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 I. Office of the Governor
CHAPTER 4. Automobile Theft Prevention Authority
1 TAC sec.sec.4.2, 4.7, 4.14
(Editor's note: The text of the following sections proposed for repeal will not 
be published.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 Automobile 
Theft Prevention Authority or in the Texas Register office, Room 245, James Earl 
Rudder Building, 1019 Brazos Street, Austin.)
The Automobile Theft Prevention Authority (ATPA) proposes to repeal sec.sec.4.2, 
4.7, and 4.14, relating to the review and approval of grant projects. All ATPA 
rules, except these sections, were transferred to Title 43, effective February 
24, 1998. See Texas Register, March 6, 1998, (23 TexReg 2280). The subject 
matter of these rules is addressed in 43 TAC sec.sec.57.2, 57.7, and 57.14. 
Accordingly, these rules are no longer needed.
Agustin De La Rosa, Director, has determined that for each year of the first 
five year period that the proposed repeal will be in effect, there will be no 
additional fiscal implications for state or local governments as a result of the 
proposed repeal. 
Mr. De La Rosa has also determined that, for each year of the first five years 
the proposed repeal is in effect, the public benefit anticipated as a result of 
enforcing the proposed repeal is better notice of ATPA rules, with the 
elimination of duplicate or unnecessary rules. There will be no fiscal 
implications on small businesses or economic cost to persons being affected by 
the repeal of the rules as proposed. The rulemaking is for the purpose of 
removing rules that are no longer needed. 
Comments on the proposal may be submitted in writing to Agustin De La Rosa, 
Director, Automobile Theft Prevention Authority, 200 East Riverside Drive, 
Austin, Texas 78704, for a period of 30 days following publication in this issue 
of the Texas Register. 
The repeal of these rules is proposed under Texas Civil Statutes, Article 
4413(37), sec.6(a), which authorizes the ATPA to adopt rules that implement its 
statutory powers and duties. 
Texas Civil Statutes, Article 4413(37) sec.6(a) is affected by this proposal. 
sec.4.2. Applicability. 
sec.4.7. Review of Grant Applications. 
sec.4.14. Approval. 
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 30, 1998.
TRD-9812038
Agustin De La Rosa 
Director
Automobile Theft Prevention Authority
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 416-4606

PART XV. Texas Health and Human Services Commission
CHAPTER 355.Medicaid Reimbursement Rates
SUBCHAPTER D.Reimbursement Methodology
1 TAC sec.sec.355.451, 355.452, 355.456, 355.457
The Texas Health and Human Services Commission proposes amendments to 
sec.sec.355.451, 355.452, 355.456, and 355.457 of 1 TAC Chapter 355, Medicaid 
Reimbursement Rates, Subchapter D, Reimbursement Methodology, regarding 
reimbursement for the Intermediate Care Facilities for the Mentally Retarded 
(ICF/MR) program operated by the Texas Department of Mental Health and Mental 
Retardation (TDMHMR). 
The proposed amendment to sec.355.451 would change the term "Direct Services 
Cost Survey" to " Fiscal Accountability Cost Report" to more accurately reflect 
the nature of the report. The proposed amendment to sec.355.452 would update a 
rule citation. The proposed amendment to sec.355.456 would change the language 
to indicate that annual rates for the time period between the years that modeled 
rates are rebased are set by inflating the "direct service portion" of the 
previous year's rate, rather than the previous year's "direct costs." The 
proposed amendments to sec.355.457 would require the recoupment thresholds and 
percentages applied to providers that do not spend at least 90% of their direct 
service revenues on direct service costs to increase effective January 1, 1999. 
The proposed amendments to sec.355.457 would also require, for those providers 
that contract the management and operation of their ICF/MR facilities, the 
provider to be responsible for submitting the fiscal accountability cost report 
on the subcontractor's direct care costs and paying any recoupment.
Gary Bego, Associate Commissioner for Fiscal Policy, Texas Health and Human 
Services Commission has determined that for each year of the first five-year 
period the rule, as proposed, would be in effect there would be for FY 1999 a 
total fiscal impact of ($6,078,025), of which ($3,795,119) is federal funds and 
($2,282,906) is state funds; for FY2000, at total fiscal impact of ($3,051,519), 
of which ($1,895,603) is federal funds and ($1,155,915) is state funds. Fiscal 
impact for years FY 2001 and beyond is dependent upon the development of cost 
data that reflects the behavior of the ICF/MR providers. Provider behavior is 
governed by such factors as cost of services, consumer needs and program trends. 
Since these factors cannot accurately be predicted at this time, an estimate of 
fiscal impact for FY2001 and beyond would be purely speculative. Accordingly, 
THHSC cannot provide a reliable estimate of fiscal impact for FY 2001 and beyond 
at this time. There would be no fiscal impact on local government. 
Mr. Bego also has determined that for each year of the first five years the 
amendments would be in effect the public benefit anticipated would be an 
increase in administrative efficiency and flexibility. For each year of the 
first five years the amendments would be in effect there would be no anticipated 
economic cost to persons who are required to comply with the amendments. There 
will be no effect on small business. 
A public hearing will be held at 9:00 a.m., Wednesday, September 9,1998, in 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number which is (512) 206-5330. 
Persons requiring any other accommodation should notify Sheila Wilkins, Office 
of Policy Development, at least 72 hours prior to the hearing by calling (512) 
206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication of this notice. 
The sections are proposed under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021 and sec.531.033, 
which provide the Texas Health and Human Services Commission (THHSC) with the 
authority to administer federal medical assistance funds, administer the state's 
medical assistance program, and authorize the commissioner of THHSC to adopt 
rules necessary to carry out THHSC's statutory duties.
The sections affect Texas Human Resources Code, Chapter 32, and Texas Government 
Code, Chapter 531, sec.531.021 and sec.531.033

sec.355.451.Definitions and General Reimbursement Information.
(a) The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) (No change.)
(2) <nl>Fiscal Accountability Cost Report<ol> [Direct Services Cost Survey] -
Annual survey conducted by TDMHMR in which cost data related to direct care 
services is submitted by providers. 
(3)-(12) (No change.)
(b) (No change.) 

sec.355.452.Cost Reporting Procedures. 
(a)-(l) (No change.) 
(m) Access to records. Each provider must allow access to any and all records 
necessary to verify cost data submitted to TDMHMR. This requirement includes 
records pertaining to related-party transactions and other business activities 
engaged in by the provider that are directly or indirectly related to the 
provision of contracted services. Failure to allow inspection of pertinent 
records within 10 working days following written notice from TDMHMR constitutes 
an administrative contract violation. In the case of an administrative contract 
violation, penalties are applied as specified in <nl>25 TAC sec.406.62(c)(2) 
<ol> [25 TAC sec.355.62(c)(2)] (<nl>regarding<ol> Sanction Provisions for 
Violations of Title XIX ICF/MR Contractual Agreements). If a central office or 
other entity pertaining to a multi-facility operation refuses access to records, 
then the penalties are extended to all of the provider's entities having 
Medicaid contracts with TDMHMR. Additional rules regarding access to records 
that are out-of-state are in sec.355.702 of this title (relating to Methods for 
Cost Determination). 
(n)-(o) (No change.) 

sec.355.456.Rate Setting Methodology.
(a)-(c) (No change.) 
(d) Reimbursement rate determination for non-state operated facilities. The 
department will present the reimbursement rates for non-state operated 
facilities to the Texas MHMR Board for approval and then to the Texas Health and 
Human Services Commission for final adoption in accordance with Subchapter F of 
this chapter (relating to General Reimbursement Methodology for all Medical 
Assistance Programs) and this subchapter. 
(1) (No change.) 
(2) Annual rates for the time period between the years that modeled rates are 
rebased are set by inflating <nl>the direct service portion of<ol> the previous 
year's [direct cost] rates by the IPD-PCE as defined in Subchapter F of this 
chapter. These rates are uniform by class of facility and client level-of-need, 
and determined prospectively and annually. 
(3)-(7) (No change.)
(e)-(f) (No change.) 

sec.355.457.Fiscal Accountability.
(a) (No change.) 
(b) Annual reporting. Fiscal accountability will consist of the annual reporting 
of direct service costs from all non-state operated providers. The data will be 
collected on a cost report designed by TDMHMR or its designee in accordance with 
sec.355.453 of this title (relating to Cost Reporting Procedures). 
(1) (No change.)
(2) <nl>The provider is responsible for submission of the fiscal accountability 
cost report, and payment of amounts to TDMHMR in accordance with subsections 
(e)(2) and (e)(3) of this section, regardless of whether the provider contracts 
with another entity for the management or operation of the ICF/MR.<ol> For staff 
whose duties include work other than the provision of direct services, the 
proportion of work that is spent on direct services may be included in the 
direct service costs. The proportion of their salary and benefits that are 
compensation for direct services work can be included in the direct service cost 
report. The salary and benefits for this direct service work must be the lesser 
of the actual wages and benefits paid or the wages and benefits for a comparable 
direct services staff assumed in the model. The facility must have a procedure 
that specifies how direct service work time is allocated. 
(3)-(4) (No change.)
(c)-(d) (No change.) 
(e) The department will require providers to report all direct costs incurred in 
their annual fiscal year. The department will compare the reported direct 
service costs to the direct service cost component of the modeled rates. 
(1) <nl>Paragraph 2 of this section, concerning the fiscal accountability 
repayment, applies to that portion of the provider's fiscal year that occurs 
after April 5, 1998. Paragraph 3 of this section, concerning the fiscal 
accountability repayment, applies to that portion of the provider's fiscal year 
that begins on or after January 1, 1999.<ol> [Provisions of this section 
concerning fiscal accountability recoupment or repayment apply to that portion 
of the provider's fiscal year that occurs after the effective date of such 
provisions.] 
(2) The total direct service revenue of the modeled rates is the direct service 
portion of the rate multiplied by the number of allowable units [billed and] 
paid for services provided during the reporting period. 
<nl>(A)<ol> [(3)] Providers whose direct service costs are 90% or more of the 
direct service revenues will not be subject to repayment under this section. 
<nl>(B)<ol> [(4)] Providers whose direct service costs are less than 80% of the 
direct service revenues will be required to pay to TDMHMR the difference between 
the <nl>direct service costs<ol> [actual expenses incurred] and 95% of the 
direct service revenues. 
<nl>(C)<ol> [(5)] Providers whose direct service costs are between 80% and 85% 
of the direct service revenues will be required to pay to TDMHMR 100% of 
difference between the <nl>direct service costs <ol> [actual expenses incurred] 
and 85% of the direct service revenues plus 50% of the difference between 85% 
and 90% of the direct service revenues. 
<nl>(D)<ol> [(6)] Providers whose direct service costs are between 85% and 90% 
of the direct service revenues will be required to pay to TDMHMR 50% of the 
difference between the <nl>direct service costs <ol> [actual expenses incurred] 
and 90% of the direct service revenues. 
<nl>(3)<ol> <p<nl> The total direct service revenue of the modeled rates is the 
direct service portion of the rate multiplied by the number of allowable units 
paid for services provided during the reporting period. 
<nl>(A)<ol> <p<nl> Providers whose direct service costs are 90% or more of the 
direct service revenues will not be subject to repayment under this section. 
<nl>(B)<ol> <p<nl> Providers whose direct service costs are less than 85% of the 
direct service revenues will be required to pay to TDMHMR the difference between 
the direct service costs and 95% of the direct service revenues. 
<nl>(C)<ol> <p<nl> Providers whose direct service costs are between 85% and 90% 
of the direct service revenues will be required to pay to TDMHMR 75% of the 
difference between the direct service costs and 90% of the direct service 
revenues. 
<nl>(4)<ol> [(7)] Providers will be notified of their repayment status within 90 
days of submitting their cost reports. A provider's repayment status may change 
as a result of the desk reviews or outside audits of cost reports, or by 
adjustments to claims paid to the provider for services provided in the cost 
reporting period. Providers will submit the repayment amount within 60 days of 
notification. 
<nl>(5)<ol> [(8)] Repayment will be collected from the following: 
(A) the provider or legal entity submitting the report; 
(B) any other legal entity responsible for the debts or liabilities of the 
submitting entity; or 
(C) the legal entity on behalf of which a report is submitted. 
<nl>(6)<ol> [(9)] These entities will be jointly and severally liable for any 
repayment due to TDMHMR. Failure to repay the amount due when notified may 
result in a vendor hold on all of the facilities included in the cost report. 
<nl>(7)<ol> [(10)] Providers who wish to appeal the requirement to make payment 
to TDMHMR in accordance with this section may do so in accordance with 25 TAC 
Chapter 409, Subchapter B. 
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 August 3, 1998.
TRD-9812184
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 424-6576

SUBCHAPTER F.General Reimbursement Methodology for all Medical Assistance 
Programs
1 TAC sec.355.722
The Texas Health and Human Services Commission proposes amendments to 
sec.355.722 of 1 TAC Chapter 355, Medicaid Reimbursement Rates, Subchapter F, 
General Reimbursement Methodology for all Medical Assistance Programs, regarding 
reimbursement for the home and community-based services (HCS) program operated 
by the Texas Department of Mental Health and Mental Retardation (TDMHMR).
The proposed amendments to sec.355.722 would require the recoupment thresholds 
and percentages applied to HCS providers that do not spend at least 90% of their 
direct service revenues on direct service costs to increase effective January 1, 
1999. 
Gary Bego, associate commissioner for fiscal policy, Texas Health and Human 
Services Commission has determined that for each year of the first five-year 
period the rule, as proposed, would be in effect there would be no effect on 
state or local government. 
Mr. Bego also has determined that for each year of the first five years the 
amendments would be in effect the public benefit anticipated would be an 
increase in administrative efficiency and flexibility. For each year of the 
first five years the amendments would be in effect there would be no anticipated 
economic cost to persons who are required to comply with the amendments. There 
will be no effect on small business. 
A public hearing will be held at 10:00 a.m. on Wednesday, September 9, 1998, in 
the auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number which is (512) 206-5330. 
Persons requiring any other ADA accommodation should notify Sheila Wilkins, 
Office of Policy Development, at least 72 hours prior to the hearing by calling 
(512) 206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication of this notice. 
The section is proposed under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021 and sec.531.033, 
which provide the Texas Health and Human Services Commission (THHSC) with the 
authority to administer federal medical assistance funds and the state's medical 
assistance program and authorize the commissioner of THHSC to adopt rules 
necessary to carry out THHSC's statutory duties. 
The section affects Texas Human Resources Code, Chapter 32, and Texas Government 
Code, Chapter 531, sec.531.021 and sec.531.033. 

sec.355.722.Reporting Costs.
(a)-(r) (No change.) 
(s) Fiscal Accountability. 
(1)-(5) (No change.)
(6) <nl>Paragraph (7) of this subsection applies to that portion of the 
provider's fiscal year that occurs after April 5, 1998. Paragraph (8) of this 
subsection, concerning the following fiscal accountability repayment, applies to 
that portion of the provider's fiscal year that begins on or after January 1, 
1999.<ol> [Provisions of this section concerning fiscal accountability 
recoupment or repayment apply to that portion of the provider's fiscal year that 
occurs after the effective date of such provisions.
(7) Direct service revenues are calculated by multiplying the number of units 
eligible for payment that have been paid, for services delivered during the 
reporting period times the appropriate direct service portion of the rate for 
the service billed. 
<nl>(A)<ol> [(8)] Providers whose direct service costs are 85% or more of the 
direct service revenues will not be subject to repayment under this section. 
<nl> (B) <ol> [(9)] Providers whose direct service costs are less than 80% of 
the direct service revenues will be required to pay to TDMHMR the difference 
between the <nl>direct service costs<ol> [actual expenses incurred] and 95% of 
the direct service revenues. 
<nl>(C)<ol> [(10)] Providers whose direct service costs are between 80% and 85% 
of the direct service revenues will be required to pay to TDMHMR 100% of the 
difference between the <nl>direct service costs <ol> [actual expenses incurred] 
and 85% of the direct service revenues. 
<nl>(8)<ol> <nl>Direct Service Revenues are calculated by multiplying the number 
of units eligible for payment that have been paid, for services delivered during 
the reporting period times the appropriate direct service portion of the rate 
for the service billed<ol>.
<nl>(A) <ol> <nl>Providers whose direct service costs are 90% or more of the 
direct service revenues will not be subject to repayment under this section. 
<ol>
<nl>(B)<ol> <nl>Providers whose direct service costs are between 85% and 90% of 
the direct service revenues will be required to pay to TDMHMR 50% of the 
difference between the direct service costs and 90% of the direct service 
revenues. <ol>
<nl>(C)<ol> <nl> Providers whose direct service costs are between 80% and 85% of 
the direct service revenues will be required to pay to TDMHMR 100% of the 
difference between the direct service costs and 85% of the direct service 
revenues plus 50% of the difference between 85% and 90% of the direct service 
revenues. <ol>
<nl>(D)<ol> <nl>Providers whose direct costs are less than 80% of the direct 
service revenues will be required to pay to TDMHMR the difference between the 
direct service costs and 95% of the direct service revenues.<ol>
<nl>(9)<ol> [(11)] Where applicable, providers will be notified of the 
requirement to repay revenues within 90 days of submitting their cost reports. A 
provider's repayment status may change as a result of the desk reviews or 
outside audits of cost reports, or adjustments to claims paid to the provider 
for services provided in the cost reporting period. Providers will submit the 
repayment amount within 60 days of notification. 
<nl> (10) <ol> [(12)] Recoupment will be collected from the following: 
(A) the provider or legal entity submitting the report; 
(B) any other legal entity responsible for the debts or liabilities of the 
submitting entity; or 
(C) the legal entity on behalf of which a report is submitted. 
<nl> (11) <ol> [(13)] Providers required by TDMHMR to repay revenues will be 
jointly and severally liable for any repayment. TDMHMR may apply a vendor hold 
on Medicaid payments to all providers included in a report for not making the 
repayment amount to TDMHMR within 60 days of receiving notice. 
<nl> (12) <ol> [(14)] Providers who wish to appeal the requirement to make 
payment to TDMHMR should do so in accordance with 25 TAC sec.409.106.
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 August 3, 1998.
TRD-9812181
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 424-6576

1 TAC sec.355.743
The Texas Health and Human Services Commission (THHSC) proposes amendments to 
sec.355.743 of 1 TAC Chapter 355, Medicaid Reimbursement Rates, Subchapter F 
General Reimbursement Methodology for all Medical Assistance Programs (regarding 
reimbursement for the case management (service coordination) program operated by 
the Texas Department of Mental Health and Mental Retardation (TDMHMR)). 
Associated with the current proposal is a proposal by THHSC to repeal 
sec.sec.355.751-355.753 of 1 TAC Chapter 355, Medicaid Reimbursement Rates, 
Subchapter D, General Reimbursement Methodology for all Medical Assistance 
Programs (regarding reimbursement for the case management (service coordination) 
program operated by the Texas Department of Mental Health and Mental Retardation 
(TDMHMR)) Also associated with the current proposal are proposals by TDMHMR to 
repeal existing Chapter 409, Medicaid Programs, Subchapter F, concerning Case 
Management Program Requirements; to repeal existing Chapter 409, Medicaid 
Programs, Subchapter G, concerning Case Management for Persons with Severe and 
Persistent Mental Illness; and new sec.sec.412.451-412.466 of Chapter 412, Local 
Authority Responsibilities, Subchapter J, concerning Service Coordination. 
The proposed amendments to sec.355.743 would consolidate case management 
reimbursement methodology for mental retardation and for chronic mental illness 
under sec.sec.355.741-355.744. The amendments would also allow the payment on a 
separate monthly unit rate for case management services for persons with mental 
retardation, adults with severe mental illness, and individuals ages 0-17 years 
with serious emotional disturbance based on a face-to-face contact with the 
consumer. The amendments would disallow payment for telephone contacts.
Gary Bego, associate commissioner for fiscal policy, Texas Health and Human 
Services Commission has reviewed the proposed repeal of 1 TAC sec.sec.355.751-
355.753 and the proposed amendments to 1 TAC sec.355.743 of Chapter 355, 
Medicaid Reimbursement Rates, Subchapter F, General Reimbursement Methodology 
for all Medical Assistance Programs, regarding reimbursement for the case 
management (service coordination) program operated by TDMHMR in conjunction with 
the proposed new 25 TAC sec.sec.412.451-412.462. Mr. Bego has determined that 
for each year of the first five-year period the proposed amendments would be in 
effect, there would be an estimated fiscal impact for FY 1999 of an increase in 
cost of $316,283, which would be funded by $197,518 from federal sources and 
$118,765 from state sources, for FY 2000, an increase in cost of $481,248, which 
would be funded by $298,949 from federal sources and $182,299 from state 
sources, for FY 2001 an increase in cost of $493,279, which would be funded by 
$306,277 from federal sources and $187,002 from state sources, for FY 2002 an 
increase in cost of $505,611, which would be funded by $313,934 from federal 
sources and $191,677 from state sources, and for FY 2003 an increase in cost of 
$518,591, which would be funded by $321,993 from federal sources and $196,598 
from state sources. There would be no fiscal implications to local government as 
a result of enforcing or administering the proposed new subchapter. 
Mr. Bego also has determined that for each year of the first five years the 
proposal would be in effect the public benefit anticipated would be an increase 
in administrative efficiency and flexibility. For each year of the first five 
years the proposal would be in effect there would be no anticipated economic 
cost to persons who are required to comply with the amendments. There would be 
no effect on small business because they do not participate in the case 
management program. 
A public hearing will be held at 11:00 a.m., Wednesday, September 9,1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired or other accommodation should Sheila Wilkins, Office of 
Policy Development, at (512) 206-5330, or should call the TDY phone number of 
Texas Relay, which is 1-800-735-2988, within 72 hours prior to the public 
hearing. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication of this notice.
The sections are proposed under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021 and sec.531.033, 
which provide the Texas Health and Human Services Commission (THHSC) with the 
authority to administer federal medical assistance funds and the state's medical 
assistance program and authorize the commissioner of THHSC to adopt rules 
necessary to carry out THHSC's statutory duties.
The section affects Texas Human Resources Code, Chapter 32, and Texas Government 
Code, Chapter 531, sec.531.021 and sec.531.033. 

sec.355.743.Reimbursement Methodology for Case Management [for Individuals with 
Mental Retardation or Related Condition].
(a) General Information. As specified in sec.sec.335.701-355.707 of this title 
(relating to General Specifications; Methodology; Basic Objectives and Criteria 
for Desk Review of Cost Reports; Determination of Inflation Indices; 
Notification; Adjusting Rates When New Legislation, Regulations, or Economic 
Factors Affect Costs; and Reviews and Administrative Hearings), [TDMHMR] 
<nl>Texas Department of Mental Health and Mental Retardation (TDMHMR) <ol> 
reimburses qualified providers for case management services provided to Medicaid 
eligible individuals <nl>who are eligible according to 25 TAC sec.412.454 
(relating to Eligibility for Service Coordination) <ol> [with mental retardation 
or a related condition]. The Texas <nl>Health and Human Services Commission<ol> 
[Board of Mental Health and Mental Retardation] determines reimbursement 
<nl>with the advice and recommendation of the TDMHMR Board<ol> at least annually 
for case management services. Reimbursement is: 
(1) uniform statewide 
(2) prospective ([see] <nl>as defined in <ol> sec.355.741 of this title 
(relating to Definitions)); and 
(3) cost related <nl>with a year end settlement<ol>.
<nl>(b)<ol><nl> Separate rates are set for: case management for persons with 
mental retardation or a related condition as defined in 25 TAC sec.412.451 
(relating to Definitions) and 25 TAC sec.412.454 (relating to Eligibility); case 
management for adults with severe mental illness as defined in 25 TAC 
sec.412.451 (relating Definitions); and case management for individuals ages 0 
through 17 years with severe mental illness as defined in 25 TAC sec.412.451 
(relating to Definitions). <ol>
<nl>(c) <ol><nl>Provider qualifications. Section 4118(i) of P.L. 100-203, 
Omnibus Reconciliation Act of 1987, is invoked to limit the provider of case 
management services to the state mental retardation authorities, the state 
mental health authorities, TDMHMR, or its designated providers authorized under 
sec.534.054 of the Texas Health and Safety Code, who offer a service delivery 
system of required services as outlined in sec.534.053 of the Texas Health and 
Safety Code. <ol>
<nl> (d)<ol> <nl>TDMHMR has implemented rules, standards, and procedures to 
ensure that case management services are: <ol>
<nl>(1) <ol> <nl>administered through a community-based center or a state 
operated center that is governed by the operating procedures and program 
standards established by TDMHMR; <ol> 
<nl>(2) <ol> <nl>provided by persons who meet the requirements specified by 
TDMHMR; and provided in compliance with federal, state, and local laws, 
including directives, settlements and resolutions applicable to the target 
population. <ol> 
(e) [(b)] Basis for Reimbursement Analysis.
(1) For the <nl>initial<ol> reimbursement period <nl> beginning January 1, 1999 
and until such time as the department determines that cost data collected as 
described in subsection (f) of this section (relating to Reporting of Costs) are 
reliable, providers will be reimbursed utilizing a modeled rate. The modeled 
rate is based on cost calculations that include a statewide weighted average 
hourly wage for individuals who provide case management as 100% of their job 
responsibilities, a predetermined caseload size, a statewide weighted average 
supervisory wage rate and span of control, a statewide weighted average benefits 
factor, and a statewide weighted average associated service add-on. The 
associated service add-on includes clerical and support costs, travel and 
training costs, and other allowable operating costs (e.g., rent, utilities, 
office supplies, administration, and depreciation) necessary to provide case 
management services. At the end of the reimbursement period the difference 
between the statewide rate and each provider's case management costs will be 
compared. If a provider's costs are less than 95% of the statewide rate, TDMHMR 
will recoup the difference between that provider's costs and 95% of the 
statewide rate. If a provider's costs exceed the statewide rate, TDMHMR will 
reimburse that provider their cost up to 125% of the statewide rate. At that 
time the provider will be notified of the amount due to TDMHMR, by certified 
mail, and the provider will have 30 days to make payment from the receipt of 
that notice. If a reimbursement is due a provider, TDMHMR will notify that 
provider by certified mail of the amount that is owed to that provider and will 
make payment within 30 days from receipt of that notice. If payment is not 
received from the provider within 30 days of the date specified on the certified 
mail receipt, the provider will be placed on vendor hold. At such time that 
reliable cost data becomes available, the statewide reimbursement rates will be 
developed using the department's process as described in (g) of this section<ol> 
[providers will be reimbursed on the projected expenses required to provide case 
management services for individuals with mental retardation or related 
condition] 
(2) TDMHMR or its designee collects both statistical and cost data. The 
statistical information includes, <nl>but is not limited to, the total number of 
recipients of case management services, and the number of Medicaid eligible case 
management recipients<ol> [the number of telephone and in person (face to face) 
case management contacts provided to clients the number of direct service hours 
performed during the cost reporting period] The cost data include direct costs, 
programmatic indirect costs, and general and administrative costs including 
salaries, benefits, and non-labor costs. 
[(3) The reimbursement based upon cost report data submitted by providers 
consultation with service providers, and consultation with professionals 
experienced in case management services.]
<nl> (f) <ol>[(c)] Reporting of <nl>Costs<ol> [Cost]. 
(1) Cost reporting. Each provider must submit financial and statistical 
information in a cost report or survey format designated by TDMHMR or its 
designee. The cost report will capture the expenses of the provider including 
salaries and benefits, administration, building and equipment, utilities, 
supplies, travel, and indirect overhead expenses related to the provision of 
case management services. 
(2) The following requirements apply. 
(A) Accounting requirements. All information submitted on the cost reports must 
be based upon the accrual method of accounting unless the governmental entity 
operates on a cash or modified accrual basis. The provider must complete the 
cost report according to the prescribed statement of allowable and unallowable 
costs <nl>as referenced in sec.355.702 of this title (regarding Method of Cost 
Determination) <ol>. Cost reporting should be consistent with generally accepted 
accounting principles (GAAP). In cases in which cost reporting rules conflict 
with GAAP, Internal Revenue Service, or other authorities, the cost reporting 
rules take precedence for Medicaid provider cost reporting. 
(B) Reporting period. The provider must prepare the cost report <nl> according 
to sec.355.702 of this title.<ol> [to reflect activities during the provider's 
fiscal year. The cost report is due three months after the end of this fiscal 
year, although an extension may be granted for good cause. TDMHMR or its 
designee may require cost reports or other information for other time periods. 
Failure to file an acceptable cost report or complete required additional 
information will result in a hold on the vendor payments until the cost report 
information or additional information is provided. The provider must certify the 
accuracy of the cost report or additional information.
(C) Review of cost reports. As specified in sec.355.703 of this title (relating 
to Basic Objectives and Criteria for Desk Review of Cost Reports), TDMHMR or its 
designee reviews such cost reports or surveys. Cost reports not completed 
according to instructions or rules are <nl>required to be corrected and 
resubmitted by the provider<ol> [returned to the provider for proper completion] 
(D) On-site audit of cost reports <nl>and billing and payment reviews. The 
provider must allow TDMHMR or its designated agents access to any and all 
records. <ol> TDMHMR or its designee performs a sufficient number of audits and 
reviews each year to ensure the fiscal integrity of the case management 
reimbursement. The number of on-site audits <nl>and reviews<ol> actually 
performed each year may vary. [Adjustments consistent with the results of on-
site audits are made to the reimbursement base until the reimbursement base is 
closed for final reimbursement analysis.] <nl>Recoupment for billing and payment 
reviews may be taken according to the TDMHMR Medicaid Targeted Case Management-
Billing and Payment Protocol, application of error rate calculations. <ol> 
(E) Recordkeeping requirements. Each provider must maintain records according to 
the requirements specified in 40 TAC sec. 69.202. The provider must ensure that 
the records are accurate and sufficiently detailed to support the financial and 
statistical information reported in the cost report. If a provider does not 
maintain records which support the financial and statistical information 
submitted on the cost report, the provider will be given 90 days to correct this 
recordkeeping. A hold [of] <nl> on<ol> the vendor payments to the provider will 
be made if the deficiency is not corrected within 90 days from the date the 
provider is notified. 
(F) Access to records. The provider must allow TDMHMR or its designated agents 
access to any and all records necessary to verify information on the cost 
report. 
(G) Reviews of cost report disallowances. A provider who disagrees with TDMHMR 
or is designee on cost report disallowances may request a review of the 
disallowances as specified in sec. 355.707 of this title (relating to Reviews 
and Administrative Hearing). 
(H) TDMHMR or its designee notifies providers of exclusions and adjustments to 
reported expenses made during desk reviews and on-site audits of cost reports 
according to sec. 355.705 of this title (relating to Notification). 
<nl> (g) <ol> [(d)] Reimbursement methodology. 
(1) Reimbursement by unit of service. Reimbursement for case management services 
will be determined for a unit of service <nl>which is a face-to-face contact 
with an eligible recipient as defined in 25 TAC sec.412.454 (relating to 
Eligibility) by an authorized provider as referenced in sec.355.743 (b) 
(regarding Provider Qualifications) and 25 TAC sec.412.461 (relating to Minimum 
Qualifications) during a calendar month. The contact must include the provision 
of one or more services as defined in 25 TAC sec.412.452 (relating to Service 
Coordination Activities). Reimbursement is limited to one unit of service per 
client per month <ol>[defined as a case management contact. The action can be 
face to face or by telephone. See sec.355.741 of this title (relating to 
Definitions) for the definition of "case management contact."
(2) Exclusion or adjustment of expenses. Providers must eliminate unallowable 
expenses from the cost report. TDMHMR or its designee excludes from the 
<nl>cost<ol> [reimbursement] base any unallowable expenses included in the cost 
report and makes adjustments to expenses reported by providers to ensure that 
the <nl>cost <ol>[reimbursement] base reflects costs which are consistent with 
efficiency, economy and quality care, are necessary for the provision of case 
management services, and are consistent with federal and state Medicaid 
regulations <nl>as specified in sec.355.701 of this title (relating to General 
Specifications) <ol>. If there is doubt as to the accuracy of allowability of a 
significant part of the information reported, individual cost reports may be 
eliminated from the <nl> cost<ol> [reimbursement] base. 
(3) Reimbursement determination process. The <nl>Texas Health and Human Services 
Commission<ol> [Texas Board of Mental Health and Mental Retardation] determines 
reimbursement according to sec.355.701 of this title (relating to General 
Specifications) <nl>with the advice and recommendation of the TDMHMR Board<ol>. 
As specified in sec. 355.706 of this title (relating to Adjusting Rates When New 
Legislation, Regulations, or Economic Factors Affect Costs), the <nl>Texas 
Health and Human Services Commission<ol> [Texas Board of Mental Health and 
Mental Retardation] may also adjust reimbursements when new legislation, 
regulations, or economic factors affect costs <nl>as recommended by the Board of 
TDMHMR <ol>. TDMHMR <nl>Board approves for submittal<ol> [staff submit] 
reimbursement recommendations to the <nl>Texas Health and Human Services 
Commission. The recommended service add-ons for the modeled rates and the 
statewide rates are based wholly on cost reports and are determined in the 
following manner<ol> [Texas Board of Mental Health and Mental Retardation. 
Recommended reimbursements are determined in the following manner]: 
(A) Total allowable costs for each provider <nl>for each rate<ol> will be 
determined from analyzing the allowable historical costs reported on the cost 
report. 
(B) Each provider's total allowable costs are projected from the historical cost 
reporting period to the prospective reimbursement period using inflation factors 
according to sec.355.704 of this title (relating to Determination of Inflation 
Indices).
(C) For each <nl>case management covered contact, each provider's projected cost 
per unit of service is calculated<ol> [type of contact (face to face and 
telephone) each provider's cost per contact is calculated]. The mean provider 
cost per contact is calculated, and the statistical outliers (those providers 
whose cost per contact exceeds plus or minus () two standard deviations of the 
mean provider cost per contact) are removed. After removal of the statistical 
outliers, the mean cost per contact is calculated. This mean cost per contact 
becomes the recommended [reimbursement] <nl> cost<ol> per contact<nl>. 
<ol><nl>Following each annual reimbursement period, allowable costs will be 
compared to reimbursement and any resulting monetary reconciliation will be 
made<ol> [as of May 29, 1995,].
<nl> (h) <ol>[(e)] General information. Only allowable cost information is used 
to compile the <nl>cost<ol> [reimbursement] base, <nl> as defined in<ol> [See 
]sec.355.741 of this title (relating to Definitions) <nl>and sec.355.102 of this 
title (relating to General Principles of Allowable and unallowable Costs) <ol>. 
[for definitions of allowable and unallowable costs.] 
[(1) List of allowable costs. The following list of allowable costs is not 
comprehensive; instead, it is meant to serve as a general guide and to clarify 
certain key expense areas. The absence of a particular cost does not necessarily 
mean that expense is not an allowable cost.] 
[(A) Compensation of staff providing case management services. Compensation may 
be provided only to those staff who provide case management services directly to 
the clients or who support the work of staff providing case management services, 
including supervisor, administrators, and clerical workers. This category 
includes: ] 
[(i) wages and salaries; ] 
[(ii) payroll taxes and insurance, including Federal Insurance Contributions Act 
(FICA or Social Security), unemployment compensation insurance, workman's 
compensation insurance; and ] 
[(iii) employee benefits. This category includes employer paid health, life 
accident, liability and disability insurance for employees; contributions to 
employee retirement funds; and deferred compensation limited to the dollar 
amount the employer contributes, ] 
[(B) Indirect costs. Costs incurred at administrative and support levels of 
management (that is, personnel, staff development, legal, quality assurance, 
accounting, bookkeeping, and building and equipment maintenance) above the staff 
providing case management services are allowable only if the costs were incurred 
in the purchase of materials, supplies, or services used by the staff providing 
case management services in the conduct of normal operations. Allowable costs 
are limited to the allocated portion of these costs which can be documented as 
being related to the delivery of case management services.] 
[(C) Utilization review committee. ] 
[(D) Materials and supplies. This category includes office supplies, 
housekeeping supplies, and materials and supplies for the operation, 
maintenance, and repair of buildings, grounds, and equipment. ] 
[(E) Utilities. This category includes electricity, natural gas, fuel oil, 
water, waste water, garbage collection, telephone, and telegraph. ] 
[(F) Buildings, equipment, and capital expenses. ] 
[(i) Buildings, equipment, and capital used by the staff providing case 
management services or in support of the staff providing case management 
services, and not for personal business. If these costs are shared with other 
program operations the portion of these costs relating directly to the provision 
of case management services may be allowed on a pro rata basis if the proportion 
of use for provision of case management services is documented.]
[(ii) Depreciation and amortization expense. Property owned by the provider 
entity and improvements to owned, leased or rented property that is used in the 
provision of case management services that are valued at more than $500 at the 
time of purchase must be depreciated or amortized, using the straight line 
method. The minimum usable lives to be assigned to common classes of depreciable 
property are: ] 
[(I) buildings: a minimum of 30 years, with a minimum salvage value of 10%; ] 
[(II) transportation equipment used for the transport of clients, materials and 
supplies, or staff providing case management services: a minimum of three years 
for passenger automobiles, with a minimum salvage value of 10%; five years for 
light trucks and vans, with a minimum salvage value of 10%. ] 
[(G) Provider owned property. Property may be treated by the provider as 
ordinary expenses when the property and improvements to the property owned, 
leased, or rented by the provider are valued at less than $500 at the time of 
purchase. ] 
[(H) Rental and lease expense. This category includes buildings, building 
equipment, transportation equipment, equipment, materials and supplies. 
Allowable rental or lease expense paid to a related party is limited to the 
actual allowable cost incurred by the related party. ] 
[(I) Transportation expense. This category includes depreciation, lease, or 
mileage claimed at the allowable reimbursement per mile set by the state 
legislature for state employees. ] 
[(J) Business and professional association dues limited to associations devoted 
primarily to the issues of case management.
[(K) Outside training costs. These expenses are limited to direct costs 
(transportation, meals, lodging, and registration fees) for training provided to 
staff providing case management services. The training must be directly related 
to issues concerning case management, and it must be located with in the 
continental United States. ] 
[(2) List of unallowable costs. Unallowable costs are not included in the 
reimbursement base used to determine recommended reimbursement. The following 
list clarifies certain expense categories of unallowable costs. See also 
sec.355.741 of this title (relating to Definitions) for the definition of 
unallowable costs.] 
[(A) Compensation in the form of salaries, benefits, or any form of compensation 
given to individuals for the provision and support of services other than case 
management services. ] 
[(B) Personal expenses not directly related to the provision of case management 
services. ] 
[(C) Management fees or indirect costs that are not derived from the actual cost 
of materials, supplies or services provided directly to staff providing case 
management services.] 
[(D) Advertising expenses other than those for advertising in the yellow pages, 
adds for employee recruitment, and advertising to meet any statutory or 
regulatory requirement. ] 
[(E) Business expenses not directly related to the provision of case management 
services. ] 
[(F) Political contributions. ] 
[(G) Depreciation and amortization of unallowable costs. This category includes 
amounts in excess of those resulting form straight line depreciation method, 
capitalized lease expenses in excess of the actual lease payment, and goodwill 
or any excess above the actual value of the physical assets at the time of 
purchase. ] 
[(H) Trade discounts of all types. This category includes returns, allowance, 
and refunds. ] 
[(I) Donated facilities, materials, supplies and services including the values 
assigned to the services of unpaid workers and volunteers. ] 
[(J) Dues to all types of political and social organizations, and to 
professional associations not directly and primarily concerned with case 
management services. ] 
[(K) Entertainment expenses except those incurred for entertainment provided to 
the staff providing case management services as an employee benefit.] 
[(L) Board of directors fees. ] 
[(M) Fines and penalties for violations of regulations, statutes, and ordinances 
of all types. ] 
[(N) Fund raising and promotional expenses. ] 
[(O) Interest expenses on loans pertaining to unallowable items and on that 
portion of interest paid which is reduce or offset by interest income. ] 
[(P) Insurance premiums pertaining to items of unallowable costs. ] 
[(Q) Accrued expenses that are not a legal obligation of the provider or are not 
clearly enumerated as to dollar amount. This category includes any form of 
profit sharing and the accrued liabilities of deferred compensation plans. ] 
[(R) Mileage expense exceeding the current reimbursement rate set by the Texas 
Legislature for state employee travel. ] 
[(S) Costs of purchases from a related party which exceed the original cost to 
the related party.] 
[(T) Out of state travel expenses, except for provision of case management 
related services including training and quality assurance functions.] 
[(U) Contributions to self insurance funds which do not represent payments based 
on current liabilities.] 
[(V) Expenses incurred because of imprudent business practices. ] 
[(W) Expenses which cannot adequately be documented.
[(X) Expenses not reported according to the instructions of the cost report. ] 
[(Y) Expenses not allowable under other pertinent federal, state, or local laws 
or regulations.] 
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 August 3, 1998.
TRD-9812182
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 424-6576

1 TAC sec.sec.355.751-355.753 
(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 Health 
and Human Services Commission or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Health and Human Services Commission (THHSC) proposes the repeal of 
sec.sec.355.751-355.753 1 TAC Chapter 355, Medicaid Reimbursement Rates, 
Subchapter F, General Reimbursement Methodology for all Medical Assistance 
Programs, regarding reimbursement for the case management (service coordination) 
for persons with severe and persistent mental illness program operated by the 
Texas Department of Mental Health and Mental Retardation (TDMHMR). 
Associated with the current proposal is the contemporaneous proposal to amend 
sec.355.743 of 1 TAC Chapter 355, Medicaid Reimbursement Rates, Subchapter F 
General Reimbursement Methodology for all Medical Assistance Programs, regarding 
reimbursement for the case management (service coordination) program operated by 
the TDMHMR. Also associated with the current proposal are the contemporaneous 
proposals by TDMHMR to: repeal existing Chapter 409, Medicaid Programs, 
Subchapter F, governing Case Management Program Requirements; repeal existing 
Chapter 409, Medicaid Programs, Subchapter G, governing Case Management for 
Persons with Severe and Persistent Mental Illness; and new sec.sec.412.451-
412.466 of Chapter 412, Local Authority Responsibilities, Subchapter J, 
governing Service Coordination. 
The proposed repeal of sec.sec.355.751-355.753 would allow consolidation of case 
management reimbursement methodology for mental retardation and severe and 
persistent mental illness under sec.sec.355.741-355.744 of this title.
Gary Bego, associate commissioner for fiscal policy, Texas Health and Human 
Services Commission has reviewed the proposed repeal of 1 TAC sec.sec.355.751-
355.753 and the proposed amendments to 1 TAC sec.355.743 of Chapter 355, 
Medicaid Reimbursement Rates, Subchapter F, General Reimbursement Methodology 
for all Medical Assistance Programs, regarding reimbursement for the case 
management (service coordination) program operated by TDMHMR in conjunction with 
the proposed new 25 TAC sec.sec.412.451-412.466. Mr. Bego has determined that 
for each year of the first five-year period the proposed amendments would be in 
effect, there would be an estimated fiscal impact for FY 1999 of an increase in 
cost of $316,283, which would be funded by $197,518 from federal sources and 
$118,765 from state sources, for FY 2000, an increase in cost of $481,248, which 
would be funded by $298,949 from federal sources and $182,299 from state 
sources, for FY 2001 an increase in cost of $493,279, which would be funded by 
$306,277 from federal sources and $187,002 from state sources, for FY 2002 an 
increase in cost of $505,611, which would be funded by $313,934 from federal 
sources and $191,677 from state sources, and for FY 2003 an increase in cost of 
$518,591, which would be funded by $321,993 from federal sources and $196,598 
from state sources. There would be no fiscal implications to local government as 
a result of enforcing or administering the proposed new subchapter. 
Mr. Bego has also determined that for each year of the first five years the 
proposal would be in effect the public benefit anticipated would be an increase 
in administrative efficiency and flexibility. For each year of the first five 
years the proposal would be in effect there would be no anticipated economic 
cost to persons who are required to comply with the amendments. There would be 
no effect on small business because they do not participate in the case 
management program. 
A public hearing will be held at 11:00 a.m., Wednesday, September 9,1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired or other accommodation should Sheila Wilkins, Office of 
Policy Development, at (512) 206-5330, or should call the TDY phone number of 
Texas Relay, which is 1-800-735-2988, within 72 hours prior to the public 
hearing. 
Questions about the proposal may be directed to Ron Gernsbacher, Medicaid 
Administration, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication of this notice.
The sections are proposed under the Texas Human Resources Code, Chapter 32, 
sec.32.021, and Texas Government Code, Chapter 531, sec.531.021 and sec.531.033, 
which provide the Texas Health and Human Services Commission (THHSC) with the 
authority to administer federal medical assistance funds and the state's medical 
assistance program and authorize the commissioner of THHSC to adopt rules 
necessary to carry out THHSC's statutory duties.
The proposal affects Texas Human Resources Code, Chapter 32, and Texas 
Government Code, Chapter 531, sec.531.021. 
sec.355.751.Service Limitations.
sec.355.752.Reimbursement Methodology for Case Management for Persons with 
Severe and Persistent Mental Illness.
sec.355.753.Right to Appeal.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812183
Marina S. Henderson
Executive Deputy Commissioner
Texas Health and Human Services Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 424-6576

TITLE 10. COMMUNITY DEVELOPMENT
PART I. Texas Department of Housing and Community Affairs
CHAPTER 1. Administration 
SUBCHAPTER C. Administrative Hearings
10 TAC sec.sec.1.21, 1.23, 1.25
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Housing and Community Affairs or in the Texas Register office, 
Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Housing and Community Affairs (the Department) proposes 
the repeal of sec.sec.1.21, 1.23 and 1.25, concerning Administrative Hearings. 
The sections are proposed to be repealed in order to remove duplicative and 
unnecessary rules as well as to comply with Section 167, Article IX, of the 
General Appropriations Act. 
Mr. Larry Paul Manley, Executive Director, has determined that for the first 
five-year period the repeal is in effect there will be no fiscal implications 
for state or local government as a result of enforcing or administering the 
repeal. 
Mr. Larry Paul Manley, Executive Director, has determined that for the first 
five-year period the repeal is in effect the public benefit anticipated as a 
result of enforcing the repeal will be to permit the adoption of new rules for 
the Department. There will be no effect on small businesses. There is no 
anticipated economic cost to persons who are required to comply with the repeal 
as proposed. 
Comments on the proposal may be submitted to Ms. Anne Paddock, Deputy General 
Counsel, Texas Department of Housing and Community Affairs, P. O. Box 13941, 
Austin, Texas 78711-3941 or by fax 512/475-3978 within thirty days of this 
notice. 
The repeal is proposed pursuant to the authority of the Texas Government Code, 
Chapter 2306; and Section 167, Article IX, of the General Appropriations Act. 
No other code, articles or statutes are affected by this repeal. 
sec.1.21. Administrative Hearings Procedures. 
sec.1.23. Rules of Evidence and Official Notice. 
sec.1.25. Action after the Hearing. 
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 29, 1998.
TRD-9811991
Larry Paul Manley 
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 475-3726

10 TAC sec.1.21
The Texas Department of Housing and Community Affairs (the Department) proposes 
new sec.1.21, Administrative Hearing Procedures. This proposed new section is 
proposed in order to provide guidance on matters not addressed by the 
Administrative Procedures Act or the rules of the State Office of Administrative 
Hearings, as well as to comply with Section 167, Article IX, of the General 
Appropriations Act. 
Mr. Larry Paul Manley, Executive Director, has determined that for the first 
five-year period the proposed new rule section is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the proposed new rule section. 
Mr. Larry Paul Manley, Executive Director, has determined that for the first 
five-year period the proposed new rule section is in effect the public benefit 
anticipated as a result of enforcing this proposed new rule section will be to 
provide guidance on matters not addressed by the Administrative Procedures Act 
or the rules of the State Office of Administrative Hearings. There will be no 
effect on small businesses. There is no anticipated economic cost to persons who 
are required to comply with the proposed new rule section. Comments on the 
proposal may be submitted to Ms. Anne Paddock, Deputy General Counsel, Texas 
Department of Housing and Community Affairs, P. O. Box 13941, Austin, Texas 
78711-3941 or by fax 512/475-3978 within thirty days of this notice. 
The new section is proposed pursuant to the authority of the Texas Government 
Code, Chapter 2306; and Section 167, Article IX, of the General Appropriations 
Act. 
No other code, articles or statutes are affected by this proposed new rule 
section. 

sec.1.21. Administrative Hearings Procedures. 
(a) Hearing Procedures. Unless otherwise expressly set forth in this chapter, 
the Manufactured Housing Standards Act, or conducted pursuant to an appeals 
process set out in an applicable state plan approved by a federal funding 
source, all hearings shall be held and conducted pursuant to the Administrative 
Procedures Act (APA), sec.2001, and 1 TAC Chapter 155. 
(b) Request for Hearing. The department on its own motion or on the petition of 
a party may request a hearing from the State Office of Administrative Hearings. 
A petition for a hearing by a party must be submitted within 15 calendar days of 
receipt of notice of the action giving rise to the request for hearing. The 
petition requesting a hearing shall state the specific grounds upon which the 
party wishes to challenge the department's action. 
(c) Notice of Hearing; Default Judgment. Service of notice of the hearing shall 
be provided pursuant APA sec.2001 and 1 TAC sec.155.27. Service may be made by 
sending the notice to the party's last known address as shown by the 
department's records. If, after receiving notice of a hearing, a party fails to 
appear in person or by representative on the day and time set for hearing or 
fails to appear by telephone in accordance with APA sec.2001, the hearing may 
proceed in that party's absence and a default judgment may be entered. 
(d) Exceptions. Pursuant to APA sec.2001, each party has the right to file 
exceptions to the Proposal for Decision issued by the Administrative Law Judge 
and present a brief with respect to the exceptions. All exceptions must be filed 
with the department within ten working days of the Proposal for Decision, with 
replies to be filed within ten working days of the filing of exceptions. 
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 29, 1998.
TRD-9811990
Larry Paul Manley 
Executive Director
Texas Department of Housing and Community Affairs
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 475-3726

TITLE 16. ECONOMIC REGULATION
PART III. Texas Alcoholic Beverage Commission
CHAPTER 45.Marketing Practices
SUBCHAPTER D.Advertising and Promotion-All Beverages
16 TAC sec.45.100
The Alcoholic Beverage Commission proposes a new rule, sec.45.100, concerning 
advertising and promotional activities by industry members at publicly owned 
entertainment venues. The rule is proposed to clarify when industry members may 
engage in promotional activities without violating various provisions of the 
Alcoholic Beverage Code regulating the relationship between the retail, 
wholesale and manufacturing tiers of the alcoholic beverage industry. 
Lou Bright, General Counsel, has determined that for the first five year period 
the rule is in effect there will be no fiscal implications for state or local 
government as a result of enforcing the rule. 
Mr. Bright also has determined that for the first five years the rule is in 
effect the public will benefit from this rule in that members of the alcoholic 
beverage industry will have greater ability to advertise and promote products at 
public venues. There is no anticipated costs to owners of small businesses or to 
persons required to comply with this rule. 
Comments should be submitted to Lou Bright, General Counsel, Texas Alcoholic 
Beverage Commission, P. O. Box 13127, Austin, Texas 78711 
This rule is imposed under Alcoholic Beverage Code, sec.5.31, which provides the 
Alcoholic Beverage Commission with authority to prescribe and publish rules 
necessary to carry out the provisions of the Alcoholic Beverage Code. 
Cross Reference: Alcoholic Beverage Code, sec.sec.102.01, 102.04, 102.07, 
102.12, 102.13, 102.16, 108.05 and 108.06 are affected by this rule. 

sec.45.100.Advertising and Promotion in Publicly Owned Facilities.
(a) This rule is enacted pursuant to sec.102.07 and sec.108.05 of the Alcoholic 
Beverage Code and applies to all licensees and permittees.
(b) Members of the manufacturing and wholesale tiers may advertise, promote and 
sponsor entertainment events at publicly owned facilities, provided that 
alcoholic beverages sold or served at such facilities or events may only be 
furnished by an independent concessionaire. 
(c) Publicly owned facility means buildings or grounds owned by a state, county 
or local governmental entity and designed or adopted for use as a venue for 
public entertainment. 
(d) Independent concessionaire means a licensed or permitted member of the 
retail tier. The independent concessionaire may receive no direct or indirect 
monetary benefit from advertising revenues generated by operation of the 
facility. The facility owner, operator, or upper tier members may not directly 
or indirectly control the quantities or brands of alcoholic beverages bought or 
sold by the independent concessionaire. 
(e) If the percentage of a product that is the subject of an advertising or 
promotional event sold or served during the event is more than five percent 
greater than the percentage of that product sold in the surrounding county 
during the preceding 12 month period, it shall constitute prima facie evidence 
of a violation of the following sections of the Alcoholic Beverage Code: 102.01, 
102.04, 102.07, 102.12, 102.13, 102.16, 108.06. 
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 31, 1998.
TRD-9812060
Doyne Bailey
Administrator
Texas Alcoholic Beverage Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-3204

PART VIII. Texas Racing Commission
CHAPTER 305.Licenses for Pari-Mutuel Racing
SUBCHAPTER A.General Provisions
16 TAC sec.305.4
The Texas Racing Commission proposes an amendment to sec.305.4, concerning the 
application site of pari-mutuel licenses. This amendment adds the option for 
certain occupational license applicants to file the appropriate application form 
and related documents by mail to the main commission office in Austin. This will 
decrease the burden to applicants. 
Roselyn Marcus, General Counsel for the Texas Racing Commission, has determined 
that for the first five-year period the amendment is in effect there will be no 
fiscal implications for state or local government as a result of enforcing the 
proposal. 
Ms. Marcus has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that the licensing process for participants in pari-mutuel 
racing will be less burdensome, costly and time-consuming. There will be no 
fiscal implications for small businesses as a result of enforcing this proposal. 
There is no anticipated economic cost to an individual required to comply with 
the proposal. The proposal has no effect on the state's agricultural, horse 
breeding, horse training, greyhound breeding, or greyhound training industries. 
Comments on the proposal may be submitted on or before September 15, 1998, to 
Roselyn Marcus, General Counsel, for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the Commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act. 
The proposed amendment implements Texas Civil Statutes, Article 179e. 

sec.305.4.Application Site.
(a) (No change.) 
(b) <nl>Except as provided in subsection (c) of this section, an<ol> [An] 
applicant for an individual license must file the appropriate application form 
and related documents at the licensing office at the racetrack at which the 
applicant desires to participate in pari-mutuel racing. 
<nl>(c)<ol> <nl>An applicant for the following occupational license types may 
file the appropriate application form and related documents by mail to the main 
office of the commission in Austin; kennel owner, kennel owner/owner, kennel 
owner/owner/trainer, kennel owner/trainer, owner, owner/trainer, trainer, 
multiple owner/stable/farm registration, training facility employee, and 
training facility general manager/CEO. <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 August 3, 1998.
TRD-9812147
Roselyn Marcus
General Counsel
Texas Racing Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 833-6699

16 TAC sec.305.7
The Texas Racing Commission proposes an amendment to sec.305.7, concerning the 
duration of pari-mutuel licenses. The Texas Racing Act allows licenses to be 
valid for up to 36 months. This amendment implements this provision by providing 
that certain occupational licenses, upon election by the applicant, may be valid 
for one, two or three years. 
Roselyn Marcus, General Counsel for the Texas Racing Commission, has determined 
that for the first five-year period the amendment is in effect there will be no 
fiscal implications for local government as a result of enforcing the proposal. 
Ms. Marcus has also determined for the first five-year period the amendment is 
in effect there may be a positive fiscal implication for state government as a 
result of enforcing the proposal. The Commission estimates that the costs of 
occupational licensing may decrease due to the issuance of multi-year licenses. 
The exact amount of the savings cannot be determined at this time, however, 
because it will depend on the number of applicants that choose to have a multi-
year license issued. 
Ms. Marcus has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that the licensing process for agency staff and for 
participants in pari-mutuel racing will be less burdensome, costly and time-
consuming. There will be no fiscal implications for small businesses as a result 
of enforcing this proposal. There is no anticipated economic cost to an 
individual required to comply with the proposal. The proposal has no effect on 
the state's agricultural, horse breeding, horse training, greyhound breeding, or 
greyhound training industries. 
Comments on the proposal may be submitted on or before September 15, 1998, to 
Roselyn Marcus, General Counsel, for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the Commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.7.07, which 
authorize the Commission to set a time period in which a license will be valid, 
not to exceed 36 months. 
The proposed amendment implements Texas Civil Statutes, Article 179e. 

sec.305.7.Duration of License.
(a) (No change.)
(b) <nl>Except as provided in subsection (c) of this section, an<ol>[An] 
occupational or training facility license is valid for one year and expires on 
the last day of the month in which the license was issued. 
<nl>(c)<ol> <nl>An applicant for the following occupational license types may 
choose to have the license valid for a period of one, two or three years; kennel 
owner, kennel owner/owner, kennel owner/owner/trainer, kennel owner/trainer, 
owner, owner/trainer, trainer, veterinarian, jockey, or multiple 
owner/stable/farm registration license.<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 August 3, 1998.
TRD-9812148
Roselyn Marcus
General Counsel
Texas Racing Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 833-6699

SUBCHAPTER B.Individual Licenses
Division 1. General Provisions
16 TAC sec.305.35
The Texas Racing Commission proposes an amendment to sec.305.35, concerning 
occupational licensing categories and fees. The amendment reduces the fees for a 
one year license and establishes the fees for multi-year licenses which are 
proposed in the amendment to sec.305.7. 
Roselyn Marcus, General Counsel for the Texas Racing Commission, has determined 
that for the first five-year period the amendment is in effect there will be no 
fiscal implications for local government as a result of enforcing the proposal. 
Ms. Marcus has also determined for the first five-year period the amendment is 
in effect there will be a fiscal implication for state government as a result of 
enforcing the proposal. The Commission estimates the state will receive less 
revenue due to the reduced licensing fees. Although the exact amount of the 
decrease will depend on the number of licenses that are issued, the Commission 
estimates a net reduction in revenue from occupational licensing of 
approximately $380,000 per year. Due to cost saving changes in occupational 
licensing procedures, the Commission estimates the reduction in revenue will not 
affect the agency's ability to effectively administer the licensing program. 
Ms. Marcus has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that participants in pari-mutuel racing will have a reduced 
cost to be licensed. There will be a reduced fiscal implication for small 
businesses as a result of enforcing this proposal. There is a reduced economic 
cost to an individual required to comply with the proposal. The proposal has no 
effect on the state's agricultural, horse breeding, horse training, greyhound 
breeding, or greyhound training industries. 
Comments on the proposal may be submitted on or before September 15, 1998, to 
Roselyn Marcus, General Counsel for the Texas Racing Commission, P.O. Box 12080, 
Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the Commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; sec.5.01, which 
authorizes the commission to prescribe reasonable license fees for each category 
of license; sec.7.02, which authorizes the commission to adopt categories of 
occupational licenses and to establish the criteria for those licenses; and sec. 
7.05, which authorizes the Commission to adopt a fee schedule for occupational 
licenses. 
The proposed amendment implements Texas Civil Statutes, Article 179e.

sec.305.35.Occupational Licensing Categories and Fees.
The [annual] fee for an individual license is as follows:
Figure: 16 TAC sec.305.35
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 August 3, 1998.
TRD-9812149
Roselyn Marcus
General Counsel
Texas Racing Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 833-6699

CHAPTER 309.Operation of Racetracks
SUBCHAPTER B.Horse Racetracks
Division 4. Operations
16 TAC sec.309.200
The Texas Racing Commission proposes an amendment to sec.309.200, concerning 
stakes and other prepayment races. The amendment requires each pari-mutuel horse 
racetrack to designate the official who will be responsible for these 
activities. 
Roselyn Marcus, General Counsel for the Texas Racing Commission, has determined 
that for the first five-year period the amendment is in effect there will be no 
fiscal implications for state or local government as a result of enforcing the 
proposal. 
Ms. Marcus has also determined that for each of the first five years the 
amendment is in effect the public benefit anticipated as a result of enforcing 
the proposal will be that the Commission will have a point of contact from whom 
staff can obtain information and remain informed of the stakes and other 
prepayment races conducted at Texas pari-mutuel racetracks without overly 
burdening the sponsors and coordinators of the races and protect the funds. 
There will be no fiscal implications for small businesses as a result of 
enforcing this proposal. There is no anticipated economic cost to an individual 
required to comply with the proposal. The proposal has no effect on the state's 
agricultural, horse breeding, horse training, greyhound breeding, or greyhound 
training industries. 
Comments on the proposal may be submitted on or before September 15, 1998, to 
Roselyn Marcus, General Counsel, for the Texas Racing Commission, P.O. Box 
12080, Austin, Texas 78711-2080. 
The amendment is proposed under the Texas Civil Statutes, Article 179e, 
sec.3.02, which authorize the Commission to adopt rules for conducting racing 
with wagering and for administering the Texas Racing Act; and sec.6.06, which 
authorize the Commission to adopt rules on all matters relating to the operation 
of racetracks. 
The proposed amendment implements Texas Civil Statutes, Article 179e.

sec.309.200.Stakes and Other Prepayment Races.
(a)-(b) (No change.) 
(c) The association shall <nl>maintain one account<ol> [ensure all funds paid 
into the race are maintained in escrow] in an F.D.I.C. secured financial 
institution, <nl>for which only funds received for stakes and other prepayment 
races may be deposited,<ol> except as otherwise authorized by <nl>these 
rules<ol> [the commission]. The [escrow] account must require, for all 
withdrawals, the signatures of <nl> two officers<ol> [the sponsor of the race 
and either the horsemen's bookkeeper or general manager] of the 
<nl>association<ol> [racetrack]. 
<nl>(d)<ol> <nl>The association shall designate an official as the stakes 
nomination secretary who shall be responsible for the collection and deposit of 
all stakes, nomination, futurity and derby payments, preparation of the list of 
horses and their owners nominated for stakes, nomination, futurity and derby 
races and serving as the point of contact for the commission staff for questions 
or information regarding stakes and other prepayment races. The association 
shall include the name of the person designated as the stakes nomination 
secretary in the list of officials prepared pursuant to Section 313.4 of this 
title (relating to Approval of Officials). The association shall include the 
person designated as the stakes nomination secretary in an insurance policy or 
fidelity bond covering employee dishonesty.<ol>
<nl>(e)<ol> [(d)] Not later than five business days after receiving a request by 
the commission, the association shall provide to the commission a list of all 
horses nominated for the race, distinguishing which horses remain eligible as of 
the date of the request and the names of all owners of each horse remaining 
eligible. 
<nl>(f)<ol> [(e)] Not later than five business days after receiving a request by 
the commission, the association shall provide a written report to the commission 
regarding the activity and status of the [escrow] account in which the race 
funds are maintained. The report must include the name of the financial 
institution in which the account is held, the dates and amounts of deposits into 
the account by each nominator or sponsor, the dates and amounts of all 
withdrawals or deductions from the account, and for what purpose each withdrawal 
or deduction was made. 
<nl>(g)<ol> [(f)] Not later than five business days after receiving a request 
from the commission, the <nl>horsemen's bookkeeper <ol> [association] shall 
provide to the commission the final report for the <nl>distribution of the purse 
for stakes and other prepayment races.<ol> [escrow account. The final report 
must include all information required in subsection (e) of this section and a 
certification by the association that the purse has been distributed.] The 
<nl>final report<ol> [certification] must state how the purse was distributed to 
each purse winner, including the address to which a check was mailed or the date 
on which winnings were deposited in the appropriate horsemen's account. 
[(g) An association may not conduct a stakes or other prepayment race sponsored 
by a person or organization other than the association unless the person or 
organization agrees in writing to comply with this section. The failure of an 
association to ensure compliance with this section is grounds for disciplinary 
action against the association. An association is responsible for the payment of 
all purse money for each stakes or prepayment race conducted at its licensed 
facility or which the association has agreed to conduct at its licensed 
facility, regardless of whether the association is the sponsor of the race.] 
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 August 3, 1998.
TRD-9812150
Roselyn Marcus
General Counsel
Texas Racing Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 833-6699

TITLE 19. EDUCATION
PART I. Texas Higher Education Coordinating Board
CHAPTER 5.Program Development
SUBCHAPTER A.General Provisions
19 TAC sec.5.4
(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 Higher 
Education Coordinating Board or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Higher Education Coordinating Board proposes the repeal of sec.5.4, 
concerning Transfer Curricula and Resolution of Transfer Disputes for Lower-
Division Courses. The repeal of the rule would carry out the provisions of 
Senate Bill 148 of the 75th Legislature, directing the Coordinating Board to 
develop a recommended core curriculum of at least 42 semester credit hours, 
including a statement of the content, component areas, and objectives of the 
core curriculum. The repeal of the rule offers those guiding principles but does 
not prescribe specific courses, a responsibility designated in the bill to each 
individual college and university. 
Bill Sanford, Assistant Commissioner for Universities has determined that for 
the first five- year period the rule is in effect there will be no fiscal 
implications as a result of enforcing or administering the rule. 
Dr. Sanford also has determined that for the first five years the rule is in 
effect the public benefit will be that it will provide for a common academic 
core of lower-division courses that could be readily transferred among public 
higher education institutions as individual courses or as a completed block; it 
will reduce obstacles to transfer and provide a more comprehensive procedure for 
the resolution of transfer disputes; it will provide for the evaluation and 
monitoring of each institution's transfer practices; and it will remove the 
problem of the state paying twice for the same courses. There will be no effect 
on state or local government or small businesses. There is no anticipated 
economic costs to persons who are required to comply with the rule as proposed. 
Comments on the repealed rule may be submitted to Dr. Don W. Brown, Commissioner 
of Higher Education, Texas Higher Education Coordinating Board, P.O. Box 12788, 
Capitol Station, Austin, Texas 78711. 
The repeal of the rule is proposed under Texas Education Code, sec.61.822, which 
provides the Texas Higher Education Coordinating Board with the authority to 
adopt rules concerning Transfer Curricula and Resolution of Transfer Disputes 
for Lower-Division Courses. 
There were no other sections or articles affected by the proposed amendments.
sec.5.4.Transfer Curricula and Resolution of Transfer Disputes for Lower-
Division Courses.
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 27, 1998.
TRD-9811885
James McWhorter
Assistant Commissioner for Administration
Texas Higher Education Coordinating Board
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 483-6162

TITLE 22. EXAMINING BOARDS
PART XII. Board of Vocational Nurse Examiners
CHAPTER 235.Licensing
SUBCHAPTER D.Issuance of Licenses
22 TAC sec.235.48
The Board of Vocational Nurse Examiners proposes an amendment to sec.235.48 
relative to Reactivation of a License. This rule is amended for consistency with 
sec.237.19 and to include the requirement for proof of 20 hours of continuing 
education of individuals whose license has been delinquent for more than one 
renewal period, but less than five years. 
Marjorie A. Bronk, Executive Director, has determined that for the first five 
year period the rule is in effect, there will be no fiscal implication for state 
or local government as a result of enforcing the rule. 
Mrs. Bronk has also determined that for the first years the rule is in effect, 
that the public will have further assurance that individuals renewing their 
license will have up to date information on health care as a result of 
enforcement of the rule. 
Comments on the proposed rule may be submitted to Marjorie A. Bronk, R.N., 
M.S.H.P., Executive Director, Board of Vocational Nurse Examiners, 333 
Guadalupe, Suite 3-400, Austin, Texas 78701 (512) 305-8100. 
The amendment of this rule is proposed under Texas Civil Statutes, Article 
4528c, sec.5(f), which provides the Board of Vocational Nurse Examiners with the 
authority to make such rules and regulations as may be necessary to carry in 
effect the purposes of the law. 
No other statute, article or code will be affected by this proposal. 

sec.235.48.Reactivation of a License.
(a) (No change.) 
(b) A vocational nurse who has been on inactive status or whose license has been 
delinquent for one full renewal period, but less than five years, shall meet the 
following criteria for licensure: 
(1) submit reactivation form and affidavits provided by the Board <nl>with 
required fees<ol>; 
(2) submit verification of employment as a licensed vocational nurse in another 
state or employment as a registered nurse in this state or another state within 
the past five years immediately prior to renewal <nl> and proof of 20 hours of 
continuing education; or<ol> 
(3) submit evidence of successful completion of a refresher course or an 
agreement to supervised employment with a copy of the job description, and 
verification of such submitted to the Board office prior to the issuance of a 
license [; and] 
[(4) submit required fees]. 
(c)-(e) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on July 29, 1998.
TRD-9811977
Marjorie A. Bronk
Executive Director
Board of Vocational Nurse Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-8100

CHAPTER 237.Continuing Education
SUBCHAPTER B.Continuing Education
22 TAC sec.237.19
The Board of Vocational Nurse Examiners proposes an amendment to sec.237.19 
relative to Relicensure Process. This rule is amended for consistency with 
sec.235.48 and to include the requirement for proof of twenty hours of 
continuing education of individuals whose license has been delinquent for more 
than one renewal period, but less than five years. 
Marjorie A. Bronk, Executive Director, has determined that for the first five 
year period the rule is in effect, there will be no fiscal implication for state 
or local government as a result of enforcing the rule. 
Mrs. Bronk has also determined that for the first years the rule is in effect, 
that the public will have further assurance that individuals renewing their 
license will have up to date information on health care as a result of 
enforcement of the rule. 
Comments on the proposed rule may be submitted to Marjorie A. Bronk, R.N., 
M.S.H.P., Executive Director, Board of Vocational Nurse Examiners, 333 
Guadalupe, Suite 3-400, Austin, Texas 78701 (512) 305-8100. 
The amendment of this rule is proposed under Texas Civil Statutes, Article 
4528c, sec.5(f), which provides the Board of Vocational Nurse Examiners with the 
authority to make such rules and regulations as may be necessary to carry in 
effect the purposes of the law. 
No other statute, article or code will be affected by this proposal. 

sec.237.19.Relicensure Process.
In addition to meeting all board requirements specified in Chapter 235 of this 
title (relating to Licensing), the following conditions for relicensure shall be 
met. 
(1)-(3) (No change.) 
(4) Reactivation of a License 
(A) A <nl>vocational<ol> nurse who has been on delinquent <nl> or inactive<ol> 
status for less than one renewal period must provide proof of 20 hours of 
continuing education prior to the renewal of a license. 
(B) A vocational nurse whose license has been on inactive <nl> status or whose 
license has been delinquent for one full renewal period, but less than five 
years <ol>[or delinquent status for less than five years], shall meet the 
following criteria for licensure: 
(i) submit reactivation form and affidavits provided by the Board <nl>with 
required fees<ol>; 
(ii) submit verification of employment as a licensed vocational nurse in another 
state or employment as a registered nurse in this state or another state within 
the past five years immediately prior to <nl>renewal <ol> [application;] <nl>and 
proof of 20 hours of continuing education; or<ol> 
(iii) submit evidence of successful completion of a refresher course or an 
agreement to supervised employment with a copy of the job description, and 
verification of such submitted to the Board office prior to the issuance of a 
license[; ] 
[(iv) submit required fees]. 
(C) (No change.) 
(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 29, 1998.
TRD-9811976
Marjorie A. Bronk
Executive Director
Board of Vocational Nurse Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-8100

PART XVII. Texas State Board of Plumbing Examiners
CHAPTER 365. Licensing
22 TAC sec.365.5
The Texas State Board of Plumbing Examiners proposes an amendment to sec.365.5, 
concerning renewals. This section specifies the requirements for renewal of a 
license or endorsement. The proposed amendment would allow a licensee to take a 
medical gas continuing education correspondence course, in lieu of a classroom 
course, to renew a medical gas endorsement. The amendment providing for the 
correspondence course would apply only to those licensees that reside out of 
state or in a county that does not contain a city with a population of 100,000 
or more. 
James Fowler, Chief Fiscal Officer, Texas State Board of Plumbing Examiners, has 
determined that for the first five-year period the rule is in effect there will 
be no effect to state or local government as a result of enforcing the rule. 
Mr. Fowler also has determined that for each year of the first five years the 
rule is in effect the public benefit will be to those licensees that live out of 
state or in rural counties that are unable to attend a medical gas continuing 
education class without enduring the expense of traveling to a city outside of 
the county where the licensee lives. There will be no effect on small 
businesses. There is no economic cost, but rather a cost savings to the persons 
having to comply with the rule as proposed. 
Comments on the proposed amendment may be submitted to Gilbert Kissling, 
Administrator, Texas State Board of Plumbing Examiners, 929 East 41st Street, 
P.O. Box 4200, Austin 78765-4200. 
The amendment is proposed under Texas Revised Civil Statutes Annotated Article 
6243-101, sec.5(a) and sec.8(C) and sec.12 and sec.12 (B), (Vernon Supp. 1998). 
The amendment affects Texas Revised Civil Statutes Annotated Article 6243-101, 
sec.5(a) and sec.8(C) and sec.12 and sec.12 (B), (Vernon Supp. 1998).
No other statute, article, or code is affected by this proposed amendment.

sec.365.5. Renewals. 
(a)-(f) (No change.) 
<nl>(g)<ol> Any license holder with a medical gas endorsement who lives in a 
county having no city with a population in excess of 100,000, or resides out of 
state, may fulfill the continuing education requirements defined in subsection 
(f) of this section by completing a correspondence course approved by the Board. 
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 29, 1998.
TRD-9812010
Robert L. Maxell
Chief of Field Services/Investigations
Texas State Board of Plumbing Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 458-2145

PART XXII. Texas State Board of Public Accountancy
CHAPTER 501. Professional Conduct
SUBCHAPTER E. Other Responsibilities and Practices
22 TAC sec.501.48
The Texas State Board of Public Accountancy (Board) proposes an amendment to 
sec.501.48, concerning responses. 
The proposed amendment to sec.501.48 will allow the Qualifications Division to 
compel a response from an applicant and, if no response is received, to deny 
licensure to the applicant based on the failure to respond. 
The Board certifies that the proposed amendment has been reviewed by its legal 
counsel and found to be within the Board's authority to adopt. 
William Treacy, Executive Director of the Board, has determined that for the 
first five-year period the proposed amendment will be in effect: 
A.the additional estimated cost to the state and to local governments expected 
as a result of enforcing or administering the amendment will be zero because the 
amendment does not require or cause any actions on the part of state or local 
government, and; 
B.the estimated reduction in costs to the state and to local governments as a 
result of enforcing or administering the amendment will be none, and; 
C.the estimated loss or increase in revenue to the state or to local governments 
as a result of enforcing or administering the amendment will be none. 
Mr. Treacy has determined that for the first five-year period the amendment is 
in effect the public benefits expected as a result of adoption of the proposed 
amendment will be that the applications will be more efficiently handled.
The probable economic cost to persons required to comply with the amendment will 
be the costs of communicating with the Board by correspondence, fax, telephone 
or Email. 
Mr. Treacy has determined that a Local Employment Impact Statement is not 
required because the proposed amendment will not affect a local economy. 
The Board requests comments on the proposed amendment from any interested 
person. Comments must be received at the Board no later than noon on September 
17, 1998. Comments should be addressed to Amanda G. Birrell, General Counsel, 
Texas State Board of Public Accountancy, 333 Guadalupe, Tower III, Suite 900, 
Austin, Texas 78701 or faxed to her attention at (512) 305-7854. 
Mr. Treacy has determined that the proposed amendment will not have an adverse 
economic effect on small businesses because the costs of compliance will be 
costs of communicating with the Board by correspondence, fax, telephone or E-
mail which are not significant. The Board specifically invites the comments of 
the public on the issues of whether or not the proposed amendment will have an 
adverse economic effect on small business; if the amendment is believed to have 
such an effect, how the Board could legally and feasibly reduce that effect 
considering the purpose of the statute under which the amendment is to be 
adopted; and if the amendment is believed to have such an effect, how the cost 
of compliance for a small business compares with the cost of compliance for the 
largest business affected by the amendment under any of the following standards: 
(a) cost per employee; (b) cost for each hour of labor; or (c) cost for each 
$100 of sales. 
The amendment is proposed under The Public Accountancy Act, TEX. REV. CIV. STAT. 
ANN., Article 41a-1, Section 6(a) (Vernon Supp. 1998), which authorizes the 
Board to adopt rules deemed necessary or advisable to effectuate the Act. 
No other article, statute or code is affected by this proposed amendment.

sec.501.48. Responses. 
(a) <nl>An applicant,<ol> [A] certificate or registration holder shall respond 
in writing to any communication from the board requesting a response, within 30 
days of the mailing of such communication by registered or certified mail to the 
last address furnished to the board by the <nl>applicant,<ol> certificate or 
registration holder. 
(b) (No change.) 
(c) Each <nl>applicant,<ol> certificate holder and each person required to be 
registered with the board under the Public Accountancy Act of 1991, sec.10, 
shall notify the board, in writing, of any and all changes in such person's 
mailing address and the effective date thereof within 30 days before or after 
such effective date. 
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 August 3, 1998.
TRD-9812179
William Treacy
Executive Director
Texas State Board of Public Accountancy
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-7848

PART XXII. Texas Real Estate Commission
CHAPTER 535. Provisions of the Real Estate License Act
SUBCHAPTER F. Education, Experience, Educational Programs, Time Periods, and 
Type of License
22 TAC sec.535.66
The Texas Real Estate Commission (TREC) proposes an amendment to sec.535.66, 
concerning schools accredited by TREC. The amendment would require accredited 
schools to ensure that the provisions of a TREC rule concerning the 
confidentiality of examination materials is read aloud to students at the 
beginning of an examination preparation course. 
TREC accredits proprietary schools to offer courses to prospective licensees. A 
number of those proprietary schools also offer courses designed to prepare 
students to sit for the qualifying examination required for a license. The 
amendment to sec.535.61 would protect the integrity of the examination process 
by informing prospective licensees that examination materials are confidential 
and that their applications may be disapproved or they may be disciplined for 
violations of the confidentiality rule. 
Mark A. Moseley, general counsel, 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. There 
is no anticipated impact on local or state employment as a result of 
implementing the section. 
Mr. Moseley also has determined that for each year of the first five years the 
section as proposed is in effect the public benefit anticipated as a result of 
enforcing the section will be maintaining the confidentiality of licensing 
examination materials. There is no anticipated adverse effect on small 
businesses. There is no anticipated economic cost to persons who are required to 
comply with the proposed section. 
Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, 
Texas Real Estate Commission, P.O. Box 12188, Austin, Texas 78711-2188. 
The amendment is proposed under Texas Civil Statutes, Article 6573a, sec.5(h), 
which authorize the Texas Real Estate Commission to make and enforce all rules 
and regulations necessary for the performance of its duties. 
The statute which is affected by this proposal is Texas Civil Statutes, Article 
6573a. 

sec.535.66. Educational Programs: Accreditation. 
(a)-(g) (No change.) 
(h) No school may be accredited or operate under commission approval for the 
sole purpose of offering courses of instruction designed to prepare its students 
for the state examination for any license issued by the commission. Schools 
approved by the commission may offer examination preparation courses on a non-
credit basis. Before being presented, any such courses must be submitted to and 
approved by the commission in the same manner as courses accepted for licensure 
requirements.<nl> Schools shall ensure that at the beginning of each examination 
preparation course, the instructor reads aloud to all students the provisions of 
sec.535.61(hh) of this title (relating to Examinations).<ol> 
(i)-(ss) (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 28, 1998.
TRD-9811956
Mark A. Moseley 
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 465-3900

CHAPTER 539. Provisions of the Residential Service Company Act
SUBCHAPTER F. Authorized Personnel
22 TAC sec.539.51
The Texas Real estate Commission proposes an amendment to sec.539.51, concerning 
the definition of the term "employee". The amendment would replace the terms 
"salesman" and "his" with "salesperson" and "the employee's", respectively, to 
comply with House Bill 814, 75th Legislature (1997), which requires TREC to use 
the term "salesperson" in all its rules and documents. 
Mark A. Moseley, general counsel, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for the 
state or for local government as a result of enforcing or administering the 
section. There is no anticipated impact on local or state employment as a result 
of implementing the section. 
Mr. Moseley also has determined that for each year of the first five years the 
section as proposed is in effect the public benefit anticipated as a result of 
enforcing the section will be conformity between the agency's rules and its 
enabling legislation. There will be no effect on small businesses. There is no 
anticipated economic cost to individuals who are required to comply with the 
proposed rule. 
Comments on the proposal may be submitted to Mark A. Moseley, General Counsel, 
Texas Real Estate Commission, P. O. Box 12188, Austin, Texas 78711-2188. 
The amendment is proposed under Texas Civil Statutes, Article 6573b, sec.5, 
which authorize the Texas Real Estate Commission to make and enforce rules and 
regulations necessary to effectuate the intent and provisions of that act. 
The statute that is affected by this section is Texas Civil Statutes, Article 
6573b. 

sec.539.51. Employee Defined. 
For the purposes of Texas Civil Statutes, Article 6573b, sec.6(b), "employee" 
means any person other than a licensed real estate <nl>salesperson <ol> 
[salesman], real estate broker, mobile home dealer, or insurance agent 
authorized by a licensed service company to sell, offer to sell, arrange or 
solicit the sale of, or receive applications for residential service contracts 
subject to the following conditions. 
(1) The residential service company must have the right to direct and control 
the employee's performance. 
(2) The residential service company must accept responsibility for 
representations made by the employee within the scope of <nl>the employee's <ol> 
[his] employment. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 28, 1998.
TRD-9811954
Mark A. Moseley 
General Counsel
Texas Real Estate Commission
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 465-3900

PART XXIX. Texas Board of Professional Land Surveying
CHAPTER 661. General Rules of Procedures and Practices
SUBCHAPTER F. Firms Furnishing Surveying Crews
22 TAC sec.661.121
The Texas Board of Professional Land Surveying proposes an amendment to 
sec.661.121, concerning firms furnishings surveying crews. The amended section 
will establish a regulation regarding firms furnishing surveying parties. 
Sandy Smith, executive director, 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. 
Ms. Smith also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be the use of a Registered Professional Land Surveyor with 
construction layout parties, establishing boundaries, laying out infrastructure, 
locating natural features, man made works or other objects in relation to 
boundaries. There will be no effect on small businesses. There is no anticipated 
economic cost to persons who are required to comply with the section as 
proposed.
Comments on the proposal may be submitted to Sandy Smith, Texas Board of 
Professional Land Surveying, 7701 North Lamar, Suite 400, Austin, Texas 78752. 
The amendment is proposed under Texas Civil Statutes, Article 5282c, sec.9, 
which provides the Texas Board of Professional Land Surveying with the authority 
to make and enforce all reasonable and necessary rules, regulations and bylaws 
not inconsistent with the Texas Constitution, the laws of this state, and this 
Act. 
No other statute, article, or code is affected by this proposal. 

sec.661.121. Firms Furnishing <nl>Surveying Parties <ol> [Crews]. 
<nl>Any person or firm furnishing contract surveying filed parties or 
construction layout parties, establishing boundaries, laying out infrastructure, 
locating natural features, man made works or other objects in relation to 
boundaries must have a registered professional land surveyor as a full-time 
employee in that firm as reflected in a Certificate of Firm Name filed with the 
board<ol> [Any firm furnishing contract land surveying crews must have a 
registered professional land surveyor as a full-time employee in that firm as 
reflected in its certificate of firm name filed with the board].
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 August 3, 1998.
TRD-9812197
Sandy Smith
Executive Director
Texas Board of Professional Land Surveying
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 452-9427

TITLE 25. HEALTH SERVICES
PART I. Texas Department of Health
CHAPTER 29.Purchased Health Services
SUBCHAPTER L.General Administration
25 TAC sec.29.1125
Subject to the approval of the State Medicaid Director, the Texas Department of 
Health (department) submits a proposed amendment to sec.29.1125, concerning 
organ transplant facility approval and designation. This amendment clarifies the 
department's authority to approve and designate all types of organ transplant 
facilities. 
To be eligible for reimbursement for organ transplant services, a hospital must 
meet the requirements included in the Social Security Act, sec.1138 and be 
approved and designated by the department as an organ transplant facility. 
Joe Moritz, Health Care Financing Budget Director, has determined that for the 
first five-year period the section is in effect, there will be no fiscal 
implication to state or local government as a result of administering the 
section as proposed. 
Mr. Moritz has also 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 that the department's rule will reflect and clearly state 
the requirement that all hospitals must be approved and designated by the 
department in order to receive Medicaid reimbursement for any organ transplant. 
There will be no impact 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 submitted to Brenda Salisbery, Program 
Specialist, Health Care Financing, Texas Department of Health, 1100 West 49th 
Street, Austin, TX 78756-3168, (512) 338-6521. Comments will be accepted for 30 
days following the publication of this proposal in the Texas Register. 
This amendment is proposed under the Human Resources Code sec.32.021 and Texas 
Government Code sec.531, which provide the Health and Human Services Commission 
with the authority to adopt rules to administer the state's medical assistance 
program and is submitted by the department, under its agreement with the Health 
and Human Services Commission to operate the purchased health services program 
and as authorized under Chapter 15, sec.1.07, Acts of the 72nd Legislature, 
First Called Session (1991). 
The amendment affects Chapter 32 of the Human Resources Code, and Texas 
Government Code sec.531.

sec.29.1125.Organ Transplants.
(a)- (c) (No change.) 
(d) To be reimbursed for transplant services, a hospital must meet the 
requirements <nl>included<ol> [contained] in the Social Security Act, sec.1138 
<nl>and be approved and designated by the department as an organ transplant 
facility<ol>. [To be reimbursed for a heart or liver transplant, a hospital must 
also be approved by the department or its designee as a heart or liver 
transplant facility.] 
(e) (No change.) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on July 31, 1998.
TRD-9812069
Susan K. Steeg
General Counsel
Texas Department of Health
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 458-7236

PART II. Texas Department of Mental Health and Mental Retardation
CHAPTER 406.ICF/MR Programs
SUBCHAPTER C.Vendor Payments
25 TAC sec.406.101
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
an amendment to sec.406.101 of Chapter 406, ICF/MR Programs, Subchapter C, 
governing Vendor Payments. 
The proposed amendment would specify the time allowed for the electronic 
submission of claims for services provided by Intermediate Care Facilities for 
the Mentally Retarded (ICF/MR). The amendment was prompted by the development of 
a new electronic billing system for several human service programs that will be 
implemented on January 1, 1999. 
Don Green, chief financial officer, has determined that for each year of the 
first five-year period the proposal is in effect there will be no fiscal 
implications for state or local government as a result of enforcing or 
administering the proposed sections. 
Ernest McKenney, director, Medicaid Administration, has determined that for each 
year of the first five years the proposed section would be in effect the public 
benefit anticipated would be to require providers to file claims in a timely 
manner. For each year of the first five years the proposal would be in effect 
there would be no anticipated economic cost to persons who are required to 
comply with the proposed sections. There would be no effect on small business. 
A public hearing will be held at 1:30 p.m., on Tuesday, September 8, 1998, in 
the auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number, which is (512) 206-5330. 
Persons requiring any other accommodation should notify Sheila Wilkins, Office 
of Policy Development, at least 72 hours prior to the hearing by calling (512) 
206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication. 
The amendment is proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency.
The amended section affects Human Resources Code, Chapter 32, sec.32.021, and 
Government Code, Chapter 531, sec.531.021. 

sec.406.101. Vendor Payments.
(a)-(b) (No change.) 
(c) An Intermediate Care Facility for the Mentally Retarded (ICF/MR) is entitled 
to payment if the monthly claim or adjustment for services is received by the 
National Heritage Insurance Company (NHIC) within 180 days after the end of the 
service month. The exception is if the client's Medicaid eligibility is 
established for a period that exceeds the 180-day limitation due to a delay in 
Medicaid eligibility determination. All claims and adjustments for months prior 
to January 1, 1999, must be submitted by March 31, 1999. 
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 August 3, 1998.
TRD-9812217
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER E.Eligibility and Review
25 TAC sec.sec.406.201-406.214, 406.216, 406.217
(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 Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
the repeal of existing sec.sec.406.201-406.214, 406.216, and 406.217, of Chapter 
406, ICF/MR Programs, Subchapter E, governing Eligibility and Review. The repeal 
is proposed contemporaneously with proposed new sec.406.201-406.217 of Chapter 
406, ICF/MR Programs, Subchapter E, governing Eligibility and Review, in this 
issue of the Texas Register. 
The proposed repeal would accommodate the proposal of new sec.sec.406.201-
406.217 of Chapter 406, ICF/MR Programs, Subchapter E, governing Eligibility and 
Review, which is proposed contemporaneously in this issue of the Texas Register, 
which would afford a concise and relevant body of rules. 
Don Green, chief financial officer, has determined that for each of the first 
five years the proposed repeal is in effect there will be for FY 1999 a net 
fiscal impact of ($277,020), of which $0.00 is federal and ($277,020) is state; 
for FY 2000 a net fiscal impact of ($313,610), of which $0.00 is federal and 
($313,610) is state; for FY 2001 a net fiscal impact of ($313,610), of which 
$0.00 is federal and ($313,610) is state; for FY 2002 a net fiscal impact of 
($313,610), of which $0.00 is federal and ($313,610) is state; for FY 2003 a net 
fiscal impact of ($313,610), of which $0.00 is federal and ($313,610) is state. 
There is no anticipated local economic impact.
Ernest McKenney, director, Medicaid Administration, has determined that for each 
of the first five years the proposed repeal is in effect the public benefit 
anticipated would be the proposal of new sec.sec.406.201-406.217 of Chapter 406, 
ICF/MR Programs, Subchapter E, governing Eligibility and Review. Mr. McKenney 
has determined that for each of the first five years the repeal would be in 
effect there would be no anticipated economic cost to persons required to comply 
as a result of the repeal. There would be no effect on small business. 
A public hearing will be held at 1:30 p.m. on Tuesday, September 8, 1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number, which is (512) 206-5330. 
Persons requiring any other accommodation should notify Sheila Wilkins, Office 
of Policy Development, at least 72 hours prior to the hearing by calling (512) 
206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repealed sections are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. 
The sections affect Human Resources Code, Chapter 32, sec.32.021, and Government 
Code, Chapter 531, sec.531.021. 
sec.406.201. Purpose. 
sec.406.202. Definitions for Level-of-care and Level-of-need Criteria.
sec.406.203. Eligibility for Level-of-care Determination. 
sec.406.204. Level-of-care Determination and Level-of-need Assignment. 
sec.406.205. ICF/MR I Level-of-care Criteria.
sec.406.206. ICF/MR V Level-of-care Criteria.
sec.406.207. ICF/MR VI Level-of-care Criteria.
sec.406.208. ICF/MR/RC VIII Level-of-care Criteria.
sec.406.209. Retroactive Level-of-care Determination. 
sec.406.210. Reconsideration of Level-of-Care Determination and Effective Dates. 
sec.406.211. Payment for Absences from the Facility. 
sec.406.212. Discharge and Transfer. 
sec.406.213. Utilization Control. 
sec.406.214. Utilization Review. 
sec.406.216. Preadmission and Admission Process. 
sec.406.217. Continued-stay Review. 
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 August 3, 1998.
TRD-9812219
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

25 TAC sec.sec.406.201-406.217
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
new sec.sec.406.201-406.217 of Chapter 406, ICF/MR Programs, Subchapter E, 
governing Eligibility and Review. The new sections are proposed 
contemporaneously with the proposed repeal of existing sec.sec.406.201-406.217 
of Chapter 406, ICF/MR Programs, Subchapter E, governing Eligibility and Review, 
in this issue of the Texas Register.
The proposed new sections transfer responsibility for level-of-care 
determinations processes from the Texas Department of Human Services (TDHS) to 
TDMHMR, beginning January 1, 1999. Other new language clarifies the requirements 
surrounding individuals who have dangerous behaviors and limits the recoupment 
of payments to a provider to six months prior to the notification of recoupment 
of payment.
Don Green, chief financial officer, has determined that for each of the first 
five years the proposed new sections are in effect there will be: for FY 1999 a 
net fiscal impact of $62,357, of which $0.00 is federal and $62,357 are state; 
for FY 2000 a net fiscal impact of $76,510, of which $0.00 is federal and 
$76,510 are state; for FY 2001 a net fiscal impact of $76,510, of which $0.00 is 
federal and $76,510 are state; for FY 2002 a net fiscal impact of $76,510, of 
which $0.00 is federal and $76,510 are state; for FY 2003 a net fiscal impact of 
$76,510, of which $0.00 is federal and $76,510 are state. There is no 
anticipated local economic impact. 
Ernest McKenney, director, Medicaid Administration, has determined that for each 
of the first five years the proposed new sections are in effect the public 
benefit anticipated is the implementation of a new electronic claims management 
system; the determinations of level of care being made more expediently; and the 
clarification of rule language regarding the correct level of need for 
individuals with dangerous behaviors. For each of the first five years the new 
sections are in effect there is no anticipated economic cost to persons required 
to comply as a result of the proposed new sections. For each of the first five 
years the proposed rule is in effect there will be no effect on small business. 
A public hearing will be held at 1:30 p.m. on Tuesday, September 8, 1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal Persons requiring an interpreter for the deaf 
or hearing impaired or other accommodation should Sheila Wilkins, Office of 
Policy Development, at (512) 206-5330, or should call the TDY phone number of 
Texas Relay, which is 1-800-735-2988, within 72 hours prior to the public 
hearing. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The new sections are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. The sections 
affect Human Resources Code, Chapter 32, sec.32.021, and Government Code, 
Chapter 531, sec.531.021. 

sec.406.201.Purpose. 
The rules in this subchapter state the requirements for a determination of a 
level-of-care and an assignment of a level-of-need in the Intermediate Care 
Facility for Mentally Retarded (ICF/MR) Program. These criteria are used in 
determining both a level-of-care and a level-of-need for individuals who apply 
for admission to the ICF/MR Program and in the redetermining of a level-of-care 
and level-of-need during the continued-stay review. 

sec.406.202.Definitions for Level-of-care and Level-of-need Criteria. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise: 
(1) Active treatment - Continuous aggressive, consistent implementation of a 
program of habilitation, specialized and generic training, treatment, health 
services, and related services. The program must be directed toward: 
(A) the acquisition or maintenance of the behaviors necessary for the individual 
to function with as much self-determination and independence as possible, and 
(B) the prevention or deceleration of regression or loss of current optimal 
functional status. Active treatment does not include services to maintain 
generally independent individuals who are able to function with little 
supervision or in the absence of a continuous active treatment program. 
(2) Adaptive behavior level (ABL) - The effectiveness or degree to which the 
individual meets the standards of personal independence and social 
responsibility expected of the person's age and cultural group as assessed by a 
standardized assessment instrument. 
(3) Cerebral palsy - A group of disabling conditions that results from 
nonprogressive damage to the central nervous system which usually occurs before, 
during, or shortly after birth. The disability is characterized by an inability 
to fully control motor functions. 
(4) Epilepsy - A paroxysmal transient disturbance of brain function that may be 
manifested as episodic impairment or loss of consciousness, abnormal motor 
phenomena, psychic or sensory disturbances, and perturbation of the autonomic 
nervous system. Symptoms are the result of paroxysmal disturbance of the 
electrical activity of the brain. 
(5) Inventory for Client and Agency Planning (ICAP) service level - A 
designation which identifies the level of services needed by an individual as 
determined by the ICAP assessment instrument. 
(6) Interdisciplinary team (IDT) - Those individuals (professionals, 
paraprofessionals and non-professionals) who possess the knowledge, skills and 
expertise necessary to accurately identify the comprehensive array of an 
individual's needs and design a program which is responsive to those needs. 
(7) Level of care (LOC) - A determination given to an individual based on data 
submitted on the MR/RC Assessment. 
(8) Level of need (LON) - The assignment given to an individual based on the 
ICAP service level and selected items on the MR/RC Assessment form which 
determines the rate of reimbursement for that individual. 
(9) MR/RC Assessment - A form utilized by TDMHMR for eligibility determination 
and LON assignment. 
(10) Medical care plan - A plan developed by a physician, in cooperation with 
licensed nursing personnel, for an individual who requires 24-hour supervision 
by licensed nurses. 
(11) Mental retardation (MR) - Significantly subaverage general intellectual 
functioning existing concurrently with deficits in adaptive behavior and 
originating during the developmental period. 
(12) Related condition (RC)- A severe, chronic disability that: 
(A) is attributed to: 
(i) cerebral palsy or epilepsy; or 
(ii) any other condition, other than mental illness, found to be closely related 
to mental retardation because the condition results in impairment of general 
intellectual functioning or adaptive behavior similar to that of persons with 
mental retardation, and requires treatment or services similar to those required 
for mentally retarded persons; 
(B) is manifested before the person reaches age 22; 
(C) is likely to continue indefinitely; and 
(D) results in substantial functional limitations in at least three of the 
following areas of major life activity; 
(i) self-care; 
(ii) understanding and use of language; 
(iii) learning; 
(iv) mobility; 
(v) self-direction; 
(vi) capacity for independent living. 
(13) TDHS - The Texas Department of Human Services. 
(14) TDMHMR - The Texas Department of Mental Health and Mental Retardation. 
(15) Qualified mental retardation professional (QMRP) - A person who meets the 
criteria set forth in 42 CFR sec.483.430(a).

sec.406.203.Eligibility Criteria.
To be eligible for the ICF/MR Program an individual must: 
(1) be an individual with: 
(A) mental retardation and an IQ of 69 or below as measured by a standardized 
psychometric instrument; or 
(B) a related condition diagnosed through formal testing and evaluation and 
meeting all five conditions listed in the "MR/RC Assessment, Instructions, 
Related Conditions Eligibility Screening Instrument". Assessments of IQ are not 
required. 
Figure: 25 TAC sec.406.203(1)(B)
(2) be in need of and able to benefit from the active treatment provided in the 
24-hour supervised residential setting of an ICF/MR facility as evidenced by 
information submitted for a level-of-care determination by TDMHMR; and 
(3) meet the Title XIX Medicaid financial eligibility criteria and the level-of-
care determination criteria. The level-of-care determination is made 
independently of the financial need determination.

sec.406.204.LOC Determination and LON Assignment. 
(a) TDHS responsibilities. LOC determinations and LON assignments will be 
performed by TDHS through December 31, 1998. Effective January 1, 1999, LOC 
determinations and LON assignments will be performed by TDMHMR.
(b) TDMHMR responsibilities. Effective January 1, 1999, ICF/MR providers must 
electronically submit to TDMHMR information from the MR/RC Assessment form that 
substantiates a LOC determination or LON assignment. 
(c) LOC determination. The LOC determination is based on the LOC criteria in 
sec.406.205 of this title (relating to ICF/MR I LOC Criteria), sec.406.206 of 
this title (relating to ICF/MR V LOC Criteria), sec.406.207 of this title 
(relating to ICF/MR VI LOC Criteria), and sec.406.208 of this title (relating to 
ICF/MR/RC VIII LOC Criteria). 
(1) The ICF/MR provider must: 
(A) submit a MR/RC Assessment which includes current data obtained from 
standardized evaluations and formal assessments which measure physical, 
emotional, social, and cognitive factors for review in making a LOC 
determination; and 
(B) retain a copy of the MR/RC Assessment signed by a physician in each 
individual's record. 
(2) The ICF/MR Program has four levels of care: ICF/MR I, ICF/MR V, ICF/MR VI, 
and ICF-MR/RC VIII. LOC I, V, and VI determinations are based on the 
individual's intellectual functioning. LOC VIII determinations are based on the 
following variables regarding the developmental needs of each individual: 
(A) adaptive behavior; and 
(B) health status. 
(3) A single, specific deficit or developmental need does not necessarily 
indicate a need for active treatment. 
(4) If an IQ score cannot be obtained for a person with severe or profound 
deficits in intellectual functioning, a social composite score obtained on the 
Vineland Adaptive Behavior Scale or other professionally accepted scale must be 
submitted. Documentation must be available that an assessment of intelligence 
with a standardized instrument was attempted. 
(5) An individual is not eligible for the ICF/MR Program if the individual: 
(A) has been medically diagnosed as having "brain death," which includes no 
evidence of sensory receptivity or sensory responsiveness on a permanent basis; 
or 
(B) does not respond in any way to his environment, but needs continuous care 
for medical reasons. 
(6) If subsequent to the LOC determination it is discovered that information 
submitted for a LOC was not correct or has changed, the LOC will be reevaluated. 
(7) If an individual's IQ or adaptive behavior level is such that he is eligible 
for the ICF/MR Program but does not meet the criteria for any one LOC, a special 
review of his application for a LOC will be conducted. 
(8) Based on I.Q or adaptive behavior level, an individual may meet the criteria 
for two levels of care. In this situation, the LOC that best meets the 
individual's developmental needs will be requested. 
(d) LON assignment. The LON assignment is based on the LON criteria in this 
section. 
(1) ICF/MR providers must submit the ICAP service level and selected items on 
the MR/RC Assessment for review in making a LON assignment. 
(2) The ICF/MR Program has five levels of need: Intermittent (LON 1); Limited 
(LON 5); Extensive (LON 8); Pervasive (LON 6); and Pervasive Plus (LON 9). 
(A) Unless modified in accordance with subparagraph (C) or (D) of this 
paragraph, LONs 1, 5, 8, and 6 are assigned in accordance with an individual's 
ICAP service level as follows: 
(i) LON 1 is assigned if the individual's ICAP service level equals 7, 8, or 9; 
(ii) LON 5 is assigned if the individual's ICAP service level equals 4, 5, or 6; 
(iii) LON 8 is assigned if the individual's ICAP service level equals 2 or 3; 
(iv) LON 6 is assigned if the individual's ICAP service level equals 1. 
(B) Regardless of an individual's ICAP service level score, LON 9 is assigned if 
the individual exhibits extremely dangerous behavior and the individual's MR/RC 
Assessment is scored with a 2 in the "Behavior" section of the form. Extremely 
dangerous behavior: 
(i) is life threatening to the individual or others or could cause catastrophic 
emotional harm to others; 
(ii) requires a written behavior plan which is based on on-going written data 
and targets the extremely dangerous behavior; and 
(iii) requires that to manage behavior the individual be supervised by a staff 
member assigned exclusively to the individual for the entire time the individual 
is awake. The staff member must have no other duties while assigned to the 
supervision of this individual. 
(C) LON assignments 1, 5, and 8 made in accordance with subparagraph (A) of this 
paragraph may be modified if an individual has dangerous behavior and the 
individual's MR/RC Assessment is scored with a 1 in the "Behavior" section of 
the form. A modification made in accordance with this subparagraph changes the 
initial LON assignment to the next level (i.e., LON 1 to LON 5; LON 5 to LON 8; 
and LON 8 to LON 6). Dangerous behavior: 
(i) is that which could cause serious physical injury to the individual or 
others; 
(ii) requires a written behavior plan which is based on on-going written data 
and targets the dangerous behavior; and 
(iii) requires intensive staff intervention and extraordinary staff resources to 
manage the dangerous behavior when it occurs. 
(D) LONs 1, 5, and 8 made in accordance with subparagraph (A) of this paragraph 
may be modified if an individual has extraordinary medical needs which are 
documented in writing by the IDT and the individual's MR/RC Assessment is scored 
with a 6 in the "Nursing" section of the form. Extraordinary medical needs 
require direct nursing services in excess of 180 minutes per week. The provision 
of nursing services must be documented by a nurse in the individual's medical 
record including the amount of time spent for treatment.
(3) If the provider determines the information submitted for a LON was not 
correct or changed, the provider must submit a corrected MR/RC Assessment. 
(e) The provider must submit the MR/RC Assessment within 20 working days of the 
individual's admission to the ICF/MR. 

sec.406.205.ICF/MR I LOC Criteria. 
The individual eligible for the ICF/MR I Program must have the potential to 
participate in a training program that will prepare him or her for eventual 
placement in a less structured living setting. The individual requires services 
to assist him or her to function with as much self-determination and 
independence as possible. These services may include training and assistance in 
maintaining the home, managing money, using community resources, acquiring 
independence, and improving skills and/or behaviors related to self-care, 
socialization, cognitive development, sensory-motor functions, communications, 
and work (when appropriate to the individual's age).
(1) Intellectual functioning. The individual functions in the mild to moderate 
range of mental retardation as evidenced by a full scale IQ score within the 
range of 35 to 69 obtained by formal assessment. If the individual has been 
diagnosed as having a related condition the individual must have a full scale IQ 
score within the range of 35 to 75 obtained by formal assessment. If the 
individual has a sensory or motor handicap for which a specialty standardized 
intelligence test or a certain portion of a standardized intelligence test is 
appropriate, then that score must be reported as the IQ score for compliance 
with this criterion. 
(2) Adaptive behavior level. The individual exhibits mild to moderate deficits 
in adaptive behavior with an adaptive behavior level of I or II noted on the LOC 
assessment form. 
(3) Health status. The individual's health status does not interfere with 
participation in the active treatment program. 

sec.406.206. ICF/MR V LOC Criteria.
The individual eligible for the ICF/MR V Program may need assistance and 
supervision in the refinement of self-help skills. The individual may require 
training in socialization skills, work skills and behaviors (if appropriate to 
the individual's age), motor skills, care of belongings and home, and group 
recreation skills. The individual may require daily supervision and management 
to ensure completion of scheduled activities and compliance with staff requests. 
The individual may have maladaptive behaviors that require programmatic 
intervention. The individual may also have health care needs requiring daily 
supervision by licensed nursing personnel.
(1) Intellectual functioning. The individual functions in the mild to severe 
range of mental retardation as evidenced by an IQ score within the range of 20 
to 69 obtained by formal assessment. If the individual has been diagnosed as 
having a related condition, the individual must have a full scale IQ score 
within the range of 20 to 75 obtained by formal assessment. If the individual 
has a sensory or motor handicap for which a specialty standardized intelligence 
test or a certain portion of a standardized intelligence test is appropriate, 
then that score must be reported as the IQ score for compliance with this 
criterion. 
(2) Adaptive behavior level. The individual exhibits moderate to severe deficits 
in adaptive behavior with an adaptive behavior level of II or III noted on the 
LOC assessment form. 
(3) Health status. The individual's health status does not interfere with 
participation in the active treatment program. The individual may have health 
care needs requiring daily supervision by licensed nursing personnel.

sec.406.207. ICF/MR VI LOC Criteria.
The individual eligible for the ICF/MR VI Program requires extensive supervision 
and assistance in the completion of self-help activities. The individual 
requires a highly structured environment with ongoing supervision. The 
individual may also have medical needs requiring close supervision and nursing 
intervention. Training is necessary in basic self-help skills, work skills, care 
of belongings and home, sensory-motor development, compliance with daily 
routines and group activities, and socially appropriate behaviors. Maladaptive 
behaviors often are present and require active programmatic intervention.
(1) Intellectual functioning. The individual functions in the severe to profound 
range of mental retardation as evidenced by a full scale IQ score of 39 or below 
obtained by formal assessment. If the individual has a sensory or motor handicap 
where a specialty standardized intelligence test or a certain portion of a 
standardized intelligence test is appropriate, then that score must be reported 
as the IQ score for compliance with this criterion. If an IQ score cannot be 
obtained for a severely or profoundly retarded individual, a social composite 
score obtained on the Vineland Adaptive Behavior Scale or other professionally 
accepted scale must be submitted. Documentation must be available that an 
assessment of intelligence with a standardized intelligence test was attempted. 
(2) Adaptive behavior level. The individual exhibits extreme deficits in 
adaptive behavior with an adaptive behavior level of III or IV noted on the LOC 
assessment form.
(3) Health status. The individual's health status does not interfere with 
participation in the active treatment program. The individual may require close 
daily supervision and nursing intervention. The individual, however, must be 
able to participate in active treatment outside the bedroom area during waking 
hours. 

sec.406.208. ICF/MR/RC VIII LOC Criteria.
(a) The individual eligible for the ICF/MR/RC VIII program does not have mental 
retardation, but does have a related condition, and: 
(1) requires services to assist him or her to function with as much self-
determination and independence as possible. These services may include training 
and assistance in maintaining the home, managing money, using community 
resources, acquiring independence, and improving skills and/or behaviors related 
to self-care, socialization, cognitive development, sensory-motor functions, 
communications, and work (when appropriate to the individual's age); 
(2) requires habilitative or medical interventions to prevent or decelerate loss 
of current functional status. These interventions may include physical, 
occupational, rehabilitative, and speech therapy services;
(3) may need augmentative communication devices and corrective, orthodontic, 
prosthetic, and support devices to improve his or her functional status; and 
(4) may have medical, dental, or nursing needs that require close supervision, 
or maladaptive behaviors that require programmatic intervention. 
(b) Except as specified in sec.406.204(c)(7) of this title (relating to LOC 
Determination and LON Assignment), individuals must meet all the following 
criteria to qualify for the ICF/MR/RC VIII LOC: 
(1) Related condition. The individual has a related condition. An IQ score is 
not required to qualify for this LOC. 
(2) Primary diagnosis of a related condition. The determination that the 
individual has a related condition is evidenced by an appropriate primary 
diagnosis on the LOC assessment form. The primary diagnosis must be one of a 
group of TDMHMR approved diagnoses listed in "ICD-9-CM Diagnostic Codes for 
Persons with Related Conditions"
Figure: 25 TAC sec.406.208(b)(2). 
(3) Adaptive behavior level. The individual exhibits moderate to extreme 
deficits in adaptive behavior as evidenced by an adaptive behavior level of II, 
III, or IV noted on the LOC assessment form. 
(4) Health status. The individual's health status does not prevent participation 
in the active treatment program. Although the individual may require close daily 
supervision and nursing intervention, he or she must be medically able to 
participate in active treatment outside the bedroom area during waking hours.

sec.406.209. Retroactive LOC Determination.
Private-pay individuals living in Medicaid-certified ICF/MR facilities who do 
not receive SSI cash benefits may be eligible for "three-months prior" vendor 
payments. To ensure that vendor payments begin on the date that an individual's 
financial resources are exhausted, the potential recipient must have a valid LOC 
and the ICF/MR provider should maintain his or her records in compliance with 
the Medicaid Utilization Review (UR) requirements. To be in compliance with UR 
requirements, potential recipients' records must be maintained and reviewed as 
follows.
(1) Facility staff must conduct an IDT evaluation before the potential 
recipient's admission to the Medicaid program. The IDT, which consists of 
health-care professionals and includes a QMRP, must make a comprehensive 
medical, social, and psychological evaluation of the potential recipient's need 
for ICF/MR services. If the evaluation indicates the potential recipient's needs 
could be met by alternative services, facility staff must document this fact in 
the potential recipient 's record and must document attempts to locate the 
services. The provider must comply with 42 CFR sec.456.370 and sec.456.371. 
(2) The potential recipient must have a current individual program plan. The 
physician's certification of need for ICF/MR services must be dated no more than 
30 days before the date that the facility administrator learned about the 
potential recipient 's application for Medicaid assistance, or before 
authorization for vendor payment.

sec.406.210. Reconsideration of LOC Determination and Effective Dates.
When a facility provides care for an individual for a period of time not covered 
by a LOC determination, TDMHMR or its agent will reconsider the LOC effective 
dates if requested. 
(1) Individuals eligible for reconsideration of LOC effective dates must have 
the following, prior to the submission of a request for reconsideration: 
(A) financial eligibility established; 
(B) admission to the Medicaid ICF/MR Vendor Payment System on Client Movement 
form; and 
(C) a current LOC determination using the MR/RC Assessment. 
(2) Requests for reconsideration are limited to days that are not covered by a 
valid LOC determination. 
(3) Requests for reconsideration for periods of time already denied a LOC 
determination by TDHS's appeal process are not accepted. 
(4) The provider must submit a request within 12 months from the date services 
were provided without a valid LOC. 
(5) TDMHMR or its agent shall notify the provider of the results of the 
reconsideration within 45 days. The provider may initiate an appeal, when 
reconsideration is denied, by submitting a request in writing in accordance with 
Chapter 409, Subchapter B of this title (relating to Adverse Actions). 
(6) The provider may neither charge nor take any other recourse against Medicaid 
recipients, their family members, or their representatives for any claim denied 
or reduced because of the facility's failure to comply with any rule, 
regulation, or procedure pertaining to reimbursement.

sec.406.211. Payment for Absences from the Facility.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Day - A 24-hour period extending from midnight to midnight. For counting 
days of absence from a facility, the first day is the first 24-hour period 
beginning at midnight after the individual's departure. 
(2) Extended therapeutic leave - An individual's absence from a facility for 
therapeutic purposes for a period of time greater than three days in duration. 
Leave(s) must not exceed ten cumulative days annually. Combinations of leave 
duration are allowable (e.g., leave combinations of 5 days and 5 days; 6 days 
and 4 days; or 10 consecutive days). One extended therapeutic leave may be 
combined with one therapeutic leave (3 days) per calendar year. 
(3) Legally authorized representative - A legally authorized representative 
means: 
(A) a parent or legal guardian if the individual is a minor, or a legal guardian 
if the client has been adjudicated incompetent to manage the individual's 
personal affairs; 
(B) an agent of the individual authorized under a durable power of attorney for 
health care; 
(C) an attorney ad litem appointed for the individual; or 
(D) a parent, spouse, adult child, or personal representative if the individual 
is deceased. 
(4) Therapeutic leave - An individual's absence from a facility for therapeutic 
purposes for not more than three consecutive days. The number of therapeutic 
leaves an individual may utilize is unlimited.
(5) Special leave - An individual's absence from a facility for a special 
activity (e.g., Special Olympics, camping). 
(6) Absence - A period of time which an individual is not present in the 
residing facility. 
(b) Leave. For all types of leave, all the following must be met: 
(1) Facility staff must be available, by telephone or at the facility, to 
individuals during their absence, even if all residents of the facility are 
absent from the facility. 
(2) The individual must stay in the facility overnight before being eligible to 
take another therapeutic or extended therapeutic leave. 
(3) Records must be available when TDMHMR or its authorized agent audits the 
provider to ensure the provider's documentation of all types of leave and 
verifies the provider's compliance with the provisions of this section. 
(c) Payment criteria. Payment criteria for the types of leave are: 
(1) Therapeutic and extended therapeutic leave. A provider may receive payment 
from TDMHMR or its authorized agent for days during which an individual is on 
therapeutic or extended therapeutic leave if the following criteria are met: 
(A) the individual's individual program plan (IPP) provides for therapeutic 
and/or extended therapeutic leave; and 
(B) the following information is documented on a "Record of Therapeutic Leaves": 
(i) the name of the individual taking the leave; 
(ii) authorization for the leave by the individual's QMRP, subject to approval 
by the physician; 
(iii) the date and time of the individual's departure from the facility; and 
(iv) the date and time of the individual's return to the facility. 
(2) Extended therapeutic leave. For extended therapeutic leave, the individual, 
or a member of the individual's family or legally authorized representative, 
must set forth in writing specific dates for the individual's extended 
therapeutic leave. 
(A) When an extended therapeutic leave begins in one calendar year and extends 
into the next, it constitutes an extended therapeutic leave for the calendar 
year in which it began. 
(B) If an individual transfers into another facility within the same year he or 
she has taken all ten days of his or her extended therapeutic leave, then the 
individual is not eligible for another extended therapeutic leave until the 
following year. 
(3) Special leave. A provider receives payment from TDMHMR or its authorized 
agent for days during which an individual is on special leave if the following 
criteria are met: 
(A) the need to attend the special activities is documented in the individual's 
IPP; 
(B) sufficient staff are present at the special activity to meet the 
requirements for direct care staff set forth in 42 CFR sec.483.430(d); 
(C) the provider continues to incur the usual costs for caring for the 
individual including, but not limited to, the cost of meals, lodging, and staff; 
and 
(D) the provider continues to provide the individual the active treatment 
program specified in the individual's IPP. 
(4) Unauthorized leave. A provider may not receive payment from TDMHMR or its 
authorized agent for days an individual is absent from the facility and: 
(A) the individual is receiving inpatient hospitalization; 
(B) the individual has made an unauthorized departure from the facility; or 
(C) payment during the individual's absence is not authorized as a therapeutic, 
extended therapeutic, or special leave. 
(d) Bed hold charge procedures. If an individual is absent from a facility for 
purposes other than therapeutic, extended therapeutic, or special leave, the 
provider must discharge the individual by submitting a Client Movement Form. 
Additionally, the provider may choose to offer the individual a bed hold charge 
option. A provider may charge an individual or an individual's legal 
representative a bed hold charge during an individual's absence, if the 
following criteria are met: 
(1) the provider does not receive payment from TDMHMR or its authorized agent 
for days the facility charges to hold a bed for a resident; 
(2) a written agreement, signed and dated by the facility's administrator, QMRP, 
or designee and the individual or the individual's legal representative, is 
executed for each absence; 
(3) the provider does not charge an amount which exceeds TDMHMR's rate of 
reimbursement for the individual's LON at the time of the individual's departure 
from the facility; 
(4) the provider documents amounts charged to hold a bed in an individual's 
financial record at the time the bed is held; and 
(5) the provider complies with sec.406.253 of this title (relating to Protection 
of Funds) when it collects a bed hold charge from an individual's trust fund 
account. 

sec.406.212. Discharge.
(a) If an individual is discharged from a facility, the administrator of the 
facility must complete a Client Movement Form to document the discharge. Within 
72 hours of the discharge, the provider must submit the Client Movement Form to 
TDMHMR or its authorized agent and to the appropriate TDHS Medicaid eligibility 
worker. The provider must include the individual's post discharge address, if 
known, on the Client Movement Form. 
(b) If an individual is discharged to another facility, the admitting facility 
must initiate a LOC assessment if: 
(1) more than 30 days have elapsed since the discharge; 
(2) the individual's current LOC has expired; or 
(3) the admitting facility's LOC is different from the individual's current LOC. 
(c) If an individual is discharged from and subsequently readmitted to a 
facility, the facility must initiate a LOC assessment if: 
(1) more than 30 days have elapsed between the discharge and readmission; or 
(2) the individual's current LOC assignment has expired. 

sec.406.213. Utilization Control.
Utilization control (UC) includes patterns of care and services provided by an 
ICF/MR, including the provision of active treatment. Reviewers consider 
necessity, appropriateness, and availability of the provider's services. UC 
consists of: 
(1) inspection of services provided by the provider; 
(2) a physician's certification or recertification of an individual's need for 
ICF/MR; and 
(3) utilization review (UR) consisting of admission and continued-stay review of 
the individual's eligibility for ICF/MR services.

sec.406.214. Utilization Review. 
(a) Utilization Review (UR) plans and procedures must comply with 42 CFR 
sec.456.401. The Texas State Plan for Title XIX requires a UR process for ICF/MR 
providers participating in the Texas Medical Assistance Program. 
(b) TDMHMR performs the UR functions for the providers. 
(c) TDMHMR is responsible for developing and maintaining LOC and LON criteria to 
evaluate the necessity for each individual's continued stay. These LOC and LON 
criteria are specified in sec.406.204 of this title (relating to LOC 
Determination and LON Assignment), sec.406.205 of this title (relating to ICF/MR 
I LOC Criteria), sec.406.206 of this title (relating to ICF/MR V LOC Criteria), 
sec.406.207 of this title (relating to ICF/MR VI LOC Criteria), and sec.406.208 
of this title (relating to ICF/MR/RC VIII LOC Criteria). 
(d) UR plan objectives are to: 
(1) promote quality care and training that meets individuals' needs; 
(2) determine whether needed services are available and are provided on a 
continuing basis; 
(3) determine that individuals are classified in the correct payment category; 
(4) ensure that the services provided are necessary; and 
(5) review the individual program plans. 
(e) The provider may request a reconsideration of the LON assignment made by 
TDMHMR or its designee by completing the Reconsideration Notice and sending it 
to the Utilization Review Section of Medicaid Administration at TDMHMR by 
certified mail within 10 days of the date notification of the LON assignment. 
The provider must include with the request additional clinical and supporting 
documentation. The Utilization Review Department will review all 
reconsiderations and notify the provider in writing within 15 working days of 
the receipt of the request. 
(f) The utilization review section of the TDMHMR office of Medicaid 
Administration, or its designee, will conduct periodic retrospective reviews. 
Based on such reviews, TDMHMR may recoup or deny payments to a provider. 
Recoupment will be limited to no more than six months prior to the date of 
notification of denial. 

sec.406.215. Individuals' Right to Fair Hearing. 
An individual whose request for eligibility for the ICF/MR Program is denied for 
any reason, including denial of a LOC determination, or is not acted upon with 
reasonable promptness, or whose ICF/MR services have been terminated, suspended, 
or reduced by TDMHMR, is entitled to a fair hearing, conducted by TDHS, in 
accordance with 40 TAC sec.79.1101 et seq., except that a request for a fair 
hearing must be submitted to the TDMHMR Office of Medicaid Administration and 
received within 90 days from the date the individual receives the notice of 
denial of eligibility for the ICF/MR Program or notice of termination, 
suspension, or reduction of ICF/MR services. 

sec.406.216. Admission Process.
The provider may not admit new residents while the provider's payments are on 
vendor hold. 

sec.406.217. Service Authorizations.
Beginning October 1, 1998, providers participating in the pilot for 
implementation of the electronic billing system will submit MR/RC Assessments 
both electronically and on paper. Effective November 1, 1998, the pilot 
participants will submit MR/RC Assessments electronically only. Effective 
January 1, 1999, all ICF/MR providers will submit MR/RC Assessments 
electronically only. A paper copy with the physician's signature must be 
maintained at the facility.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812218
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER G.Additional Facility Responsibilities
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
the repeal of sec.406.307, amendments to sec.406.308, and new sec.406.311 of 
Chapter 406, ICF/MR Programs, Subchapter G, governing Additional Facility 
Responsibilities. 
The proposed repeal of sec.406.307 would eliminate TDMHMR's requirements 
regarding medical transportation, because such a rule is appropriately the 
responsibility of the Texas Department of Health. The proposed amendments to 
sec.406.308 would require ICF/MR facility staff to release copies of documents 
as requested by state agencies identified in the rule. The proposed new 
sec.406.311 would require ICF/MR providers to ensure the proper fit of durable 
medical equipment, provide instruction regarding the appropriate use of the 
equipment, and maintain a record of compliance with the requirements in the 
child's record at the facility. 
Don Green, chief financial officer, has determined that for each year of the 
first five-year period the proposed rule sections would be in effect there would 
be no fiscal implications for state or local government as a result of enforcing 
or administering them. 
Ernest McKenney, director, Medicaid Administration, has determined that for each 
year of the first five years the proposed sections are in effect the public 
benefit anticipated would be the elimination of duplicative requirements 
regarding medical transportation, the availability of necessary records to 
ensure the continuity of services, and the proper fit, use, and subsequent 
record of compliance of requirements for durable medical equipment for children 
residing in ICFs/MR. For each year of the first five years the proposal is in 
effect there would be no anticipated economic cost to persons who are required 
to comply with the proposed sections. There would be no effect on small 
business. A public hearing will be held at 1:30 p.m. on Tuesday; September 8, 
1998, in the auditorium of the main TDMHMR Central Office building (Building 2) 
at TDMHMR Central Office, 909 West 45th Street, Austin, Texas, to accept oral 
and written testimony concerning the proposal. Persons requiring an interpreter 
for the deaf or hearing impaired should contact the Central Office operator at 
least 72 hours prior to the hearing by calling the TDD phone number which is 
(512) 206-5330. Persons requiring any other accommodation should notify Sheila 
Wilkins, Office of Policy Development, at least 72 hours prior to the hearing by 
calling (512) 206-4516.
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication.

25 TAC sec.406.307
(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 Mental 
Health and Mental Retardation or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The repeal is proposed under the Texas Health and Safety Code, sec.532.015(a), 
which provides TDMHMR with broad rulemaking authority, sec.32.021 of Human 
Resource Code, and Government Code, Chapter 531, sec.531.021, which provide the 
Texas Health and Human Services Commission (THHSC) with the authority to 
administer federal medical assistance funds and administer the state's medical 
assistance program. Senate Bill 509 of the 74th Texas Legislature clarifies 
THHSC's authority to delegate the operation of all or part of a Medicaid program 
to a health and human service agency. 
The repealed section affect Human Resources Code, Chapter 32, sec.32.021, and 
Government Code, Chapter 531, sec.531.021. 
sec.406.307.Medical Transportation. 
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 August 3, 1998.
TRD-9812221
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

25 TAC sec.406.308
The amended section is proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. 
The amended section affects Human Resources Code, Chapter 32, sec.32.021 and 
Government Code, Chapter 531, sec.531.021.

sec.406.308. Record Retention and Other Related Record Requirements. 
(a) The facility must promptly make records and supporting documents available 
for review <nl>and release copies of the documents to <ol> [by] the following 
agencies at any time without prior notification or consent: 
(1) the United States Department of Health and Human Services; 
(2) the Texas Department of Health; 
(3) the Texas Department of Mental Health and Mental Retardation; 
(4) the Texas attorney general's Medicaid Fraud Control Unit; 
(5) the Texas Department of Human Services; and 
(6) the Comptroller General of the United States. 
(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 August 3, 1998.
TRD-9812222
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

25 TAC sec.406.311
The new section is proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program, and Human Resources Code, 
Chapter 32, sec.32.024(u), which requires this rule Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. 
The new section affects Human Resources Code, Chapter 32, sec.32.021 and 
Government Code, Chapter 531, sec.531.021.

sec.406.311. Children's Durable Medical Equipment. 
In accordance with sec.32.024 of the Human Resources Code, an ICF/MR provider 
who arranges for durable medical equipment for a child residing in the facility 
must: 
(1) ensure that the child receives the equipment prescribed, the equipment fits 
properly, if applicable, and the child or the child's parent or guardian, as 
appropriate considering the age of the child, receives instruction regarding the 
equipment's use; and 
(2) maintain a record of compliance with the requirements of (1) in the child's 
record. 
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 August 3, 1998.
TRD-9812220
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

CHAPTER 409.Medicaid Programs
SUBCHAPTER F.Case Management Program Requirements
25 TAC sec.sec.409.201-409.207
(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 Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.409.201-409.207 of Chapter 409, Subchapter F, 
governing Case Management Program Requirements. 
The repeal is part of a comprehensive reorganization of chapters and subchapters 
within the department's portion of the Texas Administrative Code in conjunction 
with the sunset review required by the current Appropriations Act, Article IX, 
Section 167. The key subject matter of these sections and related sections in 
Chapter 409, Subchapter G, Case Management for Persons with Severe and 
Persistent Mental Illness are addressed in new Chapter 412, Subchapter J, 
Service Coordination. The repeal of Chapter 409, Subchapter F, and proposed new 
Chapter 412, Subchapter J, are published contemporaneously for public comment in 
this issue of the Texas Register.
Don C. Green, chief financial officer, has determined that the fiscal impact to 
state government for fiscal year 1999 will be ($15,550,668) of which 
($9,678,007) is federal and ($5,872,661) is state. For fiscal year 2000, the 
total impact will be ($15,888,144) of which ($9,869,662) is federal and 
($6,018,522) is state. For fiscal year 2001, the total impact will be 
($16,285,389) of which ($10,111,598) is federal and ($6,173,791) is state. For 
fiscal year 2002, the total impact will be ($16,692,524) of which ($10,364,388) 
is federal and ($6,328,136) is state. For fiscal year 2003, the total impact 
will be ($17,121,057) of which ($10,630,464) is federal and ($6,490,593) is 
state. For fiscal year 2004, the total impact is ($17,577,715) of which 
($10,914,003) is federal and ($6,663,712) is state. There will be no fiscal 
impact on local government.
Ernest McKenney, director, Medicaid Administration, has determined that the 
public benefit anticipated would be the efficient and effective execution of the 
department's oversight of Medicaid programs, and the existence of a concise and 
relevant body of rules. There is no anticipated economic cost to persons as a 
result of the proposed repeal. There will be no effect on small business because 
they do not participate in the case management program. A public hearing will be 
held at 10:00 a.m. on Tuesday, September 8, 1998, in the auditorium of the main 
TDMHMR Central Office building (Building 2) at TDMHMR Central Office, 909 West 
45th Street, Austin, Texas, to accept oral and written testimony concerning the 
proposal. Persons requiring an interpreter for the deaf or hearing impaired or 
other accommodation should contact Sheila Wilkins, Office of Policy Development, 
at (512) 206-4516, or should call the TDY phone number of Texas Relay, which is 
1-800-735-2988, within 72 hours prior to the public hearing. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication of this notice. 
The repeal is proposed under the Texas Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; Human Resources Code, Chapter 32, sec.32.021 and 
Government Code, Chapter 531, sec.531.021, which provide the Texas Health and 
Human Services Commission (THHSC) with the authority to administer federal 
medical assistance funds and administer the state's medical assistance program. 
Senate Bill 509 of the 74th Texas Legislature clarifies THHSC's authority to 
delegate the operation of all or part of a Medicaid program to a health and 
human service agency. 
The section affects the Human Resources Code, Chapter 32, and the Government 
Code, Chapter 531, sec.531.021.
sec.409.201. Definitions. 
sec.409.202. Eligible Individuals. 
sec.409.203. Case Management Services.
sec.409.204. Service Limitations. 
sec.409.205. Provider Qualification. 
sec.409.206. Reimbursement Methodology for Case Management for Individuals with 
Mental Retardation.
sec.409.207. Right to Appeal. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812227
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER G.Case Management for Persons With Severe and Persistent Mental 
Illness
25 TAC sec.sec.409.251-409.255
(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 Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (department) 
proposes the repeal of sec.sec.409.251-409.255 of Chapter 409, Subchapter G, 
governing Case Management for Persons with Severe and Persistent Mental Illness. 
The repeal is part of a comprehensive reorganization of chapters and subchapters 
within the department's portion of the Texas Administrative Code in conjunction 
with the sunset review required by the current Appropriations Act, Article IX, 
Section 167. The key subject matter of these sections and related sections in 
Chapter 409, Subchapter F, Case Management Program Requirements are addressed in 
new Chapter 412, Subchapter J, Service Coordination. The repeal of Chapter 409, 
Subchapter G, and proposed new Chapter 412, Subchapter J, are published 
contemporaneously for public comment in this issue of the Texas Register. 
Don C. Green, chief financial officer, has determined that the fiscal impact to 
state government for fiscal year 1999 will be ($2,1059,018) of which 
($13,148,422) is federal and ($7,910,596) is state. For fiscal year 2000, the 
total impact will be ($21,585,493) of which ($13,408,802) is federal and 
($8,176,691) is state. For fiscal year 2001, the total impact will be 
($22,125,130) of which ($13,737,493) is federal and ($8,387,637) is state. For 
fiscal year 2002, the total impact will be ($22,678,259) of which ($14,080,931) 
is federal and ($8,597,328) is state. For fiscal year 2003, the total impact 
will be ($23,260,458) of which ($14,442,418) is federal and ($8818,040) is 
state. For fiscal year 2004, the total impact is ($2,3880,868) of which 
($14,827,631) is federal and ($9,053,237) is state. There will be no fiscal 
impact on local government.
Ernest McKenney, director, Medicaid Administration, has determined that the 
public benefit anticipated would be the efficient and effective execution of the 
department's state authority oversight of Medicaid programs, and the existence 
of a concise and relevant body of policy documents. There is no anticipated 
economic cost to persons required to comply as a result of the proposed repeal. 
There will be no effect on small business because they do not participate in the 
case management program. 
A public hearing will be held at 10:00 a.m. on Tuesday, September 8, 1998, in 
the auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired or other accommodation should contact Sheila Wilkins, Office 
of Policy Development, at (512) 206-4516, or should call the TDY phone number of 
Texas Relay, which is 1-800-735-2988, within 72 hours prior to the public 
hearing. 
Written comments on the proposal may be sent to Linda Logan, director, Policy 
Development, Texas Department of Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication of this notice. 
The repeal is proposed under the Texas Health and Safety Code, sec.532.015(a), 
which provides the Texas Mental Health and Mental Retardation Board with broad 
rulemaking authority; Human Resources Code, Chapter 32, sec.32.021 and 
Government Code, Chapter 531, sec.531.021, which provide the Texas Health and 
Human Services Commission (THHSC) with the authority to administer federal 
medical assistance funds and administer the state's medical assistance program. 
Senate Bill 509 of the 74th Texas Legislature clarifies THHSC's authority to 
delegate the operation of all or part of a Medicaid program to a health and 
human service agency. 
The section affects the Human Resources Code, Chapter 32, and the Government 
Code, Chapter 531, sec.531.021. 
sec.409.251. Target Population. 
sec.409.252. Case Management Services. 
sec.409.253. Service Limitations.
sec. 409.254. Provider Qualifications. 
sec.409.255. Reimbursement Methodology for Case Management.
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 August 3, 1998.
TRD-9812226
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

SUBCHAPTER J.Reimbursement for Services in Institutions for
Mental Diseases
25 TAC sec.sec.409.371-409.380
(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 Mental Health and Mental Retardation or in the Texas Register 
office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
the repeal of existing sec.sec.409.371-409.380 of Chapter 409, Medicaid 
Programs, Subchapter J, governing Reimbursement for Services in Institutions for 
Mental Diseases. The repeal is proposed contemporaneously with new 
sec.sec.419.371-419.379 of Chapter 419, Medicaid State Operating Agency 
Responsibilities, Subchapter J, governing Institutions for Mental Diseases, in 
this issue of the Texas Register. The proposed repeal and the readoption of the 
subchapter as sec.sec.419.371-419.379 of Chapter 419, Medicaid State Operating 
Agency Responsibilities, Subchapter J, governing Institutions for Mental 
Diseases, are part of a comprehensive reorganization of chapters and subchapters 
within TDMHMR's portion of the Texas Administrative Code and fulfill the 
requirements of Section 167 of Article IX of the current Appropriations Act. 
The proposed repeal would accommodate the proposal of new sec.sec.419.371-
419.379 of Chapter 419, Medicaid State Operating Agency Responsibilities, 
Subchapter J, governing Institutions for Mental Diseases, which is proposed 
contemporaneously in this issue of the Texas Register. 
Don Green, chief financial officer, has determined that as a result of the 
repeal there will be no significant fiscal impact on state and local government. 
There is no anticipated local economic impact. 
Ernest McKenney, director, Medicaid Administration, has determined that the 
public benefit anticipated from the repeal will be the efficient and effective 
execution of TDMHMR's oversight of Medicaid programs, and the existence of a 
concise and relevant body of rules. There is no anticipated economic cost to 
persons as a result of the repeal. There will be no effect on small business.
A public hearing will be held at 9:00 a.m. on Tuesday; September 8, 1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number which is (512) 206-5330. 
Persons requiring any other accommodation should notify Sheila Wilkins, Office 
of Policy Development, at least 72 hours prior to the hearing by calling (512) 
206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, Texas 78711-2668, within 30 days of publication. 
The repealed sections are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021, which provide the Texas Health and Human Services Commission 
(THHSC) with the authority to administer federal medical assistance funds and 
administer the state's medical assistance program. Senate Bill 509 of the 74th 
Texas Legislature clarifies THHSC's authority to delegate the operation of all 
or part of a Medicaid program to a health and human service agency. 
The sections affect Human Resources Code, Chapter 32, and Government Code, 
Chapter 531, sec.531.021. 
sec.409.371. Purpose. 
sec.409.372. Application. 
sec.409.373. Definitions.
sec.409.374. Eligible Population. 
sec.409.375.Provider Eligibility for Reimbursement. 
sec.409.376. Provider Reimbursement. 
sec.409.378. Discharge Criteria. 
sec.409.379. References. 
sec.409.380. Distribution. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812223
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

CHAPTER 412.Local Authority Responsibilities
SUBCHAPTER J.Service Coordination
25 TAC sec.sec.412.451-412.466
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
new sec.sec.412.451-412.466 of Chapter 412, Local Authority Responsibilities, 
Subchapter J, concerning Service Coordination. The new subchapter is part of a 
comprehensive reorganization of chapters and subchapters in TDMHMR's portion of 
the Texas Administrative Code (TAC) and is part of TDMHMR's efforts to fulfill 
the requirements of Section 167 of Article IX of the current Appropriations Act. 
The proposed new subchapter incorporates selected provisions, with revisions, 
from the following existing subchapters proposed for repeal in this issue of the 
Texas Register: Chapter 409, Subchapter F, governing Case Management Program 
Requirements, and Chapter 409, Subchapter G, governing Case Management for 
Persons with Severe and Persistent Mental Illness. The new subchapter describes 
service coordination activities, eligibility, assessment, frequency, and type of 
contact as well as qualifications and training requirements of staff providing 
service coordination. It also replaces the term "case management" with "service 
coordination" to be consistent with current department terminology. 
In association with the new subchapter, the Texas Health and Human Services 
Commission (THHSC) is proposing in this issue of the Texas Register amendments 
to sec.355.743 and the repeal of sec.sec.355.751-355.753 of 1 TAC Chapter 355, 
Medicaid Reimbursement Rates, Subchapter F, General Reimbursement Methodology 
for all Medical Assistance Programs.
Don Green, chief financial officer, has reviewed the proposed new 25 TAC 
sec.sec.412.451-412.466, in conjunction with the proposed repeal of 1 TAC 
sec.sec.355.751-355.753 and the proposed amendments to 1 TAC sec.355.743 of 
Chapter 355, Medicaid Reimbursement Rates, Subchapter F, General Reimbursement 
Methodology for all Medical Assistance Programs, regarding reimbursement for the 
case management (service coordination) program operated by TDMHMR. Mr. Green has 
determined that for each year of the first five-year period the proposed 
subchapter would be in effect, there would be an estimated fiscal impact for FY 
1999 of an increase in cost of $316,283 to TDMHMR, which would be funded by 
$197,518 from federal sources and $118,765 from state sources, for FY 2000, an 
increase in cost of $481,248 to TDMHMR, which would be funded by $298,949 from 
federal sources and $182,299 from state sources, for FY 2001 an increase in cost 
of $493,279 to TDMHMR, which would be funded by $306,277 from federal sources 
and $187,002 from state sources, for FY 2002 an increase in cost of $505,611 to 
TDMHMR, which would be funded by $313,934 from federal sources and $191,677 from 
state sources, and for FY 2003 an increase in cost of $518,591 to TDMHMR, which 
would be funded by $321,993 from federal sources and $196,598 from state 
sources. There would be no fiscal implications to local government as a result 
of enforcing or administering the proposed new subchapter. 
Dave Wanser, director, Behavioral Health Services Division, has determined that 
for each year of the first five years the new sections are in effect the public 
benefit anticipated is the clear definition of service coordination as a local 
authority function and an increase in local control and efficiency of service 
delivery. There are no anticipated economic cost to persons who are required to 
comply with the proposed sections. There would be no effect on small businesses 
because small businesses do not participate in the service coordination program. 
A public hearing will be held at 10:00 a.m. on Tuesday, September 8, 1998, in 
the auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired or other accommodation should contact Sheila Wilkins, Office 
of Policy Development, at (512) 206-4516, or should call the TDY phone number of 
Texas Relay, which is 1-800-735-2988, within 72 hours prior to the public 
hearing. 
Comments on the proposed sections should be submitted to Linda Logan, director, 
Policy Development, Texas Department Mental Health and Mental Retardation, P.O. 
Box 12668, Austin, Texas 78711-2668, within 30 days of publication.
The new sections are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021 and sec.531.033, which provide the Texas Health and Human Services 
Commission (THHSC) with the authority to administer federal medical assistance 
funds and administer the state's medical assistance program. Senate Bill 509 of 
the 74th Texas Legislature clarifies THHSC's authority to delegate the operation 
of all or part of a Medicaid program to a health and human service agency. 
The sections affect Health and Safety Code, sec.532.015, Human Resources Code, 
Chapter 32, sec.32.021, and Government Code, Chapter 531, sec.531.021, and 
sec.531.033.

sec.412.451. Purpose. 
This subchapter describes requirements for service coordination delivered by 
local authorities for individuals in the adult and child mental health priority 
populations and the mental retardation priority population who live in the 
community. 

sec.412.452. Application. 
This subchapter applies to all local authorities. 

sec.412.453. Definitions. 
The following words and terms, when used in this chapter, shall have the 
following meanings, unless the context clearly indicates otherwise: 
(1) Adult mental health priority population - Adults who have severe and 
persistent mental illnesses such as schizophrenia, major depression, manic 
depressive disorder, or other severely disabling mental disorders which require 
crisis resolution or ongoing and long-term support and treatment. 
(2) CARE - TDMHMR's centralized, confidential database, which registers and 
tracks individuals receiving services from TDMHMR throughout the service 
delivery system. CARE uses unique, statewide identification numbers to collect, 
maintain and report descriptive information for each individual served. 
(3) Child mental health priority population - Children and adolescents under the 
age of 18 who have a diagnosis of mental illness and who exhibit severe 
emotional or social disabilities which are life-threatening or require prolonged 
intervention. 
(4) Community support services - Services provided in the community that enhance 
and improve an individual's health, safety, well-being, and quality of life. 
These services may include clinical services such as medical, psychological, 
social, and rehabilitative services or other community-based services which are 
legal, financial, or educational in nature. 
(5) Family-directed planning - A process which empowers the family of a minor to 
direct the development of a plan of supports and services which meet the child 
and family's personal outcomes. The process must: 
(A) identify existing supports and services necessary to achieve the child and 
family's outcomes; 
(B) identify natural supports available to the child and family and negotiate 
needed service system supports; 
(C) occur with the support of a group of people chosen by the child and family; 
(D) be supportive of the self-determination of the child, and 
(E) mirror the way in which families without children with disabilities make 
plans. 
(6) Individual - A person in the adult or child mental health priority 
populations or the mental retardation priority population who is seeking or 
receiving mental health or mental retardation services. 
(7) LAR (legally authorized representative) - The parent or managing conservator 
of an individual who is a minor or the guardian of the person of an individual 
who is an adult. 
(8) Licensed practitioner of the healing arts - A person who is: 
(A) a physician (MD or DO) licensed to practice medicine in accordance with 
Texas Revised Civil Statutes Annotated Art. 4495b; 
(B) a licensed professional counselor as defined in Texas Revised Civil Statutes 
Annotated Art. 4512g; 
(C) an advanced nurse practitioner as defined in Texas Revised Civil Statutes 
Annotated, Article 4514, sec.8, and recognized by the Board of Nurse Examiners 
for the State of Texas as a clinical nurse specialist (CNS) in psych/mental 
health or nurse practitioner (NP) in psych/mental health; 
(D) a licensed marriage and family therapist as defined in Texas Revised Civil 
Statutes Annotated Art. 4512c-1; 
(E) a licensed master social worker-advanced clinical practitioner (LMSW-ACP) as 
defined in 22 TAC Chapter 781; or 
(F) a psychologist as defined in Texas Revised Civil Statutes Annotated Art. 
4512c. 
(9) Local authority - An entity to which the Texas Board of Mental Health and 
Mental Retardation delegates its authority and responsibility within a specified 
region for planning, policy development, coordination, and resource development 
and allocation and for supervising and ensuring the provision of mental health 
or mental retardation services to individuals with mental illness or mental 
retardation in one or more local service areas. 
(10) Mental retardation priority population - Those individuals who: 
(A) request (or whose legally authorized representatives request on their 
behalf) and need services and have one or more of the following conditions: 
(i) mental retardation, as defined in sec.591.003(13), of the Texas Health and 
Safety Code; or 
(ii) autism as defined in the current edition of the Diagnostic and Statistical 
Manual (DSM); 
(iii) pervasive developmental disorder as defined in the current edition of the 
DSM; and 
(B) are eligible for either of the following: 
(i) early childhood intervention services; or 
(ii) home and community waiver services-OBRA in accordance with sec.409.153 of 
this title (relating to Eligibility Criteria). 
(11) Parent Case Management Program - A program that utilizes experienced, 
trained parents of individuals with disabilities to provide case management for 
other families. 
(12) Partners in Policy Making - A leadership training program administered by 
the Texas Planning Council for Developmental Disabilities for self-advocates and 
parents. 
(13) Permanency planning - A philosophy and planning process that focuses on the 
outcome of family support by facilitating a permanent living arrangement with 
the primary feature of an enduring and nurturing parental relationship. 
(14) Person-directed planning - A process that empowers the individual (or the 
LAR on the individual's behalf) to direct the development of a plan of supports 
and services that meet the individual's personal outcomes. The process must: 
(A) identify existing supports and services necessary to achieve the 
individual's outcomes; 
(B) identify natural supports available to the individual and negotiate needed 
services system supports; 
(C) occur with the support of a group of people chosen by the individual or the 
LAR on the individual's behalf; and 
(D) mirror the way in which people without disabilities make plans. 
(15) Plan of care - A format for documenting an individual's services and 
supports that meet the individual's choices and outcomes or those of the LAR on 
the individual's behalf. 
(16) Service coordination - Services provided by a local authority in 
partnership with individuals (or an LAR on behalf of the individual) who are 
eligible for service coordination and who are determined to need assistance in 
accessing medical, social, educational, and other appropriate services that will 
help them achieve a quality of life and community participation acceptable to 
each individual or LAR on the individual's behalf. Service coordination 
includes; 
(A) crisis prevention and management - locating and coordinating services and 
supports to prevent or manage a crisis; 
(B) monitoring - ensuring that individuals receive needed services and 
evaluating the effectiveness of services in relation to adequacy and outcomes 
identified to meet the individual's needs and desires; 
(C) assessment - obtaining information about the individual from the individual 
or the individual's LAR and identifying the nature of the presenting problem and 
the service and support needs of the individual; and 
(D) service planning and coordination - identifying, arranging, advocating, 
collaborating with other agencies, and linking for the delivery of outcome 
focused services and supports that address the individual's needs and desires or 
the desires of the LAR on behalf of the individual. 

sec.412.454. Organizational Structure.
(a) Local authorities may determine an organizational structure for providing 
service coordination. Service coordination must be provided only by staff who 
meet the minimum qualifications, as described in sec.412.461 of this title 
(relating to Minimum Qualifications). 
(b) The local authority must comply with Chapter 408, Subchapter B of this title 
(relating to Mental Health Community Services Standards) and Chapter 412, 
Subchapter H of this title (relating to Standards and Quality Assurance for 
Mental Retardation Community Services and Supports).

sec.412.455. Eligibility. 
To be eligible for service coordination, an individual must be in the adult 
mental health, child mental health, or mental retardation priority populations 
or be a person with a related condition as defined in 42 CFR sec.435.1009, and: 
(1) require multiple services and supports from community providers; 
(2) be transitioning between providers or placements; or 
(3) if transitioning from an institutional to a noninstitutional provider, be 
within 30 days prior to discharge or furlough. 

sec.412.456. Evaluation for Service Coordination.
The local authority will evaluate all eligible individuals to determine the need 
for specific services and supports from community providers and the frequency, 
duration, and intensity of the service coordination that the individual will 
receive.
(1) In evaluating adults with mental illness, the local authority will utilize 
the uniform assessment for the adult mental health population in combination 
with a clinical evaluation by a licensed practitioner of the healing arts 
(LPHA). 
(2) In evaluating children with mental illness, the local authority will utilize 
the uniform assessment for the child mental health population. 
(3) In evaluating individuals with mental retardation, the local authority will 
utilize the Service Coordination Intensity Evaluation, Mental Retardation 
Services.
Figure 1:25 TAC sec.412.456(3)

sec.412.457. Plan of Care.
(a) The local authority will document in the individual's plan of care the 
results from the evaluation performed in accordance with sec.412.456 of this 
title (relating to Evaluation for Service Coordination), including the 
following: 
(1) the individual's choices and outcomes or those of the LAR on the 
individual's behalf; 
(2) the specific services and supports to be provided by community providers; 
and 
(3) the frequency, duration, and intensity of service coordination. 
(b) Service coordination will be provided in accordance with the individual's 
plan of care. 
(c) If an individual's needs change, the local authority will revise the 
individual's plan of care, as appropriate, and/or adjust the frequency, 
duration, and intensity of service coordination in consultation with the 
individual or the LAR on the individual's behalf. The local authority will 
perform a new evaluation in accordance with sec.412.456 of this title (relating 
to Evaluation for Service Coordination), if necessary. 
(d) The local authority may provide crisis prevention and management prior to 
documentation of this service in the individual's plan of care. 
(e) The local authority will provide individuals receiving service coordination 
with a minimum of one face-to-face contact every 90 days. 
(1) In the case of eligible children, the face-to-face contact must be with both 
the child and the parent/guardian 
(2) The face-to-face contact with the child and the parent/guardian does not 
have to be during the same service coordination contact, but does have to occur 
within the same month.

sec.412.458. Caseloads. 
Decisions regarding caseload size are made by the local authority based on 
factors such as the individual's needs; the frequency, duration, and intensity 
of contact; and travel time.

sec.412.459.Quality Management .
(a) The local authority must establish a quality management process to monitor 
quality, utilization, and outcome of service coordination. 
(b) The local authority must require that each individual receiving service 
coordination be monitored quarterly to determine the appropriateness and 
effectiveness of the services and supports provided by all community providers 
as stated in the plan of care and to ensure that the needs of the individual are 
being addressed throughout the course of treatment.

sec.412.460. Termination of Service Coordination.
The local authority will terminate service coordination for an individual if: 
(1) the individual (or the LAR on the individual's behalf) agrees that the 
personal outcomes documented in the plan of care have been achieved; 
(2) the individual (or the LAR on the individual's behalf) agrees that the 
appropriate natural supports are in place to provide for service coordination; 
(3) the individual (or the LAR on the individual's behalf) no longer desires 
service coordination and makes a statement to the effect; or 
(4) the individual no longer meets the eligibility criteria for service 
coordination as set forth in sec.412.455 of this title (relating to 
Eligibility).

sec.412.461. Minimum Qualifications.
(a) Except as provided by subsection (d) of this section, all persons who 
provide service coordination must meet the following minimum qualifications. 
(1) a bachelor's or advanced degree from an accredited college or university 
with a major in a social, behavioral, or human service field, including but not 
limited to psychology, social work, medicine, nursing, rehabilitation, 
counseling, sociology, human development, gerontology, educational psychology, 
education, criminal justice, and physician's assistant studies; or 
(2) a high school diploma or GED; and 
(A) two years of paid employed experience as a case manager in a state or 
federally funded Parent Case Management Program or a graduate of Partners in 
Policy Making; and 
(B) personal experience as an immediate family member of an individual with 
mental retardation or mental illness. 
(b) The local authority may require additional education and experience 
qualifications for persons who provide service coordination, at its discretion. 
(c) A person cannot provide service coordination to a member of that person's 
family. 
(d) If a person was authorized by a local authority to provide case management 
prior to the effective date of this rule, the person may provide service 
coordination without meeting the minimum requirements in this section at the 
discretion of the local authority. 

sec.412.462. Staff Training.
(a) The local authority must train each person who provides service coordination 
within 90 days of the date the person begins providing service coordination, and 
train each person who supervises and oversees the provision of service 
coordination prior to the person performing supervisory or oversight duties. The 
training must include the following: 
(1) appropriate policies, procedures, and standards; 
(2) performance contract requirements regarding service coordination and case 
management; 
(3) plan of care development and implementation; 
(4) person-directed planning; 
(5) family-directed planning; 
(6) permanency planning; 
(7) crisis prevention and management, monitoring, assessment, and service 
planning and coordination; 
(8) community support services availability and management; and 
(9) advocacy for the individual. 
(b) Prior to the local authority submitting a claim for Medicaid payment for 
service coordination, the local authority must ensure that the person who 
provides that service coordination has successfully completed competency-based 
training on the following: 
(1) requirements regarding the provision of case management as set forth in the 
Medicaid Targeted Case Management Services State Plan; 
(2) the Case Management Services Medicaid Reimbursement Provider Manual; and 
(3) the Medicaid Targeted Case Management Services - Billing and Payment Review 
Protocol. 
(c) The local authority will document the training provided in accordance with 
this section in the personnel record of each person providing, supervising, or 
overseeing service coordination.

sec.412.463. Documentation Requirements.
(a) The local authority's documentation must include the following: 
(1) date of specific service coordination provided; 
(2) description of service coordination provided; 
(3) progress or lack of progress in achieving treatment or habilitation goals or 
outcomes; 
(4) the person with whom the contact occurred; and 
(5) the person who provided the contact and that person's professional 
discipline. 
(b) The local authority must complete a CARE entry for all individuals receiving 
service coordination 
(c) The local authority must retain documentation in compliance with federal and 
state laws, rules, and regulations.

sec.412.464. Fair Hearings. 
(a) Any Medicaid eligible individual whose request for eligibility for service 
coordination is denied or is not acted upon with reasonable promptness, or whose 
service coordination has been terminated, suspended, or reduced by TDMHMR is 
entitled to a fair hearing, conducted by TDHS, in accordance with 40 TAC 
sec.79.1101 et seq., except that a request for a fair hearing must be submitted 
to the TDMHMR Office of Medicaid Administration and received within 90 days from 
the date of the notice of denial of eligibility for service coordination or 
notice of termination, suspension, or reduction of service coordination. 
(b) The local authority will provide Medicaid eligible recipients with notice of 
the right to request a fair hearing in the form and manner prescribed by TDMHMR. 

sec.412.465. References. 
References are made to the following state and federal statutes and Texas 
Administrative Code: 
(1) Texas Revised Civil Statutes Annotated Art. 449b, 4512c, 4512c-1, 4512g, and 
4514, sec.8; 
(2) 22 TAC Chapter 781; 
(3) 40 TAC sec.79.1101 et seq.; 
(4) Texas Health and Safety Code, sec.591.003(13); 
(5) Chapter 408, Subchapter B, governing Mental Health Community Services 
Standards; 
(6) Chapter 412, Subchapter H, governing Standards and Quality Assurance for 
Mental Retardation Community Services and Supports; and 
(7) 42 CFR sec.435.1009. 

sec.412.466. Distribution. 
(a) This subchapter shall be distributed to: 
(1) members of the Texas Mental Health and Mental Retardation Board; 
(2) executive, management, and program staff of Central Office; 
(3) executive directors of all local authorities; and 
(4) advocates and advocacy organizations. 
(b) The executive director of each local authority is responsible for 
disseminating copies of this subchapter to: 
(1) all appropriate staff; 
(2) any individual receiving services, family member, employee, or other person 
desiring a copy. 
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 August 3, 1998.
TRD-9812225
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

CHAPTER 419.Medicaid State Operating Agency Responsibilities
SUBCHAPTER J.Institutions for Mental Diseases
25 TAC sec.sec.419.371-419.379
The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
new sec.sec.419.371-419.379 of Chapter 419, Medicaid State Operating Agency 
Responsibilities, Subchapter J, governing Institutions for Mental Diseases. The 
new subchapter is proposed contemporaneously with the proposed repeal of 
existing sec.sec.409.371-409.380 of Chapter 409, Medicaid Programs, Subchapter 
J, governing Reimbursement for Services in Institutions for Mental Diseases, in 
this issue of the Texas Register. The proposed repeal and the readoption of the 
subchapter as sec.sec.419.371-419.379 of Chapter 419, Medicaid State Operating 
Agency Responsibilities, Subchapter J, governing Institutions for Mental 
Diseases, are part of a comprehensive reorganization of chapters and subchapters 
within the TDMHMR's portion of the Texas Administrative Code (TAC) and fulfill 
the requirements of Section 167 of Article IX of the current Appropriations Act. 
The new subchapter incorporates the provisions of Chapter 409, Medicaid 
Programs, Subchapter J, governing Reimbursement for Services in Institutions for 
Mental Diseases, which is proposed contemporaneously for repeal in this issue of 
the Texas Register. 
The new subchapter describes the criteria used to determine whether a provider 
is eligible to receive Medicaid reimbursement for inpatient hospital services to 
people aged 65 and older in an institution for mental diseases (IMD) and 
describes the methods by which patient and provider eligibility are established 
and reimbursement for covered services is accomplished.
Don Green, chief financial officer, has determined that for each year of the 
first five-year period the rule, as proposed, is in effect there will be no 
fiscal implications for state or local government as a result of enforcing or 
administering the proposed sections. 
Ernest McKenney, director, Medicaid Administration, has determined that for each 
year of the first five years the new sections are in effect the public benefit 
anticipated will be the efficient and effective execution of the department's 
state authority oversight of Medicaid programs, and the existence of a concise 
and relevant body of policy documents. For each year of the first five years the 
new sections are in effect there is no anticipated economic cost to persons who 
are required to comply with the proposed sections. There will be no effect on 
small business. 
A public hearing will be held at 9:00 a.m. on Tuesday; September 8, 1998, in the 
auditorium of the main TDMHMR Central Office building (Building 2) at TDMHMR 
Central Office, 909 West 45th Street, Austin, Texas, to accept oral and written 
testimony concerning the proposal. Persons requiring an interpreter for the deaf 
or hearing impaired should contact the Central Office operator at least 72 hours 
prior to the hearing by calling the TDD phone number which is (512) 206-5330. 
Persons requiring any other ADA accommodation should notify Sheila Wilkins, 
Office of Policy Development, at least 72 hours prior to the hearing by calling 
(512) 206-4516. 
Comments on the proposal may be submitted to Linda Logan, director, Policy 
Development, Texas Department Mental Health and Mental Retardation, P.O. Box 
12668, Austin, TX 78711-2668, within 30 days of publication. 
The new sections are proposed under the Texas Health and Safety Code, 
sec.532.015(a), which provides TDMHMR with broad rulemaking authority; Human 
Resource Code, Chapter 32, sec.32.021, and Government Code, Chapter 531, 
sec.531.021 and sec.531.033, which provide the Texas Health and Human Services 
Commission (THHSC) with the authority to administer federal medical assistance 
funds and administer the state's medical assistance program. Senate Bill 509 of 
the 74th Texas Legislature clarifies THHSC's authority to delegate the operation 
of all or part of a Medicaid program to a health and human service agency. 
The sections affect Human Resources Code, Chapter 32, and Government Code, 
Chapter 531, sec.531.021 and sec.531.033. 

sec.419.371. Purpose. 
The purpose of this subchapter is to describe the criteria used to determine 
whether a provider is eligible to receive Medicaid reimbursement for inpatient 
hospital services to people aged 65 and older in an institution for mental 
diseases (IMD) and to describe the methods by which patient and provider 
eligibility are established and reimbursement for covered services is 
accomplished. 

sec.419.372. Application. 
This subchapter applies to institutions for mental diseases. 

sec.419.373. Definitions. 
The following words and terms, when used in this subchapter, have the following 
meanings, unless the context clearly indicates otherwise. 
(1) Department-The Texas Department of Mental Health and Mental Retardation 
(TDMHMR) or its designee. 
(2) Inpatient hospital services-Services provided under the supervision of a 
physician in an IMD that meet the requirements for psychiatric hospitals in 42 
Code of Federal Regulations sec.482.60(b), (c), and (d) and meet certain 
utilization review requirements in 42 Code of Federal Regulations sec.482.30(a), 
(b), (d), and (e) unless the utilization review requirements have been waived 
pursuant to 42 Code of Federal Regulations sec.440.140. 
(3) Institution for mental diseases (IMD)-A hospital of more than 16 beds that 
is primarily engaged in providing psychiatric diagnosis, treatment, and care of 
persons with mental diseases, including medical care, nursing care, and related 
services. 
(4) IMD provider-A provider who has a provider agreement with the department and 
is receiving reimbursement for IMD services. 
(5) IMD services-Inpatient hospital services provided by an eligible IMD 
provider for the care and treatment (including room and board) of individuals 
with mental diseases including, but are not limited to: 
(A) initiation, titration, or change in medication; 
(B) monitoring and assessing by qualified mental health professionals; 
(C) suicide precautions; 
(D) redirection of inappropriate behaviors and/or reinforcement of appropriate 
behaviors; 
(E) group and individual therapies; 
(F) structured skills training activities; and 
(G) nursing services. 
(6) Mental diseases-Diseases listed as mental disorders in the International 
Classification of Diseases, Ninth Edition, modified for clinical applications 
(ICD-9-CM), with the exception of mental retardation and chemical dependency 
disorders. 
(7) Qualified mental health professional-A person acting within the scope of his 
or her training and licensure or certification, who is a: 
(A) licensed social worker as defined by the Human Resources Code, sec. 50.001; 
(B) licensed professional counselor as defined by the Licensed Professional 
Counselor Act, sec.2 (Texas Civil Statutes, Article 4512g); 
(C) physician who is "practicing medicine" as defined by the Medical Practice 
Act, sec. 1.03 (Texas Civil Statutes, Article 4495b) or a person employed by any 
agency of the United States having a license to practice medicine in any state 
of the United States; 
(D) registered nurse as defined in the Nurse Practice Act (Texas Civil Statutes, 
Article 4518, sec.5); or 
(E) psychologist offering "psychological services" as defined by the 
Psychologists' Certification and Licensing Act, sec.2 (Texas Civil Statutes, 
Article 4512c). 
(8) Single state agency-The Texas Health and Human Services Commission or its 
designee. 

sec.419.374. Eligible Population.
Reimbursement for IMD services is limited to individuals: 
(1) who are age 65 years or older; 
(2) who have one or more mental diseases; 
(3) who have no acceptable alternate placement as determined by the individual's 
treatment team; 
(4) who are eligible for participation in the Texas Medicaid program; 
(5) who are not eligible for medical compensation from other payment sources; 
(6) who have been certified by a licensed physician to need inpatient 
hospitalization for the care and treatment of a mental disease; 
(7) who meet all other federal, state and local regulations applicable to 
admission to a mental hospital; and 
(8) for whom the department has authorized IMD services based on medical 
necessity. Requests for initial authorization must be submitted to the 
department's Office of Medicaid Administration within seven calendar days of the 
first day for which Medicaid reimbursement for the provision of IMD services 
will be requested. Request for authorization of continued stay must be submitted 
no later than seven calendar days prior to the end date of the initial and all 
subsequent authorizations. Initial and continued stay authorizations are valid 
for up to 31 calendar days. 

sec.419.375. Provider Eligibility for Reimbursement.
(a) To be eligible for reimbursement for IMD services, a provider must: 
(1) submit an approved application for enrollment through means established by 
TDMHMR, Office of Medicaid Administration, to include evidence that the 
provider: 
(A) meets the Medicare conditions of participation specified in 42 Code of 
Federal Regulations sec.482.60; 
(B) is accredited by the Joint Commission on Accreditation of Healthcare 
Organizations; 
(C) if applicable, licensed by the state as a psychiatric hospital under the 
provision of the Texas Health and Safety Code, Chapter 577; and 
(D) has a consistent historical pattern of accepting persons involuntarily 
committed for inpatient mental health treatment as evidenced by having provided 
mental health services to a minimum of 20 persons, 65 years of age or older, 
involuntarily committed for inpatient mental health treatment under the Texas 
Health and Safety Code, Chapters 573 and 574, during the two-year period 
immediately preceding the date of application for participation. 
(2) have in effect a written provider agreement with the department which: 
(A) describes respective responsibilities of the provider and the department's 
Office of Medicaid Administration, including arrangements to ensure: 
(i) joint planning efforts; 
(ii) development of alternative methods of care; 
(iii) access by the single state agency to the institution, its patients, and 
patients' records when necessary to carry out the agency's responsibilities in 
accordance with 42 Code of Federal Regulations sec.431.107; 
(iv) recording, reporting, and exchanging medical and social information about 
the patients; and 
(v) other procedures that may be required to achieve the purposes of the 
agreement; 
(B) assures the capacity of the provider to admit, readmit from alternate care, 
and treat both eligible persons voluntarily seeking services under the Texas 
Health and Safety Code, Chapter 572, and persons involuntarily committed for 
inpatient mental health treatment under the Texas Health and Safety Code, 
Chapters 573 and 574; 
(C) assures that the provider is meeting the requirements specified in 42 Code 
of Federal Regulations sec.440.140(a) pertaining to providers of inpatient 
hospital services in institutions for mental diseases;
(D) assures that the provider is in compliance with those provisions of the 
Texas Administrative Code, Title 25, Part II, that relate to patient care and 
treatment in inpatient mental health facilities; 
(E) assures that the provider is serving a patient population in which more than 
50% currently require institutionalization because of a mental disease; and 
(F) assures that the provider will submit cost reports and audit data in a 
manner authorized by the department. 
(b) A provider's eligibility for reimbursement must be renewed periodically at a 
time designated by the department's Office of Medicaid Administration, but not 
to exceed two years. 
(c) Evidence of compliance with subsection (a) of this section will be validated 
through reviews by the TDMHMR Office of Medicaid Administration. Reviews will 
occur at an interval decided upon by the department. No facility may be notified 
more than 48 hours before the scheduled review. For each Medicaid patient, 
TDMHMR will additionally review: 
(1) the adequacy of services available to meet the patient's current health 
needs and promote the patient's maximum physical, mental, and psychosocial well-
being;
(2) the necessity or desirability of the patient's continued placement in the 
facility; and 
(3) the feasibility of meeting the patient's mental and physical health care 
needs through alternative institutional or non-institutional care. 
(d) If the provider fails to provide evidence of compliance with subsection 
(c)(1)-(3) of this section, then the provider must take corrective action, as 
needed, based on the findings contained in TDMHMR's report. 
(1) If the provider fails to take corrective action, recoupment of Medicaid 
funds associated with the finding(s) will be initiated as provided for in 
Chapter 409, Subchapter C, of this title (relating to Fraud and Abuse and 
Recovery of Funds). 
(2) Recoupment is an adverse action for which the provider is entitled to an 
administrative hearing in accordance with Chapter 409, Subchapter B, of this 
title (relating to Adverse Actions).

sec.419.376. Provider Reimbursement.
(a) Reimbursement for IMD services provided to eligible individuals begins on 
the date established by written notice from the department's Office of Medicaid 
Administration and is contingent upon validation of evidence of provider 
eligibility as described in sec.409.375(c) of this title (relating to Provider 
Eligibility for Reimbursement).
(b) Provider reimbursement for IMD services is subject to termination with 
written notice on the date that any of the following occurs: 
(1) loss of Medicare and/or JCAHO certification; 
(2) if applicable, loss of licensure as a psychiatric hospital; 
(3) failure to meet requirements specified in 42 Code of Federal Regulations 
sec. 440.140(a) pertaining to providers of inpatient hospital services in 
institutions for mental diseases; 
(4) demonstrated noncompliance with those provisions of the Texas Administrative 
Code, Title 25, Part II, that relate to patient care and treatment in inpatient 
mental health facilities, or with state laws governing admission and treatment; 
(5) breach of the written provider agreement described in sec.409.375(a)(2) of 
this title (relating to Provider Eligibility for Reimbursement); or 
(6) termination of participation by the single state agency in the reimbursement 
for services in IMD Medicaid program. 
(c) Failure to submit an acceptable cost report in the cost report time frame 
constitutes an administrative contract violation, which could result in a hold 
of vendor payments. 
(d) Termination of provider reimbursement or being placed on vendor hold are 
adverse actions for which the provider is entitled to an administrative hearing 
in accordance with Chapter 409, Subchapter B, of this title (relating to Adverse 
Actions). 
(e) Providers who receive Medicaid reimbursement for IMD services are governed 
by Chapter 409, Subchapter C, of this title (relating to Fraud and Abuse and 
Recovery of Funds). 

sec.419.377. Discharge Criteria.
Facilities must be in compliance with the following rules, as applicable, 
regarding discharge criteria: 
(1) Chapter 402, Subchapter A of this title (relating to Admissions, Transfers, 
Absences and Discharges--Mental Health Facilities); 
(2) Chapter 402, Subchapter B of this title (relating to Continuity of Services-
-Mental Health Services); and 
(3) Chapter 401, Subchapter J of this title (relating to Standards of Care and 
Treatment at Psychiatric Hospitals). 

sec.419.378. References. 
The following laws and rules are referred to in this subchapter: 
(1) 42 Code of Federal Regulations sec.sec.482.60, 482.30, 431.620, 440.140, and 
431.107; 
(2) Human Resources Code, sec.50.001; 
(3) Texas Civil Statutes, Articles 4495b, 4512c, 4512g, and 4518, sec.5; 
(4) Texas Health and Safety Code, Chapters 572-574 and 577; 
(5) those provisions of this title (relating to Texas Department of Mental 
Health and Mental Retardation), which relate to patient care and treatment in 
inpatient mental health facilities; and 
(6) Chapter 409, Subchapter B, of this title (relating to Adverse Actions); and 
(7) Chapter 409, Subchapter C, of this title (relating to Fraud and Abuse and 
Recovery of Funds). 

sec.419.379. Distribution. 
The provisions of this subchapter shall be distributed to: 
(1) the commissioner and medical director of the department; 
(2) department Central Office program and management staff; 
(3) superintendents/directors of all department facilities; 
(4) advocacy organizations; and 
(5) any person requesting a copy. 
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 August 3, 1998.
TRD-9812224
Charles M. Cooper
Chairman, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 206-4516

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 11.Contracts
30 TAC sec.11.2, sec.11.3
The Texas Natural Resource Conservation Commission (commission) proposes new 
sec.11.2 and sec.11.3, concerning Protest Procedures for Vendors and Bid Opening 
and Tabulation. 
EXPLANATION OF PROPOSED RULES
These new sections establish procedures for resolving vendor protests relating 
to purchasing issues and adopt by reference the rule of Texas General Services 
Commission (GSC) in 1 TAC sec.113.5(b), concerning bid opening and tabulation. 
This rulemaking is required by Texas Government Code, sec.2155.076 and 
sec.2156.005, which require state agencies to establish protest procedures and 
adopt GSC rules regarding bid opening and tabulation. Concurrently, the 
commission proposes the review of Chapter 11, sec.11.1, concerning Historically 
Underutilized Business Program, in accordance with the General Appropriations 
Act, Article IX, sec.167, 75th Legislature, 1997, and is publishing the proposed 
notice of review in the Rules Review Section of the Texas Register.
The rules will establish a consistent procedure for vendors and the agency to 
follow in the event a vendor is aggrieved in connection with the solicitation, 
evaluation, or award of a contract. The rules also establish consistent bid 
opening and tabulation procedures for the agency to follow. The inclusion of 
both protest procedures and bid opening and tabulation requirements in 
commission rules will clarify the bid process for the public and agency staff to 
follow. 
Specifically, sec.11.2 will set forth the procedure to be followed by a vendor 
who is aggrieved in connection with a solicitation, evaluation, or award of a 
contract. The aggrieved person will have ten days to file a protest with the 
Purchasing Section once he or she knows, or should have known, of the action 
which is protested. Copies of the protest are to be sent to all interested 
persons. The protest will be reviewed by the Purchasing or Contracts Manager 
(Manager) and a determination will be made. The aggrieved person may, within ten 
days after receiving the Manager's determination, request reconsideration by the 
executive director or his designee. The executive director may issue a 
determination or refer the matter to the commission for its consideration at a 
regularly scheduled open meeting. Documents related to the solicitation, 
evaluation, and award of a contract must be retained by commission for four 
years. 
Proposed sec.11.3 adopts the GSC rule regarding bid opening and tabulation. The 
rule states that bid openings conducted by the commission will be open to the 
public. Bid opening dates may be changed if bidders are properly notified in 
advance, and if a bid opening is canceled, all bids will be returned to bidders. 
Bid tabulation files are available for public inspection during regular working 
hours of the commission. Commission employees are not required to give bid 
tabulation information by telephone. 
FISCAL NOTE 
Stephen Minick, Strategic Planning and Appropriations Division, has determined 
that for the first five-year period the sections as proposed are in effect there 
are no significant fiscal implications anticipated for state or local 
governments as a result of enforcing or implementing the sections. Some minimal 
costs may arise from the receipt and consideration of bid protests and the delay 
of bid proceedings; however, these costs will be insignificant. 
PUBLIC BENEFIT 
Mr. Minick also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of enforcement 
of and compliance with the sections will be a more equitable and efficient 
process for resolution of vendor protests and increased consistency of 
commission administrative procedures for protests, bid opening, and tabulation 
with the rules of the GSC. Some costs may be incurred by protestants following 
the protest procedures outlined in the proposed rules, but any costs associated 
with these procedures are not anticipated to be significant and may not exceed 
the costs of investigation and pursuit of bid protests in the absence of these 
provisions. The effects of these sections on small businessses will be similar 
to the effects on any business initiating a bid protest. Although any potential 
costs are anticipated to be minimal, costs to small businesses will depend on 
the number of protests and the specifics of the particular bid in question, and 
such costs will not vary directly as a function of size of the company, 
employment, or sales. There are no other economic costs anticipated for any 
person required to comply with these sections as proposed. 
TAKINGS IMPACT ASSESSMENT 
The commission has prepared a takings impact assessment for these rules under 
Texas Government Code, sec.2007.043. The specific purpose of the rules is to 
adopt the GSC rules regarding bid opening and tabulation and to establish 
protest procedures which must be consistent with GSC rules. The adoption of 
these rules will not burden private real property. Therefore, this proposal does 
not constitute a taking of private real property. 
DRAFT REGULATORY IMPACT ANALYSIS 
The staff has reviewed the proposed rulemaking in light of the regulatory 
analysis requirements of Texas Government Code (the Code), sec.2001.0225, and 
has determined that the rulemaking is not subject to sec.2001.0225 because it 
does not meet the definition of a "major environmental rule" as defined by the 
Code. There is not a specific intent of the protest procedures and bid rules 
adopted by reference to protect the environment or reduce risks to human health 
from environmental exposure. The rules are related solely to state purchasing of 
goods and services, not the environment. Furthermore, these rules will not 
adversely affect in a material way the economy, a sector of the economy, 
productivity, competition, jobs, the environment, or the public health and 
safety of the state or a sector of the state. 
COASTAL MANAGEMENT PLAN 
The commission has reviewed the proposed rulemaking and found that the proposal 
is not a rulemaking governing air pollutant emissions, on-site sewage disposal 
systems, or underground storage tanks (Coastal Coordination Act Implementation 
Rules, 31 TAC sec.505.11(b)(2)), nor is it a rulemaking governing or authorizing 
actions listed in Coastal Coordination Act Implementation Rules, 31 TAC 
sec.505.11(a)(6). Therefore, the rulemaking is not subject to the Texas Coastal 
Mangement Program.
SUBMITTAL OF COMMENTS 
Comments may be submitted to Lisa Martin, Office of Policy and Regulatory 
Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 
239-4808. All comments should reference Rule Tracking Log Number 97161-011-AD. 
Comments must be received by 5:00 p.m., September 14, 1998. For further 
information, please contact Kathy Robbins, Financial Administration Division, 
(512) 239-0392. Persons with disabilities who have special communication or 
other accommodation needs who are planning to attend the hearing should contact 
the agency at (512) 239-4900. Requests should be made as far in advance as 
possible. 
STATUTORY AUTHORITY 
The new sections are proposed under Texas Government Code, sec.2155.076, which 
requires state agencies to adopt protest procedures for resolving vendor 
protests relating to purchasing issues, and Texas Government Code, sec.2156.005, 
which requires state agencies making purchases to adopt GSC rules related to bid 
opening and tabulation. In addition, the new rules are proposed under Texas 
Water Code, sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 
34.006 and Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 
361.017, 361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which 
authorize the commission to adopt any rules necessary to carry out its powers 
and duties under the Water Code and other laws of Texas and to establish and 
approve all general policy of the commission. The proposal is also consistent 
with the authority granted to the commission to enter into contracts under Texas 
Water Code, sec.5.229. 
The proposed new sections implement Texas Government Code, sec.2155.076 and 
sec.2156.005. 

sec.11.2. Protest Procedures for Vendors.
(a) Any actual or prospective bidder, offeror, or contractor who is aggrieved in 
connection with the solicitation, evaluation, or award of a contract may 
formally protest to the Purchasing Manager or his designee (hereafter Manager) 
of the commission. Such protests must be in writing and received in the 
Purchasing Section within ten working days after such aggrieved person knows, or 
should have known, of the occurrence of the action which is protested. Formal 
protests must conform to the requirements of this subsection and subsection (c) 
of this section, and shall be resolved in accordance with the procedure set 
forth in subsections (d) and (e) of this section. Copies of the protest must be 
mailed or delivered by the protesting person to the project manager, if any, and 
other interested persons. For the purposes of this section, "interested persons" 
means all vendors who have submitted bids or proposals for the contract 
involved. 
(b) In the event of a timely protest or appeal under this section, the state 
shall not proceed further with the solicitation or with the award of the 
contract unless the Manager makes a written determination that the award of a 
contract without delay is necessary to protect substantial interests of the 
state. 
(c) A formal protest must be sworn and notarized and contain:
(1) a specific identification of the statutory or regulatory provision(s) that 
the action complained of is alleged to have violated; 
(2) a specific description of each act alleged to have violated the statutory or 
regulatory provision(s) identified in paragraph (1) of this subsection; 
(3) a precise statement of the relevant facts; 
(4) an identification of the issue or issues to be resolved;
(5) argument and authorities in support of the protest; and 
(6) a statement that copies of the protest have been mailed or delivered to 
other identifiable interested persons. 
(d) The Manager may settle and resolve the dispute concerning the solicitation 
or award of a contract by mutual agreement with the protesting person. The 
Manager may solicit written responses to the protest from other interested 
persons. 
(e) If the protest is not resolved by mutual agreement, the Manager will issue a 
written determination on the protest. 
(1) If the Manager determines that no violation of rules or statutes has 
occurred, he or she shall inform the protesting person and other interested 
persons by letter which sets forth the reasons for the determination.
(2) If the Manager determines that a violation of the rules or statutes has 
occurred in a case where a contract has not been awarded, he or she shall inform 
the protesting person and other interested persons by letter that sets forth the 
reasons for the determination and the appropriate remedial action. 
(3) If the Manager determines that a violation of the rules or statutes has 
occurred in a case where a contract has been awarded, he or she shall inform the 
protesting person and other interested persons by letter which sets forth the 
reasons for the determination, which may include ordering the contract void. 
(f) After the Manager's determination has been made, the aggrieved person or 
interested persons may request reconsideration of the Manager's determination to 
be made by the executive director or his designee. Such request must be in 
writing and must be received in the Purchasing Section no later than ten working 
days after the date of the Manager's determination, which shall be calculated 
from the date the Manager's letter is hand-delivered, delivered by a nationally 
recognized courier service, or mailed by certified or registered mail. The 
request shall be limited to review of the Manager's determination. Copies of the 
request must be mailed or delivered by the aggrieved person to other interested 
persons. The request must contain an affidavit that such copies have been 
provided. 
(g) The executive director shall either: 
(1) issue a final determination on the protest within 15 days after receipt of 
the aggrieved person's request for reconsideration; or 
(2) in his discretion, refer the matter to the commission for its consideration 
at a regularly scheduled open meeting. 
(h) When a request for reconsideration has been received by the executive 
director under subsection (f) of this section and has been referred to the 
commission by the executive director under subsection (g) of this section, the 
following requirements shall apply. 
(1) The request for reconsideration and responses of interested persons, if any, 
shall be filed with the chief clerk by the executive director.
(2) Copies of all documents filed with the chief clerk shall be mailed to the 
executive director, the appealing party, and all other interested persons, no 
later than the day of filing. 
(3) All interested persons who wish to make an oral presentation at the open 
meeting shall complete a public participation form and deliver it to the chief 
clerk's representative at the meeting. 
(4) The commission may consider oral presentations and written documents 
presented by staff and interested persons. 
(5) The commission's determination of the appeal shall be by commission order. 
(i) Unless good cause for delay is shown or the Manager or executive director 
determines that a protest or appeal raises issues significant to procurement 
practices or procedures, a protest or appeal that is not filed timely will not 
be considered. 
(j) A decision issued in response to a request for reconsideration, either by 
the commission, or in writing by the executive director, shall be the final 
administrative action of the commission. 
(k) In the event of a protest, all documents collected by the commission as part 
of a solicitation, evaluation, and/or award of a contract shall be retained by 
the commission for a period of four years to include the current fiscal year and 
three additional fiscal years. 

sec.11.3. Bid Opening and Tabulation.
(a) The commission adopts by reference the rules of the Texas General Services 
Commission in 1 TAC sec.113.5(b) (relating to Bid Submission, Bid Opening, and 
Tabulation) effective April 20, 1993. 
(b) The adoption of this rule is required by Texas Government Code, 
sec.2156.005(d), 75th Legislature, 1997. 
(c) Copies of the rule are filed in the Texas Natural Resource Conservation 
Commission's (TNRCC) Library, located at 12100 Park 35 Circle, Building A, 
Austin, and at all TNRCC regional offices. 
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 31, 1998.
TRD-9812099
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: October 21, 1998
For further information, please call: (512) 239-1966

CHAPTER 113.Control of Air Pollution From Toxic Materials
SUBCHAPTER B.Lead From Stationary Sources
The commission proposes the repeal of sec.sec.113.31-113.37, 113.41-113.48, 
113.51-113.54, and 113.61-113.68, concerning Lead from Stationary Sources and a 
proposed revision to the State Implementation Plan (SIP) concerning these 
repeals. The commission also proposes new sec.113.55, concerning Radon Emissions 
from Phosphogypsum Stacks (40 CFR 61, Subpart R); a new division concerning 
Radionuclide National Emission Standards for Hazardous Air Pollutants (NESHAPs); 
and to change the title of Subchapter B from "Lead from Stationary Sources" to 
"National Emission Standards for Hazardous Air Pollutants (FCAA sec.112, 40 CFR 
61).
EXPLANATION OF PROPOSED RULES
This proposal is part of the regulatory reform effort. Regulatory reform 
projects identify rules and regulations which need clarification for the benefit 
of the public; are outdated; impose regulatory requirements in excess of their 
contribution to the commission's mission; or are duplicated, unnecessary, or 
inconsistent. This proposal is also a request for delegation of authority to 
implement one of the Title 40, Code of Federal Regulations, Part 61 (40 CFR 61) 
NESHAPs. 
The proposed repeals will eliminate lead rules which no longer apply to active 
lead sources. The lead rules for El Paso were adopted February 17, 1984, and for 
Dallas were adopted May 18, 1984, as a result of a primary lead smelter (ASARCO) 
located in El Paso County, and two secondary lead smelters (battery recycling 
facilities) located in Dallas County, which caused the counties to violate the 
National Ambient Air Quality Standard for lead. Subsequently, the lead processes 
in all three facilities were shut down and the equipment dismantled. The 
remaining lead emitting process (a copper process) in the El Paso facility is 
under very rigid permit control (New Source Review (NSR) permit number 20345) 
for lead emissions. Fugitive lead emissions from the ASARCO plant are 
effectively controlled by existing particulate rules in Chapter 111 (concerning 
Control of Air Pollution from Visible Emissions and Particulate Matter) which 
apply throughout El Paso. The fugitive lead emissions from outdoor storage piles 
are controlled by NSR permit number 4151 as well as controls found in 30 TAC 
sec.111.143, concerning Materials Handling. The fugitive lead emissions from the 
grounds and roads of the plant are controlled by permit number 20345 as well as 
controls found in 30 TAC sec.111.147(a)(1), concerning Roads, Streets, and 
Alleys. One of the sites in Dallas (known as the Dixie Metals Company or the 
Exide Corporation) has been remediated under the federal Superfund program, and 
the other site in Dallas (Murph Metals, Incorporated, a subsidiary of RSR 
Corporation) is proposed for a state and federally supported remediation. There 
are no other operational lead smelters located, or anticipated to be located, 
within El Paso or Dallas County; therefore, the subject rules are being proposed 
for repeal under rule streamlining. 
The proposed repeal of the existing Subchapter B, concerning Lead from 
Stationary Sources will be concurrent with a proposed new Subchapter B, 
concerning National Emission Standards for Hazardous Air Pollutants (FCAA 
sec.112, 40 CFR 61). The new Subchapter B will complement the existing 
Subchapter C, concerning National Emissions Standards for Hazardous Air 
Pollutants for Source Categories (FCAA sec.112, 40 CFR 63), which are 
requirements of the 1990 Federal Clean Air Act Amendments. Unlike other Part 61 
NESHAPs, Texas was not automatically delegated authority to implement any 
Radionuclide NESHAP. Part 61, Subpart R, Radon Emissions from Phosphogypsum 
Stacks, is actually one of seven standards that apply to various types of 
federal or industrial facilities which have potential emissions of radioactive 
substances (radionuclides). The United States Environmental Protection Agency 
(EPA) has requested that Texas take delegation of Subpart R. For the existing 
facilities to be in compliance under Part 61, Subpart R, the commission would be 
notified in advance of a Radon test so it may be observed. Ninety days after the 
test, the report would be sent to the commission. The test requires a 
statistical sampling approach which is unique from other requirements associated 
with air regulations. The operators will also submit an annual report to both 
the EPA and the appropriate commission regional office. 
FISCAL NOTE
Stephen Minick, Strategic Planning and Appropriations Division, has determined 
that for the first five-year period the proposed revisions are in effect there 
will be no significant fiscal implications for state or local government as a 
result of administration or enforcement of the rules. All lead processes in 
Dallas County and El Paso County have been shut down and therefore the need for 
Subchapter B no longer exists. Only a copper process which emits lead remains in 
an El Paso facility and is under very rigid permit control for lead emissions. 
The proposed new Subchapter B, concerning Radon Emissions from Phosphogypsum 
Stacks, will require review of existing records at facilities already being 
inspected by regional offices. 
PUBLIC BENEFIT 
Mr. Minick also has determined that for each year of the first five years the 
proposed sections are in effect, the public benefit anticipated from enforcement 
of and compliance with these sections will be a reduction in the emission of 
hazardous air pollutants, increased consistency between federal and state air 
quality regulations, and more cost effective implementation and enforcement of 
air quality standards. The economic impact of complying with the standards as 
they are promulgated will vary for each standard and for each industry subject 
to the standards; however, no additional economic impact to affected owners and 
operators is anticipated due to the state's adoption of the federal requirements 
or the delegation of enforcement to the state. There are no additional 
anticipated economic costs to persons or small businesses required to comply 
with the sections as proposed. All known facilities that the Radionuclide NESHAP 
would be applicable under do not meet the definition of small business as 
defined in Texas Government Code, sec.2006.002. The Radon Emissions from 
Phosphogypsum Stacks (40 CFR 61, subpart R) rule has been enforced by the EPA 
since 1992 and the state is only seeking delegation through this rule. Any 
financial impact that would be expected from this rule would be minimal. The 
repeal is removing requirements and therefore should have no economic impacts. 
DRAFT REGULATORY IMPACT ANALYSIS 
The commission has reviewed the proposed rulemaking in light of the regulatory 
analysis requirements of Texas Government Code, sec.2001.0225, and has 
determined that the rulemaking is not subject to sec.2001.0225 because it does 
not meet the definition of a "major environmental rule" as defined in the act, 
and it does not meet any of the four applicability requirements listed in 
sec.2001.0225(a). The repeal of the Subchapter B rules will not change the 
current level of protection of the environment. The proposed new rule does 
protect the environment and reduces risks to human health from environmental 
exposure, but does not meet the definition of a major environmental rule because 
the obligations have already been established by federal law and thus are not 
new requirements. The repeals and proposed new rule should not adversely affect 
the economy in a material way because the identified affected facilities are 
currently meeting the federal standard being enforced by EPA. Therefore, this 
does not meet the definition of a "major" environmental rule. 
TAKINGS IMPACT ASSESSMENT
The commission has prepared a Takings Impact Assessment for this proposal under 
Texas Government Code, sec.2007.043. The following is a summary of that 
assessment. The specific purpose of this rulemaking is to repeal lead rules 
because there is no longer a need due to the shut down and dismantling of the 
affected facilities. The adoption by reference of 40 CFR 61, Subpart R will give 
Texas the authority to enforce the federal standard. Promulgation and 
enforcement of this rulemaking will not affect private real property because the 
rules being proposed for repeal apply to non-existent or decommissioned 
facilities, and the rules being proposed for adoption already exist at the 
federal level and are currently enforced by EPA. 
COASTAL MANAGEMENT PLAN
The commission has determined that the proposed rulemaking concerning the 40 CFR 
61, Subpart R NESHAP relates to an action or actions subject to the Texas 
Coastal Management Program (CMP) in accordance with the Coastal Coordination Act 
of 1991, as amended (Texas Natural Resource Code, sec.sec.33.201 et. seq.), and 
the commission's rules in 30 TAC Chapter 281, Subchapter B, concerning 
Consistency with the Texas Coastal Management Program. The repeal of the lead 
rules should not relate due to the nonexistence of applicable sources in Texas. 
As required by 31 TAC sec.505.11(b)(2) and 30 TAC sec.281.45(a)(3), relating to 
actions and rules subject to the CMP, commission rules governing air pollutant 
emissions must be consistent with the applicable goals and policies of the CMP. 
The commission has reviewed this proposed action for consistency with the CMP 
goals and policies in accordance with the rules of the Coastal Coordination 
Council and has determined that the proposed action is consistent with the 
applicable CMP goals and policies. The CMP policy applicable to this rulemaking 
action is the policy that commission rules comply with regulations at 40 CFR, to 
protect and enhance air quality in the coastal area (31 TAC sec.501.14(q)). This 
proposal does not change existing requirements which already comply with 
regulations in 40 CFR, and is therefore consistent with this policy. Interested 
persons may submit comments on the consistency of the proposed rules with the 
CMP during the public comment period. 
PUBLIC HEARING 
Public hearings on the proposal will be held in Austin on September 8, 1998 at 
10:00 a.m. in Building F, Room 2210 of the Texas Natural Resource Conservation 
Commission complex, located at 12100 North IH-35, Park 35 Technology Center, 
Austin; and in El Paso on September 9, 1998, at 7:00 p.m. at the City of El Paso 
Council Chambers, 2 Civic Center Plaza, 2nd Floor. The hearings are structured 
for the receipt of oral or written comments by interested persons. Individuals 
may present oral statements when called upon in order of registration. Open 
discussion within the audience will not occur during the hearings; however, an 
agency staff member will be available to discuss the proposal 30 minutes prior 
to each hearing and answer questions before and after each hearing.
SUBMITTAL OF COMMENTS
Written comments may be submitted to Heather Evans, Office of Policy and 
Regulatory Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087, or 
faxed to (512) 239-4808. All comments should reference Rule Log No. 98006-113-
AI. Comments must be received by 5:00 p.m. September 14, 1998. For further 
information, please contact Phil Harwell of the Air Policy and Regulations 
Division, Office of Policy and Regulatory Development, (512) 239-1517. 
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the agency at (512) 
239-4900. Requests should be made as far in advance as possible. 

Division 1. Nonferrous Smelters in El Paso County
30 TAC sec.sec.113.31-113.37
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY 
The repeals are proposed under the Texas Health and Safety Code, Texas Clean Air 
Act (TCAA), sec.382.017, which provides the commission with the authority to 
adopt rules consistent with the policy and purpose of the TCAA because the 
primary purposes of this rulemaking are to repeal a subchapter which contains an 
air emission standard applicable to nonexisting sources and to propose the 
adoption by reference of a federal standard. 
The proposed repeals do not implement any new state or federal requirement, and 
are part of the regulatory reform effort. 
sec.113.31. Maintenance and Operation of Control Equipment.
sec.113.32. Areas Accessible to the General Public. 
sec.113.33. Control of Fugitive Dust. 
sec.113.34. Materials Handling and Transfer.
sec.113.35. Smelting of Lead. 
sec.113.36. Smelting of Copper and Zinc. 
sec.113.37. Lead Emissions Limits for Stacks.
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 31, 1998.
TRD-9812103
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 18, 1998
For further information, please call: (512) 239-1970

Division 2. Lead Smelters in Dallas County
30 TAC sec.sec.113.41-113.48
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
STATUTORY AUTHORITY
The repeals are proposed under the Texas Health and Safety Code, Texas Clean Air 
Act (TCAA), sec.382.017, which provides the commission with the authority to 
adopt rules consistent with the policy and purpose of the TCAA because the 
primary purposes of this rulemaking are to repeal a subchapter which contains an 
air emission standard applicable to nonexisting sources and to propose the 
adoption by reference of a federal standard. 
The proposed repeals do not implement any new state or federal requirement, and 
are part of the regulatory reform effort. 
sec.113.41. Maintenance and Operation of Control Equipment.
sec.113.42. Storage of Lead-Containing Materials.
sec.113.43. Transport of Materials.
sec.113.44. Fugitive Emissions from Lead Processes.
sec.113.45. Battery or Lead Reclaiming Operations.
sec.113.46. Lead Emission Limits for Reverberatory Furnaces and Blast Furnaces.
sec.113.47. Control of Fugitive Dust.
sec.113.48. Additional Measures to Reduce Lead Emissions.
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 31, 1998.
TRD-9812104
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 18, 1998
For further information, please call: (512) 239-1970

Division 3. Alternate Controls
30 TAC sec.sec.113.51-113.54
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
STATUTORY AUTHORITY 
The repeals are proposed under the Texas Health and Safety Code, Texas Clean Air 
Act (TCAA), sec.382.017, which provides the commission with the authority to 
adopt rules consistent with the policy and purpose of the TCAA because the 
primary purposes of this rulemaking are to repeal a subchapter which contains an 
air emission standard applicable to nonexisting sources and to propose the 
adoption by reference of a federal standard. 
The proposed repeals do not implement any new state or federal requirement, and 
are part of the regulatory reform effort. 
sec.113.51. Alternate Means of Control in El Paso County.
sec.113.52. Alternate Emission Reductions in El Paso County.
sec.113.53. Alternate Means of Control in Dallas County.
sec.113.54. Alternate Emission Reductions in Dallas County.
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 31, 1998.
TRD-9812105
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 18, 1998
For further information, please call: (512) 239-1970

SUBCHAPTER B.National emission Standards for Hazardous Air Pollutants (FCAA 
sec.112.40 CFR 61)
1. Radionuclide NESHAPs
30 TAC sec.113.55
STATUTORY AUTHORITY 
The new section is proposed under the Texas Health and Safety Code, Texas Clean 
Air Act (TCAA), sec.382.017, which provides the commission with the authority to 
adopt rules consistent with the policy and purposes of the TCAA because the 
primary purposes of this rulemaking are to repeal a subchapter which contains an 
air emission standard applicable to nonexisting sources and propose the adoption 
by reference of a federal standard. The new section is also proposed under the 
TCAA, sec.382.011, which provides the commission with the authority to control 
the quality of the state's air which the new proposed rule will accomplish by 
regulating emissions from phosphogypsum stacks. Under TCAA, sec.382.012, which 
provides for the commission to prepare and develop a general, comprehensive plan 
for the proper control of the state's air, the new proposed rule is one of many 
national standards developed for the overall control of hazardous air pollutants 
in the United States. The new rule is also proposed under TCAA, sec.382.016, 
which authorizes the commission to require monitoring requirements and 
examination of records and therefore is consistent with the referenced 
requirements. 
The authority for delegation of 40 CFR Part 61 for both the implementation and 
enforcement of NESHAPs is contained in sec.112(l) of the 1990 Federal Clean Air 
Act Amendments and 40 CFR 63, Subpart E, Approval of State Programs and 
Delegation of Federal Authorities. 

sec.113.55. Radon Emissions from Phosphogypsum Stacks (40 CFR 61, Subpart R). 
The National Emissions Standards for Radon Emissions from Phosphogypsum Stacks 
as specified in 40 CFR 61, Subpart R, as promulgated on June 3, 1992, are 
incorporated by reference. 
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 31, 1998.
TRD-9812106
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 18, 1998
For further information, please call: (512) 239-1970

SUBCHAPTER B.Lead From Stationary Sources
Division 4. Compliance and Control Plan Requirements
30 TAC sec.sec.113.61-113.68
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas Natural 
Resource Conservation Commission or in the Texas Register office, Room 245, 
James Earl Rudder Building, 1019 Brazos Street, Austin.) 
STATUTORY AUTHORITY
The repeals are proposed under the Texas Health and Safety Code, Texas Clean Air 
Act (TCAA), sec.382.017, which provides the commission with the authority to 
adopt rules consistent with the policy and purpose of the TCAA because the 
primary purposes of this rulemaking are to repeal a subchapter which contains an 
air emission standard applicable to nonexisting sources and to propose the 
adoption by reference of a federal standard. 
The proposed repeals do not implement any new state or federal requirement, and 
are part of the regulatory reform effort. 
sec.113.61. Compliance with Other Rules in El Paso County.
sec.113.62. Dates for Control Plan Submission and for Final Compliance in El 
Paso County.
sec.113.63. Control Plan Procedure in El Paso County.
sec.113.64. Reporting Procedure in El Paso County.
sec.113.65. Compliance with Other Rules in Dallas County.
sec.113.66. Dates for Control Plan Submission and for Final Compliance in Dallas 
County.
sec.113.67. Control Plan Procedure in Dallas County.
sec.113.68. Reporting Procedure in Dallas County.
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 31, 1998.
TRD-9812107
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 18, 1998
For further information, please call: (512) 239-1970

CHAPTER 114.Control of Air Pollution From Motor Vehicles
SUBCHAPTER G.Transportation Planning
30 TAC sec.114.260
The commission withdraws the proposed amendments to Chapter 114, Subchapter G, 
sec.114.260, concerning Transportation Conformity, and a proposed revision to 
the State Implementation Plan (SIP) concerning Transportation Conformity as 
published in the April 24, 1998 issue of the Texas Register (23 TexReg 4134). 
The commission also proposes a new set of amendments to Chapter 114, Subchapter 
G, sec.114.260, concerning Transportation Conformity, and a new proposed 
revision to the SIP concerning Transportation Conformity. 
EXPLANATION OF PROPOSED RULE
The Texas transportation conformity rule (sec.114.260) and its associated SIP 
were adopted on October 19, 1994, in response to the Federal Clean Air Act 
(FCAA) requirements. The FCAA required states to submit a revision to their SIP 
no later than November 25, 1994 establishing enforceable criteria and procedures 
for making conformity determinations for metropolitan transportation plans, 
transportation improvement programs, and projects funded by the Federal Highway 
Administration (FHWA) or the Federal Transit Administration (FTA). Emissions 
estimates of transportation plans, programs, and projects must be found to 
conform with their corresponding emissions estimates or budgets contained in the 
applicable SIP before they are approved or funded by the U. S. Department of 
Transportation or the Metropolitan Planning Organizations (MPOs) in 
nonattainment and maintenance areas. Failure to demonstrate transportation 
conformity will result in a partial loss of federal highway funding. The Texas 
transportation conformity SIP and rule were approved by the U. S. Environmental 
Protection Agency (EPA) on November 8, 1995. Since their initial promulgation, 
EPA has amended the federal transportation conformity rules three times; on 
August 7, 1995, November 14, 1995, and August 15, 1997. As a result of the 
August 15, 1997 amendments, Texas is required to amend the SIP and state 
transportation conformity rule to incorporate the federal amendments by August 
15, 1998. The proposed amendments were initially published in the April 24, 1998 
issue of the Texas Register (23 TexReg 4134), and a public hearing was held on 
May 13, 1998. Six persons attended the hearing and one person presented oral 
testimony. In addition, there were a total of two persons who provided written 
comments. As part of their testimony, EPA stated that the rule as proposed did 
not include all the requirements of 40 CFR sec.93.105(c)(4) regarding the 
responsibilities of non-federal entities to report the design or construction 
plans, or changes to the existing plans, to the MPO. Due to the fact that the 
original proposal did not include the responsibilities for these non-federal 
entities, the rule must be reproposed through the Texas Register. In addition, 
the suggested changes from other commenters were incorporated into the new 
proposal. All comments previously submitted will be addressed in the analysis of 
testimony after the second hearing and comment period. Therefore, persons who 
submitted comments for the first proposal do not have to resubmit those comments 
for the second proposal.
The proposed amendments will incorporate, by reference, the August 15, 1997, 
amendments to the federal transportation conformity rule (40 CFR, Part 51 
Subpart T and Part 93 Subpart A) with the exception of sec.93.102(d) and 
sec.93.105. Section 93.102(d) established a grace period for new nonattainment 
areas and has been disallowed as a result of the Sierra Club versus EPA federal 
court case on November 4, 1997. Section 93.105 requires states to develop their 
own consultation procedures subject to EPA guidelines. Chapter 114, sec.114.260 
establishes the interagency and public consultation procedures consistent with 
the EPA guidelines.
Most of the amendments to the federal transportation conformity rule are 
organizational changes or are slightly less stringent in nature. However, the 
amendment that requires a nonattainment area to demonstrate transportation 
conformity to a nitrogen oxides (NO<sub>x) motor vehicle emissions budget, 
regardless of the area's NO<sub>x waiver status, is more stringent than the 
current Texas transportation conformity rule. The proposed revisions to 
sec.114.260 will adopt the new federal NO<sub>x requirements by reference.
This proposed rule revision will also simplify the transportation control 
measure (TCM) requirements by deleting references to sec.114.270(d), which is 
the TCM Enforcement Rule. Instead of being required to develop new TCMs 
consistent with the transportation conformity process to make up an emissions 
reduction shortfall, the nonattainment and maintenance area MPOs would only be 
required to ensure timely TCM implementation and report the implementation and 
emissions reductions status of adopted TCMs annually to the commission.
The proposed rule adds the requirements of 40 CFR sec.93.105(c)(4) regarding the 
responsibilities of non-federal entities to report the design or construction 
plans, or changes to the existing plans, for regionally significant 
transportation projects which are not FHWA-FTA projects to the MPO. This 
revision is found in proposed sec.114.260(d)(2)(C).
In addition, this proposed rule will clarify the transportation conformity 
determination process by identifying who makes the determinations, who issues 
the joint conformity finding, and when the conformity is effective. MPOs and 
their governing bodies, or the Texas Department of Transportation (TxDOT), if 
applicable, would make the transportation conformity determinations. Upon 
completion of the transportation conformity review process, the FHWA and the FTA 
would issue a joint conformity finding, indicating the transportation conformity 
status of the documents under review. The transportation conformity would be 
effective on the date of the joint FHWA-FTA conformity finding. Finally, the 
rule states that the new transportation conformity procedures will be effective 
on the effective date of the EPA approval of the SIP and rule.
FISCAL NOTE
Stephen Minick, Strategic Planning and Appropriations Division, has determined 
that for the first five-year period this rule as proposed is in effect, there 
may be significant fiscal implications for state or local government as a result 
of administration or enforcement of the rule. One of the federal rule amendments 
requires nonattainment or maintenance areas to demonstrate transportation 
conformity to a NO<sub>x mobile source emissions budget, regardless of the 
area's NO<sub>x waiver status. Current MPO officials in Texas nonattainment 
areas predict that it will be extremely difficult to demonstrate transportation 
conformity for NO<sub>x. If they cannot, highway sanctions will be imposed, 
resulting in a partial loss of federal highway funding for implementing 
agencies. Additional resources will be needed to develop NO<sub>x mobile source 
emissions budgets and sufficient on-road mobile source NO<sub> x emissions 
control strategies to ensure an area's compliance.
The other rule amendments will have minimal fiscal impact. All of the affected 
agencies are subject to the requirements of the current transportation 
conformity rule, so the effect of the rule amendments will be minimal. These 
rule amendments would not increase or decrease costs for these agencies. There 
will be no significant fiscal implications to the commission.
PUBLIC BENEFIT
Mr. Minick also has determined that for each year of the first five years the 
rule as proposed is in effect, the public benefit of this rule will be the 
limitation of on-road mobile source emissions to those specified in the SIP, 
which will result in the reduction and/or stabilization of on-road mobile source 
emissions and contribute to cleaner air. These proposed rules target state/local 
government agencies and transportation planning organizations and specify the 
processes by which they plan transportation projects and allocate federal 
transportation monies. Therefore, because there are no recordkeeping, reporting, 
or compliance requirements for entities other than government agencies and 
planning organizations, there will be no adverse impact and no economic costs to 
persons or businesses (small or large) as a result of compliance with the 
proposed rule.
DRAFT REGULATORY IMPACT ANALYSIS
The proposed rulemaking is a "major environmental rule" because it deals with 
the construction of highway and other transportation projects within the 
nonattainment and maintenance areas of the state, most of which are major 
metropolitan areas. Incorporation of the new federal transportation conformity 
requirements by reference means that all nonattainment and maintenance areas 
will be required to demonstrate conformance of a budget for NO<sub> x or be 
subject to loss of highway or other transportation funding. Under the existing 
rules, the nonattainment areas have not been required to conform to the NO<sub>x 
budget.
However, the proposed rulemaking does not meet the other criteria for being 
subject to Texas Government Code (TGC) sec.2001.0025 because it does not exceed 
a standard set by federal law; there is no express requirement of state law 
regarding the subject matter of this rule, and federal law does require this 
rule; does not exceed a requirement of a delegation agreement or contract to 
implement a state and federal program; is not being proposed solely under the 
general powers of the commission; and is not being proposed on an emergency 
basis to reduce risks to human health from environmental exposure.
Therefore, the commission has reviewed the proposed rulemaking in light of the 
regulatory analysis requirements of TGC sec.2001.0225, and has determined that 
the rulemaking is not subject to TGC sec.2001.0025. 
The commission invites public comment on the draft Regulatory Impact Analysis. 
TAKINGS IMPACT ASSESSMENT
The commission has prepared a Takings Impact Assessment for this rule pursuant 
to TGC sec.2007.043. The following is a summary of that assessment. The specific 
purpose of the rule amendment is to meet the federal requirement to incorporate 
recent EPA changes to the federal transportation conformity rule, which requires 
all transportation plans, programs, and projects in nonattainment or maintenance 
areas to conform to the SIP. Other proposed amendments would simplify and reduce 
TCM requirements and clarify the transportation conformity determination 
process. The rule amendment will substantially advance this specific purpose by 
incorporating the required sections of the federal transportation conformity 
rule, as amended on August 15, 1997, by reference and including specific 
language that simplifies TCM requirements and clarifies the transportation 
conformity determination process. Promulgation and enforcement of this rule 
amendment will not affect private real property which is the subject of the rule 
because the proposed rule only serves to ensure that transportation plans, 
programs, and projects in nonattainment and maintenance areas conform with the 
SIP.
COASTAL MANAGEMENT PROGRAM
The commission has determined that this rulemaking action is subject to the 
Texas Coastal Management Program (CMP) in accordance with the Coastal 
Coordination Act of 1991, as amended (Texas Natural Resources Code, 
sec.sec.33.201 et. seq.), the rules of the Coastal Coordination Council (31 TAC 
Chapters 501-506), and the commission's rules in 30 TAC Chapter 281, Subchapter 
B, concerning Consistency with the Texas Coastal Management Program. As required 
by 31 TAC sec.505.11(b)(2) and 30 TAC sec.281.45(a)(3) relating to actions and 
rules subject to the CMP, agency rules governing air pollutant emissions must be 
consistent with the applicable goals and policies of the CMP. The commission has 
reviewed this action for consistency, and has determined that this rulemaking is 
consistent with the applicable CMP goals and policies. The primary CMP policy 
applicable to this rulemaking action is the policy that commission rules comply 
with regulations at 40 CFR to protect and enhance air quality in the coastal 
area. This rule amendment merely adopts the changes EPA has made to 40 CFR Parts 
51 and 93, and therefore, is in agreement with the CMP policy governing air 
pollutant emissions. In compliance with 31 TAC sec.505.22(e), the commission 
affirms that this rule is consistent with CMP goals and policies. Interested 
persons may submit comments on the consistency of the proposed rules with the 
CMP during the public comment period.
PUBLIC HEARING
A public hearing on this proposal will be held September 8, 1998 at 2:00 p.m. in 
Building F, Room 2210 at the Texas Natural Resource Conservation Commission 
complex, located at 12100 North IH-35, Park Technology Center, Austin. 
Individuals may present oral statements when called upon in order of 
registration. Open discussion within the audience will not occur during the 
hearing; however, an agency staff member will be available to discuss the 
proposal 30 minutes prior to the hearing and will answer questions before and 
after the hearing. All comments previously submitted will be addressed in the 
analysis of testimony after the second hearing and comment period. Therefore, 
persons who submitted comments for the first proposal do not have to resubmit 
those comments for the second proposal.
SUBMITTAL OF COMMENTS
Written comments may be mailed to Heather Evans, Office of Policy and Regulatory 
Development, MC 205, P.O. Box 13087, Austin, Texas 78711-3087 or faxed to (512) 
239-4808. All comments should reference Rule Log Number 98003-114-AI. Comments 
must be received by 5:00 p.m., September 14, 1998. For further information, 
please contact Cathy Stephens, Air Quality Planning and Assessment Division, 
(512)239-1749 or Alan J. (Buddy) Henderson, Air Policy and Regulations Division, 
(512)239-1510.
Persons with disabilities who have special communication or other accommodation 
needs who are planning to attend the hearing should contact the commission at 
(512) 239-4900. Requests should be made as far in advance as possible.
STATUTORY AUTHORITY
This amendment is proposed under the TCAA, Texas Health and Safety Code, 
sec.382.017, which provides the commission with the authority to adopt rules 
consistent with the policy and purposes of the TCAA. Revisions to sec.114.260 
are also proposed under TCAA, sec.382.011, which provides the commission with 
the authority to control the quality of the state's air; sec.382.012, which 
provides for the commission to prepare and develop a general, comprehensive plan 
for the proper control of the state's air; sec.382.016, concerning monitoring 
requirements and examinations of records; and sec.382.019, which provides the 
commission with the authority to adopt rules to control and reduce emissions 
from engines used to propel land vehicles.
The amendment implements FCAA, sec.176(c) as amended (42 USC 7401 et seq.). 

sec.114.260. Transportation Conformity.
(a) Purpose. The purpose of this section is to implement the requirements set 
forth in Title 40 of the Code of Federal Regulations (40 CFR) <nl>Part 93, 
Subpart A <ol> [Part 51, Subpart T] (relating to Conformity to State or Federal 
Implementation Plans of Transportation Plans, Programs, and Projects Developed, 
Funded, or Approved Under Title 23 United States Code or the Federal Transit 
<nl>Laws <ol> [Act]), which are the regulations developed by the EPA under the 
FCAA Amendments of 1990, sec.176(c). It includes policy, criteria, and 
procedures <nl>to demonstrate <ol> [for demonstrating] and <nl>assure <ol> 
[assuring] conformity of transportation planning activities with the State 
Implementation Plan (SIP).
(b) Applicability. This section applies to transportation-related pollutants for 
which an area is designated nonattainment or is subject to a maintenance plan. 
The pollutants include ozone, carbon monoxide, nitrogen dioxide, particles with 
an aerodynamic diameter of [less than or equal to[sub]10) <nl>and smaller, <ol> 
and the precursors of those pollutants. The affected nonattainment and 
maintenance areas are listed in sec.101.1 of this title (relating to 
Definitions). 
(c) CFR incorporation. <nl>The Transportation Conformity Rules, as specified in 
40 CFR 93, Subpart A, (62 FR 43780) dated August 15, 1997, are incorporated by 
reference with the exception of sec.93.102(d) and sec.93.105. The requirements 
of sec.93.105 are addressed in this section. <ol> [The provisions promulgated in 
the following listed sections of 40 CFR, Part 51, Subpart T, dated November 24, 
1993 are hereby incorporated by reference: sec.sec.51.392, 51.394, 51.398, 
51.400, 51.404, 51.406, 51.408, 51.410, 51.412, 51.414, 41.416, 51.418, 51.420, 
51.422, 51.424, 51.426, 51.428, 51.430, 51.432, 51.434, 51.436, 51.438, 51.440, 
51.442, 51.444, 51.446, 51.448, 51.450, 51.452, 51.454, 51.456, 51.458, 51.460, 
51.462, and 51.464.
(d) Consultation. Under <nl>40 CFR, sec.93.105,<ol> [40 CFR, sec.51.402] 
regarding consultation, the following procedures shall be undertaken in 
nonattainment and maintenance areas before making conformity determinations and 
before adopting applicable SIP revisions. 
(1) General factors. 
(A) For the purposes of this subsection, concerning consultation, the affected 
agencies shall include: 
(i)-(vii) (No change.) 
(viii) local air quality agencies in nonattainment or maintenance areas 
(recipients of FCAA, sec.105 funds)<nl>.<ol>[ ;] 
(B) All correspondence with the affected agencies in subparagraph (A) of this 
paragraph shall be addressed to the following designated <nl> points <ol> 
[point] of contact: 
(i)-(v) (No change.) 
(vi) FTA: Director of Office of Program Development <nl> or designee <ol> - FTA 
Region 6 [, or designee]; 
(vii) EPA: Regional Administrator <nl>or designee <ol> - EPA Region 6 [, or 
designee]; 
(viii)-(xi) (No change.) 
(2) Roles and responsibilities of affected agencies. 
(A) The MPO, in cooperation with TxDOT and publicly owned transit services, 
shall consult with the agencies in paragraph (1)(A) of this subsection in the 
development of Metropolitan Transportation Plans (MTPs), Transportation 
Improvement Programs (TIPs), projects, technical analyses, travel demand or 
other modeling, and data collection. Specifically, the MPOs shall: 
(i) allow the commission's Air Quality Planning and Assessment <nl> Division 
<ol> Director, or a designated representative, to <nl>be a voting member <ol> 
[participate in meetings] of technical committees on surface transportation and 
air quality in each nonattainment and maintenance area in order to consult 
directly with the particular committee during the development of the 
transportation plans, programs, and projects; 
(ii) send information on time and location, an agenda, and supporting materials 
(including preliminary versions of MTPs and TIPs) for all regularly scheduled 
meetings on surface transportation or air quality to each of the agencies 
specified in paragraph (1)(B) of this subsection. <nl> This <ol> [Such] 
information shall be provided in accordance with the locally adopted public 
involvement process as required by 23 CFR, Part 450, sec.450.316(b)(1); 
(iii) (No change.) 
(iv) for the purposes of regional emissions analysis, initiate a consultation 
process with the affected agencies specified in paragraph (1)(A) of this 
subsection during the development stage of new or revised MTPs and TIPs to 
determine which transportation projects should be considered regionally 
significant and which projects should be considered to have a significant change 
in design concept and scope from the effective MTP and TIP. Regionally 
significant projects will include, at a minimum, all facilities classified as 
principal arterial or higher, or fixed guideway systems or extensions that offer 
an alternative to regional highway travel. Also, these include minor arterials 
included in the travel demand modeling process which serve significant 
interregional and intraregional travel, and connect rural population centers not 
already served by a principal arterial, or connect with intermodal 
transportation terminals not already served by a principal arterial. A 
significant change in design concept and scope is defined as a revision of a 
project in the MTP or TIP that would significantly affect model speeds, vehicle 
miles traveled, or network connec- tions. In addition to new facilities, 
examples [may] include changes in the number of through lanes or length of 
project (more than one mile), access control, addition of major intermodal 
terminal facilities (such as new international bridges, park-and-ride lots, and 
transfer terminals), addition/deletion of inter- changes, or changing between 
free and toll facilities. When a significant change in the design and scope of a 
project is proposed, the MPO shall document the rationale for the change and 
give the affected agencies specified in paragraph (1)(A) of this subsection a 
30-day opportunity to comment on their rationale. The MPO shall consider the 
views of each agency that comments, and respond in writing <nl>before <ol> 
[prior to] any final action on these issues. If the MPO receives no comments 
within 30 days, the MPO may assume concurrence by the agencies specified in 
paragraph (1)(A) of this subsection; 
(v) include in the TIP a list of projects exempted from the requirements of a 
conformity determination under <nl>40 CFR, Part 93, sec.93.126 and 93.127 <ol> 
[40 CFR, Part 51, sec.51.460 and sec.51.462]. The MPO shall consult with the 
affected agencies specified in paragraph (1)(A) of this subsection in 
determining if a project on the list has potentially adverse emissions for any 
reason, including whether or not the exempt project will interfere with 
implementation of an adopted transportation control measure (TCM). The MPO shall 
respond in writing to all comments within 30 days on final MTP and TIP 
documents. <nl>In addition, if <ol> [If] no comments are received as part of the 
<nl>subsequent <ol> public involvement process for the TIP, the MPO may proceed 
with implementation of the exempt project.
(vi) notify the affected agencies specified in paragraph (1)(A) of this 
subsection in writing of any MTP or TIP revisions or amendments which add or 
delete the exempt projects identified in <nl>40 CFR, sec.93.126 <ol> [40 CFR, 
sec.51.460]; 
(vii) as required by <nl>40 CFR, sec.93.116, and sec.93.123 <ol> [40 CFR, 
sec.51.424 and sec.51.454 of the final EPA transportation conformity rule], 
<nl>and in cooperation with TxDOT, <ol> make a preliminary identification of 
those projects located at sites in PM<sub> 10 nonattainment and maintenance 
areas that require quantitative PM<sub>10 Hot Spot analyses. After these 
projects have been identified, the MPO shall submit a list of these projects and 
sufficient data to the agencies specified in paragraph (1)(A) of this subsection 
for review and comment; 
(viii)-(ix) (No change.) 
(x) [under sec.114.270 of this title (relating to Transportation Control 
Measures),] ensure [the] timely <nl>TCM <ol> implementation [of TCMs] and report 
[to the commission annually] on the <nl>implementation and emissions reductions 
<ol> status of adopted TCMs <nl>annually to the commission.<ol> [If alternative 
TCMs or other reduction measures are deemed necessary, and these are not already 
included in the SIP, the MPO shall develop new TCMs with equal or greater 
emissions reductions consistent with the MTP, TIP, SIP, and conformity 
requirements, under sec.114.270(d) of this title. Any changes in TCMs will be 
coordinated with the affected agencies specified in paragraph (1)(A) of this 
subsection];
(xi)-(xii) (No change.) 
(B) <nl>The <ol> commission, as the lead air quality planning agency, shall work 
in consultation with the agencies specified in paragraph (1)(A) of this 
subsection in developing applicable transportation related SIP revisions, air 
quality modeling, general emissions analysis, emissions inventory, and all 
related activities. Specifically, the commission shall:
(i) (No change.) 
(ii) schedule public hearings in order to gather public input on the applicable 
transportation-related SIP revisions <nl>in accordance with 40 CFR, sec.51.102 
<ol> and notify the agencies specified in paragraph (1)(B) of this subsection of 
the hearings [according to 40 CFR, sec.51.102
(iii) (No change.) 
(iv) after consultation with the MPO regarding TCMs [under sec.114.270(a) of 
this title], distribute to all agencies specified in paragraph (1)(B) of this 
subsection and other interested persons the list of TCMs proposed for inclusion 
in the SIP. In consultation with the agencies specified in paragraph (1)(A) of 
this subsection, the commission shall determine whether past obstacles to 
implementation of TCMs have been identified and are being overcome, and 
determine whether the MPOs and the implementing agencies are giving maximum 
priority to approval or funding for TCMs. Also, the commission shall consider, 
in consultation with the affected agencies, whether delays in TCM implementation 
necessitate a SIP revision to remove TCMs or <nl>to <ol> substitute TCMs or 
other emission reduction measures. 
<nl>(v)<ol> <nl> consult with the applicable agencies specified in paragraph 
(1)(A) of this subsection, in order to cooperatively choose conformity tests and 
methodologies for isolated rural nonattainment and maintenance areas, as 
required by 40 CFR, sec.93.109(g)(2)(iii). <ol>
<nl>(C)<ol> <nl> Any group, entity, or individual planning to construct a 
regionally significant transportation project which is not an FHWA-FTA project 
(including projects for which alternative locations, design concept and scope, 
or the no-build option are still being considered) must disclose project plans 
to the MPO on a regular basis and disclose any changes to those plans 
immediately. This requirement also applies to recipients of funds designated 
under Title 23 U.S.C. or the Federal Transit Laws. <ol>
(3) General procedures. 
(A)-(B) (No change.) 
(C) For the purposes of evaluating and choosing a model (or models) and 
associated methods and assumptions to be used in Hot-Spot and Regional Emissions 
Analyses, <nl>agencies specified in paragraph (1)(A) of this subsection shall 
participate in a working group identified as the Technical Working Group for 
Mobile Source Emissions (TWG). The frequency of meetings and agendas for them 
will be cooperatively determined by the agencies specified in paragraph (1)(A) 
of this subsection. <ol> [the commission shall establish a working group 
identified as the Transportation and Air Quality Technical (TAQT) Working Group. 
The TAQT Working Group shall include the agencies specified in paragraph (1)(A) 
of this subsection. The frequency of meetings and agendas for them will be 
determined by the commission in cooperation with the agencies specified in 
paragraph (1)(A) of this subsection.] The function of this working group may be 
delegated to an existing group with similar composition and purpose.
(D) The commission, affected MPOs, <nl>affected local air quality agencies, <ol> 
and TxDOT shall cooperatively evaluate events which will trigger the need for 
new conformity determinations. New conformity determinations may be triggered by 
events established in 40 CFR, <nl>sec.93.104 <ol> [sec.51.400] as well as other 
events, including emergency relief projects that require substantial functional, 
locational, and capacity changes, or in the event of any other unforeseeable 
circumstances. 
<nl>(E)<ol> <nl> The MPO and its governing body, or TxDOT if applicable, shall 
make conformity determinations for all MTPs, TIPs, regionally significant 
projects, and all other events as required by 40 CFR, Part 93, Subpart A and 
this section. Upon completion of the transportation conformity determination 
review process (including consultation, public participation, and all other 
requirements of this section), FHWA and FTA will issue a joint conformity 
finding, indicating the transportation conformity status of the document(s) 
under review. The effective date of the conformity determination for an area is 
the date of the joint conformity finding made by FHWA-FTA. <ol>
(4) Conflict resolution. 
(A) The commission and the MPO (or TxDOT where appropriate) shall make a good-
faith effort to address the major concerns of the other party in the event they 
are unable to reach agreement on the conformity determination of a proposed MTP 
or TIP. The efforts shall include meetings of the agency executive 
directors<nl>, <ol> if necessary. 
(B) In the event that the MPO or TxDOT determines that every effort has been 
made to address the <nl>commission's <ol> [commission] concerns, and that no 
further progress is possible, the MPO or TxDOT shall notify the commission 
executive director in writing to this effect. This subparagraph shall be cited 
by the MPO or TxDOT in any notification of a conflict which may require action 
by the Governor, or his or her delegate under subparagraph (C) of this 
paragraph. 
(C) The commission has 14 calendar days from date of receipt of 
notification<nl>, <ol> as required in subparagraph (B) of this paragraph, to 
appeal to the Governor. If the commission appeals to the Governor, the final 
conformity determination must then have the concurrence of the Governor. The 
Governor may delegate his or her role in this process, but not to the commission 
or <nl>commission <ol> staff [of the commission], a local air quality agency, 
the Texas Transportation Commission or [staff of ]TxDOT <nl>staff,<ol> or an 
MPO. This subparagraph shall be cited by the commission in any notification of a 
conflict which may require action by the Governor or his or her delegate. If the 
commission does not appeal to the Governor within 14 calendar days from receipt 
of written notification, the MPO or TxDOT may proceed with the final conformity 
determination. 
(5) Public comment on conformity determinations. Consistent with the 
requirements of 23 CFR, Part 450, concerning public involvement, the agencies 
<nl>making conformity determinations on transportation plans, programs, and 
projects <ol> [specified in paragraph (1)(A)of this subsection] shall establish 
a <nl>proactive <ol> public involvement process which provides opportunity for 
public review and comment<nl>. This process shall, at a minimum, provide 
reasonable public access to technical and policy information considered by the 
agency at the beginning of the public comment period and before <ol> [prior to] 
taking formal action on conformity determinations for all MTPs and TIPs<nl>, as 
required by 23 CFR sec.450.316 (b) and this section. Any charges imposed for 
public inspection and copying should be consistent with the fee schedule 
contained in 49 CFR sec.7.95. <ol> In addition, these agencies shall address in 
writing any public comment claiming that an non-FHWA/FTA funded, regionally 
significant project has not been properly represented in the conformity 
determination for an MTP or TIP. <nl> Finally <ol> [Also], these agencies shall 
provide opportunity for public involvement in conformity determinations for 
projects where otherwise required by law. 
(6) (No change.) 
<nl>(e)<ol> <nl>Effective date. The revisions to this section adopted by the 
commission on and filed with the secretary of state on shall be in effect on the 
date of EPA approval of the transportation conformity SIP associated with this 
rule.<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 31, 1998.
TRD-9812102
Kevin McCalla
Director, Legal Division
Texas Natural Resource Conservation Commission
Proposed date of adoption: November 4, 1998
For further information, please call: (512) 239-1970

TITLE 40. SOCIAL SERVICES AND ASSISTANCE
PART XII. Texas Board of Occupational Therapy Examiners
CHAPTER 362. Definitions
40 TAC sec.362.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.362.1, 
concerning Definitions. This amended section does the following: 1. Revises the 
definition "Occupational Therapy". 2. Revises the definitions of "Complete 
Application" and "Complete Renewal" to include a jurisprudence examination. 3. 
Adds a definition of "Jurisprudence Examination". 4. Revises the definitions of 
various types of supervision, including "General Supervision" of COTAs and LOTAs 
and "Continuing Supervision" of temporary licensees. 5. Revises the definition 
of "OT Aide or Orderly". 6. Adds a definition of "Occupational Therapy Plan of 
Care". 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be more effective supervision of persons involved in the delivery of 
occupational therapy, better public understanding of what can be expected of 
occupational therapy, and occupational therapy licensees who are better informed 
about the rules governing the profession in Texas. There will be no effect on 
small business. No economic cost is anticipated for persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section.

sec.362.1. Definitions. 
The following words and terms, when used in this part, shall have the following 
meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> Act - The Occupational Therapy Practice Act, Texas Civil Statutes, 
Article 8851. 
<nl>(2)<ol> AOTA - American Occupational Therapy Association. 
<nl>(3)<ol> Applicant - A person who applies for a license to the Texas Board of 
Occupational Therapy Examiners. 
<nl>(4)<ol> Application Review Committee - Reviews and makes recommendations to 
the board concerning applications which require special consideration. 
<nl>(5)<ol> Board - The Texas Board of Occupational Therapy Examiners (TBOTE). 
<nl>(6)<ol> Certified Occupational Therapy Assistant, (COTA) - An alternate term 
for a Licensed Occupational Therapy Assistant. An individual who uses this term 
must hold a regular or provisional license to practice or represent self as an 
occupational therapy assistant in Texas and must practice under the general 
supervision of an OTR or LOT. An individual who uses this term is responsible 
for ensuring that he or she is otherwise qualified to use it. 
<nl>(7)<ol> Class A Misdemeanor - An individual adjudged guilty of a Class A 
misdemeanor shall be punished by: 
(A) a fine not to exceed $3,000; 
(B) confinement in jail for a term not to exceed one year; or 
(C) both such fine and imprisonment (Vernon's Texas Codes Annotated, Penal Code, 
sec.12.21). 
<nl>(8)<ol> Close Personal Supervision - Implies direct, on-site contact whereby 
the supervising OTR, LOT, COTA or LOTA is able to respond immediately to the 
needs of the patient. 
<nl>(9)<ol> Complete Application - Notarized application form with photograph, 
license fee, <nl>jurisprudence examination with at least 70% of questions 
answered correctly <ol> and all other required documents. 
<nl>(10)<ol> Complete Renewal - Contains renewal fee, continuing education 
record card (if applicable), home/work address(es) and phone number(s), 
<nl>jurisprudence examination with at least 70% of questions answered correctly 
<ol> and supervision <nl>log <ol>[form ](if applicable). 
<nl>(11)<ol> Consultation - The provision of occupational therapy expertise to 
an individual or institution. This service may be provided on a one time only 
basis or on an ongoing basis. 
<nl>(12)<ol> Continuing Education Committee - Reviews and makes recommendations 
to the board concerning continuing education requirements and special 
consideration requests. 
<nl>(13)<ol> Continuing Supervision, OT - Includes, at a minimum, the following:
<nl>(A)<ol> Frequent communication between the supervising OTR or LOT and the 
temporary licensee by telephone, written report or conference, including the 
review of progress of patients/clients assigned to the OT. 
<nl>(B)<ol> Face-to-face encounters twice a month where the OTR or LOT directly 
observes the temporary licensee providing OT services to one or more 
patients/clients. 
[Continuing Supervision, OT - Includes frequent, face-to-face meetings which 
occur at the worksite of the temporary licensee and regular interim 
communication between the supervising OTR or LOT and the temporary licensee by 
telephone, written report, or conference. The contact must occur at the worksite 
of the temporary licensee at minimum on a weekly basis.] 
<nl>(14)<ol> Continuing Supervision, OTA - Includes, at a minimum, the 
following: 
<nl>(A)<ol> Frequent communication between the supervising OTR or LOT and the 
temporary licensee by telephone, written report or conference, including the 
review of progress of patients/clients assigned to the OTA.
<nl>(B)<ol> Face-to-face encounters twice a month where the OTR or LOT directly 
observes the temporary licensee providing OT services to one or more 
patients/clients. 
<nl>(C)<ol> Sixteen hours of supervision per month must be documented for a 
full-time OTA. A part-time OTA may prorate the documented supervision, but shall 
document no less than eight hours per month. 
[Continuing Supervision, OTA - Includes frequent, face-to-face meetings which 
occur at the worksite of the temporary licensee and regular interim 
communication between the supervising OTR or LOT and the temporary licensee by 
telephone, written report, or conference. The contact must occur at the worksite 
of the temporary licensee at minimum on a weekly basis. Sixteen hours of 
supervision per month must be documented and can include the minimum weekly 
supervisory contacts made at the worksite of the temporary licensee.] 
<nl>(15)<ol> Coordinator of Occupational Therapy Program - The employee of the 
Executive Council who carries out the functions of the Texas Board of 
Occupational Therapy Examiners. 
<nl>(16)<ol> Direct Service - Refers to the provision of occupational therapy 
services to individuals to develop, improve, and/or restore occupational 
functioning. 
<nl>(17)<ol> Evaluation - Refers to a process of determining an individual's 
status for the purpose of determining the need for occupational therapy services 
or for implementing a treatment program. 
<nl>(18)<ol> Examination -The Examination as provided for in Section 17 of the 
Act. The current Examination is the initial certification Examination given by 
the National Board for Certification in Occupational Therapy (NBCOT). 
<nl>(19)<ol> Executive Council - The Executive Council of Physical Therapy and 
Occupational Therapy Examiners. 
<nl>(20)<ol> Executive Director - The employee of the Executive Council who 
functions as its agent. The Executive Council delegates implementation of 
certain functions to the Executive Director. 
<nl>(21)<ol> First Available Examination - Refers to the first scheduled 
Examination after successful completion of all educational requirements. 
<nl>(22)<ol> General Supervision - Includes, at a minimum, the following: 
<nl>(A)<ol> Frequent communication between the supervising OTR or LOT and the 
regular or provisional COTA or LOTA by telephone, written report or conference, 
including the review of progress of patients/clients assigned to the COTA or 
LOTA. 
<nl>(B)<ol> Eight hours of supervision per month must be documented for a full-
time COTA or LOTA. Twenty-five percent of the required documented supervision 
time must consist of face-to-face encounters where the OTR or LOT directly 
observes the COTA or LOTA providing OT services to one or more patients/clients. 
<nl>(C)<ol> A part-time COTA or LOTA may prorate the documented supervision. 
[General Supervision - Includes frequent, weekly face-to-face meetings at the 
worksite and regular interim communication between the OTR or LOT and the COTA 
or LOTA by telephone, written report, or conference.] 
<nl>(23)<ol> Investigation Committee - Reviews and makes recommendations to the 
board concerning complaints and disciplinary actions regarding licensees and 
facilities. 
<nl>(24)<ol> Investigator - The employee of the Executive Council who conducts 
all phases of an investigation into a complaint filed against a licensee, an 
applicant, or an entity regulated by the board. 
<nl>(25)<ol> Jurisprudence Examination - An examination covering information 
contained in the Texas Occupational Therapy Practice Act and Texas Board of 
Occupational Therapy Examiners rules. This test is an open book examination with 
multiple choice or true-false questions. The passing score is 70%. 
<nl>(26)<ol> License - Document issued by the Texas Board of Occupational 
Therapy Examiners which authorizes the practice of occupational therapy in 
Texas. 
<nl>(27)<ol> Licensed Occupational Therapist (LOT) - A person who holds a valid 
regular or provisional license to practice or represent self as an occupational 
therapist in Texas. 
<nl>(28)<ol> Licensed Occupational Therapy Assistant (LOTA) - A person who holds 
a valid regular or provisional license to practice or represent self as an 
occupational therapy assistant in Texas and who is required to practice under 
the general supervision of an OTR or LOT. 
<nl>(29)<ol> Medical Condition - A condition of acute trauma, infection, disease 
process, psychiatric disorders, addictive disorders, or post surgical status 
where prudence and custom require the services of a physician. 
<nl>(30)<ol> Monitored Services - The checking on the status/condition of 
students, patients, clients, equipment, programs, services, and staff in order 
to make appropriate adjustments and recommendations. Minimum contact for the 
purpose of monitoring will be one time a month. 
<nl>(31)<ol> NBCOT (formerly AOTCB) - National Board for Certification in 
Occupational Therapy (formerly American Occupational Therapy Certification 
Board). 
<nl>(32)<ol> Non-Medical Condition - A condition where the ability to perform 
occupational roles is impaired by developmental disabilities, learning 
disabilities, the aging process, sensory impairment, psycho-social dysfunction, 
or other such conditions which does not require the routine intervention of a 
physician. 
<nl>(33)<ol> Occupational Therapist (OT) - A person who holds a Temporary 
License to practice as an occupational therapist in the state of Texas, who is 
waiting to receive results of taking the first available Examination, and who is 
required to be under continuing supervision of an OTR or LOT. 
<nl>(34)<ol> Occupational Therapist, Registered (OTR) - An alternate term for a 
Licensed Occupational Therapist. An individual who uses this term must hold a 
regular or provisional license to practice or represent self as an occupational 
therapist in Texas. An individual who uses this term is responsible for ensuring 
that he or she is otherwise qualified to use it. 
<nl>(35)<ol> Occupational Therapy - The use of purposeful activity or 
intervention to achieve functional outcomes. Achieving functional outcomes means 
to develop or facilitate restoration of the highest possible level of 
independence in interaction with the environment. Occupational Therapy provides 
services to individuals limited by physical injury or illness, a dysfunctional 
condition, cognitive impairment, psychosocial dysfunction, mental illness, a 
developmental or learning disability or an adverse environmental condition, 
whether due to trauma, illness or condition present at birth. Occupational 
therapy services include but are not limited to: 
<nl>(A)<ol> The evaluation / assessment, treatment and education of or 
consultation with the individual, family or other persons; 
<nl>(B)<ol> interventions directed toward developing, improving or restoring 
daily living skills, work readiness or work performance, play skills or leisure 
capacities; 
<nl>(C)<ol> intervention methodologies to develop, restore or maintain 
sensorimotor, oral-motor, perceptual or neuromuscular functioning; joint range 
of motion; emotional, motivational, cognitive or psychosocial components of 
performance. 
[Occupational Therapy - The evaluation and treatment of individuals whose 
ability to perform life roles is threatened or impaired by developmental 
deficits, the aging process, environmental deprivation, sensory impairment, 
physical injury or illness, or psychological or social dysfunction. Occupational 
therapy utilizes therapeutic goal-directed activities to evaluate, prevent, or 
correct physical, mental, or emotional dysfunction or to maximize function in 
the life of the individual. Such activities are applied in the treatment of 
patients on an individual basis, in groups, or through social systems, by means 
of direct or monitored treatment or consultation.] 
<nl>(36)<ol> Occupational Therapy Assistant (OTA) - A person who holds a 
Temporary License to practice as an occupational therapy assistant in the state 
of Texas, who is waiting to receive results of taking the first available 
Examination, and who is required to be under continuing supervision of an OTR or 
LOT. 
<nl>(37)<ol> Occupational Therapy Plan of Care - A written statement of the 
planned course of Occupational Therapy intervention for a patient/client. It 
must include goals, objectives and/or strategies, recommended frequency and 
duration, and may also include methodologies and/or recommended activities. 
<nl>(38)<ol> OT Aide or OT Orderly - A person who aids in the practice of 
occupational therapy and whose activities require on-the-job training and 
<nl>close personal <ol> [on-site] supervision by an OTR, LOT, COTA or LOTA. 
<nl>(39)<ol> Physician - An individual licensed by the Texas State Board of 
Medical Examiners, e.g., Medical Doctors (M.D.) and Doctors of Osteopathy 
(D.O.). 
<nl>(40)<ol> Place(s) of Business - Any facility in which a licensee practices 
<nl>(41)<ol> Practice - Providing occupational therapy as a clinician, 
practitioner, educator, or consultant. Only a person holding a license from 
TBOTE may practice occupational therapy in Texas. 
<nl>(42)<ol> Provisional License - A license issued by TBOTE to an applicant who 
holds a valid license in good standing from another state, District of Columbia, 
or territory of the United States requesting licensure; or a license issued to 
an applicant who has passed the Examination and who has been employed as an OTR, 
LOT, COTA or LOTA within five years of the receipt date of current, complete 
application for licensure with TBOTE. 
<nl>(43)<ol> Recognized Educational Institution - An educational institution 
offering a course of study in occupational therapy that has been accredited or 
approved by the American Occupational Therapy Association. 
<nl>(44)<ol> Regular License - A license issued by TBOTE to an applicant who has 
met the academic requirements and who has passed the Examination. 
<nl>(45)<ol> Rules - Refers to the TBOTE Rules. 
<nl>(46)<ol> Screening - A process or tool used to determine a potential need 
for occupational therapy interventions. This information may be compiled using 
observation, medical or other records, the interview process, self reporting, 
and/or other documentation. 
<nl>(47)<ol> Temporary License - A license issued by TBOTE to an applicant who 
meets all the qualifications for a license except taking the first available 
Examination after completion of all education requirements; or a license issued 
to an applicant who has passed the Examination but has not been employed as an 
OTR, LOT, COTA or LOTA for five years or more from the receipt date of current, 
complete application for licensure with TBOTE. 
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 August 3, 1998.
TRD-9812206
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 364. Requirements for Licensure
40 TAC sec.364.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.364.1, 
concerning Requirements For Licensure. This amended section adds a requirement 
for a jurisprudence exam to other requirements for licensure.
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be occupational therapy licensees who are better informed about the 
rules governing the profession in Texas. There will be no effect on small 
business. No economic cost is anticipated for persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section.

sec.364.1. Requirements for Licensure.
(a) Unless exempted by sec.15 of the Act, an applicant for a license must have 
successfully completed requirements in accordance with sec.16 of the Act. 
(1) (No change.) 
(2) Examination requirements in accordance with sec.17 of the Act. 
(A) To become an occupational therapist or occupational therapy assistant, the 
applicant must pass the <nl>National Board for Certification in Occupational 
Therapy (NBCOT)<ol> [American Occupational Therapy Certification Board (AOTCB)] 
certification examination. 
(B) The accepted passing score is the one set by the <nl> NBCOT<ol> [AOTCB] . 
(C) (No change.) 
(b) (No change.) 
<nl>(c)<ol> All applicants must complete and return a board prepared 
jurisprudence examination (as defined in sec.362.1 of this title (relating to 
Definitions)). The test will be scored by TBOTE staff. At least 70% of questions 
must be answered correctly.
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 August 3, 1998.
TRD-9812207
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 366. Application for License
40 TAC sec.366.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.366.1, 
concerning Application for License. This amended section does the following: 1. 
Simplifies the process of obtaining an application for a license. 2. Corrects 
references to other chapters concerning licensure fees. 3. Describes how the 
requirement for a jurisprudence examination will be implemented for applicants 
for a license. 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be occupational therapy licensees who are better informed about the 
rules governing the profession in Texas and simpler application procedures. 
There will be no effect on small business. No economic cost is anticipated for 
persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section. 

sec.366.1. Application for License.
<nl>(a)<ol> Individuals wishing to obtain an application for licensure can 
phone, fax, write or e-mail the board. 
[(a) Individuals wishing to obtain an application for licensure can phone or 
write the board. A request for application must indicate which type of license 
is being requested (refer to sec.365.1 of this title (relating to Types of 
Licenses)).] 
(b) (No change.)
(c) An individual who makes application to the board in excess of 12 months 
after passing the <nl>NBCOT<ol> [AOTCB] certification examination may need to 
meet additional continuing education requirements during the first year of 
licensure. 
<nl>(d)<ol> A license may be issued upon receipt of a complete application 
(refer to sec.362.1 of this title (relating to Definitions)) and payment of the 
prescribed fee (refer to sec.375.1 of this title (relating to Fees) and 
sec.651.1 of this title (relating to Occupational Therapy Board Fees) of the 
Executive Council of Physical Therapy and Occupational Therapy Examiners and 
upon meeting applicable requirements (refer to sec.364.1 of this title (relating 
to Requirements for Licensure)). 
[(d) A license may be issued upon receipt of a complete application (refer to 
sec.362.1 of this title (relating to Definitions)) and payment of the prescribed 
fee (refer to sec.368.1 of this title (relating to Fees)) and upon meeting 
applicable requirements (refer to sec.364.1 of this title (relating to 
Requirements for Licensure)).] 
(e) (No change.)
<nl>(f)<ol> All applicants must complete and return a board prepared 
jurisprudence examination (as defined in sec.362.1 of this title). The test will 
be scored by TBOTE staff. At least 70% of questions must be answered correctly. 
(1) A passing score on the jurisprudence examination will be noted in the 
application file, and the test will be returned to the applicant upon issuance 
of a license. 
<nl>(2)<ol> A failing score on the jurisprudence examination will be noted in 
the application file and a new test will be sent to the applicant to complete. 
Once a passing score on the jurisprudence examination is achieved, that will be 
noted in the application file and the test will be returned to the applicant 
upon issuance of a license. 
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 August 3, 1998.
TRD-9812208
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 370. License Renewal
40 TAC sec.370.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.370.1, 
concerning License Renewal. This amended section does the following: 1. Removes 
obsolete language concerning the transition from annual to biennial renewals. 2. 
Describes how the requirement for a jurisprudence examination will be 
implemented for persons renewing their licenses. 3. Clarifies that all elements 
of a renewal must be postmarked before the expiration date, including a passing 
jurisprudence exam. 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be occupational therapy licensees who are better informed about the 
rules governing the profession in Texas and clearer procedures for license 
renewal. There will be no effect on small business. No economic cost is 
anticipated for persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section.

sec.370.1. License Renewal.
(a) Renewal of an unexpired license shall be in accordance with the Act, sec.24, 
and renewal of an expired license shall be in accordance with the Act, sec.25. 
<nl>(1)<ol> Regular licenses must be renewed every two years. Renewals are due 
by the end of the licensee's birth month.
<nl>(2)<ol> For each biennial renewal, licensees must submit 30 contact hours of 
continuing education. These 30 contact hours must have been obtained in the 24 
months immediately preceding the renewal month. (See Chapter 367 of this title 
(relating to Continuing Education)) [(1) Biennial renewal. Licensees holding a 
regular license are required to renew their licenses biennially by the end of 
their birthday month.] 
[(2) Implementation of the two-year renewal will occur in two phases. 
Implementation of these phases will begin January 1996.] 
[(A) Licensees whose last digit in their license number is even will renew their 
licenses for two years. They are required to submit 15 contact hours of 
continuing education with the renewal which is required in 1996. These 15 
contact hours of continuing education must have been obtained in the 12 months 
prior to their birthday month. For their 1998 and beyond biennial renewal, they 
must submit 30 contact hours of continuing education. These 30 contact hours 
must have been obtained in the 24 months prior to their birthday month.] 
[(B) Licensees whose last digit in their license number is odd will initially 
renew their licenses for only one year. They are required to submit 15 contact 
hours of continuing education with the renewal which is required in 1996. These 
15 contact hours of continuing education must have been obtained in the 12 
months prior to their birthday month. For their 1997 renewal, they must submit 
15 contact hours of continuing education. These 15 contact hours must have been 
obtained in the 12 months prior to their birthday month. For their 1999 and 
beyond biennial renewal, they must submit 30 contact hours of continuing 
education. These 30 contact hours must have been obtained in the 24 months prior 
to their birthday month.] 
(b) (No change.)
<nl>(c)<ol> All licensees must complete and return a board prepared 
jurisprudence examination (as defined in sec.362.1 of this title (relating to 
Definitions)) as part of the renewal application. The test will be scored by 
TBOTE staff. At least 70% of questions must be answered correctly. 
<nl>(1)<ol> A passing score on the jurisprudence examination will be noted in 
the licensee file, and the test will be returned to the licensee upon issuance 
of a renewal certificate. 
<nl>(2)<ol> A failing score on the jurisprudence examination will be noted in 
the licensee file and a new test will be sent to the licensee to complete. Once 
a passing score on the jurisprudence examination is achieved, that will be noted 
in the licensee file and the test will be returned to the licensee upon issuance 
of a renewal certificate. 
<nl>(d)<ol> [(c)] To be assured receipt of a license renewal certificate or 
written verification of licensure for display purposes, the complete renewal 
application must be postmarked by the fifteenth of the month preceding the birth 
month. 
<nl>(e)<ol> [(d)] For the purpose of assessing late fees, the board considers a 
complete renewal (refer to sec.362.1 of this title (relating to Definitions)) 
on-time if it is postmarked not later than the expiration date of the license. 
<nl>(f)<ol> If the renewal application does not include all requirements for a 
complete renewal (refer to sec.362.1 of this title), it is not complete. If the 
required additional material is not postmarked by the expiration date, the 
licensee must pay the late fee before a renewal certificate is issued. 
<nl>(g)<ol> [(e)] A licensee who fails to renew his or her license by the 
expiration date and continues to work as an OTR, LOT, COTA or LOTA shall be 
subject to disciplinary action. 
<nl>(h)<ol> [(f)]A license shall not be renewed if a licensee has defaulted on a 
Guaranteed Student Loan from the Texas Guaranteed Student Loan Corporation 
(TGSLC). Upon notice from TGSLC that a repayment agreement has been established, 
the license shall be renewed. 
(1) On receipt of notification that an individual is in default on a guaranteed 
student loan, the coordinator shall immediately determine whether or not the 
board has issued a license to the obligator named in the notification. 
(2) The licensee will be notified the license will not be allowed to be renewed 
while the guaranteed student loan remains in default status. 
(3) If the licensee remains in default past the expiration of the license, the 
license will be expired and cannot be renewed until paragraph (5) of this 
subsection has been met. 
(4) An individual who continues to use the titles "occupational therapist, 
registered" (OTR), "licensed occupational therapist" (LOT), "certified 
occupational therapy assistant" (COTA), "licensed occupational therapy 
assistant" (LOTA), "occupational therapist" (OT), or "occupational therapy 
assistant" (OTA) after the expiration of the license is practicing in violation 
of the Act and rules and shall be subject to disciplinary action. 
(5) On notification from the guaranteed student loan program that a repayment 
agreement has been established, the licensee shall be informed of such receipt. 
If the license is current or if it has been expired for less than one year from 
receipt date of notification, the licensee will be notified of the opportunity 
to renew the license. If the licensee elects to renew his/her license, the 
licensee must submit a complete renewal application, including any and all 
license renewal fees and late renewal fees, as applicable. 
(6) If the license has been expired for one year or more from receipt date of 
such notification, the licensee will be notified that he or she is subject to 
sec.25 of the Act and may not renew the license. 
(7) If the licensee remains in default past the expiration of a temporary 
license, extended temporary license, or provisional license, the license will be 
expired. The license will not be converted to a regular license until paragraph 
(5) of this subsection is met. 
<nl>(i)<ol> [(g)] The board shall suspend a license for failure to pay child 
support according to requirements as set forth in these rules. 
(1) On receipt of a final court or attorney general's order suspending a license 
due to failure to pay child support, the coordinator shall immediately verify 
whether the board has issued a license to the obligator named on the order. If a 
license has been issued the board shall: 
(A) record the suspension of the license in the board's records and licensee's 
file; 
(B) report the suspension as appropriate; and 
(C) demand surrender of the suspended license. 
(2) The board shall implement the terms of a final court or attorney general's 
order suspending a license without additional review or hearing by the board. 
The board will provide appropriate notice to the licensee and to any entity to 
which the licensee provides occupational therapy services. 
(3) The board may not modify, remand, reverse, vacate, or stay a court or 
attorney general's order suspending a license issued under the Family Code, 
Chapter 232 as added by Acts 1995, 74th Legislature Chapter 751, sec.85 (House 
Bill 433) and may not review, vacate, or reconsider the terms of an order. 
(4) A licensee who is the subject of a final court or attorney general's order 
suspending the license is not entitled to a refund for any fee paid to the 
board. 
(5) If a suspension overlaps a license renewal period, an individual with a 
license suspended under this section shall comply with the routine renewal 
procedures in the Act and rules. The license will not be renewed until paragraph 
(8) of this subsection is met. 
(6) If a suspension overlaps a period during which a temporary license, extended 
temporary license, or provisional license should be converted to a regular 
license, an individual with a license suspended under this section shall comply 
with the routine conversion procedures in the Act and rules. The license will 
not be converted to a regular license until paragraph (8) of this subsection is 
met. 
(7) An individual who continues to use the titles and/or initials "occupational 
therapist, registered" (OTR), "licensed occupational therapist" (LOT), 
"certified occupational therapy assistant" (COTA), "licensed occupational 
therapy assistant" (LOTA), "occupational therapist" (OT), or "occupational 
therapy assistant" (OTA) after the issuance of a court or attorney general's 
order suspending the license is liable for the same penalties as stated in 
sec.28 of the Act. 
(8) Upon the board's receipt of a court or attorney general's order vacating or 
staying an order suspending a license, the board shall reissue the license to 
the individual, provided no other restrictions exist and all applicable fees 
have been paid. 
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 August 3, 1998.
TRD-9812209
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 371. Inactive/Retiree Status
40 TAC sec.371.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.371.1, 
concerning Inactive Status. This amended section adds a requirement for a 
jurisprudence exam to other requirements for renewal of inactive status. 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be occupational therapy licensees who are better informed about the 
rules governing the profession in Texas. There will be no effect on small 
business. No economic cost is anticipated for persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section. 

sec.371.1. Inactive Status. 
A request for a change to inactive status, in accordance with sec.25A of the 
Act, may only be made at renewal date. 
(1)-(4) (No change.) 
<nl>(5)<ol> A licensee on inactive status must complete and return the 
jurisprudence examination (as defined in sec.362.1 of this title (relating to 
Definitions)) at the time of renewal for either inactive or active status. At 
least 70% of questions must be answered correctly. 
<nl>(6)<ol> [(5)] A licensee on inactive status will not have to pay a renewal 
fee but will have to pay an appropriate late fee if he/she does not notify the 
board prior to the expiration of the license of his/her intent to remain on 
inactive status. A licensee will have to pay a fee to change to active status. 
<nl>(7)<ol> [(6)] A licensee may not represent himself/herself as an OTR, LOT, 
COTA or LOTA while on inactive status. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on August 3, 1998.
TRD-9812210
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 372. Provision of Services
40 TAC sec.372.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.372.1, 
concerning Provision of Services. This amended section does the following: 1. 
Requires that an Occupational Therapy plan of care must be prepared by an OTR or 
LOT. 2. Specifies general parameters for discharging patients. 3. Adds a general 
description of the role of the COTA or LOTA in the provision of care. 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be more clearly defined requirements for the delivery of OT services. 
There will be no effect on small business. No economic cost is anticipated for 
persons having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section. 

sec.372.1. Provision of Services.
(a) (No change.) 
<nl>(b)<ol> A COTA or LOTA may assist in the provision of OT services as 
specified in sec.373.1 (b) of this title (relating to Supervision). 
<nl>(c)<ol> [(b)] Screening and Evaluation 
(1) Screening for occupational therapy services must be initiated and completed 
by a TBOTE licensee. 
(2) Occupational therapy intervention may not be provided without an 
occupational therapy evaluation completed by an OTR or LOT. [A COTA or LOTA may 
assist in the evaluation as specified in sec.373.1 (b) (4) of this title 
(relating to Supervision).] 
<nl>(d)<ol> [(c)] Occupational Therapy Plan of Care Development 
(1) An occupational therapy plan of care must be based on an occupational 
therapy evaluation. 
<nl>(2)<ol> The occupational therapy plan of care (refer to sec.362.1 of this 
title (relating to Definitions)) must be developed by an OTR or LOT. 
<nl>(3)<ol> [(2)] An occupational therapy plan of care may be integrated into an 
interdisciplinary plan of care, but occupational therapy goals or objectives 
must be easily identifiable in the plan of care. 
<nl>(4)<ol> [(3)] Only an OTR or LOT may change an occupational therapy plan of 
care. 
<nl>(e)<ol> [(d)] Occupational Therapy Plan of Care Implementation 
(1) Only licensed occupational therapy personnel may implement an occupational 
therapy plan of care. 
(2) Only licensed occupational therapy personnel may train non-licensed 
individuals to carry out specific tasks that support the occupational therapy 
plan of care. 
<nl>(f)<ol> [(e)] Discharge 
(1) An OTR or LOT has authority to discharge patients from occupational therapy 
services. 
<nl>(2)<ol> The OTR or LOT shall discharge a patient or client when the patient 
or client has achieved predetermined goals; has achieved maximum benefit from OT 
services; or when other circumstances warrant discontinuation of occupational 
therapy services. 
[(2) The occupational therapy discharge summary must be completed by an OTR or 
LOT. A COTA or LOTA may assist in the discharge as specified in sec.373.1 (b) 
(6).] 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on August 3, 1998.
TRD-9812211
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

CHAPTER 373. Supervision
40 TAC sec.373.1
The Texas Board of Occupational Therapy Examiners proposes amended sec.373.1, 
concerning Supervision. This amended section does the following: 1. Clarifies 
the requirements for recording supervision of COTAs, LOTAs and OTAs on the 
supervisory log. 2. Requires that tasks delegated to COTAs or LOTAs must be 
those that the OTR and COTA agree are within the competency of the COTA. 3. 
Defines the tasks in each phase of service provision that are restricted to the 
OTR or LOT or can be delegated to the COTA or LOTA. 4. Requires that a licensee 
interact with the patient during each treatment session with an aide. 5. 
Clarifies that a temporary licensee may not supervise a COTA or LOTA. 
John P. Maline, Executive Director of the Executive Council of Physical Therapy 
and Occupational Therapy Examiners, has determined that for the first five-year 
period the rule is in effect there will be no effect on state or local 
government. 
Mr. Maline also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be improved supervision of persons providing OT services. There will 
be no effect on small business. No economic cost is anticipated for persons 
having to comply. 
Comments on the proposed rule may be submitted to Alicia Dimmick Essary, OT 
Coordinator, Texas Board of Occupational Therapy Examiners, 333 Guadalupe, Suite 
2-510, Austin, Texas 78701-3942. 
The amended section is proposed under the Occupational Therapy Practice Act, 
Texas Civil Statutes, Article 8851, which provides the Texas Board of 
Occupational Therapy Examiners with the authority to adopt rules consistent with 
this Act to carry out its duties in administering this Act.
Texas Civil Statutes, Article 8851 is affected by this amended section. 

sec.373.1. Supervision.
(a) Occupational Therapists, Registered or Licensed Occupational Therapists 
(OTRs or LOTs) are fully responsible for the planning and delivery of 
occupational therapy services. 
(1) The supervising OTR or LOT <nl>is responsible<ol> [has overall 
responsibility] for providing the supervision necessary to protect the health 
and welfare of the consumer receiving OT services from a COTA, LOTA, temporary 
licensee, or OT aide or orderly. 
(2) (No change.)
<nl>(3)<ol> The COTA, LOTA or temporary licensee is responsible for the 
execution of his or her professional duties.
[(3) However, this does not absolve the COTA, LOTA or temporary licensee from 
his or her professional responsibilities.] 
<nl>(b)<ol> Supervision of COTAs. 
<nl>(1)<ol> The OTR or LOT shall delegate responsibilities to the COTA or LOTA 
that are within the scope of his or her training. 
<nl>(2)<ol> A COTA or LOTA shall provide occupational therapy services only 
under the general supervision of a licensed OTR or LOT. (See Chapter 362 of this 
title (relating to Definitions)) 
<nl>(A)<ol> General supervision (See Chapter 362 of this title (relating to 
Definitions)) of COTAs or LOTAs must be documented on an "Occupational Therapy 
Supervision Log" prescribed by the board. COTAs and LOTAs employed part time or 
with more than one employer shall pro rate the required documented supervision. 
<nl>(i)<ol> The "Occupational Therapy Supervision Log" must be kept by the COTA 
or LOTA and a copy of this form must be maintained by each employer. 
<nl>(ii)<ol> The "Occupational Therapy Supervision Log" must be submitted to 
TBOTE with the COTA's or LOTA's renewal application. 
<nl>(B)<ol> The supervising OTR or LOT need not be physically present or on the 
premises at all times. 
(3) <nl>Except where otherwise restricted by rule, the supervising OTR or LOT 
may only delegate tasks to a COTA or LOTA that the OTR or LOT and COTA or LOTA 
agree are within the competency level of that COTA or LOTA. <ol> 
<nl>(A)<ol> A COTA or LOTA may initiate and perform the screening process and 
collect information for the OTR's or LOT's review. The OTR or LOT is responsible 
for determining if intervention is needed and if a physician's referral is 
required for evaluation and/or occupational therapy intervention. 
<nl>(B)<ol> An OTR or LOT is responsible for the patient's 
evaluation/assessment. The supervising OTR or LOT may delegate to a COTA or LOTA 
the collection of data or information for the evaluation. 
<nl>(i)<ol> The OTR or LOT is responsible for the accuracy of evaluative 
information collected by the COTA or LOTA. 
<nl>(ii)<ol> The OTR or LOT must have face-to-face interaction with the patient 
or client during the evaluation process. 
<nl>(C)<ol> Only an OTR or LOT may develop or modify an Occupational Therapy 
plan of care (refer to sec.362.1 of this title (relating to Definitions)). 
<nl>(D)<ol> The OTR or LOT is responsible for the content and validity of the 
discharge summary and must sign the discharge summary.
<nl>(4)<ol> It is the responsibility of the OTR or LOT and the COTA or LOTA to 
ensure that all documentation prepared by the COTA or LOTA which becomes part of 
the patient's/client's permanent record is approved and co-signed by the 
supervising OTR or LOT. Occupational Therapy notes must be initialed by the OTR 
or LOT and signed at the bottom of each page. 
<nl>(5)<ol> These rules shall not preclude the COTA or LOTA from responding to 
emergency situations in the patient's condition which require immediate action. 
[(b) Supervision of COTAs.] 
[(1) The OTR or LOT shall delegate responsibilities to the COTA or LOTA that are 
within the scope of his or her training.] 
[(2) A COTA or LOTA shall provide occupational therapy services only under the 
general supervision of a licensed OTR or LOT. (See Chapter 362 of this title 
(relating to Definitions))] 
[(A) A minimum of eight hours of supervision per month for full time COTAs or 
LOTAs must be documented on an "Occupational Therapy Supervision Log" prescribed 
by the board. COTAs and LOTAs employed part time shall prorate the required 
supervision.] 
[(i) The "Occupational Therapy Supervision Log" must be kept by the COTA or LOTA 
and a copy of this form must be maintained by the facility where the COTA or 
LOTA provides services. One "Occupational Therapy Supervision Log" must be 
completed for each separate employer.] 
[(ii) The "Occupational Therapy Supervision Log" must be submitted to TBOTE with 
the COTA's or LOTA's renewal application.] 
[(B) The manner of supervision shall depend on the treatment setting, 
patient/client caseload, and the competency of the COTA or LOTA as determined by 
the supervising OTR or LOT.] 
[(C) The supervising OTR or LOT need not be physically present or on the 
premises at all times.] 
[(3) A COTA or LOTA may initiate and perform the screening process and collect 
information for the OTR's or LOT's review. The OTR or LOT is responsible for 
determining if intervention is needed and if a physician's referral is required 
for evaluation and/or occupational therapy intervention.] 
[(4) An OTR or LOT is responsible for completing the patient's 
evaluation/assessment. The supervising OTR or LOT may delegate any evaluative 
task to a COTA or LOTA that the OTR or LOT and COTA or LOTA agree is within the 
competency level of that COTA or LOTA.] 
[(5) An OTR or LOT is responsible for developing and modifying the patient's 
treatment plan. The treatment plan must include the following components: goals, 
interventions/modalities, frequency, and duration.] 
[(6) An OTR or LOT assumes responsibility for the patient's discharge summary. 
The supervising OTR or LOT may delegate any discharge-related task to a COTA or 
LOTA that the OTR or LOT and COTA or LOTA agree is within the competency level 
of that COTA or LOTA.] 
[(7) It is the responsibility of the OTR or LOT and the COTA or LOTA to ensure 
that all documentation prepared by the COTA or LOTA which becomes part of the 
patient's/client's permanent record is co-signed by the supervising OTR or LOT. 
Occupational Therapy notes must be initialed by the OTR or LOT and signed at the 
bottom of each page.] 
[(8) These rules shall not preclude the COTA or LOTA from responding to 
emergency situations in the patient's condition which require immediate action.] 
(c) Supervision of an OT Aide or OT Orderly. 
(1) (No change.)
<nl>(2)<ol> The OTR, LOT, COTA or LOTA must interact with the patient regarding 
the patient's condition, progress and/or achievement of goals during each 
treatment session. 
<nl>(3)<ol> [(2)] An OTR, LOT, COTA and/or LOTA using OT Aide or OT Orderly 
personnel to assist with the provision of occupational therapy services must 
provide close personal supervision in order to protect the health and welfare of 
the consumer. (See Chapter 362 of this title) 
<nl>(4)<ol> [(3)] Delegation of tasks to OT Aides or OT Orderlies. 
(A) The primary function of an OT Aide or OT Orderly functioning in an 
occupational therapy setting is to perform designated routine tasks related to 
the operation of an occupational therapy service. An OTR, LOT, COTA and/or LOTA 
may delegate to an OT Aide or OT Orderly only specific tasks which are not 
evaluative or recommending in nature, and only after insuring that the OT Aide 
or OT Orderly has been properly trained for the performance of the tasks. Such 
tasks include, but are not limited to: 
(i) routine department maintenance; 
(ii) transportation of patients/clients; 
(iii) preparation or setting up of treatment equipment and work area; 
(iv) assisting patients/clients with their personal needs during treatment; 
(v) assisting in the construction of adaptive equipment and splints; 
(vi) clerical, secretarial, administrative activities; 
(vii) carrying out a predetermined segment or task in the patient's care. 
(B) The OTR, LOT, COTA and/or LOTA shall not delegate to an OT Aide or OT 
Orderly: 
(i) performance of occupational therapy evaluative procedures; 
(ii) initiation, planning, adjustment, modification, or performance of 
occupational therapy procedures requiring the skills or judgment of an OTR, LOT, 
COTA or LOTA; 
(iii) making occupational therapy entries directly in patients' or clients' 
official records; 
(iv) acting on behalf of the occupational therapist in any matter related to 
occupational therapy which requires decision making or professional judgment. 
(d) Supervision of an occupational therapist or an occupational therapy 
assistant with a temporary license. 
[(1) Temporary Licenses:] 
<nl>(1)<ol> [(A)]A person issued a temporary occupational therapy license must 
practice occupational therapy under the continuing supervision of an OTR or LOT. 
(See Chapter 362 of this title) 
<nl>(2)<ol> [(B)]A minimum of 16 hours of supervision per month for full time 
OTAs must be documented on an "Occupational Therapy Supervision Log" prescribed 
by the board. OTAs employed part time <nl> or with more than one employer<ol> 
shall prorate the required <nl>documented <ol>supervision. If the OTA is 
employed less than 20 hours per week, a minimum of eight hours of supervision is 
required per month. [The "Occupational Therapy Supervision Log" must be kept by 
the OTA, and a copy of this form must be maintained by the facility where the 
OTA provides services. One "Occupational Therapy Supervision Log" must be 
completed for each separate employer.] 
<nl>(A)<ol> The "Occupational Therapy Supervision Log" must be kept by the OTA 
and a copy of this form must be maintained by each employer. 
<nl>(B)<ol> The "Occupational Therapy Supervision Log" must be submitted to 
TBOTE with the COTA's first renewal application after regular licensure. 
<nl>(3)<ol> [(C)] The temporary licensee <nl> must <ol> [will] certify to the 
board [as to] the name, license number[,] and address of his or her supervisor 
on a form provided by the board during the application process. 
<nl>(4)<ol> [(D)] The temporary licensee must notify the board within 15 days of 
a change in the OTR or LOT supervisor. 
<nl>(5)<ol> [(E)] The temporary licensee shall not supervise an occupational 
therapy student, <nl>a COTA or LOTA, <ol>an occupational therapy assistant[,] or 
an OT Aide or OT Orderly. 
<nl>(6)<ol> [(F)] All documentation completed by an individual holding a 
temporary license which becomes part of the patient's/client's permanent file 
must be <nl>approved and <ol>co-signed by the supervising OTR or LOT. 
Occupational Therapy notes must be initialed by the OTR or LOT and signed at the 
bottom of each page. 
<nl>(e)<ol> [(2)] Provisional Licenses: 
<nl>(1)<ol> [(A)] OTRs and LOTs with provisional licenses are excluded from 
supervision requirements. 
<nl>(2)<ol> [(B)] COTAs and LOTAs with provisional licenses will require general 
supervision by a licensed OTR or LOT. 
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 August 3, 1998.
TRD-9812212
Jennifer J. Jones
Executive Assistant
Texas Board of Occupational Therapy Examiners
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 305-6900

TITLE 43. TRANSPORTATION
PART I. Texas Department of Transportation
CHAPTER 3.Public Information
SUBCHAPTER C.Complaint Resolution
43 TAC sec.3.24, sec.3.25
The Texas Department of Transportation proposes amendments to sec.3.24 and 
sec.3.25, concerning complaint resolution. 
EXPLANATION OF PROPOSED AMENDMENTS 
Transportation Code, sec.201.801, requires the department to make information 
available to the public and appropriate state agencies describing its complaint 
resolution process and prescribes requirements for complaint file maintenance 
and content. 
The amendments to sec.3.24 are proposed to add the application for motor carrier 
registration and the application for a permit authorizing the movement of 
oversize and overweight vehicles and loads, to the enumerated documents on which 
the department will include notice of how to direct complaints concerning the 
department's regulation of an entity. 
The amendments to sec.3.25 are proposed to reflect recently enacted legislation 
affecting the department's responsibilities for providing complaint 
investigation and resolution information to the complainant and the person or 
entity that is the subject of the complaint, and the content of the complaint 
file. 
FISCAL NOTE 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the amended sections are in effect, there will be no fiscal 
implications for state or local governments as a result of enforcing or 
administering the amendments. There are no anticipated economic costs for 
persons required to comply with the sections as proposed. 
C. Eloise Lundgren, Director, Public Information Office, has certified that 
there will be no significant impact on local economies or overall employment as 
a result of enforcing or administering the amendments. 
PUBLIC BENEFIT 
Ms. Lundgren 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 
or administering the amendments will be to notify affected parties of the 
complaint investigation and resolution process and ensure that the department 
maintains complete records of complaints. There will be no effect on small 
businesses. 
SUBMITTAL OF COMMENTS 
Written comments on the proposed amendments to these sections may be submitted 
to C. Eloise Lundgren, Public Information Office, 125 East 11th Street, Austin, 
Texas 78701-2483. The deadline for receipt of comments will be 5:00 p.m. on 
September 14, 1998. 
STATUTORY AUTHORITY 
The amendments are proposed under Transportation Code, sec.201.101, which 
provides the Texas Transportation Commission with the authority to establish 
rules for the conduct of the work of the Texas Department of Transportation, and 
more specifically, Transportation Code, sec.201.801, which requires the 
commission to adopt rules establishing methods by which consumers and service 
recipients are notified of the department's name, mailing address, and telephone 
number for directing complaints to the department. 
No statutes, articles, or codes are affected by these proposed amendments. 

sec.3.24.Notice to Consumers and Service Recipients.
The department will provide notice of mailing addresses and/or telephone numbers 
as may be appropriate to geographical locations and subject matter for purposes 
of directing complaints to the department. Relevant information will at a 
minimum be provided as follows.
(1)-(2) (No change.)
(3) Notice to entities regulated by the department. The department will include 
notice of how to direct complaints concerning the department's regulation of a 
regulated entity in an: 
(A)-(E) (No change.)
(F) <nl>application for motor carrier registration issued under Transportation 
Code, Chapters 643, 645, and 646<ol> [information piece concerning motor carrier 
regulation]; 
(G) (No change.)
(H) information piece concerning carriers of household goods; [and] 
(I) insert to a motor vehicle registration renewal notice<nl>; and<ol> 
<nl>(J)<ol> <nl>application for a permit issued under Chapter 28 of this title 
(relating to Oversize and Overweight Vehicles and Loads) authorizing the 
movement of oversize and overweight vehicles and loads.<ol> 

sec.3.25.Complaint Resolution.
(a) Department response. 
(1) (No change.)
(2) Written complaints. The department will respond to each written complaint by 
providing a resolution letter to the complainant. <nl> The department will 
provide the person who filed the complaint, and each person or entity that is 
the subject of the complaint, information about the department's policies and 
procedures relating to complaint investigation and resolution.<ol> 
(3) (No change.)
(b) Recordkeeping. 
(1) File. The department will maintain an information file for each written 
complaint and its disposition. <nl>The file will contain: <ol> 
<nl>(A)<ol> <nl>the date the complaint is filed; <ol>
<nl>(B)<ol> <nl>the name of the person filing the complaint; <ol>
<nl>(C)<ol> <nl>the subject matter of the complaint; <ol>
<nl>(D)<ol> <nl>a record of each person contacted in relation to the complaint; 
<ol>
<nl>(E)<ol> <nl> a summary of the results of the review or investigation of the 
complaint; and<ol> 
<nl>(F)<ol> <nl> if the department takes no action on the complaint, an 
explanation of the reasons that no action was taken. <ol>
(2) (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 August 3, 1998.
TRD-9812166
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

CHAPTER 5.Finance
SUBCHAPTER A.General
43 TAC sec.sec.5.1-5.3
(Editor's note: The text of the following sections proposed for repeal will not 
be published. The sections may be examined in the offices of the Texas 
Department of Transportation or in the Texas Register office, Room 245, James 
Earl Rudder Building, 1019 Brazos Street, Austin.)
The Texas Department of Transportation proposes the repeal of sec.sec.5.1-5.3, 
concerning equipment leases, wrecked equipment, and equipment construction. 
EXPLANATION OF PROPOSED REPEAL 
Section 5.1(a), Equipment Leases, is proposed for repeal because the subject 
matter is now covered by the State Purchasing and General Services Act, 
Government Code, Chapters 2151-2177. The remainder of sec.5.1 and sec.5.2, 
Wrecked Equipment, and sec.5.3, Equipment Construction, are proposed for repeal 
because they are obsolete, out of context, and of no assistance to the public. 
FISCAL NOTE 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the repeals are in effect, there will be no significant fiscal 
implications for state or local governments as a result of enforcing or 
administering the sections. There are no anticipated economic costs for persons 
required to comply with the sections as proposed. 
Lawrence J. Zatopek, Director, General Services Division, has certified that 
there will be no significant impact on local economies or overall employment as 
a result of enforcing or administering the sections. 
PUBLIC BENEFIT 
Mr. Zatopek has also determined that for each year of the first five years the 
sections are in effect, the public benefit anticipated as a result of the 
repeals will be a more orderly organization of the department's rules by the 
removal of rules that provide no assistance to the public. There will be no 
effect on small businesses. 
SUBMITTAL OF COMMENTS 
Written comments on the proposed repeals may be submitted to Lawrence J. 
Zatopek, Director, General Services Division, 125 East 11th Street, Austin, 
Texas 78701-2483. The deadline for receipt of comments will be 5:00 p.m. on 
September 14, 1998. 
STATUTORY AUTHORITY 
The repeals are proposed under Transportation Code, sec.201.101, which provides 
the Texas Transportation Commission with the authority to establish rules for 
the conduct of the work of the Texas Department of Transportation. 
No statutes, articles, or codes are affected by the proposed repeals. 
sec.5.1.Equipment Leases.
sec.5.2.Wrecked Equipment.
sec.5.3.Equipment Construction.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812167
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

CHAPTER 7.Bridge Division
The Texas Department of Transportation proposes the repeal of sec.7.1, 
concerning minimum vertical clearances, sec.7.11, concerning highway adjustments 
for reservoir construction, and sec.7.21, concerning irrigation closings.
EXPLANATION OF PROPOSED REPEALS 
Title 43 of the Texas Administrative Code contains rules concerning various 
subjects under Chapter 7, Bridge Division. The Bridge Division of TxDOT was 
merged into another division in a 1993 reorganization of the department. Repeal 
of these sections is necessary because the subject matter more appropriately 
falls within Chapter 15, Transportation Planning and Programming. 
Section 7.1 is proposed for repeal since these criteria for minimum vertical 
clearances are now governed by federal and state highway design guidelines.
Section 7.11 and sec.7.21 are proposed for repeal and will be reenacted as new 
subsections (f) and (g) to amended sec.15.54 which is being simultaneously 
proposed for adoption. 
FISCAL NOTE 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the repeals are in effect, there will be no fiscal implications 
for state or local governments as a result of enforcing or administering the 
repeals. There are no anticipated economic costs for persons required to comply 
with the sections as proposed. 
Robert L. Wilson, Director, Design Division, has certified that there will be no 
significant impact on local economies or overall employment as a result of 
enforcing or administering the repeals. 
PUBLIC BENEFIT 
Mr. Wilson 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 
or administering the repeals will be to consolidate into one subchapter existing 
department rules concerning federal, state, and local participation. There will 
be no effect on small businesses. 
SUBMITTAL OF COMMENTS 
Written comments on the proposed repeals may be submitted to Robert L. Wilson, 
Director, Design Division, 125 East 11th Street, Austin, Texas 78701-2483. The 
deadline for receipt of comments will be 5:00 p.m. on September 14, 1998. 

SUBCHAPTER A.Vertical Clearances Under Structures
43 TAC sec.7.1
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Department 
of Transportation or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY 
The repeal is proposed under Transportation Code, sec.201.101, which provides 
the Texas Transportation Commission with the authority to establish rules for 
the conduct of the work of the Texas Department of Transportation. 
No statutes, articles, or codes are affected by this proposed repeal. 
sec.7.1.Minimum Vertical Clearances.
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 August 3, 1998.
TRD-9812168
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

SUBCHAPTER B.Reservoir Construction
43 TAC sec.7.11
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Department 
of Transportation or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY 
The repeal is proposed under Transportation Code, sec.201.101, which provides 
the Texas Transportation Commission with the authority to establish rules for 
the conduct of the work of the Texas Department of Transportation. No statutes, 
articles, or codes are affected by this proposed repeal.
sec.7.11.Highway Adjustments for Reservoir Construction.
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812169
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

SUBCHAPTER C.Irrigation Facilities
43 TAC sec.7.21
(Editor's note: The text of the following section proposed for repeal will not 
be published. The section may be examined in the offices of the Texas Department 
of Transportation or in the Texas Register office, Room 245, James Earl Rudder 
Building, 1019 Brazos Street, Austin.)
STATUTORY AUTHORITY 
The repeal is proposed under Transportation Code, sec.201.101, which provides 
the Texas Transportation Commission with the authority to establish rules for 
the conduct of the work of the Texas Department of Transportation. 
No statutes, articles, or codes are affected by this proposed repeal. 
sec.7.21.Irrigation Crossings.
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 August 3, 1998.
TRD-9812176
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

CHAPTER 15.Transportation Planning and Programming
SUBCHAPTER E.Federal, State, and Local Participation
43 TAC sec.sec.15.51, 15.52, 15.54
The Texas Department of Transportation proposes amendments to sec.sec.15.51, 
15.52, and 15.54, concerning federal, state, and local participation. 
EXPLANATION OF PROPOSED AMENDMENTS 
Title 43 of the Texas Administrative Code contains rules concerning various 
subjects under Chapter 7, Bridge Division. The Bridge Division of TxDOT was 
merged into another division in a 1993 reorganization of the department. 
Sections 7.1, 7.11, and 7.21 are simultaneously being proposed for repeal in 
this issue of the Texas Register. The substantive language of sec.7.11 and 
sec.7.21 is being added to amended sec.15.54 subsections (f) and (g). Section 
7.1 is no longer necessary and will not be replaced. 
Section 15.51, Definitions, is amended by numbering the definitions in 
accordance with Texas Register guidelines, adding the definition of reservoir 
agency, and amending the definition of State Park Road Program to be consistent 
with proposed amendments to sec.15.60 of this title (relating to State Park 
Roads). 
Section 15.52, Agreement, is amended by adding the term "reservoir agency" to be 
included with local governments when applicable. Additional amendments include 
the requirement that, when specified, a reservoir agency will be responsible for 
providing necessary right of way, utility relocation, and direct costs incurred 
by the department for preliminary engineering, construction engineering, 
construction, and right of way, as well as the direct cost for any work included 
which is eligible for state participation. 
Section 15.54 is amended by clarifying subsection (d)(3)(C)(ii) to read that the 
department is responsible for designing and constructing the frontage road and 
the local government is responsible for 100% of the construction, right of way, 
and utility adjustment costs including preliminary and construction engineering. 
Section 15.54 is further amended by adding new subsections (f) and (g) which 
outline the provisions for highway adjustments for reservoir construction and 
irrigation crossings. 
FISCAL NOTE 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the amendments are in effect, there will be no fiscal 
implications for state or local governments as a result of enforcing or 
administering the amendments. There are no anticipated economic costs for 
persons required to comply with the sections as proposed. 
Robert L. Wilson, Director, Design Division, has certified that there will be no 
significant impact on local economies or overall employment as a result of 
enforcing or administering the amendments. 
PUBLIC BENEFIT 
Mr. Wilson 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 
or administering the amendments will be to consolidate into one subchapter 
existing department rules concerning federal, state, and local participation. 
There will be no effect on small businesses. 
SUBMITTAL OF COMMENTS 
Written comments on the proposed amendments may be submitted to Robert L. 
Wilson, Director, Design Division, 125 East 11th Street, Austin, Texas 78701-
2483. The deadline for receipt of comments will be 5:00 p.m. on September 14, 
1998. 
STATUTORY AUTHORITY 
The amendments are proposed under Transportation Code, sec.201.101, which 
provides the Texas Transportation Commission with the authority to establish 
rules for the conduct of the work of the Texas Department of Transportation
No statutes, articles, or codes are affected by the proposed amendments.

sec.15.51.Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
<nl>(1)<ol> Added capacity - An increase in the carrying capacity of a segment 
of the state highway system, including the addition of new travel lanes (other 
than high occupancy vehicle lanes or auxiliary lanes). 
<nl>(2)<ol> Commission - The Texas Transportation Commission. 
<nl>(3)<ol> Congestion Mitigation and Air Quality Improvement Program (CMAQ) - A 
federal program, established and administered in accordance with 23 United 
States Code sec.104 and federal regulations, which provides federal funds for a 
project in a non-attainment area that contributes to the attainment of a natural 
ambient air quality standard or will have certified benefits to air quality. 
<nl>(4)<ol> Construction cost - All direct and indirect costs identified by the 
department's cost accounting system to a highway improvement project, other than 
for right of way acquisition, preliminary engineering, and construction 
engineering. 
<nl>(5)<ol> Construction engineering cost/expenses - Engineering or project 
administration costs and expenses incurred, including indirect costs and 
expenses identified by the department's cost accounting system, on a highway 
improvement project after contract award. 
<nl>(6)<ol> Department - The Texas Department of Transportation. 
<nl>(7)<ol> Economically disadvantaged county - As determined from data provided 
to the department by the Texas Comptroller of Public Accounts at the beginning 
of each fiscal year, a county that has, in comparison to other counties in the 
state: 
(A) below average per capita taxable property value; 
(B) below average per capita income; and 
(C) above average unemployment. 
<nl>(8)<ol> Farm and Ranch to Market (FM/RM) System Route - A system of roads 
designated by the commission under Transportation Code, sec.201.104. 
<nl>(9)<ol> Federal funds - Financial assistance provided by the federal 
government for highway improvement projects. 
<nl>(10)<ol> Highway improvement project - A project which provides for the 
design, construction, improvement, or enhancement of a public road, including 
bridges, culverts, or other necessary structures related to public roads, either 
on or off the state highway system. 
<nl>(11)<ol> Interstate Maintenance Program (IM) - A federal program which 
provides federal funding to reconstruct, rehabilitate, or maintain a portion of 
the Interstate Highway System; criteria for eligible projects in this program 
are set forth in federal law and regulations. 
<nl>(12)<ol> Local government - Any county, city, other political subdivision of 
this state, or special district that has the authority to finance a highway 
improvement project. 
<nl>(13)<ol> Local participation - Financial assistance provided by a local 
government to participate in costs associated with highway improvement projects. 
<nl>(14)<ol> Matching funds/participation ratio - Those portions of funds 
required or chargeable for the contribution toward a highway improvement 
project's cost by a government entity. 
<nl>(15)<ol> Metropolitan planning organization (MPO) - An organization 
designated in certain urbanized areas to carry out the transportation planning 
process as required by 23 United States Code sec.134. 
<nl>(16)<ol> National Highway System (NHS) - A part of the National Intermodal 
Transportation System consisting of the National System of Interstate and 
Defense Highways and those principal arterial roads which are essential for 
interstate and regional commerce and travel, national defense, intermodal 
transfer facilities, and international commerce and border crossings as 
designated by the United States Congress by criteria set forth in federal law. 
<nl>(17)<ol> National System of Interstate and Defense Highways (Interstate 
Highway System) - A system of roads and bridges that constitute a part of the 
National Highway System designated by the United States Congress as essential 
for interstate and regional commerce and travel, national defense, intermodal 
transfer facilities, and international commerce and border crossings. 
<nl>(18)<ol> New construction (I) - Activities authorized for the completion of 
the designated Interstate Highway System. 
<nl>(19)<ol> New route - Activities related to an existing roadway or new 
location not previously designated on the state highway system. 
<nl>(20)<ol> Off-State Highway System Bridge Program - A federally mandated 
program by which federal funds are made available to replace or rehabilitate 
bridges under the jurisdiction of a local government and not on the state 
highway system, administered in accordance with criteria set forth under federal 
law and regulations and state law, safety standards, design standards, and 
construction standards. 
<nl>(21)<ol> Off-state highway system routes - Those routes not designated on 
the state highway system which are the responsibility of local governments. 
<nl>(22)<ol> Off-State Highway System Safety Program - A federally mandated 
program by which federal funds are made available for safety improvements to 
facilities under the jurisdiction of a local government and not on the state 
highway system, administered in accordance with criteria set forth under federal 
law and regulations. 
<nl>(23)<ol> On-State Highway System Bridge Program - A federally mandated 
program by which federal funds are made available to replace or rehabilitate 
bridges on the state highway system in accordance with criteria set forth under 
federal law and regulations. 
<nl>(24)<ol> On-State Highway System Safety Program - A federally mandated 
program by which federal funds are made available for safety improvements on the 
state highway system in accordance with criteria set forth under federal law and 
regulations. 
<nl>(25)<ol> Preliminary engineering cost/expenses - Costs and expenses 
incurred, including indirect costs and expenses identified by the department's 
cost accounting system, on a highway improvement project before contract award. 
<nl>(26)<ol> Principal Arterial Street System (PASS) Program - A commission 
approved program to improve urban arterial streets designated on this system to 
relieve major traffic corridors and enhance total system operations in urban 
areas over 200,000 in population. 
<nl>(27)<ol> Reconstruction - The primary activities involving the rebuilding of 
a segment of highway along the existing route as well as those associated with 
the acquisition of rights of way where necessary to upgrade to current 
standards. 
<nl>(28)<ol> Rehabilitation - The primary activities to restore, or re-establish 
in good condition, a segment of highway (not including the construction of 
additional travel lanes, other than high occupancy vehicle lanes or auxiliary 
lanes). 
<nl>(29)<ol> <nl>Reservoir agency - A public or private agency that has the 
authority to construct, maintain, or operate a reservoir facility. <ol>
<nl>(30)<ol> Right of way costs - All direct and indirect costs identified by 
the department's cost accounting system for the acquisition of land or an 
interest in land necessary for the development of a highway improvement project 
(including access rights to abutting properties and usually including eligible 
utility relocation/adjustment costs). 
<nl>(31)<ol> Right of way procurement - That process identified with the 
acquisition of real property, access rights, mineral rights, and easements 
permitted in accordance with state law for the construction of approved highway 
improvement projects. 
<nl>(32)<ol> State funds - Money received by the department, other than federal 
funds or local participation, to be expended for highway improvement projects. 
<nl>(33)<ol> State highway system - The system of highways in the state included 
in a comprehensive plan prepared by the department's executive director under 
the direction and with the approval of the commission in accordance with 
Transportation Code, sec.201.103. 
<nl>(34)<ol> State highway system routes - Those state numbered routes 
designated as a part of the state highway system. 
<nl>(35)<ol> State Park Road Program - A program by which state funds are 
utilized to construct roads to or within public facilities administered by the 
Texas Parks and Wildlife Department [or other qualified state agencies]. 
<nl>(36)<ol> Surface Transportation Program (STP) - A federal-aid program where 
states may obligate federal funds to projects related to certain public roads, 
in accordance with the criteria established in federal law and regulations. 
<nl>(37)<ol> Transportation Enhancement Program - A federally mandated program 
identified in sec.11.200 et seq. of this title (relating to Statewide 
Transportation Enhancement Program), providing federal funding for activities 
that enhance the intermodal transportation systems and facilities within the 
state for the enjoyment of the users of those systems.
<nl>(38)<ol> Transportation Improvement Program (TIP) - A transportation program 
cooperatively developed with metropolitan planning organizations which includes 
improvement projects proposed for federal funding in accordance with the 
criteria set forth in federal law and federal regulations. 
<nl>(39)<ol> United States (<nl>U.S.<ol> [US]) System Route - Those routes 
designated on the state highway system as U.S. highways and eligible for 
federal-aid funds as set forth in federal law and regulations. 
<nl>(40)<ol> Urban Road System - A commission designated system of routes that 
consist of the continuation of Farm to Market Roads in urban areas over 50,000 
in population. 
<nl>(41)<ol> Urban Streets Program - A state program of projects, designated by 
the commission, on certain urban streets developed and constructed in accordance 
with state law and safety, design, and construction standards. 
<nl>(42)<ol> Urbanized area - As defined in 23 United States Code sec.101, an 
area with a population of 50,000 or more designated by the United States Bureau 
of Census, within boundaries to be fixed by responsible state and local 
officials in cooperation with each other, and subject to the approval of the 
United States Secretary of Transportation. 
<nl>(43)<ol> Utility relocation/adjustment costs - Costs of work related to the 
adjustment, relocation, and removal of utility facilities accomplished in 
accordance with sec.21.21 of this title (relating to State Participation in 
Relocation, Adjustment, and/or Removal) and sec.sec.21.31 et seq. of this title 
(relating to Utility Accommodation). 

sec.15.52.Agreements.
When a local government <nl>or reservoir agency<ol> is responsible for providing 
financial assistance for a highway improvement project, the department and the 
local government <nl>or reservoir agency<ol> shall enter into an agreement 
before any work is performed. The agreement will include, but not be limited to, 
the following provisions of this section.
(1) Right of entry. If the local government <nl>or reservoir agency<ol> is the 
owner of the project site, it shall permit the department or its authorized 
representative access to occupy the site to perform all activities required to 
execute the work. 
(2) Right of way and/or utility relocation/adjustments. The local government 
will provide all necessary right of way and utility relocation/adjustments, 
whether publicly or privately owned, in accordance with sec.15.55 of this title 
(relating to Construction Cost Participation). <nl>When specified, the reservoir 
agency will provide all necessary right of way and utility relocation 
adjustments, whether publicly or privately owned.<ol> Existing utilities will be 
relocated and/or adjusted with respect to location and type of installation in 
accordance with the requirements of the department as specified in sec.21.21 of 
this title (relating to State Participation in Relocation, Adjustment, and/or 
Removal) and sec.21.31 et seq. of this title (relating to Utility 
Accommodation). 
(3) Funding arrangement. The agreement will specify the type of funding share 
arrangement agreed upon by the department and the local government. The funding 
share arrangement shall include any adjustments required by sec.15.55 of this 
title (relating to Construction Cost Participation). <nl> The funding 
arrangement agreed upon by the department and the reservoir agency will be as 
specified under sec.15.54(f) of this title (relating to Construction). <ol> 
(A) Standard. The local government is responsible for all, or a specified 
percentage as shown in Appendix A of sec.15.55 of this title (relating to 
Construction Cost Participation), of the direct and indirect costs incurred by 
the department for preliminary engineering, construction engineering, and 
construction, as well as the cost for any work included which is ineligible for 
federal or state participation. <nl>When specified, the reservoir agency is 
responsible for all of the direct costs incurred by the department for 
preliminary engineering, construction engineering, construction, and right of 
way as well as the direct cost for any work included which is ineligible for 
federal or state participation.<ol> 
(B) (No change.)
(4) Interest. The department will not pay interest on funds provided by the 
local government <nl>or the reservoir agency<ol>. Funds provided by the local 
government <nl>or the reservoir agency<ol> will be deposited into, and retained 
in, the state treasury. 
(5) Amendments. In the case of significantly changed site conditions or other 
mutually agreed upon changes in the scope of work authorized in the agreement, 
the department and the local government <nl> or reservoir agency<ol> will amend 
the funding agreement, setting forth the reason for the change and establishing 
the revised participation to be provided by the local government <nl>or 
reservoir agency<ol>. 
(6) Payment provision. The agreement will establish the conditions for payment 
by the local government <nl>or reservoir agency<ol>, including, but not limited 
to, the method of payment and the time of payment.
(A) Standard. Following execution of the agreement, the local government <nl>or 
reservoir agency<ol> will pay, as a minimum, its funding share for the estimated 
cost of preliminary engineering for the project. Prior to the department's 
scheduled date for contract letting, the local government <nl> or reservoir 
agency<ol> will remit to the department an amount equal to the remainder of the 
local government's <nl>or reservoir agency's<ol> funding share for the project. 
(i) When the standard funding arrangement is used, if it is found that the 
amount received is insufficient to pay the local government's <nl> or reservoir 
agency's<ol> funding share, then the department shall notify the local 
government <nl>or reservoir agency<ol> which shall transmit the required amount 
to the department. After the project is completed the final cost will be 
determined by the department, based on its standard accounting procedures, and 
any excess funds paid by the local government <nl>or reservoir agency<ol> shall 
be returned. 
(ii) (No change.)
(B) (No change.)
(7) Termination. If the local government <nl>or reservoir agency<ol> withdraws 
from the project after the agreement is executed, it shall be responsible for 
all direct and indirect project costs incurred by the department for the items 
of work in which the local government <nl> or reservoir agency<ol> is 
participating. 
(8) Responsibilities of the parties. The agreement shall identify the 
responsibilities of each party, including, but not limited to, preparing or 
providing construction plans, advertising for bids, awarding a construction 
contract, and construction supervision. The local government <nl> or reservoir 
agency<ol> must acknowledge that while not an agent, servant, nor employee of 
the state, it is responsible for its own acts and deeds and for those of its 
agents or employees during the performance of the work authorized in the 
contract. 

sec.15.54.Construction.
(a)-(c) (No change.)
(d) Control of Access on Freeway <nl>Mainlanes<ol> [Mainlines]. 
(1)-(2) (No change.)
(3) In those instances where requests for additional frontage roads are received 
during or subsequent to the planning stage or after the freeway has been 
constructed, they may be considered and placed in order of the priority of 
highway needs. 
(A)-(B) (No change.)
(C) The department may approve additional frontage road construction, which is 
100% funded by the requesting local government as follows: 
(i) (No change.)
(ii) except as provided in subparagraph (E) of this paragraph, where the 
department is responsible for <nl>designing and constructing the frontage 
road<ol> [design and construction] and the requesting local government is 
responsible for 100% <nl>of the<ol> construction, right of way, and utility 
adjustment costs including preliminary and construction engineering. 
(D)-(E) (No change.)
(4)-(5) (No change.)
(e) (No change.)
<nl>(f)<ol> <nl> Highway adjustments for reservoir construction.<ol> 
<nl>(1)<ol> <nl>Where existing highways and roads provide a satisfactory traffic 
facility in the opinion of the department and no immediate rehabilitation or 
reconstruction is contemplated, it shall be the responsibility of the reservoir 
agency, at its expense, to replace the existing road facility in accordance with 
the current design standards of the department, based upon the road 
classification and traffic needs. <ol>
<nl>(2)<ol> <nl>Where no highway or road facility is in existence but where a 
route has been designated for construction across a proposed reservoir area, the 
department will bear the cost of constructing a satisfactory facility across the 
proposed reservoir, on a line and grade for normal conditions of topography and 
stream flow, and any additional expense as may be necessary to construct the 
highway or road facility to line and grade to comply with the requirements of 
the proposed reservoir shall be borne by the reservoir agency. <ol>
<nl>(3)<ol> <nl> In soil conservation and flood control projects involving the 
construction of flood retarding structures where a highway or road operated by 
the department will be inundated at less than calculated 50-year frequencies by 
the construction of a floodwater retarding structure, it will be expected that 
the soil conservation service or one of its cooperating agencies will provide 
funds as necessary to raise or relocate the road above the water surface 
elevation which might be expected at 50-year intervals. In those cases where a 
highway or road operated by the department will not be inundated by floods of 
less than 50-year calculated frequency, it will be the purpose of the department 
to underwrite this hazard for the general welfare of the state and continue to 
operate the road at its existing elevation until such time as interruption and 
inconvenience to highway travel may necessitate raising the grade. <ol>
<nl>(g)<ol> <nl>Irrigation crossings. <ol>
<nl>(1)<ol> <nl>Where an irrigation facility is in existence prior to the 
acquisition of highway right of way, including right of way for widening, and 
the highway project will interfere with such a facility, the following revisions 
shall govern.<ol> 
<nl>(A)<ol> <nl> If, at the place of interference, the irrigation facility 
consists primarily of an irrigation canal which crosses the entire width of the 
proposed right of way, this shall be considered a crossing and it shall be the 
duty and responsibility of the department to construct and maintain an adequate 
structure and to make the necessary adjustments or relocations of minor laterals 
and pumps, etc., associated with the crossing, in such a manner that the 
operation of the irrigation facility will not be injured. The construction work 
at a crossing will be considered a construction item with the expense to be 
borne by the department. The acquisition of any land required to accomplish the 
adjustments and/or relocation shall be a right of way consideration. <ol>
<nl>(B)<ol> <nl>Any irrigation facility encountered which does not cross the 
right of way and consists primarily of a longitudinal canal and/or associated 
irrigation appurtenances such as pumps, gates, etc., which must be removed and 
relocated shall be considered a right of way item. <ol>
<nl>(C)<ol> <nl>In those cases where both crossing and longitudinal adjustments 
or relocation of irrigation facilities are encountered, each segment shall be 
classified in accordance with subparagraph (A) and (B) of this paragraph. <ol>
<nl>(2)<ol> <nl>Where a highway is in existence, and there is a desire of others 
to cross the existing highway with an irrigation facility at a highway point 
where there is not an existing crossing facility, then those desiring to cross 
the highway must provide for the entire cost of the construction and maintenance 
of the irrigation facility which will serve their purpose while at the same time 
adequately serve the highway traffic. The design, construction, operation, and 
maintenance procedures for the facility within highway right of way must be 
acceptable to the department. <ol>
<nl>(h)<ol> [(f)] Continuous and safety lighting systems and traffic signals. 
For the installation, maintenance, and operation of continuous and safety 
lighting systems and traffic signals, the local government shall be responsible 
for providing matching funds as shown in Appendix A of sec.15.55 of this title 
(relating to Construction Cost Participation), except as adjusted under that 
section. Such installation, maintenance, and operation shall be accomplished in 
accordance with sec.25.5 of this title (relating to Installation, Operation, and 
Maintenance of Traffic Signals) and sec.25.11 of this title (relating to 
Continuous and Safety Lighting Systems). 
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 August 3, 1998.
TRD-9812170
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

CHAPTER 25.Traffic Operations
SUBCHAPTER H.City Pride Sign Program
43 TAC sec.sec.25.421, 25.422, 25.424
The Texas Department of Transportation proposes amendments to sec.sec.25.421, 
25.422, and 25.424 concerning the City Pride Sign Program. 
EXPLANATION OF PROPOSED AMENDMENTS 
The City Pride Sign Program allows municipalities to erect and display signs 
concerning points of interest, or geographical, recreational, cultural, or civic 
information, at the city limits on state highway right of way. 
Section 25.421 is amended to include definitions for Keep Texas Beautiful and 
Texas Historical Commission signs. 
The proposed amendments to sec.25.422 allow Keep Texas Beautiful and Texas 
Historical Commission signs to be placed at eligible highway entrances to a 
municipality at city expense. The program currently allows only City Pride Signs 
and Texas Natural Resource Conservation Commission signs to be placed at these 
entrances. The purpose of these proposed changes is to allow municipalities to 
continue to denote participation in the Keep Texas Beautiful and Historical 
Marker programs as they have in the past. Allowing the Keep Texas Beautiful 
signs to be freestanding will allow them greater visibility and promote the 
program which complies with the spirit of the federal and state Highway 
Beautification Acts by encouraging highways to be free from the litter that may 
distract from the safe operation of motor vehicles. The Texas Historical 
Commission signs promote and encourage tourism. This change will also provide 
for consistent treatment of this type of state agency sign. 
Section 25.424 is amended to also require the Keep Texas Beautiful and Texas 
Historical Commission signs to adhere to the requirements of the Texas Manual on 
Uniform Traffic Control Devices and sign standards and specifications as 
determined by the department. 
The proposed amendments delete sec.25.424(a)(5)(B) which requires a municipality 
to remove all existing civic organization or attachment signs from department 
right of way by September 1, 1998. Since the City Pride Program is voluntary, it 
would be in the best interest of local communities to allow the removal of these 
types of signs from state right of way to occur at the discretion of the local 
jurisdictions. The proposed rules provide that the department may remove signs 
that are damaged, broken, faded, or have become a hazard due to accidental 
damage or other causes, or to reduce the number of existing signs for the safety 
of the traveling public. The proposed rules also require participating 
municipalities to remove all free-standing signs and prohibit them from putting 
any more up. 
FISCAL NOTE 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the new and revised sections are in effect, there will not be 
fiscal implications for state or local governments as a result of enforcing or 
administering the amendments. There are no anticipated economic costs for 
persons required to comply with the sections as proposed. There will be no 
impacts on state and local governments for the first five-year period the 
sections will be in effect. 
David T. Newbern, P.E., Director, Traffic Operations Division, has certified 
that there will be no significant impact on local economies or overall 
employment as a result of enforcing or administering the amendments. 
PUBLIC BENEFIT 
Mr. Newbern 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 
or administering the amendments will be to ensure that Keep Texas Beautiful and 
Texas Historical Commission signs continue to be available at entrances to 
municipalities along eligible highways. There will be no effect on small 
businesses. 
SUBMITTAL OF COMMENTS 
Written comments on the proposed amendments may be submitted to David T. 
Newbern, P.E, Traffic Operations Division, 125 East 11th Street, Austin, Texas 
78701-2483. The deadline for receipt of comments will be 5:00 p.m. on September 
14, 1998. 
STATUTORY AUTHORITY 
The amendments are proposed under Transportation Code, sec.2001.101, which 
provides the Texas Transportation Commission with the authority to establish 
rules for the conduct of the work of the Texas Department of Transportation. 
No statutes, articles, or codes are affected by the proposed amendments. 

sec.25.421.Definitions.
The following words and terms, when used in the sections under this subchapter, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
<nl>(1)<ol> Attachment sign - A sign, provided by a civic organization or a 
governmental entity, that displays points of interest or geographical, 
recreational, cultural, or civic information, including awards for participation 
in programs. 
<nl>(2)<ol> City pride sign - A sign placed near a city's jurisdictional limits 
that displays attachment signs. 
<nl>(3)<ol> Civic organization - A non-profit organization. 
<nl>(4)<ol> Department - The Texas Department of Transportation. 
<nl>(5)<ol> District - One of the 25 geographical areas managed by a district 
engineer, in which the department conducts its primary work activities. 
<nl>(6)<ol> Eligible highway - A non-controlled access highway on the state 
highway system. 
<nl>(7)<ol> <nl> KTB sign - A sign that shows a city's dedication to the mission 
of preventing litter and promoting beautification for the Keep Texas Beautiful 
Proud Community Program. <ol>
<nl>(8)<ol> Municipality - A city, town, or a self-governing unincorporated 
community. 
<nl>(9)<ol> Non-controlled access highway - In accordance with applicable state 
law, a state highway on which owners, or occupants of abutting lands, and other 
persons have access to or from the highway other than at such points determined 
by the department. 
<nl>(10)<ol> Non-profit organization - A non-profit unincorporated association 
or society or a corporation that is incorporated or holds a certificate of 
authority under the Texas Non-Profit Corporation Act (Texas Civil Statutes, 
Article 1396-1.01 et seq.). 
<nl>(11)<ol> Texas MUTCD - Texas Manual on Uniform Traffic Control Devices for 
Streets and Highways, latest edition, issued by the Texas Department of 
Transportation. 
<nl>(12)<ol> <nl>THC sign - A Texas Historical Commission sign with the legend 
"Historical Markers in City" which is used to indicate the presence of 
historical markers in the city.<ol> 
<nl>(13)<ol> TNRCC sign - A sign that promotes the maintenance of the state's 
water quality and contains attachment signs for the Texas Natural Resources 
Conservation Commission's Superior Public Drinking Water or Clean Texas 2000 
programs. 

sec.25.422.City Pride Sign Program.
(a) Municipality application. 
(1) A municipality may obtain an application for participation in the city pride 
sign program from the Texas Department of Transportation, Traffic Operations 
Division, 125 East 11th Street, Austin, Texas 78701-2483, or a district office. 
The application may contain a request for more than one sign. One city 
pride<nl>,<ol> [sign and one] TNRCC<nl>, THC, and KTB<ol> sign may be placed at 
each eligible highway entrance.
(2) (No change.)
(b) Department approval. 
(1) The district engineer or his or her designee will approve the design and 
locations of the city pride<nl>,<ol> [and] TNRCC<nl>, THC, and KTB<ol> signs if 
the plans meet department specifications in accordance with sec.25.424 of this 
title (relating to Specifications for Signs). 
(2)-(3) (No change.)
(c)-(d) (No change.) 
(e) Installation. 
(1) The municipality or its contractor may install the city pride<nl>,<ol> [or] 
TNRCC<nl>, THC, or KTB<ol> sign. The department will inspect installation to 
ensure that the sign meets department and Texas MUTCD standards. 
(2) The municipality shall submit as-built plans to the department within 45 
calendar days upon completion of the installation of a city pride<nl>,<ol> 
[and/or] TNRCC<nl>, THC, or KTB<ol> sign. 
(f) Maintenance. The municipality shall maintain the city pride<nl>,<ol> [and] 
TNRCC<nl>, THC, or KTB<ol> signs in a safe manner and condition in accordance 
with department standards. 
(g) Sign relocation or removal. 
(1) If the department determines that additional regulatory, warning, or guide 
signing is needed, it may require the municipality to remove or relocate an 
existing or planned city pride<nl>,<ol> [or] TNRCC<nl>, THC, or KTB<ol> sign at 
the expense of the municipality. If the department determines that construction 
or maintenance activities within the state highway right of way will create 
conditions where an existing city pride<nl>,<ol> [or] TNRCC<nl>, THC, or KTB<ol> 
sign will not be in compliance with the provisions of this subchapter, the 
municipality shall remove the city pride<nl>,<ol> [or] TNRCC<nl>, THC, or 
KTB<ol> sign at its expense. 
(2) The municipality shall remove a city pride<nl>, <ol> [or] TNRCC<nl>, THC, or 
KTB<ol> sign if it has not provided a replacement sign within 60 calendar days 
of written notification from the department that the sign is damaged, broken, 
faded, or has become a hazard due to failure to build to specifications, 
inclement weather, inadequate maintenance, accidental damage, or other cause. 
(3) (No change.)
(h)-(i) (No change.)

sec.25.424.Specifications for Signs.
(a) City pride<nl>,<ol> [and] TNRCC<nl>, THC, and KTB<ol> signs. 
(1) Design. 
(A) A city pride sign: 
(i)-(iv) (No change.)
(v) <nl>shall<ol> be fabricated, erected, and maintained in conformance with 
department specifications and fabrication details; and
(vi) <nl>shall<ol> have attachment signs spaced for a balanced appearance. 
(B) [(A)] TNRCC<nl>, THC, or KTB signs<ol> [sign]: 
(i)-(ii) (No change.)
(iii) <nl>shall<ol> be fabricated, erected, and maintained in conformance with 
department specifications and fabrication details. 
(2) Content. A city pride<nl>, TNRCC, THC, or KTB<ol> sign shall not contain: 
(A)-(B) (No change.)
(C) attachments to the [city pride] sign that extend beyond the sign borders; or 
(D) attachments to the supports [of the city pride or TNRCC signs], including 
banners and flags. 
(3) Placement. Subject to approval of the department, a city pride<nl>,<ol> [or] 
TNRCC<nl>, THC, or KTB<ol> sign shall be installed or placed: 
(A)-(G) (No change.)
(4) (No change.)
(5) Existing signs. 
(A) A municipality may not remove existing regulatory, warning, destination, 
guide, recreation, and cultural interest signs; provided, however, existing 
signs may be relocated with written permission of the department at the expense 
and responsibility of the municipality to the extent necessary to accommodate 
city pride<nl>,<ol> [and] TNRCC<nl>, THC, or KTB<ol> signs. 
(B) <nl>The department may remove civic organizational or attachment signs from 
the right of way if a sign becomes damaged, broken, faded, or a hazard due to 
accidental damage or other causes, or to reduce the number of existing signs for 
the safety of the traveling public. If a municipality desires to install a city 
pride sign, any proposed or existing signs which meet the definitions of an 
attachment sign shall be placed on or transferred to the city pride sign at the 
expense of the municipality in accordance with this subchapter.<ol> [A 
municipality shall remove existing civic organization or attachment signs from 
department right of way and relocate these signs to a city pride or TNRCC sign 
approved in accordance with sec.25.422 of this title (relating to City Pride 
Sign Program). Beginning on September 1, 1998, the department will remove a sign 
that is not in compliance with this subchapter in accordance with sec.25.10 of 
this title (relating to Signs on State Highway Right of Way).] 
(b) (No change.)
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State, on August 3, 1998.
TRD-9812171
Bob Jackson
Acting General Counsel
Texas Department of Transportation
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 463-8630

PART II. Texas Turnpike Authority Division
CHAPTER 53. Contracting and Procurement Procedures
The Board of Directors (the "Board") of the Texas Turnpike Authority Division 
(the "Authority") of the Texas Department of Transportation proposes new 
sec.sec.53.1-53.12, 53.20-53.30, 53.50-53.54, and 53.60-53.71, concerning 
contracting and procurement procedures for turnpike improvement projects and 
architectural and engineering services. These rules also set forth procedures 
for addressing contract disputes, as well as the Authority's policies and 
procedures for meeting state and federal requirements for maximizing 
opportunities for participation by disadvantaged business enterprises (DBE) and 
historically underutilized businesses (HUB) in Authority contracts. 
Transportation Code, sec.361.042, requires the Authority to adopt rules for the 
regulation of its affairs and the conduct of its business and, further, to do 
all things necessary or appropriate to carry out the powers granted to the 
Authority in Transportation Code, Chapter 361 (the "Turnpike Act"). 
Transportation Code, sec.361.231 requires the Authority to award contracts and 
assume the same duties as the Texas Department of Transportation under 
Transportation Code, sec.sec.223.001-223.007, 223.009 and 223.010. 
Transportation Code, sec.361.049 requires the Authority to adopt rules 
containing policies and procedures for soliciting proposals for contracts for 
professional consulting services. Transportation Code, sec.361.050, requires the 
Authority to set annual goals for awarding of contracts to DBEs; attempt to 
identify DBEs that can provide supplies, materials, equipment or services to the 
Authority; and generally to give DBEs full access to the Authority's contract 
bidding processes.
In compliance with these statutory requirements the Board proposes new sections 
concerning procurement procedures for turnpike improvement contracts, 
contracting for architectural and engineering services, procedures for resolving 
contract disputes and determining when debarment is warranted, and policies and 
procedures concerning DBEs and HUBs. 
Sections 53.1-53.12, which comprise Subchapter A, address contracting for 
turnpike improvement contracts. Such contracts involve construction, 
maintenance, and building contracts for turnpike projects as defined in 
sec.361.001(4) of the Turnpike Act. The contracting process and procedures set 
forth in these rules are intended to provide for a fair and efficient means of 
letting Authority contracts so that Authority expenditures are made economically 
and for work performed by qualified contractors. The Authority believes that 
following these procedures will result in the efficient utilization of public 
funds for turnpike improvement projects. These procedures are also consistent 
with the requirements of Transportation Code, sec.361.231. 
Section 53.1 sets forth the general purpose of the rules in this subchapter, 
which is to prescribe the policies and procedures governing bidder 
qualification, bidding, awards, and execution of contracts entered into pursuant 
to the Texas Transportation Code. Section 53.2 sets forth definitions utilized 
throughout the subchapter relating to contracting for turnpike improvement 
contracts.
Section 53.3 addresses qualification of bidders and registration of 
subcontractors. The Texas Department of Transportation (TxDOT) currently has 
procedures in place (see, e.g., 43 TAC sec.9.12) which govern qualification of 
bidders and registration of subcontractors for construction and maintenance 
contracts. This section indicates that the Authority will rely upon the 
qualification and registration process administered by TxDOT, so that it will 
utilize the list of qualified bidders and registered contractors maintained by 
TxDOT in determining whether bidders or subcontractors are eligible to bid on, 
or receive, turnpike improvement contracts. This is intended to avoid 
unnecessary duplication in effort between the Authority and TxDOT and to more 
efficiently utilize the resources of the Authority. 
Section 53.4 prescribes the procedures for providing notice to interested 
parties of letting of contracts or issuance of proposals for turnpike 
improvement contracts. Interested parties who wish to receive notification of 
such contracts can notify the Authority pursuant to this rule. The Authority 
reserves the right to impose a fee for the cost of administration of the mailing 
list. This rule also sets forth the procedures for notification of when and 
where contracts will be let and bids will be opened, and calls for publication 
of that information in certain periodicals. The rule further sets forth the 
content of proposal forms issued by the Authority, as well as the required form 
for requests for proposal forms submitted to the Authority by interested 
parties. The rule prescribes the procedures for issuance of a proposal form for 
construction and maintenance contracts (which will vary depending on the 
financial magnitude of the project), as well as for Authority building 
contracts.
Section 53.5 sets forth procedures for delivering of bids and specific 
requirements concerning the form in which bids must be submitted. The rule also 
describes the content of proposals submitted to the Authority, and requires the 
inclusion of a proposal guaranty in a specified form. The rule requires that a 
certification be submitted for those turnpike project improvement contracts 
financed, in part, by federal funds, which certification shall describe a 
variety of information concerning any suspension, debarment, voluntary 
exclusion, or ineligibility determination actions by an agency of the federal 
government, as well as other similar information for the bidder and individuals 
or companies associated with the bidder. That information may result in 
rejection of a bid or disqualification of a bidder. 
Section 53.6 sets forth procedures for opening and reading of bids (which shall 
be done in the City of Austin), and the circumstances under which proposals will 
not be accepted by the Authority or read and considered in the procurement 
process. The rule also sets forth procedures for changing of bids prior to bid 
openings and the process for withdrawal of a bid. 
Section 53.7 specifies procedures for tabulating bids received by the Authority 
pursuant to Subchapter A. The rule specifies how total bid amounts for each 
bidder will be determined, the primary documents to be considered in determining 
a bid amount, and how certain discrepancies in information submitted will be 
resolved. 
Section 53.8 sets forth procedures concerning awarding of contracts and the 
circumstances under which all bids may be rejected. This rule also addresses the 
treatment afforded unbalanced bids and the Authority's policy of awarding a 
contract pursuant to these procedures to the lowest bidder (provided the 
Authority does not reject all bids). The rule contains a description of 
circumstances under which the Authority will not award a contract to a 
nonresident bidder consistent with Texas Government Code, Chapter 2252, 
Subchapter A and also clarifies that contracts with an engineer's estimate of 
less than $300,000 may be awarded or rejected by the Authority's chief 
administrative officer (the "Director") under other provisions of this rule. 
Section 53.9 sets forth required procedures after a contract has been awarded. 
Successful bidders must execute and furnish a contract to the Authority within 
15 days of receiving written notification of the award of a contract, and must 
include with the contract certain specified items (such as a performance bond 
and a certificate of insurance). This rule also details procedures for handling 
of proposal guaranties, return of proposal guaranties to unsuccessful bidders, 
and retention of proposal guaranties as liquidated damages under certain 
circumstances. 
Section 53.10 addresses conditions and procedures for awarding turnpike 
improvement contracts under certain emergency conditions. The rule provides for 
the expedited award of contracts to meet emergency conditions, and describes 
procedures for, and the conditions under which, the existence of an emergency 
will be determined. The rule specifies that to be eligible to bid on emergency 
projects contractors must be included on the prequalified bidders list 
maintained pursuant to the rules of TxDOT, or must complete and submit a 
bidder's questionnaire form to the Authority. 
Section 53.11 provides authorization for turnpike improvement contracts to allow 
for partial payments. For construction and preventative maintenance contracts, 
partial payments may be made of an amount not exceeding 95% of the value of the 
work done, with the Authority to retain 5.0% of the contract price until all of 
the work has been completed and accepted. No retainage will be held on routine 
maintenance and professional services contracts. 
Section 53.12 requires successful bidders under the procedures set forth under 
subchapter A to comply with the Authority's rules concerning its DBE/HUB 
program. 
Subchapter B is comprised of sec.sec.53.20-53.30, and addresses contracting for 
architectural and engineering services. The rules are necessary to assure that 
the Authority follows a fair and efficient process which will enable it to 
procure these important professional services from qualified firms and 
individuals. Architectural and engineering services are essential to the 
Authority's work, and high quality services are essential to maximizing the 
degree of safety for the traveling public using turnpike project facilities. 
These rules are also consistent with the intent and requirement of 
Transportation Code, sec.361.049 that the Authority adopt rules concerning the 
procurement of professional consulting services. 
Section 53.20 identifies the purpose of the rules in Subchapter B, which, in 
general, is to establish standard procedures for selection and contract 
management for architectural and professional engineering services in compliance 
with the Professional Services Procurement Act, Texas Government Code, Chapter 
2254, Subchapter A. 
Section 53.21 contains the definitions relevant to the rules contained in this 
subchapter. 
Section 53.22 describes the procedures for preparation of a notice of intent to 
seek architectural or professional engineering services (or both), publication 
of such notice in the Texas Register, and submission by interested parties of a 
letter of request asking for a copy of a detailed request for proposal (RFP) 
which is to be referenced in the notice of intent. 
Section 53.23 identifies the items which may be included in an RFP, and requires 
that written responses to an RFP be filed with the Authority and be received by 
the date, time and place specified in the RFP. 
Section 53.24 provides for the formation of a consultant selection team which 
will be responsible for reviewing proposals submitted by interested parties. 
Section 53.25 describes certain of the criteria which the consultant selection 
team ("CST") will consider in evaluating proposals received in response to RFPs. 
This rule allows for the CST to select a short list of providers with which 
further interviews will be conducted, but identification of a short list is not 
required. 
Section 53.26 discusses the conduct of interviews with providers on a short list 
(if any), and the general structure and purpose of such interviews. 
Section 53.27 describes the selection of a provider subsequent to the interviews 
conducted by the CST (if any), and notification to be given to the selected 
provider as well as those not selected. The rule also specifies that after 
selection, the Director or their designee will engage in negotiations with the 
selected provider to develop a contract for the provision of the requested 
services. Certain items which may be included in the contract are described in 
the rule, and the rule specifies that the selected provider must return an 
executed contract within 35 working days from the date of notification, provided 
that the Director may grant one or more 30-day extensions. The rule also directs 
that if the Authority is unable to successfully negotiate a contract with the 
selected provider, negotiations with that provider shall end and negotiations 
shall, upon written approval of the Director, begin with the next ranked 
provider as determined by the CST. 
Section 53.28 details procedures for contract management. Prime providers are 
required to perform at least 30% of the contracted work with their own work 
force, and no subcontractor may perform a higher percentage of the work than the 
prime provider. The rule describes the content of subcontracts and conditions 
under which subcontractors may be utilized, and further describes management of 
ongoing work, prerequisites to commencement of work, conditions for suspension 
of work, payment on engineering contracts, performance of interim audits, 
conditions under which supplemental agreements will be needed, correction of 
errors and omissions by providers, procedures for contract closeout, and 
provider performance evaluations to be performed periodically. 
Section 53.29 describes the three types of contact selections the Authority will 
perform, being individual contract selection, multiple contract selection 
(derived from one notice of intent and detailed RFP) and emergency contract 
selection. 
Section 53.30 requires that providers under contracts awarded pursuant to the 
rules in subchapter B must comply with the Authority's DBE program concerning 
maximization of opportunities for DBEs and HUBs. 
Subchapter C is comprised of sec.sec.53.50-53.54, which address contract 
disputes and debarment. These provisions are necessary for the Authority to be 
able to resolve potential disputes with contractors and service providers in a 
fair, efficient and economic manner. They are also intended to give aggrieved 
parties a fair and full opportunity to present their claims to the Authority. 
Debarment procedures are necessary to assure that the Authority is contracting 
with the highest quality providers and those who are free from indications that 
their work or conduct is not trustworthy. 
Section 53.50 contains definitions relevant to the contract claim procedures, 
and sets forth the composition and functions of a contract claim committee. The 
contract claim committee is to gather information, study, and meet informally 
with contractors, if requested, to resolve disputes that may exist between the 
Authority and the contractor. The committee is authorized to secure reports and 
recommendations from responsible Authority employees and to afford the 
contractor an opportunity to meet informally to discuss the disputed matters and 
to present relevant information to the committee. The committee chairman is to 
provide written notice of the committee's proposed disposition of the claim to 
the contractor, and if such proposed disposition is agreed to by the contractor 
the agreed disposition is to be forwarded to the Director for a final order on 
the claim. If the contractor is dissatisfied with the proposal of the committee, 
the contractor may petition for a formal administrative hearing to litigate the 
claim pursuant to provisions of the Administrative Procedure Act, Chapter 2001 
of the Texas Government Code. 
Section 53.51 sets forth the Authority's right to maintain surveillance of the 
equal opportunity performance of contractors and subcontractors with regard to 
certain turnpike projects. Nothing in the rules is intended to relieve 
contractors and subcontractors of their own obligation to assure that employment 
practices are conducted without discrimination and that they have implemented 
acceptable affirmative action plans. 
Section 53.52 sets forth the procedures for debarment of a contractor, and 
contains the definitions relevant to debarment proceedings. The rule sets forth 
the reasons that a contractor or its affiliates may be debarred from bidding on, 
or entering into, contracts let by the Authority, from participating as a 
subcontractor on any such contracts, or from supplying materials or equipment to 
be used in the construction or maintenance of part of a turnpike project. The 
rule also contains a provision allowing a contractor a hearing prior to its 
debarment, which, absent an agreement to the contrary between the Authority and 
the contractor, shall be conducted pursuant to the Administrative Procedure Act, 
Texas Government Code, Chapter 2001. The rule sets out procedures for 
reinstatement of debarred contractors, as well as additional factors considered 
in debarment and reinstatement decisions. Finally, the rule contains additional 
guidance concerning debarment and reinstatement, including requirements that 
contractors notify the Authority in the event of a conviction or debarment in 
connection with a bidding crime in any jurisdiction, and specifies that illegal 
or improper conduct of an individual may be imputed to a firm with which they 
are associated. Debarment of a contractor does not affect their contractual 
obligations to the state for services already contracted for by the Authority. 
Section 53.53 contains procedures and definitions relevant to suspension of a 
contractor. The rule contains conditions under which a contractor or its 
affiliates may be suspended from bidding on or contracting for turnpike project 
contracts, from participating as a subcontractor under such contracts, or from 
supplying materials or equipment to be used in construction or maintenance of 
turnpike projects. The rules specify that suspension shall remain in effect 
until cancellation, or until the occurrence of other specified events, and 
provides a right to a hearing concerning suspension which shall be conducted in 
accordance with the Administrative Procedure Act, Texas Government Code, Chapter 
2001. Suspensions may be lifted, modified or abated if it is in the public 
interest to do so. The rule additionally sets out a nonexclusive list of factors 
which may be considered in suspension decisions, including mitigating 
circumstances. 
Section 53.54 sets forth supplemental procedures for suspension or debarment of 
contractors, which provide conditions under which the Authority may suspend or 
debar a contractor and its affiliates in addition to those set forth in the 
preceding rules. Specifically, contractors may be suspended in the event of 
indictment of a contractor on a charge of a bidding crime (which suspension 
shall remain effect until final resolution of the criminal charges). Debarment 
may also result from discovery of evidence relating to a bidding crime. 
Subchapter D is comprised of Sections 53.60-53.71, which contain rules and 
information concerning the Authority's DBE/HUB programs. Such programs are 
required under provisions of state and federal law. 
Section 53.60 sets forth the purpose of subchapter D, which is to establish the 
policies and procedures to implement the Authority's DBE and HUB programs in 
compliance with the certain provisions of state and federal law. 
Section 53.61 contains definitions relevant to the Authority's DBE/HUB programs. 
Section 53.62 sets forth the Authority's policy that DBEs and HUBs shall have 
maximum opportunity to participate in performance of contracts; that all 
necessary and reasonable steps will be taken to ensure that DBEs and HUBs have 
maximum opportunity to compete for and perform contracts and subcontracts; and 
that the Authority prohibits discrimination on the basis of race, color, 
national origin, or gender in the award and performance of contracts. 
Section 53.63 notes that the DBE program is applicable to all Authority 
contracts and purchases funded in whole, or in part, with federal funds received 
from the United States Department of Transportation through the Federal Highway 
Administration, Federal Transit Administration, or the Federal Aviation 
Administration. The Authority's HUB program is applicable to all contracts and 
purchases funded entirely with state and local funds. 
Section 53.64 refers to the Authority's DBE and HUB goals. The rule notes that 
TxDOT periodically establishes overall annual DBE and HUB participation goals 
and publishes such goals in the Texas Register and other media. This rule 
authorizes the Authority to rely upon and adopt TxDOT's annual DBE and HUB 
participation goals as its own, or enables the Authority to establish its own 
goals. In the event the Authority desires to establish its own goals, the DBE 
goals shall be consistent with federal requirements of the U.S. Department of 
Transportation and be compatible with other applicable state and federal laws, 
and the HUB goals shall be consistent with those of the General Services 
Commission and as set forth in the Texas Administrative Code. Should the 
Authority fail to establish its own goals, its goals shall be presumed to be the 
same as those of TxDOT. The rule further requires that individual contract goals 
be established by the Authority to achieve the overall goals, and that 
individual contracts having potential for DBE/HUB participation shall be 
assigned participation goals based on the availability of qualified contractors, 
work site location, dollar value of the contracts, and the type of work items 
specified in the contract. The rule sets forth that the Authority will assign 
individual contract goals for DBE participation in turnpike project contracts, 
building construction and maintenance, professional services, private consultant 
services, and purchasing contracts, while HUB goals for individual contracts 
will be determined pursuant to rules of the General Services Commission as set 
forth at 1 TAC sec.111.13. 
Section 53.65 sets forth the Authority's obligation to make a good faith effort 
to meet or exceed the annual DBE and HUB goals established. The rule also sets 
forth procedures for contractors documenting steps taken in good faith to obtain 
DBE or HUB participation where required when the specific contract goals are not 
being met. The Authority will then consider the efforts taken by the contractor 
to meet the DBE/HUB requirements. 
Sections 53.66 and 53.67 address DBE and HUB certification. For DBE 
certification, the rules provide that the Authority will rely upon TxDOT's 
procedures for certification, and that valid certification by TxDOT will be 
considered valid certification for Authority contracting purposes. Section 53.67 
recognizes that TxDOT and the General Services Commission operate under a 
reciprocal certification program, and further that the General Services 
Commission maintains a directory of certified HUBs. The Authority will rely on 
the procedures of TxDOT and the General Services Commission for agency 
certification, and valid and current HUB certification by the General Services 
Commission or TxDOT shall be considered valid certification for Authority 
contracting purposes.
Section 53.68 details contract compliance requirements. The rule sets forth, in 
general, contract provisions applicable to contracts which include DBE/HUB 
goals, as well as provisions for contracts which do not include specific goals. 
The rule requires contractors to designate an employee as a DBE/HUB contact 
person, who shall be responsible for submitting reports, maintaining records, 
and documenting good faith efforts to use DBEs and HUBs pursuant to the 
Authority's rules. The rule further sets forth requirements that must be 
satisfied by the contractor unless the contractor is, itself, a DBE or HUB, and 
details reporting requirements, credits which shall be given for expenditures, 
use of DBE/HUB contractors and subcontractors, subcontracting by DBE and HUB 
contractors or subcontractors, utilization of equipment, requirements for 
maximization of opportunities for DBEs/HUBs to perform work by not creating 
unnecessary barriers or artificial requirements, substitutions for DBE/HUBs, the 
conduct of compliance conferences, sanctions for failing to comply with contract 
requirements, and rights to appeal of sanctions. 
Section 53.69 provides procedures for filing of complaints related to alleged 
discrimination or violation of the DBE program, as well as claims for additional 
compensation. The rule also provides for filing of written protests with the 
Director by firms not selected to receive a contract offered by the Authority, 
as well as procedures for processing, determining, and appealing such 
complaints.
Section 53.70 requires the Authority to adopt policies and guidelines for 
investigation of complaints unresolved through other means as provided in 
subchapter D. It also sets forth conditions under which aggrieved persons or 
businesses may request formal investigations into a protest, complaint, or 
dispute. 
Section 53.71 deals with appeals to the U.S. Department of Transportation and 
appeals to the Authority, and specifically details the process for presenting 
appeals to the Authority, including appointment of a committee, matters reviewed 
by the committee, and notification of findings of the review to the complainant.
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the new sections are in effect, there will be no significant 
fiscal implications for state or local governments as a result of enforcing or 
administering of the sections. There are no anticipated economic costs to 
persons required to comply with the sections as proposed. 
Pete Winstead, Chairman of the Board of Directors of the Texas Turnpike 
Authority Division, has certified that there will be no significant impact on 
local economies or overall employment as a result of enforcing or administering 
the proposed rules. 
Mr. Winstead also has determined that for each year of the first five years the 
sections as proposed are in effect, the public benefit anticipated as a result 
of compliance with the sections will be procurement procedures which will result 
in fair, efficient and economic contracting for turnpike improvement contracts, 
fair and efficient contracting for high quality architectural and engineering 
services, and for participation by disadvantaged business enterprises and 
historically underutilized businesses in Authority contracts in compliance with 
state and federal law. 
Comments on the proposed new sections may be submitted to C. Brian Cassidy, 
General Counsel, Texas Turnpike Authority Division, 125 East 11th Street, 
Austin, Texas 78701-2483, (512) 936-0903, fax (512) 305-9518. The deadline for 
receipt of comments will be 5:00 p.m. on September 14, 1998. 

SUBCHAPTER A. Turnpike Project Improvement Contracts
43 TAC sec.sec.53.1-53.12
The new sections are proposed under Transportation Code, sec.361.042, which 
requires the Board to adopt rules for the regulation of its affairs and the 
conduct of its business, as well as under Transportation Code, sec.361.231, 
concerning contract awards and obligations assumed; sec.361.049, regarding 
procurement of professional consulting services; and sec.361.050, relating to 
maximation of opportunities for DBEs and HUBs. 
No other statutes, articles, or codes, are affected by these proposed new 
sections. 

sec.53.1. Purpose. 
The sections under this subchapter prescribe the policies and procedures 
governing bidder qualification, bidding, award, and execution of certain 
contracts entered under Chapter 361 of the Texas Transportation Code (Vernon 
Pamph. 1998). 

sec.53.2. Definitions. 
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Available bidding capacity--Bidding capacity less uncompleted work under 
contract. 
(3) Bidder capacity--The maximum dollar value a contractor may have under 
contract at any given time. 
(4) Building contract--A contract entered under the Turnpike Act, for the 
construction or maintenance of an Authority building or appurtenant facilities. 
(5) Construction contract--A contract entered under the Turnpike Act, for the 
construction or reconstruction of a segment of a toll highway operated pursuant 
to the Turnpike Act as part of the state highway system. 
(6) Department--The Texas Department of Transportation. 
(7) Director--The director of the Texas Turnpike Authority. 
(8) Electronic bid--The submission of bid information on a computer diskette as 
a supplement to the proposal for use in the bid tabulation. 
(9) Emergency--Any situation or condition concerning the roadways, rights of 
way, buildings and appurtenances related to or comprising a Turnpike Project, 
resulting from a natural or man-made cause, which poses an imminent threat to 
life or property of the traveling public or which substantially disrupts or may 
disrupt the orderly flow of traffic and commerce. 
(10) Maintenance contract--A contract entered under the Turnpike Act, for the 
maintenance of a Turnpike Project comprising a segment of the state highway 
system. 
(11) Materially unbalanced bid--A bid which indicates that, even if low, 
generates a reasonable doubt that award to the bidder submitting such materially 
unbalanced bid is not likely to result in the lowest ultimate cost to the state. 
(12) Mathematically unbalanced bid--A bid containing lump sum or unit bid items 
which do not reflect reasonable actual costs plus a reasonable proportionate 
share of the bidder's anticipated profit, overhead costs, and other indirect 
costs. 
(13) Preventive maintenance contract--Contracts let through the construction 
contracting procedure to preserve and prevent further deterioration of the 
roadways and rights of way of a Turnpike Project, with all its components. 
(14) Proposal--The offer of the bidder, made out on the prescribed form, giving 
bid prices for performing the work described in the plans and specifications. 
(15) Proposal guaranty--The security designated in the proposal and furnished by 
the bidder as a guaranty that the bidder will enter into a contract if awarded 
the work. 
(16) Routine maintenance contract--Contracts let through the routine maintenance 
contracting procedure to preserve and repair roadways and right of way related 
to a Turnpike Project, with all its components, to its designed or accepted 
configuration. 
(17) Turnpike Act--Chapter 361.001 et seq. of the Texas Transportation Code 
(Vernon Pamph. 1998). 
(18) Turnpike project improvement contract--A construction, maintenance, or 
building contract for a project undertaken pursuant to the Turnpike Act. 
(19) Turnpike project--A toll highway constructed, maintained, or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension, or expansion to the highway, including: 
(A) a facility to relieve traffic congestion and promote safety; 
(B) a bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) an administration, storage, or other building the Authority considers 
necessary to operate the project; and 
(D) property rights, easements, and interests the Authority acquires to 
construct or operate the project. 

sec.53.3. Qualification of Bidders and Registration of Subcontractors. 
The department has promulgated rules for the qualification of bidders and 
registration of subcontractors for construction and maintenance contracts (See 
sec.9.12 of this title (relating to Qualification of Bidders and Registration of 
Subcontractor)). The Texas Turnpike Authority (Authority) will rely upon the 
qualification and registration process administered by the department, and the 
Authority will refer to the list of qualified bidders and registered contractors 
maintained by the department pursuant to sec.9.13 of this title (relating to 
Notice of Letting and Issuance of Proposals), in determining whether bidders and 
subcontractors are eligible to bid on, or receive, turnpike project improvement 
contracts. 

sec.53.4. Notice of Letting and Issuance of Proposals.
(a) Notice to bidders and advertisements. 
(1) Notice. The Texas Turnpike Authority (Authority) will maintain mailing lists 
of all individuals and entities interested in receiving notice of the letting of 
contracts and/or issuance of proposals for turnpike project improvement 
contracts. Individuals and entities desiring to receive such notices must submit 
a written request to the Authority for inclusion on the mailing list. Written 
requests should be mailed to: Texas Turnpike Authority, 125 East 11th Street, 
Austin, Texas 78701. The Authority reserves the right to impose a fee to offset 
the costs of the administration and maintenance of the mailing list. 
(2) Advertising. Notice of the time, when, and place where contracts will be let 
and bids opened will be published in a newspaper in the county where the work is 
to be done once a week for at least two weeks prior to the time set for the 
letting of the contract and in two other newspapers designated by the Authority. 
If there is no newspaper published in the county in which the work is to be 
done, the advertising shall be for publication in a newspaper published in the 
county nearest the county seat of the county in which the work is to be done. 
(b) Proposal form. 
(1) Proposal form content. A proposal form issued by the Authority shall 
include: 
(A) the location and description of the proposed work; 
(B) an approximate estimate of the various quantities and kinds of work to be 
performed or materials to be furnished; 
(C) a schedule of items for which unit prices are requested; 
(D) the time within which the work is to be completed; and 
(E) any special provisions and special specifications. 
(2) Form of request. 
(A) A request for a proposal form for a turnpike project improvement contract 
which is not financed, in whole or in part, with federal funds may be made 
orally or in writing. 
(B) A request for a proposal form on a turnpike project improvement contract 
financed, in whole or in part, with federal funds must be submitted in writing, 
and must include a statement in a form acceptable to the Authority certifying 
whether the bidder is currently disqualified by an agency of the federal 
government as a participant in programs and activities involving federal 
financial and nonfinancial assistance and benefits. 
(c) Issuance of proposal form. 
(1) Construction and maintenance contracts. 
(A) Issuance. Except where prohibited under subparagraph (B) of this paragraph, 
the Authority will, upon receipt of a request, issue a proposal form for a 
construction or maintenance contract as follows: 
(i) for a turnpike project improvement contract of a financial magnitude for 
which audited financial prequalification would not be waived by the department, 
only to a bidder prequalified by the department, and only if the estimated cost 
of the project is within that bidder's available bidding capacity; and 
(ii) for a turnpike project improvement contract of a financial magnitude for 
which audited financial qualification would be waived by the department, only if 
the estimated cost of the project is within that bidder's available bidding 
capacity. 
(B) Non-issuance. Except as provided in subparagraph (C) of this paragraph, the 
Authority will not issue a proposal form requested by a bidder for a 
construction or maintenance contract if at the time of the request the bidder: 
(i) is disqualified by an agency of the federal government as a participant in 
programs and activities involving federal assistance and benefits, and the 
contract is financed, in part, with federal funds; 
(ii) is suspended or debarred by order of the commission, department, or 
Authority, or is prohibited from rebidding a specific project because of default 
of the first awarded bid; or 
(iii) has not fulfilled the requirements for qualification under the rules of 
the department relating to qualification of bidders and registration of 
subcontractors. 
(C) Exception. The Authority may issue a proposal to a bidder who is ineligible 
under subparagraph (B)(iii) of this paragraph if the bidder has substantially 
complied with the department's rules relating to qualification of bidders and 
registration of subcontractors. 
(2) Building contracts. Except as provided in paragraph (3) of this subsection, 
the Authority will, upon request, issue a proposal form to any bidder for a 
turnpike project building contract. 
(3) All contracts. The Authority will not issue a proposal form for a turnpike 
project improvement contract to a bidder if the bidder or a subsidiary or 
affiliate of the bidder has received compensation from the Authority to 
participate in the preparation of the plans or specifications on which the bid 
or contract is based. 

sec.53.5. Submittal of Proposal.
(a) Delivery. 
(1) The bidder shall place each completed proposal form in a sealed envelope 
marked to show its contents. When submitted by mail, this envelope shall be 
placed in another envelope which shall be sealed and addressed as indicated in 
the notice. Bids must be received on or before the hour and date set for the 
receipt and opening of bids and must be in the hands of the Texas Turnpike 
Authority (Authority) letting bid receipt official by that time. 
(2) In addition to the proposal form submitted under paragraph (1) of this 
subsection, and when authorized in the proposal, a bidder may submit an 
electronic bid in the same manner. A bidder delivering an electronic bid shall 
submit the proposal in accordance with paragraph (1) of this subsection, and 
must:
(A) include the computer diskette containing the electronic bid data in a 
separate sealed envelope; 
(B) state the exact qualified name of the bidder on the envelope; 
(C) state on the computer diskette the exact qualified name of the bidder and 
the job number as taken from the order of tabulation of projects, for which 
electronic bids are being submitted; 
(D) submit a computer diskette containing bid data for those projects which are 
to be opened and read for that letting day only, as reflected in the notice; and 
(E) provide the electronic bid information on a computer diskette, free of 
virus, which has been prepared through the electronic bidding system utilized by 
the Authority. 
(3) Electronic bids are not accepted for building contracts related to turnpike 
project improvement contracts. 
(b) Proposal content. The bidder shall submit the proposal on the form furnished 
by the Authority and in compliance with the following requirements listed in 
paragraphs (1)-(4) of this subsection. 
(1) Except as provided in paragraph (2) of this subsection and subsection (c) of 
this section, the blank spaces for each item as required in the proposal form 
shall be filled in by writing in words in ink. 
(2) The bidder shall submit a unit price for each item for which a bid is 
requested (including a zero if appropriate), except in the case of a regular 
item that has an alternate bid item. In such case, prices must be submitted for 
the base bid or with the set of items of one or more of the alternates. 
(3) The proposal shall be executed with ink in the complete and correct name of 
the bidder making the proposal and be signed by the person or persons authorized 
to bind the bidder. 
(4) Except in the case of regular bid item that has an alternate bid item, unit 
prices shall be stated in dollars and/or cents for each bid item listed in the 
proposal. 
(c) Computer printouts. In lieu of writing in words in ink, a bidder may submit 
an original computer printout sheet bearing the required certification by and 
signature for the bidder. The unit prices shown on acceptable printouts will be 
the official unit prices used to tabulate the official total bid amount and used 
in the contract if awarded by the Commission. 
(d) Electronic bids. Electronic bid data must be in the form outlined under 
subsection (a)(2) of this section. The electronic bid information will be a 
supplement to the proposal for the purposes of tabulation only. Each proposal 
submitted must be accompanied by a computer printout meeting the requirements 
under subsection (c) of this section. The computer diskette will remain the 
property of the Authority. 
(e) Proposal guaranty. 
(1) A bidder must submit a proposal guaranty with the proposal form in the 
amount specified by the proposal form. The proposal guaranty shall be payable to 
the Authority and shall be a cashier's check, money order, or teller's check 
drawn by or on a state or national bank or savings and loan association, or a 
state or federally chartered credit union (collectively referred to as "bank"). 
(2) A check must be payable at or through the institution issuing the 
instrument, or must be drawn by a bank: 
(A) on a bank; or 
(B) payable at or through a bank. 
(3) The Authority will not accept as a proposal guaranty: 
(A) personal checks or certified checks; 
(B) other types of money orders; or 
(C) bid bonds. 
(f) Certification.
(1) A bidding proposal on a turnpike project improvement contract financed, in 
part, by federal funds shall include, in a form acceptable to the Authority, a 
certification of eligibility status. The certification shall describe any 
suspension, debarment, voluntary exclusion, or ineligibility determination 
actions by an agency of the federal government, and any indictment, conviction, 
or civil judgment involving fraud or official misconduct, each with respect to 
the bidder or any person associated therewith in the capacity of owner, partner, 
director, officer, principal investor, project director/super-visor, manager, 
auditor, or a position involving the administration of federal funds; and shall 
cover the three-year period immediately preceding the date of the proposal. 
(2) Information adverse to the bidder as contained in the certification will be 
reviewed by the Authority and by the Federal Highway Administration, and may 
result in rejection of the bid and disqualification of the bidder. 

sec.53.6. Acceptance, Rejection and Reading of Proposals. 
(a) Public reading. Bids will be opened and read at a public meeting conducted 
by the Director of the Texas Turnpike Authority (Authority), or his or her 
designee, on behalf of the Authority. Each meeting shall be in the City of 
Austin, at a time and location specified in the advertisement. 
(b) Proposals not read. 
(1) The Authority will not accept and will not read a proposal if: 
(A) the proposal is submitted by an unqualified bidder; 
(B) the proposal is in a form other than the official proposal form issued to 
the bidder; 
(C) the certification and affirmation are not signed; 
(D) the proposal was received after the time or at some location other than that 
specified in the advertisement; 
(E) the unit prices are written in the proposal in numerals except for bids 
governed by subparagraph (I) of this paragraph; 
(F) the proposal guaranty, when required, does not comply with sec.53.5(e) of 
this title (relating to Submittal of Proposal); 
(G) the bidder did not attend a specified mandatory pre-bid conference, if any; 
(H) the proprietor, partner, majority shareholder, or substantial owner is 30 or 
more days delinquent in providing child support under a court order or a written 
repayment agreement; 
(I) a computer printout proposal, when used, does not have the unit bid prices 
entered in designated spaces, does not include the proper certification, is not 
signed in the name of the firm to whom the proposal was issued, or omits 
required bid items or includes items not shown in the proposal; 
(J) the bidder was not authorized to be issued a proposal under the rules of the 
Authority; or 
(K) the proposal did not otherwise conform with the requirements of sec.53.5 of 
this title (relating to Submittal of Proposal). 
(2) If more than one proposal involving a bidder under the same or different 
names is submitted, the Authority will not accept and will not read any of the 
proposals submitted by that bidder. 
(c) Revision of bid by bidder. 
(1) A bidder may change a bid price before it is submitted to the Authority by 
changing the price and initialing the revision in ink. 
(2) A bidder may change a bid price after it is submitted to the Authority by 
requesting return of the bid in writing prior to the expiration of the time for 
receipt of bids, as stated in the advertisement. The request must be made by a 
person authorized to bind the bidder. The Authority will not accept a request by 
telephone or telegraph, but will accept a properly signed facsimile request. The 
revised bid must be resubmitted prior to the time specified for the close of the 
receipt of bids. 
(d) Withdrawal of bid. A bidder may withdraw a bid by submitting a request in 
writing before the time and date of the bid opening. The request must be made by 
a person authorized to bind the bidder. The Authority will not accept telephone 
or telegraph requests, but will accept a properly signed facsimile request. 

sec.53.7. Tabulation of Bids.
(a) Official bid amount. Except for lump sum building contracts bid items, the 
official total bid amount for each bidder will be determined by multiplying the 
unit bid price written in for each item by the respective quantity and totaling 
those amounts. 
(b) Texas Turnpike Authority (Authority) interpretations. 
(1) Proposal entries such as no dollars and no cents or zero dollars and zero 
cents will be interpreted to be one-tenth of a cent ($.001) and will be entered 
in the bid tabulation as $.001. Any entry less than $.001 will be interpreted 
and entered as $.001. 
(2) If a bidder submits both a completed proposal form and a properly completed 
computer printout, the Authority will use the computer printout to determine the 
total bid amount of the proposal. If the computer printout is incomplete, the 
Authority will use the completed proposal form to determine the total bid amount 
of the proposal. 
(3) If a bidder submits two computer printouts reflecting different totals, both 
printouts will be tabulated, and the Authority will use the lowest tabulation. 
(4) If a unit bid price is illegible, the Authority will make a documented 
determination of the unit bid price for tabulation purposes. 
(5) If a unit bid price has been entered for both the regular bid and a 
corresponding alternate bid, the Authority will determine the option that 
results in the lowest total cost to the state and tabulate as such. If both the 
regular and alternate bids result in the same cost to the state, the Authority 
will select the regular bid item or items. 
(6) If a bidder submits an electronic bid and the diskette furnished is unusable 
by the Authority, then the required computer printout will be used to determine 
the total bid amount of the proposal. 
(7) If the unit bid prices or the total bid amount reflected by the electronic 
bid differs from the amounts reflected on the required computer printout, then 
the amounts reflected on the printout will be used to determine the total bid 
amount. 

sec.53.8. Award of Contract.
(a) The Texas Turnpike Authority (Authority) may reject any and all bids opened, 
read, and tabulated under sec.53.6 and sec.53.7 of this title (relating to 
Acceptance, Rejection, and Reading of Proposals, and Tabulation of Bids). It 
will reject all bids if: 
(1) there is reason to believe collusion may have existed among the bidders; 
(2) the low bid is determined to be both mathematically and materially 
unbalanced; 
(3) the lowest bid is higher than the Authority's estimate and the Authority 
determines that re-advertising the project for bids may result in a 
significantly lower low bid; or 
(4) the lowest bid is higher than the Authority's estimate and the Authority 
determines that the work should be done by Authority forces or other state 
forces to which the Authority has access. 
(b) Unbalanced bids. The Authority will examine the unit bid prices of the 
apparent low bid for reasonable conformance with the Authority's estimated 
prices. The Authority will evaluate a bid with extreme variations from the 
Authority's estimate, or where obvious unbalancing of unit prices has occurred, 
and may, in its sole discretion, reject a bid on this basis. 
(c) Except as provided in subsection (d) of this section, if the Authority does 
not reject all bids, it will award the contract to the lowest bidder. 
(d) In accordance with the Government Code, Chapter 2252, Subchapter A, the 
Authority will not award a contract to a nonresident bidder unless the 
nonresident underbids the lowest bid submitted by a responsible resident bidder 
by an amount that is not less than the amount by which a resident bidder would 
be required to underbid the nonresident bidder to obtain a comparable contract 
in the state in which the nonresident's principal place of business is located. 
(e) Contracts with an engineer's estimate of less than $300,000 may be awarded 
or rejected by the Director or the Director's designee under the same conditions 
and limitations as provided in subsections (a)-(d) of this section. 

sec.53.9. After Contract Award.
(a) Contract execution. Except as provided in paragraph (3) of this subsection, 
within 15 days after written notification of award of a contract, the successful 
bidder must execute and furnish to the Texas Turnpike Authority (Authority) the 
contract with: 
(1) a performance bond and a payment bond, if required and as required by the 
Government Code, Chapter 2253, with powers of attorneys attached, each in the 
full amount of the contract price, executed by a surety company or surety 
companies authorized to execute surety bonds under and in accordance with state 
law; and 
(2) a certificate of insurance showing coverages in accordance with contract 
requirements. 
(3) A successful bidder on a routine maintenance contract will be required to 
provide the certificate of insurance prior to the date the contractor begins 
work as specified in the Authority's order to begin work. 
(b) Proposal guaranty. 
(1) Apparent low bidder. The Authority will retain the proposal guaranty of the 
successful bidder until after the contract has been awarded, executed, and 
bonded. If the successful bidder does not comply with subsection (a) of this 
section, the proposal guaranty will become the property of the state, not as a 
penalty but as liquidated damages. A bidder who forfeits a proposal guaranty 
will not be considered in future proposals of the same work unless there has 
been a substantial change in the design of the project subsequent to the 
forfeiture of the proposal guaranty. 
(2) Other bidders. Not later than 72 hours after bids are opened, the Authority 
will mail the proposal guaranty of all bidders except the apparent low bidder to 
the address specified on each bidder's return bidder's check form included in 
the proposal. 

sec.53.10. Emergency Contract Procedures.
(a) Purpose. The Texas Turnpike Authority (Authority) may award Turnpike Project 
improvement contracts under certain conditions in cases of emergency. This 
section provides for an alternate procedure for the expedited award of turnpike 
project improvement contracts to meet emergency conditions in which essential 
corrective or preventive action would be unreasonably hampered or delayed by 
compliance with other laws, this subchapter, or other sections this part. 
(b) Certification of emergency. 
(1) An Authority engineer who identified an emergency situation and determines 
that expedited action is required shall immediately notify the Director or his 
or her designee to describe the fact and nature of the emergency. Upon receiving 
authorization to proceed from the Director or his or her designee, the engineer 
may initiate procedures for the award of an emergency contract. All such 
notification will be documented in writing. 
(2) Examples of types of work which may qualify for emergency contracts include, 
but are not limited to, emergency repair or reconstruction of toll roads, 
turnpikes, or other turnpike project facilities; cleaning debris or deposits 
from the roadway or in drainage courses within the right of way; removal of 
hazardous materials; restoration of stream channels outside the right of way in 
certain conditions; temporary traffic operations; and mowing to eliminate safety 
hazards; provided, however, that in each instance, the proposed work must 
satisfy the requisites of emergency as defined in this subchapter. 
(3) Before the contract is awarded, the Director or his or her designee must 
certify in writing the fact and nature of the emergency giving rise to the 
award. 
(c) Contractor eligibility. To be eligible to bid on an emergency project, a 
contractor must be included in the department's list of prequalified bidders 
maintained pursuant to its rules or must complete a bidder's questionnaire in a 
form prescribed by, or acceptable to, the Authority. 
(d) Notification of prospective bidders. After an emergency is certified, the 
Director or his or her designee will review the department's list of eligible 
bidders and, if there is a sufficient number of firms, notify at least three of 
the proposed emergency contractors. 

sec.53.11. Partial Payments. 
Turnpike project improvement contracts may provide for partial payments. 
(1) Construction and preventative maintenance contracts. Construction contracts 
and preventive maintenance contracts will provide for partial payments of an 
amount not exceeding 95% of the value of the work done. The Texas Turnpike 
Authority (Authority) will retain 5.0% of the contract price until the entire 
work has been completed and accepted. 
(2) Routine maintenance and professional services contracts. The Authority will 
not retain funds for routine maintenance contracts or contracts for the making 
of all necessary plans and surveys preliminary to construction, reconstruction, 
or maintenance. 

sec.53.12. Compliance with DBE/HUB Requirements. 
To the extent required by the Texas Turnpike Authority (Authority) and/or 
otherwise required by law, successful bidders for contracts awarded under this 
Subchapter A must comply with requirements of Subchapter D of this chapter 
(relating to DBE/HUB 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 August 3, 1998.
TRD-9812192
C. Brian Cassidy
General Counsel
Texas Turnpike Authority Division
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 936-0903

SUBCHAPTER B. Contracting for Architectural and Engineering Services
43 TAC sec.sec.53.20-53.30
The new sections are proposed under Transportation Code, sec.361.042, which 
requires the Board to adopt rules for the regulation of its affairs and the 
conduct of its business, as well as under Transportation Code, sec.361.231, 
concerning contract awards and obligations assumed; sec.361.049, regarding 
procurement of professional consulting services; and sec.361.050, relating to 
maximation of opportunities for DBEs and HUBs. 
No other statutes, articles, or codes, are affected by these proposed new 
sections. 

sec.53.20. Purpose. 
This subchapter establishes standard procedures for selection and contract 
management of architectural and professional engineering service providers in 
accordance with Texas Government Code, Chapter 2254, Subchapter A, the 
Professional Services Procurement Act. 

sec.53.21. Definitions. 
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Board--The Board of Directors of the Authority. 
(3) Close out--The actions required to close out or complete the contract, 
including receipt and acceptance of deliverables, resolution of audit findings, 
receipt of outside approvals if applicable, resolution of other contract-related 
issues, and issuance of final payment. 
(4) Consultant selection team (CST)--The Authority's team that selects the long 
list and short list and evaluates proposals and interviews. 
(5) Debarment certification--A certification that the provider and its 
principals are not debarred from participation and not under consideration for 
debarment anywhere, and are eligible to perform the contract. 
(6) Department--The Texas Department of Transportation. 
(7) Director--The director of the Texas Turnpike Authority. 
(8) Lower tier debarment certification--A debarment certification form that is 
completed by subproviders or other lower tier participants. 
(9) Lower tier participant--A subprovider or other participant in the contract, 
other than the state, that is not the prime provider. 
(10) Notice of intent--A notification issued by the Authority that it intends to 
issue an RFP for services to be rendered in connection with a Turnpike Project. 
(11) Prime provider--The provider awarded an Authority provider contract. 
(12) Request for proposal (RFP)--A detailed request for submittal of a technical 
proposal from a provider that demonstrates competence and qualifications to 
perform the requested services and shows an understanding of the specific 
contract. 
(13) Short list--The list of providers selected from the long list by the CST 
for further consideration on an Authority contract. 
(14) Subprovider--A provider proposing to perform work through a contractual 
agreement with the prime provider. 
(15) Turnpike Project--A toll highway constructed, maintained, or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension, or expansion to the highway, including: 
(A) a facility to relieve traffic congestion and promote safety; 
(B) a bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) an administration, storage, or other building the Authority considers 
necessary to operate the project; and 
(D) property rights, easements, and interests the Authority acquires to 
construct or operate the project. 

sec.53.22. Notice of Intent and Letter of Request.
(a) Notice. The Texas Turnpike Authority (Authority) will prepare a notice of 
intent to issue an request for proposal (RFP) for architectural or professional 
engineering services, or both, for a turnpike project which fall within this 
Subchapter. The notice of intent shall include a general description of the 
turnpike project, a general description of the services required and which will 
be the subject of an RFP, and a deadline for submittal of a letter of request. 
The Authority will file the notice of intent with the Texas Register to be 
published no later than the 14th day preceding the deadline for receiving the 
letter of interest. If the notice of intent fails to appear in the Texas 
Register, the Authority will consider the notice posted. 
(b) Letter of request. The provider shall send a letter of request to the 
Authority requesting that the Authority send to it a copy of the detailed RFP 
for the turnpike project described in the notice of intent. The letter of 
request must be received by the Authority on or before the deadline specified in 
the notice of intent, and must include the name of the provider, a contact 
person, and an address to which the RFP can be sent. 

sec.53.23. Requests for Proposals and Responses. 
(a) Requests for proposals (RFP). The content of the RFP to be issued pursuant 
to this Subchapter B will be subject to the discretion of the Texas Turnpike 
Authority (Authority). An RFP may (but is not required to) include: 
(1) instructions for proposal preparation and submittal; 
(2) scope of services to be provided by the provider; 
(3) proposed contract duration; 
(4) proposed method of payment; 
(5) minimum and preferred proposal qualifications; 
(6) minimum and preferred interview qualifications; 
(7) a debarment certification form; 
(8) a lower tier debarment certification form; 
(9) a lobbying certification/disclosure form; 
(10) any special contract requirements; and 
(11) any other information the Authority may request. 
(b) Responses to RFPs. 
(1) Proposal format. A written proposal in response to an RFP is required. The 
proposal shall be limited to the specific length and information outlined in the 
RFP. 
(2) Receipt of proposals. A proposal in response to an RFP must be received by 
the date, time, and place specified in the RFP. The Authority will not accept a 
proposal by electronic facsimile. 

sec.53.24. Consultant Selection Team. 
The consultant selection team (CST) shall be responsible for reviewing proposals 
received from providers. The CST shall be composed of the Director or his or her 
designee, and one or more Texas Turnpike Authority (Authority) or department 
employees designated by the Director. 

sec.53.25. Proposal Evaluations and Determination of Short List.
(a) Proposal evaluation criteria. The consultant selection team (CST) will 
evaluate proposals received from providers based on the following criteria 
listed in paragraphs (1)-(5) of this subsection: 
(1) understanding of scope of services; 
(2) experience of the project manager and project team; 
(3) ability to meet the project schedule; 
(4) unique or innovative methods of approaching the proposed work that may save 
time or money, or result in a better quality product; 
(5) any other criteria the CST determines to be relevant to the services 
required for the turnpike project. 
(b) Short List. Following receipt and evaluation of the written proposals to an 
request for proposal (RFP), the CST may select a short list of providers. The 
short list will identify providers which the CST and/or other representatives of 
the Texas Turnpike Authority (Authority) may interview in connection with the 
possible rendition of services requested in the RFP. The CST is not required to 
compile a short list, and if it does so the number of providers included on the 
short list is subject to the CST's discretion. The Authority shall notify 
providers of the rejection of their proposal or of their inclusion on the short 
list. 

sec.53.26. Interviews and Evaluation.
(a) Interviews. The consultant selection team (CST) may conduct interviews with 
the providers on the short list. The CST may elect to perform telephone 
interviews. The prime provider's project manager is required to be present for 
the interview. Lack of attendance by the project manager may be reason to 
consider the provider nonresponsive, and dropped from further consideration. 
(b) Interview structure. The interview shall be structured to allow the 
providers to demonstrate their understanding of the project and knowledge of 
applicable rules, regulations, codes and special information to be gathered. 

sec.53.27. Selection. 
(a) After the interviews (if any) are completed, the consultant selection team 
(CST) shall select a provider. 
(b) Notification. The Texas Turnpike Authority (Authority) will: 
(1) prepare a letter to notify the provider selected for contract negotiation; 
(2) prepare a letter to each of the remaining short list of providers not 
selected, naming the one or ones selected; and 
(3) set up a meeting with the selected provider to begin contract negotiations. 
(c) Negotiations. 
(1) Selected provider. The Director or his or her designee will enter into 
negotiations with the selected provider. The provider shall submit the 
information required for the contract, including a work outline, work schedule, 
and cost proposal. 
(2) Content of Contract. The contract to be negotiated with the selected 
provider shall include such terms and conditions as the Director, subject to 
approval by the Board, deems appropriate and which can be mutually agreed upon 
with the selected provider. Because time is of the essence in the completion of 
turnpike projects such terms and conditions may include a liquidated damages 
clause for the failure to meet deadlines specified in the contract or otherwise 
agreed upon in writing by the Authority and the selected provider. Such terms 
and conditions may also include a provision authorizing the Authority to audit, 
or cause to be audited, the books and records of the selected provider at any 
time and for any reason. 
(3) Contract execution. The selected provider shall return an executed contract 
within 35 working days from the date of notification to the provider. Upon 
request, the Director may grant a 30-working day extension. An extension must be 
authorized before the expiration of the negotiation period or extension. 
Additional extensions must be authorized by the Director, for a period not to 
exceed 30 days. 
(4) Selection of alternative providers. If the Authority is unable to execute a 
satisfactory contract containing a fair and reasonable price within the allotted 
time period with the selected provider, negotiations shall formally end with 
that provider and negotiations shall, upon written approval of the Director, 
begin with the provider ranked next by the CST. Negotiations shall be undertaken 
in this sequence until a contract is awarded. 

sec.53.28. Contract Management.
(a) Subcontracts. 
(1) A prime provider shall perform at least 30% of the contracted work with its 
own work force. No subcontractor may perform a higher percentage of the work 
than the prime provider. 
(2) The Texas Turnpike Authority (Authority) may review subcontracts for 
compliance with the requirements of this subsection. Subcontracts shall 
incorporate by reference all of the provisions of the prime contract. 
(3) Subcontracts shall: 
(A) refer to the prime contract and have the same purpose;
(B) include nondiscrimination attachment; 
(C) include lower tier debarment certification (negotiated contracts); and 
(D) provide clear payment terms. 
(4) Subcontracts shall not include: 
(A) multipliers, such as supplies plus 10%; and 
(B) the state as a party to the subcontract. 
(b) Operations. 
(1) Management responsibility. The Director or his or her designee will manage 
the contract. 
(2) Project manager. The prime provider's project manager may not be changed 
without prior consent of the Authority. 
(3) Commencement of work. The provider shall not proceed with any contract work 
until advised in writing by the Authority to proceed. 
(4) Suspension of work. The Authority may suspend the work by: 
(A) verbally notifying the provider; 
(B) providing written notification of the suspension; 
(C) identifying the reason for suspension; and 
(D) identifying approximate length of suspension and payment to be made, if any, 
based on actual work completed as of the date of suspension. 
(5) Payment on engineering contracts. Payment for eligible costs will be made 
within 30 days after receiving a correct invoice. Payment may be withheld 
pending verification of satisfactory work performed. To receive payment for 
services, the provider shall submit to the Director or his or her designee: 
(A) a monthly progress report; and 
(B) an itemized and certified invoice (in a form prescribed by the Authority, if 
any, or in the absence of such form in other acceptable format). 
(6) Interim audit. The Authority may require the services of the provider during 
the construction phase to review shop drawings, plans or procedures, or perform 
other services related to its design. If these services are anticipated, the 
Authority may request an interim audit upon completion and approval of the 
plans, specifications and cost estimate. 
(c) Supplemental agreements. 
(1) The original executed contract will require a supplemental agreement if: 
(A) additional funding is required in accordance with terms of the contract; 
(B) additional time is needed to complete work in progress; or 
(C) changes in scope of services are necessary. 
(2) The supplemental agreement will be executed: 
(A) prior to the expiration date of the original contract; 
(B) prior to exceeding the contract amount; and 
(C) prior to performance of unauthorized work. 
(d) Errors and omissions. 
(1) Policy. It is the Authority's policy to require providers to perform such 
additional work as may be necessary to correct errors or omissions in the work 
required under the contract without undue delay and without additional cost to 
the Authority. 
(2) Procedure. 
(A) Notification. The Authority will notify the provider of the errors and 
omissions. 
(B) Resolution. A dispute involving errors and omissions shall be resolved in 
accordance with rules or policies of the Authority. 
(e) Contract close out. 
(1) Final audit. The Authority will perform a site audit of the provider's books 
and records in accordance with the terms of the contract.
(2) Time. A contract is ready for close out when: 
(A) services have been provided; 
(B) products have been received and accepted; 
(C) approval has been received from the U.S. Department of Transportation when a 
turnpike project is financed, in part, with federal funds; 
(D) payments have been made; 
(E) audit findings have been resolved; and 
(F) the contract expires unless extended by supplemental agreement.
(f) Provider performance evaluations. If the contract duration is greater than 
18 months, the Authority, through its staff, will evaluate the prime provider's 
or subprovider's performance in the categories of management, cost 
administration, quality, and timeliness upon completion of a phase, upon 
exemplary performance, and on an interim basis. The interim basis evaluation 
will occur not less than once every 12 months, or when the Director determines 
that the work is behind schedule or not being performed according to the 
contract. In all contracts, the prime provider and subprovider will also be 
evaluated upon completion of the contract. An evaluation of constructability 
will be performed on an interim basis not less than every 12 months and upon 
completion of the construction contract, if applicable. The evaluations will be 
given to the prime provider or subprovider for review and comment. Prime 
provider or subprovider comments, if submitted to the Authority, will be noted 
in the database. 

sec.53.29. Selection Types. 
The Texas Turnpike Authority (Authority) will perform three types of contract 
selections. 
(1) Individual contract selection. One contract will result from the notice of 
intent. 
(2) Multiple contract selection. More than one contract will result from the 
notice of intent. The detailed request for proposal (RFP) will indicate the 
number of contracts to result from the notice of intent, and specify 
characteristics for prime providers that will be considered equally qualified to 
perform the work. If more prime providers possess the characteristics than the 
anticipated number of contracts, prime providers will be selected at random. 
(3) Emergency Selection. If the Director or his or her designee certifies in 
writing that there is good cause to believe that an emergency situation exists, 
including hazards to safety and imminent expiration of a contract on an 
incomplete turnpike project, he or she will authorize the consultant selection 
team (CST) to select a provider on an emergency basis. 

sec.53.30. Compliance with DBE/HUB Requirements. 
To the extent required by the Texas Turnpike Authority (Authority) and/or 
otherwise required by law, providers under contracts awarded pursuant to this 
Subchapter B must comply with the requirements of Subchapter D of this chapter 
(relating to DBE/HUB 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 August 3, 1998.
TRD-9812193
C. Brian Cassidy
General Counsel
Texas Turnpike Authority Division
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 936-0903

SUBCHAPTER C. Contract Disputes and Debarment
43 TAC sec.sec.53.50-53.54
The new sections are proposed under Transportation Code, sec.361.042, which 
requires the Board to adopt rules for the regulation of its affairs and the 
conduct of its business, as well as under Transportation Code, sec.361.231, 
concerning contract awards and obligations assumed; sec.361.049, regarding 
procurement of professional consulting services; and sec.361.050, relating to 
maximation of opportunities for DBEs and HUBs. 
No other statutes, articles, or codes, are affected by these proposed new 
sections. 

sec.53.50. Contract Claim Procedure.
(a) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Committee--The Contract Claim Committee. 
(3) Contract claim--A claim for additional compensation, time extension, or any 
other reason, arising out of a contract between the State of Texas, acting in 
its own capacity or as an agent of a local government, and a contractor, which 
is entered into and administered by the Authority pursuant to Transportation 
Code, Chapter 361, or Texas Government Code, Chapter 2254, Subchapters A and B. 
(4) Contractor--An individual, partnership, corporation, or other business 
entity that is a party to a written contract with the State of Texas which is 
entered into and administered by the Authority pursuant to Transportation Code, 
Chapter 361, or Texas Government Code, Chapter 2254, Subchapters A and B. 
(5) Director--The director of the Texas Turnpike Authority. 
(b) Contract claim committee. 
(1) The Director will name the members and chairman of a contract claim 
committee or committees to serve at his or her pleasure. It will be the 
responsibility of a committee to gather information, study, and meet informally 
with contractors, if requested, to resolve any disputes that may exist between 
the Authority and the contractor, and which result in one or more contract 
claims. 
(2) The Authority stresses that, to every extent possible, disputes between a 
contractor and any Authority employee in charge of a project should be resolved 
during the course of the contract. If, however, after completion of a contract, 
or when required for orderly performance prior to completion, resolution of a 
contract claim is not reached with the Authority employee in charge of a 
project, the contractor should file a detailed report and request with the 
Director. The filed documents will be transmitted to the committee. 
(3) The committee will secure detailed reports and recommendations from the 
responsible Authority employees, and may confer with any other employees or 
individuals deemed appropriate by the committee. 
(4) The committee will then afford the contractor an opportunity for a meeting 
to informally discuss the disputed matters and to provide the contractor an 
opportunity to present relevant information and respond to information the 
committee has received from the Authority. 
(5) The committee chairman will give written notice ofthe committee's proposed 
disposition of the claim to the contractor. If that disposition is acceptable, 
the contractor shall advise the committee chairman in writing within 20 days of 
the date such notice is received, and the chairman will forward the agreed 
disposition to the Director for a final and binding order on the claim. If the 
contractor is dissatisfied with the proposal of the committee, the contractor 
may petition the Director for a formal administrative hearing to litigate the 
claim pursuant to the provisions of Chapter 2001 of the Texas Government Code 
(the Administrative Procedure Act). 
(6) Proceedings before the committee are conducted in order to attempt to 
mutually resolve a contract claim without litigation and are not admissible for 
any purpose in a formal administrative hearing provided in paragraph (5) of this 
subsection. 
(7) If the contractor fails to submit the petition within 20 days after notice 
of the committee's recommendation is received, that recommendation will be 
final, and all further appeal by the contractor shall be barred.

sec.53.51. Equal Employment Opportunity. 
The Texas Turnpike Authority (Authority) has the right to maintain surveillance 
of the equal employment opportunity performance of contractors and 
subcontractors on turnpike projects financed, in part, with federal funds, to 
determine that all aspects of their employment practices are conducted without 
discrimination as to race, color, religion, sex, or national origin. The 
Authority may further determine if contractors and subcontractors holding such 
federally financed contracts and subcontracts have implemented, under contract 
obligations, an acceptable affirmative action plan and the degree to which the 
programs under such plans are producing progress in terms of minority group 
employment. Nothing in this provision or any other aspect of the Authority's 
rules shall relieve contractors and subcontractors of their own obligations to 
ensure that their employment practices are conducted without discrimination and 
that acceptable affirmative action plans are implemented.

sec.53.52. Procedure for Debarment of a Contractor. 
(a) Purpose. It is the policy of the Texas Turnpike Authority (Authority) to 
protect the interest of the citizens of Texas by ensuring that contracts for 
turnpike projects be awarded only to firms or individuals who, for each 
contract, qualify as the lowest responsible bidder, and to further ensure the 
use of responsible subcontractors. The Authority will consider debarring a 
contractor under the circumstances and procedures outlined in this section as 
follows. 
(b) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Affiliates--Two business entities are affiliates if they are so closely 
connected or associated that one of them, either directly or indirectly, 
controls or has the power to control the other, if a third party controls or has 
the power to control both of them, or if they have been so closely allied 
through an established course of dealings, including but not limited to, the 
lending of financial assistance, engaging in joint ventures, etc., as to create 
a public perception that the two firms are a single entity. 
(2) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(3) Bidding crime--Any act prohibited by state or federal law, committed in any 
jurisdiction, and involving fraud, conspiracy, collusion, perjury, or material 
misrepresentation with respect to bidding on any public contract. 
(4) Contractor--An individual, partnership, corporation, or other business 
entity which is eligible through prequalification through the department's 
procedures to bid on any contract let by the Authority, or which functions, or 
seeks to function, as a subcontractor under any such contract, or as a supplier 
of materials or equipment to be used in the construction or maintenance of a 
part of a Turnpike Project. 
(5) Debar (debarment)--to disqualify (the disqualification of) a contractor from 
bidding on and/or entering into a contract with the state that is the 
responsibility of the Authority, or from participating as a subcontractor under 
any such contract, or as a supplier of materials or equipment to be used in the 
construction or maintenance of a part of a Turnpike Project. 
(6) Department--The Texas Department of Transportation. 
(7) Reinstate, reinstatement--To lift, modify, or suspend (the lifting, 
modification, or suspension of) debarment. 
(8) Subcontractor--An individual, partnership, corporation, or other business 
entity to which the prime contractor sublets, or proposes to sublet, any portion 
of a Turnpike Project. 
(9) Turnpike project--A toll highway constructed, maintained, or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension, or expansion to the highway, including: 
(A) a facility to relieve traffic congestion and promote safety; 
(B) a bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) an administration, storage, or other building the authority considers 
necessary to operate the project; and 
(D) property rights, easements, and interests the authority acquires to 
construct or operate the project. 
(c) Debarment. 
(1) The Authority, at its sole discretion, may debar a contractor and/or its 
affiliates from bidding on and/or entering into contracts let by the Authority, 
from participating as a subcontractor on any such contract, and/or from 
supplying materials or equipment to be used in the construction or maintenance 
of a part of a turnpike project for any of the following reasons listed in 
subparagraphs (A)-(C) of this paragraph: 
(A) the contractor's conviction of a bidding crime, any plea of guilty or nolo 
contendere by the contractor to a charge of a bidding crime, or any public 
admission to a bidding crime by a contractor, whether made individually or 
through one or more of its officers or partners; 
(B) conviction of the contractor of any offense, including, but not limited to, 
the bribery of or the payment of kickbacks or secret rebates to officials, 
employees or agents of any state, which indicates a lack of moral or ethnical 
integrity and which reasonably relates to or reflects upon the business 
practices of the contractor; 
(C) disqualification of the contractor by any state and/or by an agency of the 
federal government for substantially any of the reasons listed in this paragraph 
or in sec.53.54 of this title (relating to Supplemental Procedures for 
Suspension or Debarment of a Contractor). In such a case, the period of 
debarment shall be that established by such state and/or the federal agency. 
(2) Except as provided in paragraphs (3) and (4) of this subsection, the period 
of a single debarment shall be no longer than 36 months. 
(3) In the case of multiple offenses by the same contractor arising out of 
separate occurrences, the Authority, under the same process as set forth herein, 
may order additional periods of debarment, even though the total debarment 
period exceeds 36 months. 
(4) In any debarment proceeding against a contractor and/or an affiliate 
previously disqualified under this section, sec.53.53 of this title (relating to 
Procedure for Suspension of a Contractor), or sec.53.54 of this title, the 
Authority may order debarment of that contractor and/or the affiliate for an 
indefinite period or for such specific term as the Authority deems commensurate 
with its findings. 
(d) Hearing prior to debarment. 
(1) It is the policy of the Authority that a contractor be afforded the 
opportunity for a hearing prior to its debarment. 
(2) Subject to an agreement between the Authority and a contractor subject to 
debarment concerning some alternative procedure, the Authority shall follow 
Chapter 2001 of the Texas Government Code (the Administrative Procedure Act), in 
making its decision whether to debar a contractor. 
(e) Reinstatement. 
(1) At the discretion of the Authority, a debarment may be lifted, modified, or 
suspended at any time, if it is in the public interest to do so. 
(2) Subject to an agreement between the Authority and a contractor seeking 
reinstatement concerning some alternative procedure, the Authority shall follow 
Chapter 2001 of the Texas Government Code (the Administrative Procedure Act), in 
making its decision whether to reinstate a contractor. 
(f) Factors considered in debarment and reinstatement decisions. 
(1) Any mitigating circumstances may be considered by the Authority in making 
its decision whether to debar or reinstate a contractor. Such circumstances may 
include, but are not limited to: 
(A) the degree of the contractor's culpability; 
(B) whether under the facts and circumstances of the contractor's case a lengthy 
debarment is necessary to protect the interest of the state; 
(C) any restitution paid by the debarred contractor for any perceived 
overcharges or other damages suffered by any unit of government as a result of 
the contractor's bidding crime; 
(D) cooperation by the debarred contractor with the state, the United States, or 
any other sovereign body in the investigation of bidding crimes, including the 
contractor's providing a full and complete account of his or its particular 
involvement therein; and 
(E) the contractor's disassociation from individuals and firms that have been 
involved in a bidding crime. 
(2) If the Authority determines that a contractor falsified, misrepresented, or 
withheld information in order to secure reinstatement or the modification of an 
original debarment period, the Authority may declare the reinstatement or 
modification null and void. The Authority may seek the assistance and advice of 
its legal counsel to determine whether information submitted by the contractor 
has in fact been falsified, misrepresented, or does not constitute a complete 
disclosure. 
(g) Rules applicable to debarment and reinstatement. 
(1) for the purposes of debarment, the illegal or improper conduct of an 
individual may be imputed to a firm with which he is or was associated or by 
which he is or was employed when the individual engaged in such conduct within 
the course of his employment or with the knowledge or approval of the firm. 
(2) Debarment of a contractor in no way affects his contractual obligations to 
the State of Texas for services already contracted for by the Authority. 
(3) Any contractor qualified with the Authority to bid on its contracts shall 
have a duty immediately to notify the Authority if it is or has been convicted 
of or debarred in connection with a bidding crime in any jurisdiction. 
(4) Any procedures contained in the Administrative Procedure Act, Texas 
Government Code, Chapter 2001, shall be applicable to proceedings held under 
these sections. 

sec.53.53. Procedure for Suspension of a Contractor. 
(a) Purpose. In addition to the procedures for debarment of certain contractors 
from bidding on or contracting for turnpike project contracts set forth in 
sec.53.52 of this title (relating to Procedure for Debarment of a Contractor), 
or from participating as a subcontractor under any such contract, the Texas 
Turnpike Authority (Authority) may consider suspending a contractor from bidding 
on and/or contracting for turnpike project contracts or participating as a 
subcontractor under any such contract under the circumstances and procedures 
outlined as follows. 
(b) Definitions. The following words and terms, when used in this section, shall 
have the following meanings, unless the context clearly indicates otherwise. 
(1) Affiliates--Two business entities are affiliates if they are so closely 
connected or associated that one of them, either directly or indirectly, 
controls or has the power to control both of them, or if they have been so 
closely allied through an established course of dealings, including but not 
limited to, the lending of financial assistance or engaging in joint ventures, 
so as to create a public perception that the two firms are a single entity. 
(2) Authority--the Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(3) Bidding crime--Any act prohibited by state or federal law, committed in any 
jurisdiction, and involving fraud, conspiracy, collusion, perjury, or material 
misrepresentation with respect to bidding on any public contract. 
(4) Contractor--An individual, partnership, corporation, or other business 
entity which is eligible through prequalification through the department's 
procedures to bid on any contract let by the Authority or which functions or 
seeks to function as a subcontractor under any such contract, or as a supplier 
of materials or equipment to be used in the construction or maintenance of a 
Turnpike Project. 
(5) Department--The Texas Department of Transportation. 
(6) State antitrust case--A legal proceeding instituted by the Attorney General 
of Texas on behalf of the State of Texas against one or more defendants alleging 
one or more violations of the state or federal antitrust laws, Texas Business 
Commerce Code, sec.15.01 et seq. and 15 United States Code, sec.1 et seq. 
(7) Subcontractor--An individual, partnership, corporation, or other business 
entity to which the prime contractor sublets or proposes to sublet any portion 
of a Turnpike Project. 
(8) Suspend, suspension--To disqualify (the disqualification of) a contractor 
from bidding on and/or contracting for contracts with the state that are the 
responsibility of the Authority or from participating as a subcontractor, under 
any such contract, or as a supplier of materials or equipment to be used in the 
construction or maintenance of a Turnpike Project. 
(9) Turnpike project--A toll highway constructed, maintained, or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension, or expansion to the highway, including: 
(A) a facility to relieve traffic congestion and promote safety; 
(B) a bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) an administration, storage, or other building the authority considers 
necessary to operate the project; and 
(D) property rights, easements, and interests the authority acquires to 
construct or operate the project. 
(c) Suspension. 
(1) A contractor and/or its affiliates may be suspended by the Authority from 
bidding on and/or contracting for Turnpike Project contracts let by the 
Authority, from participating as a subcontractor under any such contract and/or 
from supplying materials or equipment to be used in the construction or 
maintenance of a turnpike project for any of the following reasons listed in 
subparagraphs (A)-(D) of this paragraph: 
(A) the contractor's conviction of a bidding crime or any plea of guilty or nolo 
contendere by the contractor to a charge of a bidding crime; 
(B) the contractor's being named a defendant in a state antitrust case; 
(C) conviction of the contractor of any offense, including but not limited to, 
the bribery of or the payment of kickbacks or secret rebates to officials, 
employees, or agents of any state, which indicates a lack of moral or ethnical 
integrity and which reasonably relates to or reflects upon the business 
practices of the contractor. 
(D) disqualification of the contractor by any state and/or by an agency of the 
federal government for substantially any of the reasons listed in this paragraph 
or in sec.53.54 of this title (relating to Supplemental Procedures for 
Suspension or Debarment of a Contractor). 
(2) Suspension shall remain in effect until cancellation of the suspension, 
until the conclusion of the state antitrust case by the filing of a judgment, or 
until imposition of debarment, pursuant to sec.53.52 of this title (relating to 
Procedure for Debarment of a Contractor). 
(d) Hearing regarding suspension. 
(1) It is the policy of the Authority that a contractor be afforded the 
opportunity for a hearing regarding their suspension within 30 days of the date 
of suspension. 
(2) When a contractor is suspended, the Authority shall notify the contractor by 
registered mail within five days that it has been suspended. Said notice shall 
contain the general reasons supporting the suspension and shall state that the 
contractor is entitled to a hearing within 30 days of the date of suspension if 
so requested. 
(3) In the event a hearing is requested, and subject to an agreement between the 
Authority and a contractor who has been suspended concerning some alternative 
procedure, the Authority shall follow Chapter 2001 of the Texas Government Code 
(the Administrative Procedure Act), in making its decision whether to continue 
the suspension of a contractor. 
(e) Reinstatement. At the discretion of the Authority a suspension may be 
lifted, modified, or temporarily abated at any time, if it is in the public 
interest to do so. 
(f) Factors considered in suspension decisions. Any mitigating circumstances may 
be considered by the Authority in making its decision whether to impose or 
continue the suspension of a contractor. Such circumstances may include, but are 
not limited to: 
(1) the degree of the contractor's culpability; 
(2) whether under the facts and circumstances of the contractor's case a lengthy 
suspension is necessary to protect the interests of the state; 
(3) any restitution paid by the suspended contractor for any perceived 
overcharges or other damages suffered by any unit of government as a result of 
the contractor's bidding crime; 
(4) cooperation by the suspended contractor with the state, the United States, 
or any other sovereign body in the investigation of bidding crimes, including 
the contractor's providing a full and complete account of his or its particular 
involvement therein; and 
(5) the contractor's disassociation from individuals and firms that have been 
involved in a bidding crime. 

sec.53.54. Supplemental Procedures for Suspension or Debarment of a Contractor.
In addition to the provisions and procedures for suspension or debarment of 
contractors and their affiliates from bidding on or contracting for Turnpike 
Project contracts, or from participating as a subcontractor under any such 
contract, all as detailed more fully in sec.53.52 of this title (relating to 
Procedure for Debarment of a Contractor), and sec.53.53 of this title (relating 
to Procedure for Suspension of a Contractor), the Texas Turnpike Authority 
(Authority) may also suspend or debar a contractor and its affiliates in the 
same manner and pursuant to the same procedures for the following reasons listed 
in paragraphs (1)-(2) of this section: 
(1) Suspension. 
(A) Indictment of a contractor on a charge of a bidding crime, as the term 
bidding crime is defined in sec.53.52 of this title and sec.53.53 of this title. 
Suspension on such grounds shall remain in effect until final resolution of the 
criminal charges. 
(B) Any evidence which is adequate to establish probable cause to believe that a 
contractor has committed a bidding crime or any offense which indicates a lack 
of moral or ethical integrity and which relates to or reflects upon the business 
practices of the contractor. In assessing adequate evidence, consideration 
should be given to how much credible information is available, its 
reasonableness in view of surrounding circumstances, corroboration or lack 
thereof as to important allegations, and inferences which may be drawn from the 
existence or absence of affirmative facts. 
(2) Debarment. Adequate evidence as detailed and defined in paragraph (1)(B) of 
this section. 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on August 3, 1998.
TRD-9812194
C. Brian Cassidy
General Counsel
Texas Turnpike Authority Division
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 936-0903

SUBCHAPTER D. DBE/HUB Program
43 TAC sec.sec.53.60-53.71
The new sections are proposed under Transportation Code, sec.361.042, which 
requires the Board to adopt rules for the regulation of its affairs and the 
conduct of its business, as well as under Transportation Code, sec.361.231, 
concerning contract awards and obligations assumed; sec.361.049, regarding 
procurement of professional consulting services; and sec.361.050, relating to 
maximation of opportunities for DBEs and HUBs. 
No other statutes, articles, or codes, are affected by these proposed new 
sections.

sec.53.60. Purpose. 
This subchapter establishes policies and procedures to implement the Texas 
Turnpike Authority's (Authority) Disadvantaged Business Enterprise (DBE) and 
Historically Underutilized Business (HUB) programs in compliance with 
Transportation Code, sec.361.050; Government Code, Chapter 2161; and Title 49, 
Code of Federal Regulations, Part 23. 

sec.53.61. Definitions. 
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Commission--The Texas Transportation Commission. 
(3) Concern--A business entity organized for profit, with a place of business 
located in the United States and which makes a significant contribution to the 
U.S. economy through payment of taxes and/or use of American products, materials 
and/or labor. 
(4) DBE certification--The process governed by 49 CFR Part 23 which verifies an 
applicant's eligibility to be a DBE. 
(5) DBE/HUB participation goal--A number representing participation in contracts 
and purchasing by a DBE/HUB firm determined by a percentage of the total cost of 
the contract or purchase. 
(6) Department--The Texas Department of Transportation. 
(7) Director--The director of the Authority. 
(8) Disadvantaged Business Enterprise (DBE)--As defined in 49 CFR sec.23.62, a 
small business concern which is at least 51% owned by one or more socially and 
economically disadvantaged individuals, or in the case of a publicly owned 
business, at least 51% of the stock of which is owned by one or more socially 
and economically disadvantaged individuals, and whose management and daily 
business operations are controlled by one or more of the socially and 
economically disadvantaged individuals who own it.
(9) Federal aid contract--A contract between the department and a contractor 
that is paid for in whole or in part with U.S. Department of Transportation or 
other federal financial assistance. 
(10) GSC--General Services Commission. 
(11) Historically Underutilized Business (HUB)--Any business so certified by the 
General Services Commission. 
(12) Joint venture--An association of two or more businesses to carry out a 
single business enterprise for profit which combines their property, capital, 
efforts, skills, and knowledge. 
(13) Liquidated damages--Project-related damages to the department's DBE/HUB 
programs separate from those costs associated with construction engineering 
costs. 
(14) Maximum opportunity--The opportunity to bid and receive contracts and to 
perform those contracts without unnecessary barriers which could jeopardize 
successful completion. 
(15) Minority--As defined by 49 CFR sec.23.5, a person who is a citizen or 
lawful permanent resident of the United States and who is: 
(A) Black (a person having origins in any of the black racial groups of Africa); 
(B) Hispanic (a person of Mexican, Puerto Rican, Cuban, Central or South 
American, or other Spanish culture or origin, regardless of race); 
(C) Portuguese (a person of Portuguese, Brazilian, or other Portuguese culture 
or origin, regardless of race); 
(D) Asian American (a person having origins in any of the original peoples of 
the Far East, Southeast Asia, the Indian subcontinent, or the Pacific Islands); 
(E) American Indian and Alaskan Native (a person having origins in any of the 
original peoples of North America); or 
(F) members of other groups, or other individuals, found to be economically and 
socially disadvantaged by the Small Business Administration pursuant to Title 
15, United States Code, sec.637(a). 
(16) Proposer--An individual, partnership, limited liability company, 
corporation, or any combination that submits a proposal for a contract 
advertised by the Authority. 
(17) Socially and economically disadvantaged individuals--As defined in 49 CFR 
sec.23.62, individuals who are United States citizens (or lawfully admitted 
permanent residents) and who are Women, Black Americans, Hispanic Americans, 
Native Americans, Asian-Pacific Americans, Asian-Indian Americans, or any other 
minorities or individuals found to be disadvantaged pursuant to Section 8(a) of 
the Small Business Act, Title 15 United States Code, Chapters 631-656. There is 
a rebuttable presumption that individuals in the following groups listed in 
subparagraphs (A)-(F) of this paragraph are socially and economically 
disadvantaged: 
(A) Black Americans which includes persons having origins in any of the Black 
racial groups of Africa; 
(B) Hispanic Americans which includes persons of Mexican, Puerto Rican, Cuban, 
Central or South American, or other Spanish or Portuguese culture or origin, 
regardless of race; 
(C) Native Americans which includes persons who are American Indian, Eskimo, 
Aleut, or native Hawaiian; 
(D) Asian-Pacific Americans which includes persons whose origins are from Japan, 
China, Taiwan, Korea, Vietnam, Laos, Cambodia, Philippines, Samoa, Guam, the 
Northern Marianas or the U.S. Pacific Trust Territories; or 
(E) Asian-Indian Americans which includes persons whose origins are from India, 
Pakistan, or Bangladesh; or 
(F) women. 
(18) Subcontractor--An individual, partnership, corporation, or other business 
entity to which the prime contractor sublets, or proposes to sublet, any portion 
of a contract. 
(19) Turnpike project--A toll highway constructed, maintained, or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension, or expansion to the highway, including: 
(A) a facility to relieve traffic congestion and promote safety; 
(B) a bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) an administration, storage, or other building the Authority considers 
necessary to operate the project; and 
(D) property rights, easements, and interests the authority acquires to 
construct or operate the project. 

sec.53.62. Policy. 
It is the policy of the Texas Turnpike Authority (Authority) that: 
(1) Disadvantaged Business Enterprises (DBEs) and Historically Underutilized 
Businesses (HUBs) shall have the maximum opportunity to participate in the 
performance of contracts; 
(2) all necessary and reasonable steps will be taken to ensure that DBEs and 
HUBs have maximum opportunity to compete for and perform contracts and 
subcontracts; and 
(3) discrimination is prohibited on the basis of race, color, national origin, 
or gender in the award and performance of contracts.

sec.53.63. Applicability.
(a) The Disadvantaged Business Enterprise (DBE) program is applicable to all 
Texas Turnpike Authority (Authority) contracts and purchases funded in whole or 
in part with federal funds received from the United States Department of 
Transportation through the Federal Highway Administration, Federal Transit 
Administration, or the Federal Aviation Administration. 
(b) The Historically Underutilized Business (HUB) program is applicable to all 
Authority contracts and purchases funded entirely with state and local funds. 

sec.53.64. DBE/HUB Goals. 
Pursuant to sec.9.54 of this title (relating to DBE/HUB Goals), the department 
will periodically establish overall annual Disadvantaged Business Enterprise 
(DBE) and Historically Underutilized Business (HUB) participation goals. The 
goals are to be published in the Texas Register and other media as appropriate. 
The Texas Turnpike Authority (Authority) may rely upon and adopt the 
department's annual DBE and HUB participation goals as its own, or it may 
establish its own goals which shall be published in the Texas Register and other 
media as appropriate. Should the Authority decide to establish its own DBE 
and/or HUB participation goals, the DBE goals shall be consistent with the 
federal requirements of the U.S. Department of Transportation and be compatible 
with other applicable state and federal laws, and the HUB goals shall be 
consistent with the General Services Commission (GSC) goals set forth at 1 TAC, 
sec.111.13. Absent affirmative action by the Board to adopt annual DBE and HUB 
participation goals for the Authority, the Authority's goals shall be presumed 
to be the same as the department's. Individual contract goals will be 
established by the Authority to achieve the overall goals. Individual contracts 
having the potential for DBE/HUB participation are assigned participation goals 
based on the availability of qualified DBE/HUBs, work site location, dollar 
value of the contract, and type of work items specified in the contract. 
(1) DBE goals. The Authority will assign individual contract goals for DBE 
participation in turnpike project contracts, building construction and 
maintenance, professional services, private consultant services, and purchasing 
contracts. 
(2) HUB goals. Pursuant to 1 TAC, sec.111.13 (Annual Procurement Utilization 
Goals), the Authority will establish HUB goals for individual contracts. 

sec.53.65. Good Faith Effort. 
(a) The Texas Turnpike Authority (Authority) will make a good faith effort to 
meet or exceed the annual goals it adopts as described in sec.53.64 of this 
title (relating to DBE/HUB Goals). 
(b) When a specific contract goal is not being met by a contractor, the 
contractor must document the steps taken in good faith to obtain DBE/HUB 
participation. 
(1) Disadvantaged Business Enterprise (DBE). The Authority will consider the 
following efforts listed in subparagraphs (A)-(J) of this paragraph to determine 
if a contractor has made a good faith effort to meet the DBE contract goal. The 
list provided is not intended to be mandatory, nor is the list intended to be 
exclusive. The Authority will examine the contractor's efforts and consider the 
extent of the efforts concerning: 
(A) attendance at a pre-bid meeting, if any; 
(B) advertisement of the contracting opportunity to the organizations on the 
clearinghouse list; 
(C) written notification of the contracting opportunities available to five 
firms or 10%, whichever is greater, of the DBE firms listed in the department's 
DBE directory provided for in sec.9.56 of this title (relating to DBE 
Certification): 
(i) under each category of work identified by the contractor for subcontracting; 
and 
(ii) as willing to work in the area where the project is located; 
(D) follow-up with DBE firms to determine interest in the initial solicitation; 
(E) selection of work that could be performed by DBE firms; 
(F) efforts to negotiate with DBE firms for specific categories of work; 
(G) reasons for rejecting a bid or proposal submitted by a DBE firm; 
(H) efforts made to provide information to DBEs concerning obtaining bonds and 
insurance; 
(I) effective use of services of available minority community organizations, 
minority contractors' groups, local, state and federal minority business 
assistance offices, and other organizations that provide assistance in the 
recruitment and placement of DBEs certified by the department; and 
(J) other efforts relevant to meeting the goals. 
(2) Historically Underutilized Business (HUB). The Authority will consider a 
contractor to have made a good faith effort by complying with 1 TAC, sec.111.14 
(Subcontracts). 

sec.53.66. DBE Certification. 
The Texas Turnpike Authority (Authority) will rely upon the department's 
procedures for Disadvantaged Business Enterprise (DBE) certification, as set 
forth in sec.9.56 of this title (relating to DBE Certification). Valid and 
current DBE certification by the department shall be considered valid 
certification for Authority contracting purposes. 

sec.53.67. HUB Certification. 
Pursuant to sec.9.57 of this title (relating to HUB Certification), the 
department and the General Services Commission (GSC) operate under a reciprocal 
certification program for minority and women-owned businesses. The GSC maintains 
a directory of certified Historically Underutilized Businesses (HUBs). The Texas 
Turnpike Authority (Authority) will rely upon the procedures of the department 
and the GSC for HUB certification. Valid and current HUB certification by the 
GSC and/or the department shall be considered valid certification for Authority 
contracting purposes. 

sec.53.68. Contract Compliance. 
(a) Contract provision. Texas Turnpike Authority (Authority) contracts involving 
the expenditure of funds will include a contract provision addressing 
Disadvantaged Business Enterprise (DBE) or Historically Underutilized Business 
(HUB) requirements. 
(1) A contract with a goal assigned may include a provision which sets forth 
program requirements for the type of contract receiving the goal, including, but 
not limited to, the Authority's DBE/HUB policy, the DBE/HUB contract goal, good 
faith efforts, honoring commitments, DBE/HUB substitutions, nondiscrimination, 
crediting procedures, commercially useful function, contract modifications, 
reporting requirements, maintenance of records, compliance procedures, 
enforcement, and sanctions for noncompliance with the terms of the contract 
provision. 
(2) A contract without a goal assigned may include provisions: 
(A) encouraging the use of minority, disadvantaged, and historically 
underutilized business enterprises in subcontracting activities; and 
(B) prohibiting discrimination. 
(b) Monitoring. The Authority will monitor contractor compliance by: 
(1) reviewing contractor reports; and 
(2) making on-site visits to the project or the offices of a contractor or 
subcontractor. 
(c) Contractor representative. A contractor receiving a contract with an 
assigned goal must designate an employee to serve as a DBE/HUB contact person 
during the contract, and must inform the Authority of the representative's name, 
title, and telephone number no later than five days after the contract is 
signed. The DBE/HUB representative is responsible for submitting reports, 
maintaining records, and documenting good faith efforts to use DBE/HUBs pursuant 
to sec.53.65 of this title (relating to Good Faith Effort). 
(d) Commitments. The following requirements listed in paragraphs (1)-(2) of this 
subsection must be satisfied by the contractor unless the contractor is a 
DBE/HUB. 
(1) Within the time specified in the contract proposal, the contractor must 
furnish a list of commitments made to certified DBE/HUBs to meet the contract 
goal along with a commitment agreement containing the original signatures of the 
contractor and the proposed DBE/HUB which includes, but is not limited to: 
(A) a statement that the contractor intends to provide the DBE/HUB the 
opportunity to perform the subcontract; 
(B) the items of work to be performed; 
(C) the quantities of work or material; 
(D) the unit measure, unit price, and total cost for each item; 
(E) the total amount of the DBE/HUB commitment; and 
(F) if the commitment involves a DBE/HUB material supplier, an explanation of 
the function to be performed and a description of any arrangements, including 
joint check agreements, made with other material suppliers, manufacturers, 
distributors, hauling firms, or freight companies. 
(2) The contractor must document good faith efforts taken to meet the goal in 
accordance with: 
(A) sec.53.65 of this title; and 
(B) applicable contract provisions. 
(e) Reporting. Each contractor receiving a contract with an assigned goal must 
submit the following reports listed in paragraphs (1)-(2) of this subsection. 
(1) The contractor must submit periodic reports at intervals specified in the 
contract using a report form acceptable to the Authority that includes, but is 
not limited to, identification of the DBE/HUB by name and vendor number, and 
showing the actual amount paid to the DBE/HUB. The report must be submitted even 
if no payments were made during the period being reported. When required by the 
Authority, the contractor must attach proof of payment including, but not 
limited to, copies of canceled checks. 
(2) The contractor must submit a final report in accordance with the contract, 
using a form acceptable to the Authority which shows: 
(A) the total paid to each DBE/HUB; and 
(B) if the contract goal is not met, a description of good faith efforts taken 
in accordance with: 
(i) sec.53.65 of this title; and 
(ii) applicable contract provisions. 
(f) Credit for expenditures. 
(1) Full credit for federal aid contracts. A contractor awarded a federal aid 
contract will receive credit for all payments made to a DBE firm certified in 
accordance with sec.9.56 of this title (relating to DBE Certification) unless: 
(A) a DBE firm is paid but does not assume contractual responsibility for 
providing the goods or performing the services; 
(B) a DBE firm does not perform a commercially useful function as set forth in 
subsection (g)(1) of this section; 
(C) a contractor makes payment directly to a material supplier for the cost of 
materials or supplies used by a DBE subcontractor unless the payment is made 
with a joint check to the DBE subcontractor and the material supplier in 
accordance with an invoice submitted by the material supplier; 
(D) a contractor deducts payment of the cost of materials used by a DBE 
subcontractor or the cost of leased or rented equipment used by the DBE/HUB from 
an invoice submitted by the DBE; 
(E) a payment is made: 
(i) to a DBE that cannot be linked by an invoice or canceled check to the 
contract under which credit is claimed; 
(ii) to a broker or a firm with a brokering-type operation; 
(iii) to a DBE manufacturer for a product purchased for the project and not 
manufactured by the DBE manufacturer; 
(iv) to a DBE trucking firm that does not perform 30% of the contract with 
trucks owned or leased on a long term basis or with owner-operators, and does 
not furnish operators, fuel, maintenance and insurance for the owned or leased 
trucks; 
(v) for the amount of materials and supplies required on a job site, when the 
hauler, trucker, or delivery service is not also a manufacturer of or a regular 
dealer in the materials and supplies; or 
(vi) for a bona fide service, such as professional, technical, consultant, or 
managerial services, and assistance in the procurement of essential personnel, 
facilities, equipment, materials, or supplies required for performance of the 
contract (the credit is reduced to the amount of the fee or commission charged 
provided the fee or commission does not exceed that customarily allowed for 
similar services); or 
(2) Partial credit for federal aid contracts. A contractor awarded a federal aid 
contract will receive: 
(A) 60% for payment to a regular dealer; 
(B) the percentage of DBE ownership in the joint venture for payment to a joint 
venture; or 
(C) the amount of any fee or commission charged for providing any bonds or 
insurance specifically required for the performance of the contract, provided 
that the fee or commission does not exceed that customarily allowed for such fee 
or commission. 
(3) Non-federal aid contracts. A contractor will receive credit for all payments 
actually made to a HUB for work performed and costs incurred in accordance with 
the contract with the following exceptions and/or stipulations listed in 
subparagraphs (A)-(B) of this paragraph and only if the arrangement is 
consistent with standard industry practice. 
(A) Payments: 
(i) to brokers or firms with a brokering-type operation will be credited only 
for the amount of the commission; 
(ii) to a joint venture will not be credited unless all partners in the joint 
venture are HUBs; 
(iii) to a HUB subcontractor who has subcontracted a portion of the work 
required under the subcontract will not be credited unless the HUB performs a 
commercially useful function; 
(iv) to a HUB firm will not be credited if the firm does not provide the goods 
or perform the services paid for; 
(v) made by a contractor directly to a material supplier for the cost of 
materials or supplies used by a HUB subcontractor will not be credited unless 
payment is made, from an invoice submitted by the supplier, with a joint check 
to the supplier and HUB; 
(vi) made to a HUB supplier not directly involved in the manufacture or 
distribution of the supplies or materials or who does not otherwise warehouse 
and ship the supplies will not be credited; or 
(vii) made to a HUB that cannot be linked by an invoice or canceled check to the 
contract under which credit is claimed will not be credited. 
(B) Deductions made by a contractor for the cost of materials used by a HUB 
subcontractor or the cost of leased or rented equipment used by the HUB from an 
invoice submitted by the HUB will not be credited. 
(4) The Authority may request a contractor to furnish proof of payment made to a 
DBE/HUB firm including, but not limited to, canceled checks to substantiate 
expenditures. 
(5) A contractor must not withhold or reduce payments to any DBE/HUB firm 
without a reason that is accepted as standard industry practice. 
(g) Performance. A DBE/HUB contractor or subcontractor must comply with the 
terms of the contract or subcontract for which it was selected. Work products, 
services, and commodities must meet contract specifications whether performed by 
a contractor or subcontractor. 
(1) Commercially useful function. 
(A) DBE subcontractors must perform a commercially useful function required in 
the contract in order for payments to be credited toward meeting the contract 
goal. A DBE performs a commercially useful function when it: 
(i) is responsible for a distinct element of the work of a contract; and 
(ii) actually manages, supervises, and controls the materials, equipment, 
employees, and all other business obligations attendant to the satisfactory 
completion of contracted work. 
(B) The Authority may conduct, or cause to be conducted, an on-site review of a 
DBE/HUB's performance to determine that it is performing a commercially useful 
function as part of its routine monitoring program or in response to information 
or allegations that the DBE is not performing a commercially useful function. 
(C) If the Authority determines that a DBE/HUB firm is not performing a 
commercially useful function under the contract, the Authority may: 
(i) suspend the DBE/HUB firm from the DBE/HUB program for a period to be 
determined by the Authority; 
(ii) deny all credit if the prime contractor did the work itself or directed 
another company to do the work, or deny credit from the time the Authority 
determined and notified the prime contractor that the DBE/HUB did not perform a 
commercially useful function; 
(iii) recommend to the department that DBE certification be reviewed; and 
(iv) recommend to the department revocation of DBE certification if an 
eligibility review indicates that the firm does not meet the standard as 
described 43 TAC, sec.9.56 (relating to DBE Certification). 
(2) Subcontracting. 
(A) A DBE contractor or subcontractor may subcontract no more than 70% of a 
federal aid contract. The DBE shall perform not less than 30% of the value of 
the contract work with: 
(i) assistance of employees employed and paid directly by the DBE; and 
(ii) equipment owned or rented directly by the DBE. 
(B) A HUB prime contractor must perform at least 25% of a nonfederal aid 
contract with its employees (as defined by the Internal Revenue Service). A HUB 
prime contractor may subcontract the remaining 75% of the contract to a HUB or 
non-HUB firm. 
(C) A HUB subcontractor may subcontract 75% of a nonfederal aid contract as long 
as the HUB subcontractor performs a commercially useful function. If the 
subcontractor uses an employee leasing firm for the purpose of providing salary 
and benefit administration, the employees must in all other respects be 
supervised and perform on the job as if they were employees of the 
subcontractor. 
(D) A contractor may not furnish work crews or equipment to a DBE/HUB 
subcontractor. 
(i) A DBE may lease equipment consistent with standard industry practice. A DBE 
may lease equipment from the prime contractor provided a rental agreement, 
separate from the subcontract specifying the terms of the lease arrangement, is 
approved by the department prior to the DBE starting the work. If the equipment 
is of a specialized nature, the lease may include the operator. If the practice 
is generally acceptable within the industry, the operator may remain on the 
lessor's payroll. The operation of the equipment shall be subject to the full 
control of the DBE, for a short term, and involve a specialized piece of heavy 
equipment readily available at the job site. 
(ii) For equipment that is not specialized, the DBE shall provide the operator 
and be responsible for all payroll and labor compliance requirements. 
(3) Maximum opportunity. A contractor must allow a DBE/HUB maximum opportunity 
to perform the work by not creating unnecessary barriers or artificial 
requirements for the purpose of hindering a DBE/HUB's performance under the 
contract such as, but not limited to: 
(A) inadequate notice to perform work; 
(B) failure to make timely payments; and 
(C) failure to prepare the worksite on schedule. 
(h) Substitutions. A contractor must request approval from the Authority to 
subcontract with a DBE/HUB firm other than the firm originally authorized. 
(1) A contractor must provide written justification for a request to substitute 
a DBE/HUB firm, including, but not limited to, demonstrating that the original 
firm is unable or unwilling to carry out the terms of the subcontract. 
(2) The Authority will contact the DBE/HUB to be displaced and other parties as 
needed to determine if the DBE/HUB firm to be displaced is willing and able to 
carry out the terms of the contract. 
(A) The term "unable" includes, but is not limited to: 
(i) a firm that does not have the resources and expertise to finish the project; 
(ii) a firm that substantially increases the time to complete the project 
causing liquidated damages; or 
(iii) a firm that creates a safety hazard. 
(B) If the displaced firm is unwilling or unable to carry out the terms of the 
subcontract, the department will notify the contractor in writing within five 
working days of the request of its consent to the substitution, and the 
contractor must make a good faith effort to substitute another certified DBE/HUB 
firm for the one being displaced if the cancellation of the DBE/HUB subcontract 
results in the prime not meeting the goal. 
(3) Any party aggrieved by the determination effecting the substitution of 
subcontractors may avail itself of the complaint procedures under sec.53.69 of 
this title (relating to Complaints). 
(i) Records. A contractor must retain all records specified in the contract 
provisions for three years after final payment is made under the contract, or 
until any investigation, audit, examination, or other review undertaken during 
the three years is completed. The records must be made available to 
representatives of the Authority and other agencies for inspection, audit, 
examination, investigation, or other review at all reasonable times during the 
retention period. 
(j) Compliance conference. The following process shown in paragraphs (1)-(7) of 
this subsection is made available to the contractor whenever a finding of 
noncompliance with DBE/HUB special provisions is made by the Authority. A 
contractor involved in a violation may be given an opportunity to remedy the 
violation before the Authority issues sanctions. 
(1) A letter will be sent to the contractor notifying the contractor that it is 
not in compliance with the DBE/HUB special provision in the contract. 
(2) The contractor may respond in writing. If the written response does not 
resolve the issues, the Authority will invite the contractor to attend an 
informal compliance conference, within 15 calendar days from the date of the 
written response, to discuss the issues. 
(3) The contractor will be given 15 calendar days from the date of the 
conference to submit additional information to resolve the issues. 
(4) The Authority will make a final determination regarding compliance within 15 
calendar days from the conference or receipt of any additional information. 
(5) If a determination of noncompliance has been made by the Authority, a 
contractor will be given an opportunity to submit a voluntary written corrective 
action plan to correct the violations. 
(6) When a contractor fails to take corrective actions, the Authority may issue 
a notice to the contractor to show cause for noncompliance and why enforcement 
proceedings should not be instituted. 
(7) The Authority may impose sanctions, pursuant to subsection (k) of this 
section, for failure to show cause why enforcement proceedings should not be 
instituted. 
(k) Sanctions. 
(1) The Authority may issue sanctions to a contractor that does not comply with 
contract requirements. 
(2) If a successful bidder for a turnpike project contract does not furnish the 
required DBE/HUB commitment information during the time period specified in the 
DBE/HUB special provision, the Authority may declare the contractor to be in 
default and retain the proposal guaranty as liquidated damages in accordance 
with sec.53.9 of this title (relating to After Contract Award). 
(3) The Authority will impose sanctions if the contractor: 
(A) is found to have discriminated against a DBE/HUB firm; 
(B) has failed to meet the contract DBE/HUB goal and has failed to demonstrate a 
good faith effort to meet the goal; 
(C) DBE/HUB commitments were not kept; or 
(D) DBE/HUB firms were not given the maximum opportunity to perform under a 
subcontract. 
(4) The Authority may impose any of the following sanctions listed in 
subparagraphs (A)-(D) of this paragraph: 
(A) letter of reprimand; 
(B) liquidated damages computed up to the amount of goal dollars not met; 
(C) contract termination; and/or 
(D) other remedies available by law. 
(5) Factors to be considered in issuing sanctions may include, but are not 
limited to: 
(A) the magnitude and the type of the offense; 
(B) the degree of the contractor's culpability; 
(C) any steps taken to rectify the situation; 
(D) the contractor's record of performance on other projects including, but not 
limited to: 
(i) annual DBE/HUB participation over DBE/HUB goals; 
(ii) annual DBE/HUB participation on projects without goals or payment 
incentives; 
(iii) number of complaints the Authority and/or the department have received 
from DBEs/HUBs; and 
(iv) the number of times the contractor has been previously sanctioned by the 
Authority and/or the pursuant to this section; and 
(E) whether a contractor falsified, misrepresented, or withheld information. 
(6) A contractor may appeal the Authority's sanction to the Business Appeals 
committee pursuant to sec.53.71 of this title (relating to Appeals).

sec.53.69. Business Complaints. 
(a) Filing of complaint. A complaint related to a federally funded contract may 
be filed directly with the U.S. Department of Transportation at any time within 
180 days of the date of an alleged discrimination or a violation of the DBE 
Program, or the dates on which a continuing course of conduct in violation was 
discovered. 
(b) Contractor claims. A claim for additional compensation or time extension for 
any reason under a contract between the Texas Turnpike Authority (Authority) and 
a prime contractor will be heard in accordance with sec.53.50 of this title 
(relating to Contract Claim Procedure). 
(c) Bidder/proposer protest. 
(1) A firm may file a written protest with the Director for any reason under 
this subchapter, including discrimination, within 90 calendar days after being 
notified that it was not awarded or selected to receive a contract offered by 
the Authority. 
(2) The Director or his or her designee will forward the Authority's written 
response to the protesting firm. 
(3) If the protesting firm accepts the response, further appeal is barred. 
(4) If the protesting firm is not satisfied with the response, it may request an 
investigation pursuant to policies and guidelines of the Authority, or file an 
appeal with the U.S. Department of Transportation in accordance with sec.53.71 
of this title (relating to Appeals). 
(d) Program administration complaint. 
(1) An aggrieved firm or person who believes that person or firm, another 
person, or any specific class of individuals to be subject to a violation of 
this subchapter, including discrimination, may file a written complaint with the 
Director or his or her designee. 
(2) A written complaint must be filed no later than 90 calendar days after the 
date of an alleged violation or the date on which a continuing course of conduct 
in violation of the program was disclosed.
(3) The Director or his or her designee will seek to resolve the complaint with 
the involved parties. 
(A) If the complaint is resolved as a result of this contact, no further action 
is necessary. 
(B) If the complaint is not resolved, the Director or his or her designee will 
furnish the aggrieved party with the Authority's complaint procedures concerning 
investigations. 
(C) A disputant who does not request a formal investigation may appeal to the 
U.S. Department of Transportation as provided at sec.53.71 of this title if the 
contract is federally funded.

sec.53.70. Investigation. 
The Texas Turnpike Authority (Authority) shall adopt policies and guidelines for 
the investigation of complaints that are unresolved through other means provided 
in this Subchapter D. If a person or business is aggrieved by a finding, 
response, or determination resulting from any protest, complaint, or dispute 
under sec.53.69 of this title (relating to Business Complaints), except for 
certification and contractor claims under sec.53.50 of this title (relating to 
Contract Claim Procedure), the aggrieved person or business may request a formal 
investigation into the protest, complaint, or dispute and avail themselves of 
the policies and guidelines adopted by the Authority. The request must be made 
in writing within the time period specified in the complaint procedure at 
sec.53.69 of this title. 

sec.53.71. Appeals. 
(a) Appeal to U.S. Department of Transportation. 
(1) A firm may file an appeal with U.S. Department of Transportation at any time 
pursuant to the process outlined in 49 CFR sec.sec.23.55, 23.69 or 23.73. 
(2) The appeal must be made in writing, signed and dated, no later than 180 days 
after the date of the offense or the date on which a continuing course of 
conduct in violation was discovered. The Secretary of Transportation may extend 
the time for filing or waive the time limit in the interest of justice. 
(3) The outcome of the U.S. Department of Transportation appeal process is 
final. 
(b) Appeals to the Texas Turnpike Authority (Authority). 
(1) A committee comprised of members of the Board or individuals appointed by 
the Board will hear appeals relating to sanctions pursuant to sec.53.68 of this 
title (relating to Contract Compliance) and complaints pursuant to sec.53.69 of 
this title (relating to Business Complaints), other than contractor claims set 
forth at sec.53.50 of this title (relating to Contract Claim Procedure) and 
certification if the appealing party identifies: 
(A) new information or witnesses that, if considered, might have changed the 
outcome; 
(B) harmful procedural error by the Authority which, had it not been made, could 
have led to a different conclusion; or 
(C) a finding contrary to the evidence, Authority policy, or law. 
(2) An aggrieved person, contractor, or subcontractor involved in a contract 
complaint or any other complaint involving discrimination or any aspect of the 
DBE/HUB program becomes the appellant when appealing a finding an investigation 
undertaken pursuant to policies and guidelines by the Authority. 
(3) The committee will review: 
(A) the sanction determination made in accordance with sec.53.68 of this title; 
or 
(B) the finding of an investigation conducted in accordance with the policies 
and guidelines adopted by the Authority. 
(4) The appellant may rebut the proposed sanction determination or investigative 
finding. 
(5) The committee may secure detailed reports from the affected parties and 
confer informally with the appellant and representatives of the Authority. 
(6) The committee will give written notice of the finding to the appellant. If 
the finding is acceptable to the appellant, the appellant shall advise the 
committee chairman in writing within 20 days of the date such notice is 
received, and the chairman will forward the agreed disposition to the Director 
for a final and binding order on the complaint. 
(7) Proceedings before the committee are an attempt to mutually resolve a 
business complaint without litigation and are not admissible for any purpose in 
a formal administrative hearing. 
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 August 3, 1998.
TRD-9812195
C. Brian Cassidy
General Counsel
Texas Turnpike Authority Division
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 936-0903

CHAPTER 54. Private Involvement in TTA Projects
SUBCHAPTER A. Policy, Rules and Procedures for Private Involvement
in Authority Projects
43 TAC sec.sec.54.1-54.6
The Board of Directors (the "Board") of the Texas Turnpike Authority Division 
(the "Authority") of the Texas Department of Transportation proposes new 
sec.sec.54.1-54.6, relating to policies, rules and procedures for private 
involvement in Authority projects. 
Transportation Code, sec.361.042, requires the Authority to adopt rules for the 
regulation of its affairs and the conduct of its business and, further, to do 
all things necessary or appropriate to carry out the powers granted to the 
Authority in Transportation Code, Chapter 361 (the "Turnpike Act"). Subchapter I 
of Chapter 361 of the Transportation Code provides for public and private 
participation in turnpike projects, and sec.361.306 requires the Authority to 
adopt rules, procedures and guidelines to promote fairness, obtain private 
participants in turnpike projects, and promote confidence among those 
participants. In compliance with these statutory requirements the Board proposes 
new sections concerning private participation in Authority projects. 
Subchapter A is comprised of sec.sec.54.1-54.6. These rules are intended to 
promote fairness, obtain private participants in turnpike projects, and promote 
confidence among participants (in compliance with Transportation Code, 
sec.361.306). The Authority believes it is in the best interests of the state to 
encourage and consider private involvement in its projects, and these rules are 
intended to provide a fair and efficient means for doing so. 
Section 54.1 sets forth the Authority's policy of considering the feasibility of 
private involvement in turnpike projects, as well as the objectives of that 
policy. The rule notes that the Authority may issue request for proposals (RFPs) 
and will also accept unsolicited proposals from private entities which it will 
evaluate in accordance with its rules and the Turnpike Act. The Authority is 
authorized to formulate selection criteria for its use in considering private 
entities with which the Authority may want to contract for involvement in a 
turnpike project consistent with Transportation Code, sec.361.306. This Section 
notes that these rules apply to private involvement in the acquisition or 
operation of all or substantially all of a turnpike project or projects, in 
distinction to the Authority's procurement of goods and services in the ordinary 
course of its operations. 
Section 54.2 sets forth definitions relevant to analyzing private involvement in 
turnpike projects. 
Section 54.3 sets forth general rules concerning the evaluation of proposals 
received from entities in response to RFPs issued by the Authority, as well as 
unsolicited proposals received by the Authority. The Authority reserves the 
right to reject proposals, terminate evaluation of proposals at any time, 
suspend, discontinue or terminate exclusive development agreement negotiations 
at any time, negotiate with proposers without being bound by any provision in a 
proposal, request or obtain additional information about any proposal, modify, 
amend, or cancel any RFP, revise, supplement or withdraw all or portions of 
these rules, or retain or return any proposal review fee paid pursuant to the 
rules. The rule also notes that proposals, whether solicited or unsolicited, 
become property of the Authority and are subject to the Public Information Act. 
Proposers are required to conspicuously designate information which they believe 
constitutes a trade secret, proprietary information or other information that is 
excepted from disclosure under the Public Information Act. The rule specifies 
that proposal review fees must be submitted with proposals, whether solicited or 
unsolicited, the amount of which is specified in the rules or shall be specified 
in the RFP. The rules note that any public hearings required to be held pursuant 
to applicable law or regulation will be overseen by the Authority. 
Section 54.4 addresses the submittal of solicited proposals. The rule calls for 
the Authority to issue an RFP to be published in conformance with its general 
procurement rules. The Authority may specify a two-phase approach for 
submittals, or a single phase submittal. Proposals are to be evaluated by the 
Authority based on a variety of factors, and proposers are to be evaluated to 
determine their financial condition, management stability, technological 
capability, experience, staffing, organizational structure, project commitment 
and other qualities the Authority deems relevant. The Authority will rank 
proposals which are responsive to the RFP, and the top-ranked proposer is to 
submit a financial feasibility certificate before negotiating an exclusive 
development agreement with the Authority pursuant to the authority granted in 
Transportation Code, sec.361.302. The rules delineate the Authority's options in 
the event that a financial feasibility certificate is not submitted.
Section 54.5 addresses unsolicited proposals, and provides that unsolicited 
proposals may be submitted in a "detailed" or "conceptual" form. Detailed 
proposals must contain the information specified in the rule and be accompanied 
by the required proposal review fee. Detailed proposals will be reviewed by 
Authority staff under the guidance of the Authority's chief administrative 
officer (the "Director") and a recommendation will be made to the Board as to 
whether the project should be further evaluated. If the Board determines that 
further evaluation is warranted, the Authority shall provide an opportunity for 
the submission of competing proposals through public posting of notices and 
publication in the Texas Register. The notice will summarize the proposed 
project, identify its location and interconnections with other transportation 
facilities, and provide a conceptual design. Prospective bidders are given 45 
days in which to submit a competing proposal, and the Authority will then review 
and rank proposals (along with the original unsolicited proposal) using the 
evaluation criteria set forth in the rule. At that point the selection process 
shall proceed in the manner described in sec.54.4. Conceptual proposals must 
include a general description of the proposed turnpike project, anticipated 
costs, expected level of Authority participation and the identification of a 
contact person for the proposer. Such proposals must be accompanied by a 
proposal review fee in the amount specified in the rule, and will be reviewed by 
Authority staff under the guidance of the Director. A recommendation will be 
made to the Board or a committee thereof as to whether the Authority should 
request a follow-up proposal containing the information required in a detailed 
proposal. If a follow-up proposal is requested by the Board, the proposer shall 
have 45 days to submit such proposal (and the specified proposal review fee), 
and, once received, the follow-up proposal shall be processed as a "detailed 
proposal" under the provisions of this Chapter 54.
Section 54.6 describes the requirements and substance of a financial feasibility 
certificate. The rule contemplates that the Authority will maintain a list of 
prequalified financial consultants that will be available to review proposals 
submitted to the Authority and that must have no relationship to the proposer. 
Costs for financial review and obtaining financial feasibility certificates 
shall be charged directly to the proposer by the financial consultant. Inclusion 
on the Authority's list of prequalified financial consultants shall not 
disqualify such consultants from their ability to pursue other business 
opportunities and relationships with the Authority. 
Frank J. Smith, Director, Finance Division, has determined that for the first 
five-year period the new sections are in effect, there will be no significant 
fiscal implications for the state or for local governments as a result of 
enforcing or administering of the sections. There are no anticipated economic 
costs to persons required to comply with the sections as proposed. 
James W. Griffin, Interim Director, Texas Turnpike Authority Division, has 
certified that there will be no significant impact on local economies or overall 
employment as a result of enforcing or administering the proposed rules. 
Mr. Griffin also has determined that for each year of the first five years the 
sections as proposed are in effect, the public benefit anticipated as a result 
of compliance with the sections will be the promotion and fair consideration of 
private involvement in turnpike projects which, if economically justified (as 
determined pursuant to these rules), will provide an economically efficient way 
to construct turnpike projects which, in turn, will benefit the citizens of the 
state. 
Comments on the proposed new sections may be submitted to C. Brian Cassidy, 
General Counsel, Texas Turnpike Authority Division, 125 East 11th Street, 
Austin, Texas 78701-2483, (512) 936-0903, fax (512) 305-9518. The deadline for 
receipt of comments will be 5:00 p.m. on September 14, 1998. 
The new sections are proposed under Transportation Code, sec.361.042, which 
requires the Board to adopt rules for the regulation of its affairs and the 
conduct of its business, as well as Transportation Code, sec.sec.361.301-
361.306, addressing public and private participation in turnpike projects. 
No other statutes, articles, or codes, are affected by these proposed new 
sections. 

sec.54.1. Statement of Policy.
(a) It is the policy of the Texas Turnpike Authority (Authority) to consider the 
feasibility of private involvement in every turnpike project which it 
undertakes. The objectives of this policy are to: 
(1) expand the scope of turnpike projects studied; 
(2) accelerate the construction and completion of turnpike projects; 
(3) reduce the overall costs of a turnpike project; and 
(4) maximize the benefits to be derived from turnpike project facilities. 
(b) To encourage private participation, the Authority may, pursuant to the 
provisions of the Turnpike Act, issue request for proposals (RFPs) inviting 
proposals from private entities to acquire, design, finance, construct, 
maintain, operate, extend or expand turnpike projects pursuant to the provisions 
of the Turnpike Act. The Authority will also accept unsolicited proposals from 
private entities at any time, and will evaluate those proposals in accordance 
with these rules and the Turnpike Act. The Authority staff will consider the 
extent to which private involvement in existing and future projects of the 
Authority is practicable and beneficial, and will analyze whether Authority 
participation is practicable and beneficial with respect to projects proposed by 
responsible private parties. The Authority may formulate selection criteria for 
its use in considering the private entities with which the Authority may 
contract to undertake responsibilities for its projects, as well as for 
evaluation of projects suggested to the Authority as suitable for private 
participation.
(c) These rules apply to private involvement in the acquisition, construction, 
expansion or operation of all or substantially all of a turnpike project or of 
multiple turnpike projects. These rules are not intended to limit or otherwise 
apply to the Authority's procurement of goods and services in the ordinary 
course of its operations, for which the Authority may seek private participation 
in accordance with the Turnpike Act and its other rules and policies. 

sec.54.2. Definitions. 
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. 
(1) Authority--The Texas Turnpike Authority Division of the Texas Department of 
Transportation. 
(2) Board--The Board of Directors of the Authority. 
(3) Commission--The Texas Transportation Commission. 
(4) Conceptual proposal--An unsolicited proposal requesting Authority 
participation in a turnpike project which generally describes the project, 
anticipated costs associated with the project, and the expected level of 
Authority participation. 
(5) Department--The Texas Department of Transportation. 
(6) Detailed proposal--An unsolicited proposal requesting Authority 
participation in a turnpike project which contains the information described in 
sec.54.5(1) of this title (relating to Unsolicited Proposals). 
(7) Financial feasibility certificate--A certification described more 
specifically in sec.54.6 of this title (relating to Financial Feasibility 
Certificate) concerning independent attestation as to the financial feasibility 
of a proposal submitted pursuant to this subchapter. 
(8) Proposal review fee--A fee prescribed by these rules which must be tendered 
with any solicited or unsolicited proposal submitted pursuant to this 
subchapter. 
(9) Request for proposal (RFP)--A detailed request for submittal of a proposal 
from private entities to acquire, design, finance, construct, maintain, operate, 
extend or expand turnpike projects pursuant to the Turnpike Act. 
(10) State--The State of Texas. 
(11) Turnpike Act--Chapter 361.001 et seq. of the Texas Transportation Code 
(Vernon Pamph. 1998). 
(12) Turnpike project--A toll highway constructed, maintained or operated under 
Chapter 361 of the Texas Transportation Code as part of the state highway system 
and any improvement, extension or expansion to the highway, including: 
(A) A facility to relieve traffic congestion and promote safety; 
(B) A bridge, tunnel, overpass, underpass, interchange, entrance plaza, 
approach, toll house, or service station; 
(C) An administration, storage, or other building the Authority considers 
necessary to operate the project; and 
(D) Property rights, easements and interests the Authority acquires to construct 
or operate the project. 

sec.54.3. General Rules for Private Involvement.
(a) The rules in this subchapter address the manner by which the Texas Turnpike 
Authority (Authority) intends to evaluate proposals received from private 
entities in response to request for proposals (RFPs) issued by the Authority, as 
well as unsolicited proposals received by the Authority. The Authority reserves 
all rights available to it by law in administering these rules, including 
without limitation, the right in its sole discretion to: 
(1) reject any and all proposals, whether solicited or unsolicited, at any time; 
(2) terminate evaluation of any and all proposals, whether solicited or 
unsolicited, at any time; 
(3) suspend, discontinue or terminate exclusive development agreement 
negotiations with any proposer at any time prior to the actual authorized 
execution of such agreement by all parties; 
(4) negotiate with a proposer without being bound by any provision in its 
proposal, whether solicited or unsolicited; 
(5) request or obtain additional information about any proposal(s), whether 
solicited or unsolicited; 
(6) modify, issue addenda to, or cancel any RFP; 
(7) revise, supplement or make substitutions for all or any part of these rules; 
or 
(8) retain or return all or any portion of the fees required to be paid by 
proposers hereunder. 
(b) Under no circumstances shall the state, the department, the Authority, or 
any of their agents, representatives, consultants, directors, officers or 
employees be liable for, or otherwise obligated to reimburse, the costs incurred 
by proposers, whether or not selected for negotiations, in developing solicited 
or unsolicited proposals or in negotiating agreements. Any and all information 
the Authority makes available to proposers shall be as a convenience to the 
proposer and without representation or warranty of any kind. Proposers may not 
rely upon any oral responses to inquiries. If a proposer has a question 
regarding these rules or any RFP issued by the Authority, the proposer must 
submit the question in writing to the person responsible for receiving all 
proposals and the Authority will provide the answers in writing. In submitting 
any proposal, whether solicited or unsolicited, the proposer shall be deemed to 
have unconditionally and irrevocably consented and agreed to the foregoing 
provisions and all other provisions of these rules. 
(c) All proposals, whether solicited or unsolicited, submitted to the Authority 
become the property of the Authority and are subject to the Public Information 
Act (Act), Texas Government Code, Chapter 552. Proposers should familiarize 
themselves with the provisions of that Act. In no event shall the state, the 
department, the Authority, or any of their agents, representatives, consultants, 
directors, officers, or employees be liable to a proposer for the disclosure of 
all or a portion of a proposal submitted under these rules. If the Authority 
receives a request for public disclosure of all or any portion of a proposal, 
the Authority will use reasonable efforts to notify the applicable proposer of 
the request and give such proposer an opportunity to assert, in writing, a 
claimed exception under the Public Information Act or other applicable law 
within the time period specified in the Authority's notice and allowed under the 
Act. Provided that the Authority receives the proposer's written assertions for 
the exception of identified materials within the time period specified in the 
Authority's notice, the Authority will forward those assertions to the Office of 
the Attorney General with the Authority's request for a determination of the 
matter. If a proposer has special concerns about information which it desires to 
make available to the Authority but which it believes constitutes a trade 
secret, proprietary information or other information excepted from disclosure, 
such proposer should specifically and conspicuously designate that information 
as such in its proposal. 
(d) A nonrefundable and nonnegotiable proposal review fee may be required for 
any proposal submitted pursuant to these rules, whether solicited or 
unsolicited. Any such proposal review fee shall be applied by the Authority to 
offset the cost of processing and reviewing the applicable proposals. With 
respect to a proposal submitted in response to an RFP issued by the Authority, 
the proposal review fee, if any, shall be the amount specified in the RFP. Any 
unsolicited proposal must be accompanied by a proposal review fee of $20,000, 
except as provided in sec.54.5(2) of this title (relating to Unsolicited 
Proposals). The proposal review fee for any proposal submitted during the 30-day 
period described in sec.54.5(1)(D) of this title shall be $20,000, unless 
otherwise expressly provided in the Authority's notice described in that 
subsection. Failure to submit the required proposal review fee, if any, shall 
bar the Authority's consideration of the applicable proposal. All fees payable 
by proposers pursuant to these rules shall be submitted in the form of a 
cashier's check made payable to the Authority. 
(e) All proposals, whether solicited or unsolicited, should be as thorough and 
detailed as possible so that the Authority may properly evaluate the proposer's 
capabilities to complete the proposed project. 
(f) Studies which the Authority deems necessary as to route designation, civil 
engineering, traffic and revenue, environmental compliance, and any other 
matters will be assigned, conducted and paid for as negotiated between the 
Authority and the successful proposer and set forth in the exclusive development 
agreement. Unless otherwise provided in the RFP issued with respect to a 
solicited proposal, the Authority will favor proposals, whether solicited or 
unsolicited, in which the costs for studies will be advanced by the proposer. 
Nonetheless, the Authority reserves the right to discharge, in whole or in part, 
the costs for such studies in its sole discretion and pursuant to the Turnpike 
Act. The Authority may require that the financial plan for each proposal, 
whether solicited or unsolicited, provide for reimbursement of all related 
expenses incurred by the Authority, as well as any Authority study funds 
utilized, in connection with the project. 
(g) All approvals and all monetary or in-kind participation to be obtained from 
the department and/or the commission will be sought exclusively by the 
Authority, and not by the applicable proposer. Monetary participation may 
include loans or, to the extent permitted by the Texas Constitution, grants, and 
in-kind participation may include the contribution of right-of-way, 
improvements, materials or other assets. The Authority, in its sole discretion, 
may authorize the successful proposer to seek licensing, permitting, approvals, 
and participation required from other governmental entities and private parties, 
subject to such oversight and review by the Authority as specified in the 
exclusive development agreement. 
(h) All public hearings required to be held pursuant to applicable law or 
regulation will be directed and overseen by the Authority, with participation by 
such other parties as it deems appropriate. 
(i) Any matter not specifically addressed herein which pertains to the 
acquisition, design, financing, construction, maintenance, operation, extension 
or expansion of a turnpike project pursuant to the Turnpike Act or these rules 
shall be deemed to be within the primary purview of the Board, and all decisions 
pertaining thereto, whether or not addressed herein, shall be as determined by 
said Board, subject to the provisions of the Turnpike Act. 

sec.54.4. Solicited Proposals. 
If the Texas Turnpike Authority (Authority), by or through its staff, 
consultants, or relationships with the department or other government agencies 
or authorities, develops a concept for private participation in a turnpike 
project, it will proceed in the following manner shown in paragraphs (1)-(8) of 
this section: 
(1) The Authority will set forth the basic criteria for professional expertise, 
financial capability, and end-product expectations in a request for proposal 
(RFP) and will publish it in accordance with its general procurement procedures 
set forth in Chapter 53 of this title (relating to Contracting and Procurement 
Procedures). The Authority may also elect to furnish the RFP to businesses in 
the private sector which the Authority otherwise believes might be interested, 
and qualified to participate, in the turnpike project which is the subject of 
the RFP. 
(2) At its sole option, the Authority may elect to furnish conceptual designs, 
fundamental details or detailed plans of the proposed project in the RFP; the 
RFP may request one or more conceptual approaches to bring the turnpike project 
to fruition. 
(3) The Authority may elect for the RFP to require that solicited proposals be 
submitted and evaluated according to a two-phase process. In that case, the 
first phase will require that a conceptual proposal be submitted for pre-
qualification or "conceptual" review; the second phase then will consist of the 
submission from all or a "short-list" of the original proposers of detailed 
documentation regarding the turnpike project. The RFP may require that a portion 
of the total proposal review fee (as specified in the RFP) be tendered with the 
submittal in each phase of a two-phase process. Alternatively, the RFP may 
provide for a single-phase submission and evaluation process. The determination 
of whether to utilize a two-phase or a single-phase procedure shall be based on 
the relative complexity of the turnpike project which is the subject of the RFP, 
as determined in the sole discretion of the Authority.
(4) The proposals will be evaluated by the Authority as to their feasibility 
(including the reasonableness of the financial plan), realistic time frame, 
assumptions (including those related to ownership, legal liability, law 
enforcement and operation of the project), forecasts, financial exposure and 
benefit to the Authority, compatibility with other planned or existing 
transportation facilities, likelihood of obtaining necessary approvals and other 
support, cost and pricing, toll rates and projected usage, scheduling, 
environmental impact, manpower availability, use of technology, governmental 
liaison, and project coordination, with attention to efficiency, quality of 
finished product and such other criteria, including conformity with Authority 
policies, guidelines and standards, as may be deemed appropriate by the 
Authority to maximize the overall performance of the project and the resulting 
benefits to the state. Specific evaluation criteria and requests for pertinent 
information will be set forth in the RFP. 
(5) In accordance with the terms of the RFP, each proposer will be evaluated to 
determine its financial condition, management stability, technological 
capability, experience, staffing, organizational structure, project commitment, 
and such other qualities that the Authority considers relevant to the successful 
completion of the project. 
(6) Based on the review described under paragraphs (4) and (5) of this section, 
the Authority will rank all proposals which are complete, responsive to the RFP, 
and in conformance with these rules. The proposers will be notified of the 
Authority's rankings. 
(7) Final selection of any proposal will be dependent, in part, on the adequacy 
of the financial plan presented in that proposal. The top-ranked proposer shall 
be required to submit to the Authority the financial feasibility certificate 
described in sec.54.6 of this title (relating to Financial Feasibility 
Certificate) hereof within 30 days of its receipt of the notice described in 
paragraph (6) of this section. If the top-ranked proposer fails to deliver the 
financial feasibility certificate within said 30-day period, the Authority shall 
formally end negotiations with that proposer and, in its sole discretion, 
either: 
(A) reject all proposals; 
(B) terminate or suspend the evaluation of all proposals; 
(C) cancel the RFP; 
(D) modify the RFP and recommence the submission of proposals; or 
(E) proceed to the next most highly ranked proposal and request the financial 
feasibility certificate from that proposer. 
(8) Only if a proposer properly selected under paragraph (7) of this section 
delivers the financial feasibility certificate will the Authority then attempt 
to negotiate an exclusive development agreement with that party to construct, 
maintain, repair, operate, extend and/or expand the turnpike project. The 
Attorney General or the Attorney General's designated representative will be 
included in the negotiation with the proposer. If an exclusive development 
agreement satisfactory to the Authority cannot be negotiated with that proposer, 
the Authority shall formally end negotiations with that proposer and, in its 
sole discretion, either: 
(A) reject all proposals; 
(B) terminate or suspend the evaluation of all proposals; 
(C) cancel the RFP; 
(D) modify the RFP and recommence the submission of proposals; or 
(E) proceed to the next most highly ranked proposal, request the financial 
feasibility certificate from that proposer and, if the certificate is delivered, 
attempt to negotiate an exclusive development agreement with that party in 
accordance with this paragraph. 

sec.54.5. Unsolicited Proposals. 
Private entities may submit unsolicited proposals to the Texas Turnpike 
Authority (Authority) requesting participation in a turnpike project to be 
constructed pursuant to the Turnpike Act. Such unsolicited proposals shall be 
designated by the proposer as a "Detailed Proposal" or a "Conceptual Proposal," 
and shall be processed according to the following rules shown in paragraphs (1)-
(2) of this section. 
(1) Detailed proposals. 
(A) A detailed proposal requesting Authority participation in a proposed 
turnpike project shall be filed with the Authority and must include the 
following information listed in clauses (i)-(xii) of this subparagraph: 
(i) the name, address, and professional designation of each member of the 
proposer's management team and of other key employees or consultants; 
(ii) the description, scope and location of the project; 
(iii) the results expected from project implementation and the critical factors 
for the project's success; 
(iv) all studies previously completed concerning the project; 
(v) a general conceptual plan which includes, at a minimum, all proposed 
interconnections with other transportation facilities and information responsive 
to the evaluation criteria listed in sec.54.4(4) of this title (relating to 
Solicited Proposals) ; 
(vi) complete information concerning the experience, expertise and 
qualifications of the proposer and of each member of the proposer's management 
team and of other key employees or consultants, including information responsive 
to the evaluation criteria listed in sec.54.4(5) of this title; 
(vii) a description of all federal, state and local permits and approvals, 
together with other support by appropriate public entities, required for the 
project, and a schedule and methodology for obtaining said permits, approvals 
and support; 
(viii) a detailed financial plan; 
(ix) a specific description of the level and nature of participation sought from 
the Authority; 
(x) all anticipated opposition, potentially adverse social, economic and 
environmental impacts, and potentially competing facilities and proposers; 
(xi) other information of probable interest to Authority; and 
(xii) the proposal review fee of $20,000 in the form prescribed by sec.54.3 of 
this title (relating to General Rules for Private Involvement); 
(B) Any detailed proposal properly filed with the Authority in accordance with 
subparagraph (A) of this paragraph and accompanied by the proper proposal review 
fee will be reviewed by the Authority staff under the supervision of the 
Director. Based on that review, an initial recommendation will be made to the 
Board (or designated committee thereof) as to whether the Authority should 
further evaluate its requested participation in the applicable turnpike project. 
That recommendation shall be based on whether the proposed project: 
(i) is compatible with existing and planned transportation facilities; and 
(ii) furthers state, regional and local transportation plans, programs, policies 
and goals, as well as the proposal's responsiveness to such other evaluation 
criteria as the Authority deems relevant. 
(C) If the initial recommendation is that the Authority further evaluate its 
requested participation in the applicable turnpike project and the Board (or 
designated committee thereof) approves that recommendation, the Authority staff 
shall publish notice of that decision and provide an opportunity for the 
submission of competing proposals as provided in this subsection. The Authority 
will post a notice for 45 days in a public area it normally uses for posting of 
public notices and will publish a similar notice in the Texas Register and in 
one or more newspapers of general circulation. The notice will state that the 
Authority has received an unsolicited proposal under these rules and the 
Turnpike Act, that it intends to evaluate the proposal, that it may negotiate an 
exclusive development agreement with the proposer based on the proposal, and 
that it will accept for simultaneous consideration any competing proposals that 
the Authority receives in accordance with these rules within 45 days of the 
initial publication of the notice in the Texas Register. The notice will 
summarize the proposed turnpike project, identify its proposed location and 
interconnections with other transportation facilities, and provide a conceptual 
design. The Authority also may provide traffic counts, forecasts and other 
available data either in the notice or upon request of any party responding 
thereto. 
(D) Failure by a prospective proposer to submit a competing proposal, together 
with the proper proposal review fee, within the 45-day period shall preclude 
such proposal from consideration by the Authority unless and until the Authority 
terminates consideration of, or negotiations on, the original unsolicited 
proposal and any and all competing proposals received within such 45-day period. 
The Authority will not grant requests to extend the 45-day period; and the 
receipt of one or more competing proposals during such period will not trigger 
the posting or publication of a new notice or the commencement of any new 45-day 
period. 
(E) The Authority recognizes that it may receive proposals which have certain 
characteristics in common with the original unsolicited proposal, yet differ in 
other material respects. In such cases, the Authority reserves the right, in its 
sole discretion, to treat any such proposal as either a competing proposal or a 
noncompeting proposal. Because of the consequences to a proposer of failing to 
submit within the 45-day period a proposal which the Authority could later deem 
a competing proposal, prospective proposers are strongly urged to monitor the 
Authority's notices of unsolicited proposals received, and to be prepared to 
submit within such 45-day period if they perceive that a proposal they are 
considering or are preparing bears certain similarities to, or has 
characteristics in common with, an unsolicited proposal which is the subject of 
a notice. 
(F) Upon the expiration of the 45-day period, the Authority will subject the 
original unsolicited proposal, together with any and all properly submitted 
competing proposals, to the following single-phase evaluation and selection 
process. If one or more properly submitted competing proposals are received, the 
Authority shall review and rank said proposal(s), together with the original 
unsolicited proposal, utilizing the evaluation criteria set forth in sec.54.4(4) 
and (5) of this title and the information specified in subparagraph (A) of this 
paragraph. The proposers will be notified of the Authority's rankings, and the 
process will proceed in the manner described in sec.54.4 (7) and (8) of this 
title including, without limitation, the delivery of the financial feasibility 
certificate and the participation of the Attorney General or the Attorney 
General's designated representative in the negotiation of an exclusive 
development agreement. If no properly submitted competing proposal is received, 
the party submitting the original unsolicited proposal shall be required to 
submit to the Authority the financial feasibility certificate within 30 days of 
its receipt of such notice from the Authority. If that party fails to submit the 
financial feasibility certificate within said 30-day period, the Authority shall 
formally end the evaluation of the original unsolicited proposal and all 
negotiations with the proposer submitting same. Alternatively, if that proposer 
delivers the financial feasibility certificate, the Authority will attempt to 
negotiate an exclusive development agreement for the project described in the 
original unsolicited proposal. The Attorney General or the Attorney General's 
designated representative will be included in the negotiation with the proposer. 
If an exclusive development agreement satisfactory to the Authority cannot be 
negotiated with that proposer, the Authority shall formally end the evaluation 
of the original unsolicited proposal and all negotiations with the proposer 
submitting same. 
(2) Conceptual proposals. A conceptual proposal requesting Authority 
participation in a proposed turnpike project must be filed with the Authority 
and be accompanied by a $5,000 proposal review fee. At a minimum, a conceptual 
proposal must include a general description of the turnpike project, anticipated 
costs associated with the project, the expected level of Authority 
participation, and a designated contact for the proposer. Conceptual proposals 
shall be reviewed by the Authority staff under the supervision of the Director. 
Based on that review, an initial recommendation will be made to the Board (or a 
designated committee thereof) as to whether the Authority should request that 
the proposer submit a follow-up proposal containing the information described in 
paragraph (1)(A)(i)-(xii) of this section. If the recommendation is that the 
Authority request that the proposer submit a follow-up proposal and the Board 
(or designated committee thereof) approves that recommendation, the Authority 
staff shall notify the proposer in writing of the request. The proposer shall 
have 45 days from the date of receipt of the request in which to submit the 
follow-up proposal, which must be accompanied by a proposal review fee in the 
amount of $15,000. Once received, the follow-up proposal shall be considered as 
a detailed proposal and shall be processed in accordance with the procedures set 
forth in paragraph (1)(B)-(F) of this section. 

sec.54.6. Financial Feasibility Certificate. 
All costs for the financial review and obtaining the financial feasibility 
certificate will be charged directly to the proposer by the financial 
consultant, and are not discharged by or included in the applicable proposal 
review fee. The parties placed on the Authority's list of prequalified financial 
consultants shall be informed that they must be totally independent from the 
proposer that prepared the proposal and the financial plan under evaluation. The 
financial consultant providing the financial feasibility certificate as 
described in this section will be required to certify that it has no current or 
contemplated involvement with any individual or other party identified in the 
proposal that would constitute a conflict of interest, which shall include, but 
not be limited to, participating in a consortium, service as a consultant to a 
consortium, serving as a funding source or underwriter, being a subsidiary, 
parent or affiliate of any party involved in the proposal or otherwise being 
admitted to any share or part of the proposal or to any benefit arising 
therefrom. Except for the foregoing proscription against conflicts of interest, 
a party's inclusion on the Authority's list of prequalified financial 
consultants or activities in that capacity pursuant to this section shall in no 
way disqualify that party from, or impair or limit its ability to pursue and 
engage in, other business opportunities and relationships with the Authority 
pertaining to these rules or otherwise. To be qualified as a party to analyze 
financial plans submitted in accordance with these rules and to issue, as 
appropriate, financial feasibility certificates, an interested party must submit 
a confidential questionnaire in the form prescribed by the Authority, which 
shall include certain information concerning that party's experience and 
qualifications. As provided in sec.54.4(7) of this title (relating to Solicited 
Proposals) with respect to solicited proposals and in sec.54.5(1)(F) of this 
title (relating to Unsolicited Proposals) with respect to unsolicited proposals, 
a financial feasibility certificate shall be required as a condition to 
negotiating an exclusive development agreement with the successful proposer. In 
this regard, the Texas Turnpike Authority (Authority) intends to provide a list 
of prequalified companies and other parties that will be able to analyze, and 
offer an opinion as to the adequacy of, the financial plan set forth in a 
proposal submitted in response to these rules. The financial feasibility 
certificate to be provided by the prequalified financial consultants is as 
follows: 
Figure: 43 TAC sec.54.6 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on August 3, 1998.
TRD-9812196
C. Brian Cassidy
General Counsel
Texas Turnpike Authority Division
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 936-0903

PART III. Automobile Theft Prevention Authority
CHAPTER 57. Automobile Theft Prevention Authority
43 TAC sec.57.48
The Automobile Theft Prevention Authority (ATPA) proposes an amendment to 
sec.57.48, concerning guidelines for insurers in calculating the statutory fee 
required by Texas Civil Statutes, Article 4413(37), sec.10. ATPA previously 
published proposed rules on this subject (22 TexReg 8611). The ATPA has 
withdrawn that proposal. The purpose of the proposed amendments is to clarify 
the types of motor vehicles, as well as the types of insurance which are subject 
to the statutory $1 per motor vehicle year of insurance, in an effort to provide 
the insurance industry and other interested persons better information on the 
type of policies and vehicles that are included in the calculation of the total 
amount of fees owed by an insurer. It is anticipated this, in turn, will ensure 
that the ATPA fee is collected on all vehicles and insurance policies which the 
legislature intended to be subject to the fee. 
Proposed paragraphs (3) and (4) define the term "motor vehicle" as referenced in 
Article 4413(37) sec.10, and clarify that all motor vehicle or automobile 
insurance policies (as those terms are defined by the Insurance Code), with 
certain exceptions, are subject to the fee. An insurer under sec.10 is any 
insurance company writing any form of motor vehicle insurance in this state, 
including an interinsurance or reciprocal exchange, mutual company, mutual 
association, or Lloyd's plan. Section 10(2) refers to "motor vehicle" in 
defining the term "motor vehicle years," in connection with computing the amount 
of assessment for an insurance company. Section 10, however, does not define 
"motor vehicle insurance" or "motor vehicle." By rule, the Department of 
Insurance (DOI) has notified the insurance industry that the fee is to be 
assessed only on "primary liability" motor vehicle insurance. The DOI's rule 
also excludes other types of insurance which are categorized as motor vehicle 
insurance under the Insurance Code, but which provide other purpose coverage, 28 
TAC sec.5.205. According to DOI staff, the excluded policies, garage liability 
policies, and nonresident policies, policies providing only non-ownership or 
hired auto coverages, are secondary policies for vehicles with primary policies 
which would have been assessed the $1 fee. 
The ATPA's proposed amendments incorporate the Insurance Code Article 5.01(e) 
definitions for motor vehicle insurance and motor vehicle, the exclusions in the 
DOI's rule and one other express exclusion, motor vehicle insurance policies for 
mechanical breakdowns. Mechanical breakdown policies cover the failure of parts 
installed by the manufacturer. This type of policy is in addition to a motor 
vehicle insurance policy for liability and/or collision/comprehensive which is 
assessed the fee and which is the type of policy that directly relates to the 
ATPA's mission of auto theft prevention for which the fee is intended to be 
used. Under the proposal, the fee is not limited to primary liability insurance 
policies. The proposed amendments reflect the statutory language of Article 
4413(37), which does not restrict the fee to only primary liability coverage. 
The Insurance Code defines "motor vehicle or automobile insurance" to mean 
"every form of insurance on any automobile, or other vehicle hereinafter 
enumerated and its operating equipment or necessitated by reason of the 
liability imposed by law for damages arising out of the ownership, operation, 
maintenance, or use in this State of any automobile, motorcycle, motorbicycle, 
truck, truck-tractor, tractor, traction engine, or any other self-propelled 
vehicle, and including also every vehicle, trailer or semi-trailer pulled or 
towed by a motor vehicle, but excluding every motor vehicle running only upon 
fixed rails or tracks. Workers' Compensation Insurance is excluded from the 
foregoing definition." The article also enumerates vehicles which are considered 
"motor vehicles." Under the proposal, all motor vehicle policies, not exempted 
by the proposed rule, covering a motor vehicle enumerated in the Insurance Code 
are subject to the fee. If the covered property is not a defined motor vehicle, 
even though covered under a motor vehicle policy, such as a mobile home, the 
policy on that property would not be assessed the fee. The Insurance Code's 
definitions of "motor vehicle or automobile insurance" and "motor vehicle" are 
appropriate standards to use for purposes of Article 4413(37), sec.10 and Rule 
57.48. The definitions are established and recognized standards already used by 
insurers, who are required to compute and pay the mandatory fee. The DOI has 
indicated its informal agreement with the ATPA proposal and will be proposing an 
amendment to 28 TAC sec.5.205 eliminating the restriction on the fee to primary 
liability coverage to conform with the ATPA's proposal. 
Agustin De La Rosa, director of the ATPA, has determined that for each year of 
the first five years that the section, as amended, will be in effect, there may 
be fiscal implications to state government, but not local governments, as a 
result of enforcing or administering the section. It is anticipated that for the 
first five years the fiscal impact of the proposed amendment is estimated to be 
$3,920,899 between 1999 and 2003, according to information provided by the DOI. 
To prepare this note, data on registered private, commercial and publicly owned 
automobiles, buses, motorcycles, trucks, commercial trailers, farm trailers, car 
trailers, house trailers and others, truck tractors, farm trucks, pickups, vans, 
utility vehicles and other light vehicles were taken from the U.S. Federal 
Highway Administration's Highway Statistics 1996 publication (Tables MV1, MV9 
and MV11) and the U.S. Department of Commerce's Statistical Abstract 1997. For 
calendar year 1996, 15,128,702 motor vehicles were registered in the state of 
Texas. Of these it is estimated that 12,371,691 were insured through traditional 
insurance policies (excluding self-insurance and uninsured vehicles). Estimated 
calendar year 1996 revenue under the current rule is $11,625,644. Revenue under 
the current and proposed rule were increased 1% per year based on the trend in 
motor vehicle registrations in Texas to reflect the growth in motor vehicles. 
This would produce expected revenue of $11,977,913 under the current rule and 
$12,746,565 under the proposed rule in 1999. Therefore, first year cost is 
estimated at $768,652. Both revenue streams were increased 1% per year to the 
year 2003 to reflect the increase in insured motor vehicle registrations and 
produces a five year cost impact of $3,920,899. The yearly impact is illustrated 
in the table below. 
Estimated Revenue 
Year 1 Year 2 Year 3 Year 4 Year 5 
Proposed 
Rule $12,746,565 $12,874,031 $13,002,771 $13,132,799 $13,264,127 
Current 
Rule $11,977,913 $12,097692 $12,218,669 $12,340,856 $12,464,264 
Cost 
Impact $768,652 $776,339 $784,102 $791,943 $799,863 
Mr. De La Rosa has also determined that for each year of the first five years 
the section as amended will be in effect, the public will benefit by the 
amendment further ensuring that the fee is applied and collected as intended by 
sec.10. Additionally, for the same period of time, Mr. De La Rosa has determined 
that to the extent that insurance companies writing motor vehicle or automobile 
insurance are required to pay the $1 fee on previously excluded policies, there 
will be some probable economic cost to those companies required to comply with 
the section as proposed for amendment. The economic cost associated with these 
amendments will require the payment of the statutory $1 fee on motor vehicle 
insurance policies for policies not currently being assessed. The additional 
annual economic cost will be approximately $780,000, based on the estimated 
number of motor vehicle insurance policies previously excluded. There is no 
additional effect on small business separate from other persons required to 
comply with the section as amended in as much as the fee is assessed on each 
insurance policy written not on the size of an insurance company.
Comments on the proposal may be submitted to Agustin De La Rosa, Director, 
Automobile Theft Prevention Authority, 200 East Riverside Drive, Austin, Texas 
78704, for a period of 30 days following publication in this issue of the Texas 
Register. 
This amendment is proposed under Texas Civil Statutes, Article 4413(37), 
sec.6(a). The ATPA interprets sec.6(a) as authorizing it to adopt rules 
implementing its statutory powers and duties, which includes administering the 
statutory fee assessment and collection mandates provided in sec.10, in 
coordination with the state comptroller's office and the department of 
insurance. 
sec.57.48 -- Article 4413(37) sec.sec. 6A and 10. 

sec.57.48. Motor Vehicle Years of Insurance Calculations.
(a) Each insurer, in calculating the fees established by Texas Civil Statutes, 
Article 4413(37), sec.10, shall comply with the following guidelines: 
(1)-(2) (No change.) 
<nl>(3)<ol> <nl>"Motor vehicle" as referred to in Texas Civil Statutes, Article 
4413(37), sec.10(2), means motor vehicle as defined by the Insurance Code, 
Article 5.01(e). This definition shall be used when calculating the fees under 
this section.<ol>
<nl>(4)<ol> <nl>All motor vehicle or automobile insurance policies as defined by 
Insurance Code, Article 5.01(e), covering a motor vehicle shall be assessed the 
$1 fee except mechanical breakdown policies, garage liability policies, 
nonresident policies and policies providing only non-ownership or hired auto 
coverages.<ol> 
(b) (No change) 
This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt.
Filed with the Office of the Secretary of State on July 28, 1998.
TRD-9811961
Agustin De La Rosa 
Director
Automobile Theft Prevention Authority
Earliest possible date of adoption: September 13, 1998
For further information, please call: (512) 416-4606