 
The amendment implements sec.sec.22.001-22.030 and 33.001-33.024 of the Human 
Resources Code. 

sec.12.409. Fiscal Action.
(a) (No change.) 
[(b) DHS imposes fiscal sanctions specified in this subsection on contractors 
whose required single audit falls due before June 1, 1996, for failure to comply 
with the requirements of the Single Audit Act. The contractor has the right to 
appeal this action as specified in Chapter 79 of this title (relating to Legal 
Services).] 
[(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in subparagraphs (A)-(E) of this paragraph.] 
[(A) DHS notifies each contractor upon approval of its application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in sanctions up to and including contract 
termination and recovery of payments.] 
[(B) DHS notifies contractors by certified mail within 15 days after a required 
audit is not received, or an audit is determined to be unacceptable, that 
failure to submit an acceptable audit within 30 days of receipt of the 
notification will result in suspension of payments.] 
[(C) If an acceptable audit is not received within the 30 days specified in 
subparagraph (B) of this paragraph, DHS notifies the contractor by certified 
mail that payments will be withheld beginning the next claim month, and that 
failure to submit the required audit within 30 days of receipt of this 
notification will result in termination.] 
[(D) If an acceptable audit is not received within the 30 days specified in 
subparagraph (C) of this paragraph, DHS notifies the contractor by certified 
mail that failure to submit the required audit within 30 days of receipt of this 
notification will result in termination in the next claim month.] 
[(E) If an acceptable audit is not received within the 30 days specified in 
subparagraph (D) of this paragraph, DHS notifies the contractor that the 
contract is terminated effective upon receipt of this notification.] 
[(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor.] 
[(3) If DHS imposes sanctions according to the procedures specified in paragraph 
(1) of this subsection for failure to submit an audit in compliance with the 
requirements of the Single Audit Act, and a contractor submits an audit which 
does not meet the requirements of the Single Audit Act, the sanction procedures 
will be re-initiated as specified in paragraph (1)(B) of this subsection. DHS 
may extend the time within which a contractor must submit an audit if DHS 
determines such an extension is justified.] 
<nl>(b)<ol> [(c)] DHS imposes fiscal sanctions specified in this subsection on 
contractors <nl>who are required to obtain an audit in accordance with the 
Single Audit Act, as amended, and who fail <ol>[whose required single audit 
falls due on June 30, 1996, or later for failure] to comply with the 
requirements of the Single Audit Act. The contractor has the right to appeal 
this action as specified in Chapter 79 of this title (relating to Legal 
Services). 
(1) DHS takes fiscal sanctions against a contractor according to the procedures 
specified in paragraphs (1)-(4) of this subsection. 
(A) DHS notifies each contractor upon approval of the application for program 
participation of the date by which an acceptable audit must be received by DHS, 
and that failure to comply will result in contract termination and recovery of 
overpayments as identified through audit findings. 
(B) DHS provides the contractor <nl>two <ol>[three] advance notices reminding 
the contractor of the specific date that the audit is due. 
(i) DHS issues the first notice by regular mail six months after the end of the 
contractor's fiscal year for which the audit is due. 
[(ii) DHS issues the second notice by regular mail nine months after the end of 
the contractor's fiscal year for which the audit is due.] 
<nl>(ii)<ol> [(iii)] DHS issues the <nl>second <ol>[third] notice by certified 
and regular mail <nl>eight <ol>[11] months after the end of the contractor's 
fiscal year for which the audit is due. DHS notifies the contractor that: 
(I) DHS must receive the audit on or before the due date specified in the 
notice; 
(II) if DHS does not receive the audit on or before the specified due date, DHS 
will terminate the contractor's contract effective the first day of the month 
following the month in which the audit was due; and 
(III) the contractor has the right to appeal this decision. 
(C) If DHS does not receive the audit on or before the specified due date, DHS 
notifies the contractor by certified and regular mail that their contract was 
terminated effective the first day of the month following the month in which the 
audit was due. 
(2) If DHS has determined there are extenuating circumstances, DHS may conduct 
an audit, either directly or through the engagement of a third party. All costs 
associated with such an audit must be paid by the contractor. 
(3) If a contractor submits an audit which does not meet the requirements of the 
Single Audit Act, <nl>as amended, <ol>then DHS notifies the contractor in 
writing that the audit is unacceptable, how it is unacceptable, and that the 
contractor has 30 calendar days from the date on the notification to submit an 
acceptable audit to DHS. If DHS does not receive the required audit by the 
specified time frame and has not granted an extension of the due date, DHS 
notifies the contractor by certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit within the specified 
time frames; 
(B) DHS must receive an acceptable audit by the due date specified in this 
notification; 
(C) if DHS does not receive an acceptable audit by the specified due date, DHS 
will terminate their contract effective the first day of the month following the 
due date specified in this notification; and 
(D) the contractor has the right to appeal this decision. DHS may extend the 
time within which a contractor must submit an audit if DHS determines such an 
extension is justified. 
(4) If DHS does not receive the required audit by the specified due date and has 
not granted an extension of the due date, DHS notifies the contractor by 
certified and regular mail that: 
(A) the contractor failed to provide an acceptable audit by the specified due 
date; and 
(B) DHS terminated their contract effective the first day of the month following 
the specified due date. 
(5) Once a contractor has been terminated for failure to submit an acceptable 
audit, the contractor must provide an acceptable audit for any outstanding audit 
year(s) and comply with the requirements of the Single Audit Act<nl>, as 
amended, <ol>in order to be eligible to participate in the Special Nutrition 
Programs.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 20, 1998.
TRD-9811388
Glenn Scott
General Counsel, Legal Services
Texas Department of Human Services
Proposed date of adoption: October 1, 1998
For further information, please call: (512) 438-3765

PART XX. Texas Workforce Commission
CHAPTER 813. Food Stamp Employment and Training
The Texas Workforce Commission (Commission) proposes the repeal of sec.sec.813.1 
and 813.2 and new sec.sec.813.1, 813.2, 813.11-813.14, 813.21-813.23, 813.31-
813.33, and 813.41-813.43 relating to the Food Stamp Employment and Training 
(E&T) Program. 
The purpose of the repeal and new rules is to implement the federal statutes 
that affect the E&T Program and the recipients of Food Stamps. 
Subchapter A sets out the General Provisions. Section 813.1 states the purpose 
and sec.813.2 sets out the definitions and terms used in this chapter.
Subchapter B sets out the provisions for Expenditure of Funds. Section 813.11 
states who is to be served, sec.813.12 states what funds are designated for 
able-bodied adults without dependents (ABAWDs); sec.813.13 details the 
reimbursement basis; and sec.813.14 provides information regarding the other E&T 
Program funds. 
Subchapter C sets out the Allowable Activities. Section 813.21 sets out the 
allowable activities for ABAWDs; sec.813.22 sets out the activities for all E&T 
mandatory work registrants; and sec.813.23 sets out the reimbursement rates.
Subchapter D sets out the Support Services for Participants. Section 813.31 is 
the general provision on support services, sec.813.32 discusses child care 
services; and sec.813.33 discusses the transportation assistance. 
Subchapter E sets out Complaints and Appeals. Section 813.41 addresses appeals 
of decisions made on food stamp applications and benefits; sec.813.42 addresses 
appeals of E&T program decisions; and sec.813.43 addresses discrimination 
complaints. 
The Food Stamp Act of 1977 requires able-bodied adults between the ages of 16-
59, referred by the food stamp office, to register for work and take part in an 
E&T Program. Failure to comply with these requirements may result in 
disqualification from the receipt of Food Stamp benefits. The Personal 
Responsibility and Work Opportunity Reconciliation Act of 1996 requires ABAWDs 
to work or participate in specific activities in order to receive Food Stamp 
benefits. Failure of ABAWDs to comply with these federal requirements will limit 
their assistance to three out of thirty-six (36) months. 
The Balanced Budget Act of 1997 mandates that the states utilize at least eighty 
percent (80%) of the 100% federal Food Stamp E&T funds for qualifying work 
activities for ABAWDs. The remaining twenty-percent (20%) may be used to provide 
work activities specified in the Texas State Plan, approved by the U.S. 
Department of Agriculture, for all mandatory work registrants. The remaining 
twenty percent (20%) funds are not subject to the restrictions placed upon the 
80% of the federal funds. 
The Balanced Budget Act also provides the U.S. Secretary of Agriculture with the 
authority to set reimbursement rates for the E&T Program components provided to 
ABAWDs to ensure that they reflect reasonable cost for providing those 
activities. The U.S. Food and Nutrition Service (FNS) has set two levels for the 
maximum rates paid for both workfare and training components. One level is for a 
filled position and the other level is for an unfilled position.
The proposed rules contain these reimbursement rates. The proposed rules set out 
the method in which the 80% program services funds for ABAWDs will be provided 
to local workforce development boards. TWC plans to reimburse local boards for 
their allowable expenditures for education, training, and job search/workfare 
based on the maximum reimbursement rates specified in sec.813.23 of this title 
(relating to Reimbursement Rates), and up to the board's allocation amount of 
the designated ABAWD funds. 
Randy Townsend, Chief Financial Officer, has determined that for the first five-
year period the rules are in effect, the following statements will apply: there 
are no additional estimated cost to the state and to local governments expected 
as a result of enforcing or administering the rules; 
there are no estimated reductions in costs to the state and to local governments 
as a result of enforcing or administering the rules; 
there are no estimated losses or increases in revenue to the state and to local 
governments as a result of enforcing or administering the rules;
there are no foreseeable implications relating to costs or revenue of the state 
or local governments as a result of enforcing or administering the rules; and 
there are no anticipated economic costs to persons required to comply with the 
rules. 
Randy Townsend, Chief Financial Officer, has determined that there is no 
anticipated adverse impact on small businesses as a result of enforcing or 
administering the rules. 
Mark Hughes, Director of Labor Market Information, has determined that the 
proposed rules would not affect private employment but that it would impact 
public employment by creating new workforce program slots. Nevertheless, the 
Director of Labor Market Information does not expect any significant impact upon 
overall employment conditions in the state as a result of the proposed rules. 
Jean Mitchell, Director of Workforce Development and Assistance, 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 serving the ABAWD 
population in compliance with federal law. 
Comments on the proposal may be submitted to Gayla Gibler, Welfare Reform, Texas 
Workforce Commission Building, 101 East 15th Street, Room 434T, Austin, Texas 
78778; fax (512) 463-7379. Comments may also be submitted via e-mail to Ms. 
Gibler at gayla.gibler@twc.state.tx.us. Comments must be received by the 
Commission within thirty (30) days from the date this proposal is published in 
the Texas Register. A public hearing will be held on August 11, 1998, at 2:30 
p.m. in the Texas Workforce Commission Building; 101 East 15th Street, Room 644; 
Austin, Texas 78778.

40 TAC sec.813.1, sec.813.2
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Workforce 
Commission or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
The rules are repealed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the repeals. 
sec.813.1. Expenditure of Funds. 
sec.813.2. Allowable Activities. 
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 July 20, 1998.
TRD-9811374
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER A. General Provisions
40 TAC sec.813.1, sec.813.2
The rules are proposed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the proposed rules. 

sec.813.1. Purpose. 
The Food Stamp Employment and Training (E&T) Program assists non-public 
assistance food stamp recipients in entering employment through participation in 
allowable job search, training, education, or workfare activities which promote 
self-sufficiency. 

sec.813.2. Definitions. 
The following words and terms, when used in this Chapter, shall have the 
following meanings unless the context clearly indicates otherwise. 
(1) ABAWD - able-bodied adults, age 18 to 50, without dependents.
(2) Dependents -- individuals under 18 years of age.
(3) E&T Program - the Food Stamp Employment and Training Program. 
(4) Mandatory work registrant -- a non-exempt food stamp household member, age 
16 through 59, who is required to register for employment services. 
(5) Non-Public Assistance Food Stamp Recipients - a classification by the 
Department of Human Services for a food stamp household in which all or some of 
its members do not receive Temporary Assistance for Needy Families (TANF) or 
Refugee Cash Assistance. 
(6) Participant - a Food Stamp recipient participating in the E&T program. 
(7) Workfare Program - placement with a public or private nonprofit entity in an 
unpaid job assignment for the number of hours per month equal to an E&T Program 
participant's food stamp monthly allotment amount divided by the federal minimum 
wage. 
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 July 20, 1998.
TRD-9811375
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER B. Expenditure of Funds
40 TAC sec.sec.813.11-813.14
The rules are proposed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the proposed rules. 

sec.813.11. Persons Served. 
E&T Program services are provided to mandatory work registrants.

sec.813.12. Funds Designated for ABAWDs. 
(a) Eighty percent of the state's allocation of 100% of the federal E&T Program 
funds must be spent on allowable work, education, or training activities for 
ABAWDs as listed in sec.813.21 of this title (relating to Activities for 
ABAWDs). 
(b) The provisions pertaining to specific funding for ABAWDs in this section 
applies to state and local program fund allocations and administrative fund 
allocations as specified in sec.800.54 of this title (relating to the Food Stamp 
Employment and Training Program). 

sec.813.13. Reimbursements. 
Local Workforce Development Boards will be reimbursed with the designated ABAWD 
funds within their allocations for expenses incurred in providing allowable 
activities to eligible ABAWDs. Reimbursements will be paid by the Texas 
Workforce Commission. 

sec.813.14. Other E&T Funds. 
All other federal and state E&T Program funds may be spent on any E&T Program 
activity listed in sec.813.22 of this title (relating to Other Activities for 
All Mandatory Work Registrants) for any eligible mandatory work registrant. 
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 July 20, 1998.
TRD-9811376
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER C. Allowable Activities for Participants
40 TAC sec.sec.813.21-813.23
The rules are proposed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the proposed rules. 

sec.813.21. Activities for ABAWDs. 
Allowable E&T Program activities for ABAWDs through funds designated in 
sec.813.12 of this title (relating to Funds Designated for ABAWDs) are limited 
to the following: 
(1) twenty hours or more per week of participation in work programs under the 
Trade Adjustment Act of 1974; 
(2) twenty hours or more per week of participation in programs under the Job 
Training Partnership Act (29 U.S.C. 1501, et.seq); 
(3) twenty hours or more per week of participation in education and training; or 
(4) participation in a state approved workfare program in the public or private 
non-profit sectors, which includes a 30-day job search phase prior to placement 
in an available workfare position. 

sec.813.22. Other Activities for all E&T Program Mandatory Work Registrants. 
The following activities may be provided for all E&T Program mandatory work 
registrants, including ABAWDs, as long as they are funded with the 20% of the 
100% federal funds and the state matching funds: 
(1) job search; 
(2) job readiness; 
(3) vocational training; 
(4) non-vocational education; 
(5) work experience; or 
(6) other activities approved in the current Food Stamp Employment and Training 
State Plan located at the Texas Workforce Commission state office building. 

sec.813.23. Reimbursement Rates. 
Expenditures of E&T Program funds for work, education and training activities 
for ABAWDs are subject to federally established maximum reimbursement rates. The 
following rates apply to both workfare position slots and education or training 
slots: 
(1) A filled slot is reimbursed $175. A slot is considered "filled" when a 
participant reports to the workfare, education, or training site to begin 
activities. 
(2) An offered, but unfilled slot is reimbursed $30. A slot is considered 
offered but "unfilled" when an actual workfare, education, or training 
opportunity is made available to a participant, but the participant either 
refuses the assignment or fails to report to the assignment. 
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 July 20, 1998.
TRD-9811377
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER D. Support Services for Participants
40 TAC sec.sec.813.31-813.33
The rules are proposed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the proposed rules. 

sec.813.31. Provision of Support Services. 
Support services identified in this subchapter shall be provided, if needed, to 
an E&T Program participant to remove barriers from participation in the program, 
subject to the availability of resources and funding. 

sec.813.32. Child Care Services. 
Child care services are governed by rules contained in Chapter 809 of this title 
(relating to Child Care and Development). 

sec.813.33. Transportation Assistance. 
(a) Transportation assistance may be provided for E&T Program participants if 
alternative transportation resources are not available to the participant. 
(b) The methods and amounts used to provide transportation assistance shall be 
determined by each local workforce development board, consistent with state 
policy which requires use of the most economical means of transportation that 
meets the participant's needs. 
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 July 20, 1998.
TRD-9811378
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

SUBCHAPTER E. Complaints and Appeals
40 TAC sec.sec.813.41-813.43
The rules are proposed under Texas Labor Code, sec.301.061 which provides the 
Texas Workforce Commission with the authority to adopt, amend, or repeal such 
rules as it deems necessary for the effective administration of Commission 
programs. 
Texas Labor Code, Title 4 and particularly Chapter 301 and Chapter 302 will be 
affected by the proposed rules. 

sec.813.41. Appeals of Decisions Made on Food Stamp Applications and Benefits.
Applicants and recipients of Food Stamp benefits may appeal adverse action taken 
on their application for benefits or the amount of benefits to the Department of 
Human Services (DHS) in accordance with DHS rules pursuant to sec.3.3406 of this 
title (relating to Right to Appeal). 

sec.813.42. Appeals of E&T Program Decisions. 
(a) E&T Program staff shall inform participants of their right to appeal a 
decision related to employment services or support services and the procedures 
for requesting a fair hearing. 
(b) Food Stamp E&T Program participants who are dissatisfied with E&T Program 
decisions affecting activities or support services, may have an informal review 
of these decisions through procedures established by the Commission or Local 
Workforce Development Boards. 
(c) Participants may also file an appeal of the decision under the general 
hearings process as contained in the Commission rules in Chapter 823 of this 
title (relating to General Hearings). The request must be submitted in writing 
to the Appeals Department, Texas Workforce Commission Building, 101 East 15th 
Street, Room 410; Austin, Texas 78778-0001, within 30 calendar days of the date 
of the decision. 

sec.813.43. Discrimination Complaints. 
(a) Any participant alleging discrimination on the basis of age, race, color, 
national origin, or physical or mental disability has a right to file a written 
complaint of alleged discriminatory acts within 180 calendar days from the date 
of the alleged discriminatory act. Complaints must be submitted to the Texas 
Workforce Commission Equal Opportunity Department, 101 East 15th Street, Room 
220, Austin, TX 78778-0001. 
(b) Commission staff, Local Workforce Development Boards or their service 
providers, and any other service provider must advise individuals who express an 
interest in filing a discrimination complaint of their right to file a complaint 
and the complaint procedures. 
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 July 20, 1998.
TRD-9811379
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812

CHAPTER 815. Unemployment Insurance
40 TAC sec.sec.815.1, 815.6, 815.7, 815.9, 815.14, 815.16, 815.17, 815.20, 
815.22, 815.31, 815.32
The Texas Workforce Commission (Commission) proposes amendments to 
sec.sec.815.1, 815.6, 815.7, 815.9, 815.14, 815.16, 815.17, 815.20, 815.22, 
815.31, and 815.32, concerning unemployment insurance. 
The purpose of the amendments is to update references within the rules contained 
in Chapter 815 relating to Unemployment Insurance by making technical changes to 
the rules. Generally, the technical changes include changing the name of the 
Commission from the "Texas Employment Commission" to the "Texas Workforce 
Commission" or "commission" and similar non-substantive changes for conformity 
with Texas Labor Code, Title 4, Subtitle A (the Act) and Subtitle B. 
The proposed amendments include the following changes: 
Regarding sec.815.1, numbering the definitions as required by the new Texas 
Register format; 
Regarding sec.815.1(1), and the definition of "Act", changing "being Title 4, 
Subtitle A, Labor Code, Vernon's Texas Codes" to "Texas Labor Code Annotated, 
Title 4, Subtitle A"; 
Regarding sec.815.1(2), and the definition of "additional claim," changing the 
time frame from 12 to 14 days in which employers must respond to notices of 
additional claims to conform with changes in the Act; 
Regarding sec.815.1(5), and the definition of "commission," changing "Texas 
Employment Commission" to "Texas Workforce Commission"; 
Regarding sec.815.6(b) and (g), changing "Texas Employment Commission" to 
"commission" in three places; 
Regarding sec.815.7(b) and (e), changing "agency" to "commission"; 
Regarding sec.815.9(g), changing "agency" to "commission"; 
Regarding sec.815.14(f), changing "administrator, the assistant administrators, 
and the chief of tax department" to "executive director, or the executive 
director's designee"; 
Regarding sec.815.16(2), changing "Texas Employment Commission" to "commission"; 
Regarding sec.815.16(3)(C), changing "administrator" to "executive director"; 
Regarding sec.815.16(3)(C), changing "the Act, sec.202.064" to "Texas Labor 
Code, sec.301.064"; 
Regarding sec.815.17(e), deleting the reference to "sec.815.16(c)" as there is 
no "(c)" in sec.815.16; 
Regarding sec.815.17(g), changing "Texas Employment Commission" to "Texas 
Workforce Commission"; 
Regarding sec.815.20, changing "Texas Employment Commission" to "commission" in 
first paragraph; 
Regarding sec.815.20(7)(F), adding the "Sale of Business" disqualification under 
sec.207.051 of the Act, to the list of disqualifications to conform with changes 
in the Act; 
Regarding sec.815.22(b), changing "administrator" to "executive director" in two 
places; 
Regarding sec.815.31(a), changing "Texas Employment Commission, TEC Building, 
Austin, Texas 78778" to "Texas Workforce Commission, 101 E. 15th Street, Austin, 
Texas 78778-0001"; 
Regarding sec.815.32(c)(1), changing "Texas Employment Commission (TEC)" and 
"TEC" to "commission"; 
Regarding sec.815.32(c)(5), (6), and (7) , changing "TEC" to "commission"; 
Regarding sec.815.32(d)(2), changing "TEC" to "commission"; 
Regarding sec.815.32(e)(3) and (4), changing "TEC" to "commission"; 
Regarding sec.815.32(f), changing "Texas Employment Commission" to "commission"; 
Regarding sec.815.32(g), changing "Appeal Tribunal" to "appeal tribunal"; 
Regarding sec.815.32(h), changing "TEC" to "commission" in two places; and 
Regarding sec.815.32(i)(1), (2), and (3) changing "Appeal Tribunal" to "appeal 
tribunal." 
Randy Townsend, Director of Finance, has determined that for each year of the 
first five years the amendments will be in effect the following statements will 
apply: 
There are no additional estimated costs to the state and to local governments 
expected as a result of enforcing or administering the amendments; 
There are no estimated reductions in costs to the state and to local governments 
as a result of enforcing or administering the amendments; 
There are no estimated losses or increases in revenue to the state or to local 
governments as a result of enforcing or administering the amendments;
There are no foreseeable implications relating to costs or revenue of the state 
or local governments as a result of enforcing or administering the amendments;
There are no probable economic costs to persons required to comply with the rule 
amendments; and 
There is no anticipated adverse impact on small businesses as a result of 
enforcing or administering the amendments. 
Dan Kahanek, Deputy Director of Appeals, has determined that for each year of 
the first five years that the amendments will be in effect, the public benefits 
expected as a result of adoption of the proposed amendments are to make the 
references within Chapter 815 clearer for the public to understand and 
consistent with the recent changes to the Act. 
All official comments submitted to Mr. Kahanek will be considered before the 
final rule amendments are adopted. Comments on the proposed amendments may be 
submitted to Dan Kahanek, Deputy Director of Appeals, Texas Workforce 
Commission, 101 East 15th Street, Room 414, Austin, Texas 78778-0001, (512) 463-
2817. Comments may also be submitted via fax to Dan Kahanek at (512) 475-1135 or 
e-mail at "dan.kahanek@twc.state.tx.us." 
The amendments are proposed under Texas Labor Code, sec.301.061, which provides 
the Commission with the authority to adopt, amend, and repeal such rules as it 
deems necessary for the effective administration of the Texas Labor Code, Title 
4. 
The proposed amendments affect Texas Labor Code, Titles 2 and Title 4.

sec.815.1. 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> Act--The Texas Unemployment Compensation Act<nl>, Texas Labor Code 
Annotated, Title 4, Subtitle A, as amended.<ol> [(being Title 4, Subtitle A, 
Labor Code, Vernon's Texas Labor Codes Annotated), as amended.] 
<nl>(2)<ol> Additional claim--A notice of new unemployment filed at the 
beginning of a second or subsequent series of claims within a benefit year or 
within a period of eligibility when a break of one week or more has occurred in 
the claim series with intervening employment. The employer named on an 
additional claim will have <nl>14<ol> [12] days from the date notice of the 
claim is mailed to reply to the notice. The additional claim reopens a claim 
series and is not a payable claim since it is not a claim for seven days of 
compensable unemployment. 
<nl>(3)<ol> Base period with respect to an individual--The first four 
consecutive completed calendar quarters within the last five completed calendar 
quarters immediately preceding the first day of such individual's benefit year. 
<nl>(4)<ol> Benefit period--The period of seven consecutive calendar days, 
ending at midnight on Saturday, with respect to which entitlement to benefits is 
claimed, measured, computed, or determined. 
<nl>(5)<ol> Commission--The <nl>Texas Workforce Commission<ol> [Texas Employment 
Commission]. 
<nl>(6)<ol> Day--A calendar day. 
<nl>(7)<ol> Landman--An individual who is qualified to do field work in the 
purchasing of right-of-way and leases of mineral interests, record searches, and 
related real property title determinations, and who is primarily engaged in 
performing such field work. 
<nl>(8)<ol> Reopened claim--The first claim filed following a break in claim 
series during a benefit year which was caused by other than intervening 
employment, i.e., illness, disqualification, unavailability, or failure to 
report for any reason other than job attachment. The reopened claim reopens a 
claim series and is not a payable claim since it is not a claim for seven days 
of compensable unemployment. 
<nl>(9)<ol> Week--A period of seven consecutive calendar days ending at midnight 
on Saturday. 

sec.815.6. Records of Employing Units. 
(a) (No change.) 
(b) Each employing unit shall keep, in addition to the records required by 
subsection (a) of this section, such records as will establish and reflect the 
ownership and any changes of ownership of such employing unit, the correct 
address where the headquarters of the employing unit is located, and also the 
correct mailing address of the employing unit. The records shall also show 
clearly the address at which such records are available for inspection or audit 
by representatives of the <nl>commission<ol> [Texas Employment Commission]. Such 
records shall show the addresses of owners of the employing unit; or in the 
event the employing unit is a corporation or an unincorporated organization, 
such records shall show the addresses of directors, officers, and any persons on 
whom subpoenas, legal processes, or citations may be served in Texas. In the 
event the employing unit is a member of a group account, such records shall show 
the address of the group representative. 
(c)-(f) (No change.) 
(g) All records shall be so kept and maintained as to establish clearly the 
correctness of all reports which the employing unit is required to file with the 
commission and shall be readily accessible to authorized representatives of the 
commission within the geographical boundaries of the State of Texas; and in the 
event such records are not maintained or are not available within Texas, the 
employing unit shall pay to the <nl>commission <ol> [Texas Employment 
Commission] the expenses and costs incurred when a representative of the 
<nl>commission<ol> [Texas Employment Commission] is required to go outside the 
State of Texas to inspect or audit such records. 
(h)-(i) (No change.) 

sec.815.7. Reports Required and Their Due Dates.
(a) (No change.) 
(b) Each taxed employer shall submit to the commission, within the month during 
which contributions for any period become due, and not later than the date on 
which contributions are required to be paid to the commission, an employer's 
quarterly report showing the total amount of remuneration paid during the 
preceding calendar quarter for employment (or showing that no remuneration was 
paid during such quarter), showing the total amount of wages (as defined in the 
Act, sec.201.081 and sec.201.082) paid during such quarter for employment, and 
showing the amount of wages for benefit wage credits (as defined in the Act, 
sec.207.004) paid to each individual during such quarter for employment and the 
social security account number and name of each individual to whom such wages 
were paid, and showing other information called for on the employer's quarterly 
report. The employer's quarterly report shall be made on commission forms 
printed by the commission or by magnetic or electronic media using a format 
prescribed by this <nl>commission<ol> [agency] and shall contain all facts and 
information necessary to a determination of the amount of contributions due. The 
filing of the report on magnetic or electronic media will be required to the 
extent provided below. 
(c)-(d) (No change.) 
(e) All forms and magnetic or electronic media formats for the filing of reports 
provided for in this rule shall be furnished by the commission to each employing 
unit, upon application being made therefor, and all reports shall be filed upon 
the forms and magnetic or electronic media formats so furnished or on forms and 
magnetic or electronic media formats approved by the commission in writing. 
Failure to receive notice for making such reports will not, however, relieve the 
employing unit of the responsibility of making the reports upon the date on 
which they are due. Employers who have to report 250 or more employees in any 
calendar quarter must file their quarterly wages as defined in the Texas 
Unemployment Compensation Act, sec.207.004, on magnetic or electronic media 
using a format prescribed by this <nl>commission <ol> [agency]. A magnetic or 
electronic media wage report may contain information from more than one 
employer. Employers with less than 250 employees may elect to use magnetic or 
electronic media reporting. 
(f)-(j) (No change.) 

sec.815.9. Payment of Contributions and Reimbursements.
(a)-(f) (No change.) 
(g) An agent or other entity making a payment on behalf of 20 or more employers 
shall furnish an allocation list on magnetic or electronic media using a format 
prescribed by this <nl>commission<ol> [agency]. This list shall be furnished 
with the remittance, and the remittance shall be allocated to the credit of the 
employers according to the order in which the employers appear on the list. 

sec.815.14. Employer Elections To Cover Multistate Workers.
(a)-(e) (No change.) 
(f) Approval of reciprocal coverage elections. The commission hereby delegates 
to its <nl>executive director, or the executive director's designee, <ol> 
[administrator, the assistant administrators, and the chief of tax 
department]authority to approve or disapprove reciprocal coverage elections in 
accordance with this section. 

sec.815.16. Appeals to Appeal Tribunals from Determinations on Entitlement to 
Benefits. 
Appeals with respect to entitlement to benefits shall be in accordance with the 
terms of this rule and of sec.815.17 of this title (relating to Appeals to the 
Commission from Decisions on Entitlement to Benefits) and sec.815.18 of this 
title (relating to General Rules for Both Appeal Stages). As used in this rule 
and sec.815.17 and sec.815.18, "party" means an individual or organization 
entitled to receive a copy of the determination made by the examiner under the 
terms of the Act, sec.sec.208.021 and 212.051-212.052. 
(1) (No change.) 
(2) Disqualification of appeal tribunal. No appeals examiner shall participate 
in the hearing of an appeal in which he has an interest. Challenges to the 
interest of any appeals examiner may be heard and decided by the supervisor of 
appeals or, in his discretion, be referred to the <nl> commission<ol> [Texas 
Employment Commission] for decision. 
(3) Hearing of appeal. 
(A)-(B) (No change.) 
(C) In appeals in which one or more parties are out of state, in which the 
parties are at different intrastate locations, in which both parties are at a 
location infrequently served by itinerant appeals referees, in which the 
commission is required by <nl>Texas Labor Code sec.301.064 <ol> [the Act 
sec.202.064], to provide language interpreters, or in which in-person hearings 
have been determined by the <nl>executive director<ol> [administrator] to be 
impractical because of large volume of appeals and/or limited funding resources, 
the appeal tribunal may schedule the hearing to be conducted by telephone. The 
rules and procedures governing hearings in general shall govern telephone 
hearings. 
(4)-(6) (No change.) 

sec.815.17. Appeals to the Commission from Decisions on Entitlement to Benefits. 
(a)-(d) (No change.) 
(e) Hearing of appeals. All commission hearings shall be conducted in the manner 
prescribed by sec.815.16[(c)] of this title (relating to Appeals to Appeal 
Tribunals from Determinations on Entitlement to Benefits) for hearings before 
appeal tribunals. 
(f) (No change.) 
(g) Motions for rehearing. 
(1) A motion for rehearing may be filed by writing directly to the Texas 
<nl>Workforce<ol> [Employment] Commission in Austin, or such motion may be filed 
in person at any local commission office. 
(2)-(4) (No change.) 

sec.815.20. Claim for Benefits. 
An unemployed individual who has no current benefit year and who wishes to claim 
benefits shall report to an office of the <nl>commission<ol> [Texas Employment 
Commission], or to a representative of the commission at an itinerant service 
point or such other place or in such other manner, including telephonic or 
electronic means, as the commission may approve, register for work, and file a 
claim for benefits. 
(1)-(6) (No change.) 
(7) The following provisions shall apply to the disqualification provisions of 
the Act, Chapter 207, Subchapter C, concerning disqualification for benefits. 
(A)-(C) (No change.) 
(D) An employer identified as the employer by whom the claimant was employed, 
for purposes of satisfying the requalifying requirements of the Act, Chapter 
207, Subchapter C, shall be afforded <nl>14<ol> [12] days within which to 
respond to notice by the commission of the filing of an additional claim by the 
claimant. 
(E) (No change.) 
(F) The fact that a disqualification was imposed on the basis of a given 
separation under the Act, sec.207.044<nl>,<ol> [or ]sec.207.045, <nl> or 
sec.207.051<ol> in a previous benefit year shall not prevent a disqualification 
on the basis of that separation if it is the last separation from work prior to 
the filing of an initial claim establishing a new benefit year. On filing an 
initial claim for benefits, a claimant shall not be subject to any 
disqualification under the Act, sec.sec.207.044, 207.045, [or] 207.047, <nl> or 
207.051<ol> unless such disqualification is based on that claimant's separation 
from his or her last work prior to the filing of the initial claim, or in the 
case of the Act, sec.207.047, such disqualification is based on events during 
the current benefit year established by the initial claim. The provisions in the 
preceding sentence shall not prevent disqualifications under the Act, 
sec.sec.207.044, 207.045, [or] 207.047, <nl>or 207.051 <ol>beginning during a 
benefit year and based on events occurring during that benefit year. If a new 
initial claim is not in order at the end of a benefit year but extended benefits 
are available beyond the end of the benefit year, then a disqualification 
imposed under the Act, sec.sec.207.044, 207.045, [or ]207.047, <nl>or 207.051 
<ol>will continue beyond the end of the benefit year until extended benefits are 
terminated or the claimant qualifies to file a new initial claim, or until the 
disqualification is terminated in accordance with the terms of the subsection 
under which it was imposed. 
(8)-(9) (No change.) 

sec.815.22. Special Claim Situations. 
(a) (No change.) 
(b) On a finding by the commission that a foreign conflict creates an emergency 
situation which prevents the filing of claims in accordance with all of the 
provisions of sec.815.20 of this title (relating to Claim for Benefits) and that 
such emergency is likely to continue for an extended period, the <nl>executive 
director<ol> [administrator] may permit the filing and payment of claims not 
meeting all of the requirements of sec.815.20 of this title (relating to Claim 
for Benefits). However, those requirements will be relaxed only to the extent 
that the <nl>executive director<ol> [administrator] finds necessary to prevent 
hardship or injustice that would otherwise be caused by the emergency. 

sec.815.31. Computation of Contribution Rates.
(a) Computations of contribution rates under the Act, Chapter 204, will be made 
in accordance with work sheets which are herein adopted by reference and may be 
obtained from the <nl>Texas Workforce Commission, 101 E. 15th Street, Austin, 
Texas 78778-0001<ol> [Texas Employment Commission, TEC Building, Austin, Texas 
78778]. 
(b) (No change.) 

sec.815.32. Timeliness.
(a)-(b) (No change.) 
(c) Address for proper mailing. 
(1) For a claimant, the proper address is the address given by the claimant to 
the <nl>commission<ol> [Texas Employment Commission (TEC)] subject to later 
changes given by the claimant to <nl>the commission <ol> [TEC]. 
(2)-(4) (No change.) 
(5) If a party inadvertently provides <nl>the commission <ol> [TEC] with his own 
incorrect mailing address, a <nl>commission <ol> [TEC] mailing to that address 
will be a proper mailing. 
(6) <nl>The commission<ol> [TEC] is not responsible for effectuating an address 
change when it is listed in correspondence or merely listed by a party on an 
appeal filed in person, unless specifically directed by the party. 
(7) If the <nl>commission<ol> [TEC] improperly addresses a document, time frame 
for filing an appeal will begin to run as of the actual date of receipt by the 
party. 
(8) (No change.) 
(d) Date appeal perfected for in-person appeals. 
(1) (No change.) 
(2) Receipt date is date of receipt at the earliest <nl> commission<ol> [TEC] or 
agent state location. 
(3) (No change.) 
(e) Date appeal perfected for mailed documents. 
(1)-(2) (No change.) 
(3) An appeal received in an envelope bearing no legible postmark or postal 
meter date will be considered to be perfected three business days before receipt 
by <nl>the commission<ol> [TEC], or on the date of the document, if less than 
three days earlier than date of receipt. 
(4) If the mailing envelope is lost after delivery to <nl> the commission<ol> 
[TEC], appeal document date will control. If the document is undated, appeal 
date will be three business days before receipt by <nl>the commission<ol> [TEC], 
subject to sworn testimony establishing an even earlier date. 
(f) Sworn testimony can establish a date for an appeal being perfected which is 
earlier than the postmark date. Only in the face of extremely credible evidence 
will a party be allowed to establish an appeal date earlier than a postal meter 
date or the date of the document itself. When a party alleges filing an appeal 
by the mailing of a document which the <nl>commission <ol> [Texas Employment 
Commission] has never received, the party must present credible and persuasive 
testimony of timely filing corroborated by testimony of a disinterested party 
and/or physical evidence specifically linked to the appeal in question. 
(g) Credible and persuasive testimony subject to cross-examination establishing 
timeliness allows the commission or the <nl>appeal tribunal <ol> [Appeal 
Tribunal] to rule on the merits. 
(h) If a party submits an address change to <nl>the commission<ol> [TEC] during 
the appeal period (but after <nl>the commission <ol> [TEC] document was mailed 
to the old address), address change date will control and will be considered as 
date appeal was perfected. 
(i) The substantive nature of certain cases causes, or creates, exceptions to 
the general timeliness rules, even where notice is proper or response is clearly 
late. 
(1) Cases fitting into the wage credits/rights to benefits category present a 
one-time exception to the timeliness rules. A late appeal to the <nl>appeal 
tribunal<ol> [Appeal Tribunal] on such issues, if within the same benefit year, 
will be deemed timely. However, once a decision has been issued by the 
<nl>appeal tribunal<ol> [Appeal Tribunal], the appeal time limits in the Act, 
Chapter 212, will apply. 
(2) In cases dealing with the imposition of fraud and forfeiture provisions of 
sec.214.003, there is a one-time exception at the <nl> appeal tribunal<ol> 
[Appeal Tribunal] stage, if: 
(A)-(B) (No change.) 
(3) In cases where there is a continuing ineligibility or condition and there is 
a late appeal, the <nl>appeal tribunal<ol> [Appeal Tribunal] or the commission 
can assume jurisdiction 14 days before the late appeal, and rule on the merits 
if the facts so warrant. 
(4)-(8) (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 July 16, 1998.
TRD-9811257
J. Randel (Jerry) Hill
General Counsel
Texas Workforce Commission
Earliest possible date of adoption: August 30, 1998
For further information, please call: (512) 463-8812