Adopted Sections An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 22. EXAMINING BOARDS Part X. Texas Funeral Service Commission Chapter 201. Licensing and Enforcement-Practice and Procedure 22 TAC sec.201.11 The Texas Funeral Service Commission adopts an amendment to sec.201.11, concerning disciplinary guidelines, without changes to the proposed text as published in the September 27, 1991, issue of the Texas Register (16 TexReg 5310). The amendment provides the commission and independent hearing officers with guidelines when assessing administrative penalties against individuals or establishments found not in compliance with the laws. The amendment gives the commission guidelines to follow when assessing administrative penalties against individuals or establishments found not in compliance with the laws. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1991. TRD-9114334 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: December 6, 1991 Proposal publication date: September 27, 1991 For further information, please call: (512) 834-9992 22 TAC sec.201.12 The Texas Funeral Service Commission adopts an amendment to sec.201.12, concerning retired licenses, without changes to the proposed text as published in the September 27, 1991, issue of the Texas Register (16 TexReg 5310). The amendment provides the same benefits and procedures to individuals with a 75% or greater disability as currently applied to retired licensees. The amendment sets benefits and procedures as currently applied to retired licensees to individuals with a 75% or greater disability as provided by Texas Civil Statutes, Article 4582b. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article, 4582b, sec.5, which provides the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1991. TRD-9114335 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: December 6, 1991 Proposal publication date: September 27, 1991 For further information, please call: (512) 834-9992 Chapter 203. Licensing and Enforcement-Specific Substantive Rules 22 TAC sec.203.23 The Texas Funeral Service Commission adopts new sec.203.23, concerning clarification of definition of unreasonable time, without changes to the proposed text as published in the September 27, 1991, issue of the Texas Register (16 TexReg 5311). The new section clarifies a vague term used in language adopted in Senate Bill 284. The new section clarifies term and clearly sets a standard. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1991. TRD-9114336 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: December 6, 1991 Proposal publication date: September 27, 1991 For further information, please call: (512) 834-9992 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 3. Life, Accident and Health Insurance and Annuities Subchapter FF. Credit Life and Accident and Health Insurance Presumptively Acceptable Relation of Credit Life Insurance Benefits to Premiums 28 TAC sec.3.5301, sec.3.5303 The Texas Department of Insurance adopts the repeal of sec.3.5301 and sec.3. 5303, without changes to the proposed text as published in the August 30, 1991, issue of the Texas Register (16 TexReg 4729). Section 3.5301 and sec.3.5303 concern presumptively reasonable credit life insurance rates and were adopted in 1980. The rates contained therein are not effective on or after October 1, 1991, the effective date of Board Order Number 58505. Pursuant to the Insurance Code, Article 3.53, sec.8A(2), the State Board of Insurance, in May, 1991, conducted a public hearing, in accordance with the contested case provisions of the Administrative Procedure and Texas Register Act (Texas Civil Statutes, Article 6252-13a) to adopt and promulgate resumptive premium rates for credit life insurance. Pursuant to that hearing, the State Board of Insurance has promulgated credit life and credit accident and health insurance presumptive premium rates which were effective October 1, 1991. These rates are embodied in Board Order Number 58505 resulting from that contested rate hearing. The board order from that public hearing supersedes these sections. Subsequent hearings to adopt rates will be conducted according to these amended procedures rather than through the rule making process by which these sections were adopted in 1980. The repeal of sec.3.5301 and sec.3.5303 concerns the deletion of previously adopted presumptively reasonable life rates. Rates will subsequently be adopted by the State Board of Insurance according to the contested case provisions of the Administrative Procedure and Texas Register Act. No comments were received regarding adoption of the repeal. The repeals are adopted under the Insurance Code, Article 3.53, sec.12, which allows the State Board of Insurance to issue such rules and regulations as it deems appropriate for the regulation of credit life insurance and credit accident and health insurance. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 18, 1991. TRD-9114427 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: December 9, 1991 Proposal publication date: August 30, 1991 For further information, please call: (512) 463-6328 28 TAC sec.3.5302 The Texas Department of Insurance adopts an amendment to sec.3.5302, concerning Joint Credit Life Insurance, without changes to the proposed text as published in the August 30, 1991, issue of the Texas Register (16 TexReg 4730). The amendment deletes reference to sec.3.5301(3) and (4) of this title (relating to Presumptively Reasonable Life Rates). Section 3.5301 is the subject of a repeal effective simultaneously with the adoption of this amendment to sec.3. 5302. Sections 3.5301, 3.5303, and 3.5401 will be repealed, pursuant to amendments to the Insurance Code, Article 3.53, sec.8A, allowing the State Board of Insurance to promulgate presumptive premium rates in accordance with the contested case provisions of the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a. The amendment to sec.3.5302 concerns deletion of reference to repealed subsections of this title (relating to Presumptively Reasonable Life Rates). No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Article 3.53, sec.12, which authorizes the State Board of Insurance to issue such rules and regulations as it deems appropriate for the regulation of credit life insurance and credit accident and health insurance. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 18, 1991. TRD-9114429 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: December 9, 1991 Proposal publication date: August 30, 1991 For further information, please call: (512) 463-6328 Presumptively Acceptable Relation of Credit Accident and Health Insurance Benefits to Premiums 28 TAC sec.3.5401 The Texas Department of Insurance adopts the repeal of sec.3.5401, without changes to the proposed text as published in the August 30, 1991, issue of the Texas Register (16 TexReg 4730). Section 3.5401 concerns presumptively reasonable credit accident and health insurance rates and was adopted in 1980. The rates contained therein are not effective after October 1, 1991, the effective date of Board Order Number 58505. Pursuant to the Insurance Code, Article 3.53, sec.8A(2), the State Board of Insurance, in May, 1991, conducted a public hearing, in accordance with the contested case provisions of the Administrative Procedure and Texas Register Act (Texas Civil Statutes, Article 6252-13a) to adopt and promulgate presumptive premium rates for credit accident and health insurance. Pursuant to that hearing, the State Board of Insurance has promulgated credit life and credit accident and health insurance presumptive premium rates to be effective October 1, 1991. These rates are embodied in Board Order Number 58505 resulting from that contested rate hearing. The board order from that public hearing supersedes this section. Subsequent hearings to adopt rates will be conducted according to these amended procedures rather than through the rule making process by which this section was adopted in 1980. The repeal of sec.3.5401 concerns the deletion of previously adopted presumptively reasonable accident and health rates. Rates will subsequently be adopted by the State Board of Insurance according to the contested case provisions of the Administrative Procedure and Texas Register Act. No comments were received regarding adoption of the repeal. The repeal is adopted under the Insurance Code, Article 3.53, sec.12, which allows the State Board of Insurance to issue such rules and regulations as it deems appropriate for the regulation of credit life insurance and credit accident and health insurance. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 18, 1991. TRD-9114426 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: December 9, 1991 Proposal publication date: August 30, 1991 For further information, please call: (512) 463-6328 Chapter 7. Corporate and Financial Regulation Subchapter A. Examination and Corporate Custodian and Tax 28 TAC sec.7.36 The State Board of Insurance adopts new sec.7.36, with changes to the proposed text as published in the September 10, 1991, issue of the Texas Register (16 TexReg 4928). Section 7.36 concerns required reporting by workers' compensation insurers. The new section is necessary to provide for the proper functioning of administrative regulation of the business of workers' compensation insurance and related matters in Texas and to enable the board to effect timely compliance with the provisions of the Insurance Code, Article 5.61. This adoption includes changes to sec.7.36(b),(d), and (f) to change references to the agency from the State Board of Insurance to its new name, Texas Department of Insurance. The adoption also includes changes to form WCR-1 to include the name of the company, the NAIC group number and company number. The years for which data is requested in Form WCR-1 were changed to reflect the information to be filed in the 1992 report. New sec.7.36 provides insurers with the requirements, instructions, and forms for complying with the Insurance Code, Article 5.61, and for preparing the required audited report of reserves. The new section includes the adoption by reference of new Form WCR-1 and instructions for use by all insurers subject to the provisions of this subchapter and the Insurance Code, Article 5.61. The years of data requested on Form WCR-1 will be routinely updated for the upcoming reporting year. New sec.7.36 will allow more effective regulation of the reserves of workers' compensation insurers, more effective monitoring and greater protection against insurer insolvency due to the required filing of the audited reports, and more accountability to both the consumer and the public. Comments were received regarding perceived inequities in sec.7.36. The commentor expressed concern over the initial effective date of the rule. The commentor recognizes that the Insurance Code, Article 5.61 requires the report to be filed not later than June 30th of each year and that due to the proximity in time of publication of the proposed rule the filing date was extended for receipt of the first report to September 30, 1991. The commentor recommends that the adopted rule allow reports filed prior to October 31, 1991, to be considered timely filed. The commentor also expresses concern over the number of years for which data is requested since some members claim that the requested information is not available for all the requested years and/or that the necessary supporting documentation to perform an audit is not available. The commentor suggests that the rule be changed to provide that insurers need not include information that is no longer available or that cannot be audited. The commentor makes a vague reference to certain parts of the report which need not be completed and suggests exclusion of these unnecessary parts. The American Insurance Association made comments against portions of sec.7. 36. The agency agrees with the extension of the timely filing date for the first report to October 31, 1991. The amended emergency rule and the proposed rule made changes to Form WCR-l and the instructions to the form to clarify and reduce the amount of information required. Article 5.61 provides that the report "must show the reserve development over a period of years sufficiently long to allow the board to determine whether the reserves are adequate, inadequate, or unreasonably large." The agency believes that the data requested over the period of the time stated in the rule is sufficient for the agency to meet its statutory responsibility. Permitting insurers to indiscriminately not include information not available or not able to be audited would encourage inconsistency in the data reported. The proposed rule deleted information previously requested in the emergency rule regarding retrospective premiums. The rules and Form WCR-1 do not include requests for any information that is not needed to comply with the statutory requirements. The agency is of the opinion that the parts which the commentor is recommending excluding as unnecessary were deleted from the amended emergency rule and the proposed rule. The new section is adopted under the Insurance Code, Articles 1.04, 5.61, and 5.62. The Insurance Code, Article 1.04, authorizes the State Board of Insurance to determine rules in accordance with the laws of this state. Article 5.61(b) requires each workers' compensation insurer to provide an audited report concerning reserves in accordance with the rules of the board. Article 5.62 authorizes the State Board of Insurance to make and enforce rules necessary to carry out the provisions of the Insurance Code, Chapter 5, Subchapter D, concerning regulations of workers' compensation insurance. sec.7.36. Audited Report of Workers' Compensation Reserves. (a) The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Accountant-An independent certified public accountant or accounting firm that is in good standing with the American Institute of CPAs and that holds a valid, current license to practice accounting in each state in which the accountantor accounting firm acts as an accountant. (2) Annual statement-The annual statement (association edition) to be used by fire and casualty insurance companies as promulgated by the National Association of Insurance Commissioners and as adopted each year by the State Board of Insurance under this chapter. (3) Board-The State Board of Insurance of the State of Texas. (4) Commissioner-The commissioner of insurance of the State of Texas, appointed under the Insurance Code, Article 1.09 (5) Direct Texas workers' compensation business-The workers' compensation insurance premiums and losses in Texas of any primary insurer: (A) after adjustment for additional or return premiums but before deduction of any premiums for reinsurance ceded; and (B) without inclusion of any premiums for reinsurance assumed; and (C) without inclusion of business written on behalf of, and ceded to, the Texas Workers' Compensation Facility (formerly the Texas Workers' Compensation Assigned Risk Pool). (6) Insurer- (A) an insurer which is authorized to write and which has written workers' compensation insurance in this state within the past five years; or (B) an insurer which is not currently authorized to write but which has been authorized to write and which has written workers' compensation insurance in this state within the past five years. (7) Texas Workers' Compensation Facility business -Business written by a servicing carrier of the Texas Workers' Compensation Facility (facility) and ceded to the facility and business written under the small premium plan and ceded to the facility. (b) This section, and the instructions and forms adopted under this section, apply to all insurers which transact workers' compensation business in this state or which were authorized to write and have written workers' compensation insurance within the last five years. As used in this section, the word "insurer" includes any other entity using and reporting on any form adopted under this section. The State Board of Insurance adopts by reference the instructions and form specified in this section. These instructions and this form are published by the State Board of Insurance and may be obtained from the Financial Analysis Unit, Mail Code 303-1A, Texas Department of Insurance, William P. Hobby State Office Building, 333 Guadalupe Street, P.O. Box 149099, Austin, Texas 78714-9099. Each insurer or other entity shall follow such instructions and use and report on such forms as appropriate to its operation. The board may separately require the Texas Workers' Compensation Facility to provide data on business ceded to the facility. (c) Each insurer shall complete Form WCR-1 and shall provide at a minimum the information requested in the form. The contents of Form WCR-1 shall be derived from the books and records maintained by the insurer, and data therein shall be included in the applicable schedules and exhibits of the insurer's most recent annual statement. Each insurer shall update yearly the contents of any Form WCR- 1 to provide the most recent 10 years of data for Part I and the most recent six years of data for Parts II-V. (d) The insurer shall cause an audit to be conducted by an independent certified public accountant of the data contained in the Form WCR-1 and in other statements required by this section. No exemptions from this requirement shall be permitted. The insurer shall deliver the original audited report annually to the Financial Analysis Unit of the Texas Department of Insurance on or before June 30th. (e) The audited report shall include the following: (1) the opinion of the accountant, which should address the validity of data reported and not the adequacy of reserves; (2) a statement of premium, losses, and loss development on direct Texas workers' compensation business, excluding Texas Workers' Compensation Facility business, as prescribed by Form WCR-1; (3) any notes to the statement required in paragraph (2) of this subsection; (4) an explanatory statement, including specific references to annual statement page and line numbers and to the timing of entries, of the insurer's method of recording, on a direct, assumed, ceded, and net basis: (A) written premium; (B) earned and unearned premium; (C) uncollected premiums on asset lines 9.1, 9.2, 9.3, and 11 of the annual statement, page 12; (D) uncollected premiums charged off; (5) a statement that the audited Texas data provided under paragraphs (2), (3), and (4) of this subsection agree with Texas data reported in the insurer's most recent annual statement or are included in the applicable total amounts as reported in the insurer's most recent annual statement, or, in the absence of such statement, a reconciliation of any differences between the audited statutory forms or statements and information included in the annual statement, with a written description of the nature of these differences; (6) supplementary data and information, including any additional data or information required by the commissioner or the State Board of Insurance. (f) The insurer shall also make a filing of Form WCR-1 in diskette form in the manner set forth under separate letter. Formatted diskettes will be furnished initially by the Financial analysis Unit of the Texas Department of Insurance and shall be completed by the insurer with the same data reflected in the hard copy filing. Completed diskettes shall be included with the filing of the required audited report. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114385 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: December 6, 1991 Proposal publication date: September 10, 1991 For further information, please call: (512) 463-6328 Chapter 9. Title Insurance Subchapter C. Texas Title Insurance Statistical Plan 28 TAC sec.9.401 The Texas Department of Insurance adopts an amendment to sec.9.401, concerning Texas Title Insurance Statistical Plan. Except for the deletion of the effective date, the amendment is adopted without changes to the proposed text as published in the September 3, 1991, issue of the Texas Register (16 TexReg 4823). The amendment to the Plan is necessary to provide for revised statistical coding to facilitate collection of data relative to current Texas title insurance rate rules. The amendment adopts by reference the revised codes for use by title insurance carriers in the reporting of loss experience and such other data as may be required by the Texas Department of Insurance. The amendment to sec.9.401 concerns adoption by reference of an amendment to the Plan. The State Board of Insurance adopts by reference the rules contained in the Texas Title Insurance Statistical Plan as amended. No comments were received regarding adoption of the amendment. The amendment to sec.9.401 is adopted under the Texas Insurance Code, Article 9.21. Article 9.21 provides the State Board of Insurance with the authority to promulgate and enforce rules and regulations prescribing underwriting standards and practices, and to promulgate and enforce all other rules and regulations deemed necessary to accomplish the purposes of Chapter 9, Insurance Code, concerning the regulation of title insurance. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 18, 1991. TRD-9114428 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: December 9, 1991 Proposal publication date: September 3, 1991 For further information, please call: (512) 463-6328 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part III. Texas Air Control Board Chapter 101. General Rules 31 TAC sec.101.27 The Texas Air Control Board (TACB) adopts new sec.101.27, concerning Emissions Fees, with changes to the proposed text as published in the July 5, 1991, issue of the Texas Register (16 TexReg 3761). The new section was proposed in response to the requirements of Title V of the Federal Clean Air Act (FCAA) Amendments of 1990. The subsections of the rule specify the basis for applicability, the method of fee payment, the fee rate, provisions for fee calculations, a payment deadline, and the result of nonpayment. A public hearing was held on July 31, 1991 in Austin. Testimony was received from 17 commenters during the comment period which closed August 15, 1991. An individual supported the proposal and 16 commenters opposed it. Opposing the proposal were Oxychem Petrochemicals Group; Southwestern Public Service Company (SPS); El Paso Natural Gas Company (EPNG); Maple Gas Corporation; the Department of the Air Force; San Miguel Electric Cooperative, Inc. (San Miguel); Gulf States Utilities Company; Houston Lighting and Power Company (HL&P); Texas Mid- Continent Oil and Gas Association (TMOGA); Electric Reliability Council of Texas, Inc. (ERCOT); Texas Chemical Council (TCC); Star Enterprise; Mobil Oil Corporation; Lower Colorado River Authority (LCRA); United States Environmental Protection Agency (EPA); and Texas Utilities (TU) Services, Inc. Overall, the commenters addressed the specific provisions in the proposal and presented various recommendations for changes to the proposed section. The following discussion initially addresses the more general comments and then addresses the comments which deal with specific parts of the proposal. Comments of a general nature included one from an individual who recommended that the TACB develop a program to share fee revenues with local air pollution control agencies. The board and the staff recently have initiated work on such a program. Another general comment, from Star Enterprise, indicated that the TACB lacks the statutory authority to assess and collect emissions fees. Senate Bill (S.B.) 2, passed by the Texas Legislature and signed by the governor August 12, 1991, authorizes the agency to collect emissions fees. Several commenters maintained that the TACB should use emissions fees only for the purpose of administering the FCAA, Title V, Operating Permit Program and that fee amounts should be based only on reasonable, necessary, and documented costs of the program. The intent of sec.101.27 is to provide a predictable and stable fee base to help fund the state's implementation of the 1990 amendments to the FCAA. A part of these preparations is the increase in staff resources needed to develop an approvable operating permit program. Funding for a fully operational Title V program will not be necessary until the TACB receives approval and full delegation from EPA. EPA stated that the TACB proposal appears acceptable under the proposed federal Operating Permit Program published May 10, 1991 at 56 Federal Register 21712. EPA cautioned, however, that the program requirements are not final and that the TACB emission fee rule may need revisions to accommodate future changes in the federal program. The staff will prepare recommended revisions to sec.101.27, as needed, to maintain consistency with the intent of the federal rules and the FCAA. However, the staff expects EPA's final rules will continue to provide the states with the flexibility needed to establish requirements. EPA has stated in 40 Code of Federal Regulations (CFR) 70.1(d) and in conversations with the TACB staff that it's intent is to allow the states a reasonable range of options in program design and to allow the states to establish additional requirements not inconsistent with the FCAA. Future approval and full delegation of the federal Operating Permit Program will depend on, among other things, a predictable and stable fee base and on the consistency of the state's requirements with the federal rules. The staff has reviewed the testimony in light of these basic assumptions. TMOGA and EPNG objected to the use of all air contaminants in subsection (a) to determine applicability of the section, and TMOGA recommended the words "air pollutant" to replace "air contaminant" in sec.101.27(a). The agency's intent in this provision is for emissions of regulated pollutants to cause an account to become an "affected account" and for applicability of the section to be initiated or triggered. The staff agrees with the comments and has replaced "contaminant" with "pollutant" throughout subsection (a) and has reworded the subsection to indicate that regulated pollutants will trigger applicability. EPNG and TMOGA suggested that substances such as oxygen, nitrogen, water, carbon dioxide, hydrogen, methane, and ethane be excluded from the determination of applicability. Such an exclusion is reasonable and is consistent with a similar exclusion in 31 TAC sec.116.6(a)(1), concerning exempted facilities. TMOGA suggested that the TACB limit the use of fugitive emissions in determining applicability of the rule to those source categories listed in the prevention of significant deterioration rules. This suggestion is consistent with current EPA rules under 40 CFR 51.166(b)(1)(iii) and EPA proposed rules at 40 CFR 70 regarding the use of fugitive emissions in determining whether a source is major. The staff agrees that this limitation has historical basis, would allow the regulated community to focus resources on facilities more likely to be paying fees, and would not adversely impact revenue generation. Appropriate wording has been added to subsections (a) and (c) to state that fugitive emissions from the source categories listed at 40 CFR 51.166(b)(1)(iii) will be used for applicability determination purposes, but that once applicability for an account has been determined, all fugitives must be considered for fee calculations. Several commenters opposed the assessment of fees on pollutants listed in the FCAA, Title III, which are emitted from Title IV sources until completion of EPA's three-year study on the need to regulate such pollutants. The FCAA requires EPA to conduct a study, but there is no stated relationship between the federal study and the state's collection of fees. Since the purpose of the rule is to collect revenue to support implementation of the FCAA, these types of pollutants are a reasonable part of the basis for fees. The TACB's initial intent is to include all regulated pollutants. If EPA decides not to regulate certain pollutants, the TACB may delete them from applicability of sec.101.27. TMOGA requested that TACB define "account" using a "plant site" approach and restrict facilities at the account to those belonging to the same Standard Industrial Classification (SIC) Major Group. In this section, "account" is defined consistent with the definition in 31 TAC sec.101.24, concerning inspection fees, and is independent of SIC code designations. In general, an entire plant site is listed under one account regardless of the number of SIC codes represented within the plant site. TMOGA requested that TACB not group emissions sources which constitute a "long line operation" into one account for applicability purposes. The commenter appeared to be concerned with "pipe line" operations in this instance. The agency has not performed such a grouping in the past, and none is intended under this rule. EPNG suggested that grandfathered sources be assessed lower fees since they have paid fewer fees in the past. Also, the commenter suggested that, at purely grandfathered accounts, applicability be determined for individual units instead of "affected accounts" and that fees be based on emissions from those units only. A major purpose of the emissions fee is to support the FCAA, Title V, Operating Permit Program which, in effect, will eliminate grandfathered sources as a separate category. Fees from grandfathered (and other) sources will help fund the early, initial development of a state permitting program which must be approvable by EPA. This funding is independent of fees paid in the past and of prior permit status. EPNG opposed the assessment of fees for non-permitted sources. The commenter objected to payment of emissions fees in advance of the issuance of a Title V operating permit for presently grandfathered accounts. The TACB has the statutory authority under Senate Bill 2 to assess this fee on all affected accounts. The initial purpose of the rule is to collect revenue to support preparations to implement the FCAA and is independent of permit status. TMOGA requested a clarification of the term "common ownership and control" in the definition of account. The commenter appears concerned with the grouping of facilities of several corporate entities into one account because they are located on contiguous properties. That has not been done in the past and is not intended under this rule. A sentence has been added to subsection (a) to indicate that the TACB will not initiate a combination or separation of accounts solely for fee purposes. However, companies may request combinations or separations of accounts. Each account will be assessed an emissions fee or an inspection fee, if applicable. EPNG objected to the requirement in subsection (b) for the reporting of all air contaminants, instead of just regulated air pollutants, on the fee return form. The commenter argued that information on all air contaminants is unnecessary since fees will be assessed only on regulated pollutants. The staff agrees with the commenter's concerns and has reworded the appropriate sentence in subsection (b) to clarify that only regulated pollutants must be reported. The term "air pollutant" replaces "air contaminant" in this subsection, as requested by TMOGA. EPNG expressed confusion regarding use of the term "plant," used in place of the term "account," and attempted to argue that an account should not pay a full fee if only part of the account is in operation during the year. Since each year's fee is based on the emissions from the preceding calendar year, apparent disparities for partially operated accounts would average out over time. A partially-operated account which chooses to pay fees based on actual emissions will, in effect, pay a partial fee. The term "account" replaces "plant" in this subsection. EPNG, TCC, and SPS contended that partial emissions fees should be assessed if a facility is in operation during only part of a year. Subsection (b), as proposed, is consistent with sec.101.24, concerning inspection fees, regarding the requirement for fees to be paid if the account is operated as little as one day during the year. However, in effect, partial fees for an incomplete year of operation are assessed if actual emission levels are used as the basis for fee submittal for the partial year in question. The staff has reworded parts of subsection (b) to clarify and emphasize that fees are due and payable if the affected account operates at all during the year in question. EPA commented that exemption of an account which does not operate at any time during the year is appropriate if actual emissions are used, but not if allowable emissions are used to determine fees. The staff agrees with the essence of the comment since no emissions would be present if the account were not operated for the entire year. Many commenters requested that the TACB set the fees in subsection (c) at a level necessary to implement the program instead of the federally recommended $25 per ton. Some suggested the use of a phased-in fee assessment, increasing the fee each year as needed to implement the program. The staff supports the suggestion and recommends a fee rate of $3.00 per ton for fiscal year 1992 (FY- 92) with an increase to at least $5.00 per ton for FY-93 and $25 per ton for FY- 94. The staff has determined that an initial fee of $25 per ton would result in over-collection of revenue and that $3.00 per ton will support FCAA activities and program development during the first fiscal year. Inclusion of the rates for FY-93 and FY-94 indicates agency intent to phase-in higher fees, as needed, in the future. EPA contended that if the fee rate is not set at $25 per ton of regulated pollutants, then the state must show that a lesser amount is sufficient to fund an approvable operating permit program. In the future, documentation of sufficient funding will be needed when the state applies for program delegation. The emissions fee level by that time may be $25 per ton and could be higher. Maple Gas Corporation suggested a "floating fee level" based on the costs of administering the program for different types of sources. This approach would be very staff-intensive and would not be cost-effective. In addition, it would cause unacceptable uncertainties in the fee base and would make the determination of fee levels excessively complicated. ERCOT and TU Services suggested a two-phased fee system in which accounts would report fee-based emissions for TACB evaluation, and then the TACB would evaluate those emissions, determine program administration costs, and establish fee rates accordingly. In effect, the TACB is following a similar procedure. The agency will begin the fee program with a low initial fee rate and, through experience, will gain considerable knowledge of emissions levels and needed resources, and then will be able to set fees commensurate with resource requirements. However, precisely following the suggestion of TU Services would cause considerable delay in the establishment of the system and the receipt of fees by the agency. TMOGA, EPNG, HL&P, and Mobil Oil opposed the automatic adjustment of fee levels based on the Consumer Price Index (CPI). The staff has deleted the requirement for CPI adjustments. A CPI adjustment would serve no purpose during the first two or three fiscal years and will not be necessary until full staffing and resource levels are reached and maintained. LCRA objected to the inclusion of fugitive emissions in the determination of fees. The commenter contended that accurate emissions factors are not available which address a variety of parameters, such as estimated wind speed, material silt, moisture content, and vehicular traffic. Fugitive emissions are an important component of the overall contaminants emitted from an account. Fugitives from structures, process equipment, valves, lines, etc., must be considered in calculating emissions fees because, in many cases, there may be a very significant proportion of the total emissions. The staff, however, recognizes that in some cases, such as with the storage piles, emissions may be relatively less significant and more difficult to quantify. Consequently, fugitive emissions do not need to be calculated separately if emissions are in excess of 4,000 tons per year for that pollutant category. The proposed paragraph (2) of subsection (c) included a requirement for actual emissions, if used for fee calculations, to be verified by continuous emissions monitors (CEMs) for stacks and vents. Several commenters argued that actual emission rate data should be allowed through methods other than CEMs because many accounts lack CEMs for certain regulated pollutants and some pollutants can not be monitored by CEMs. The commenters recommended the use of approved emission factors, mass balances, fuel sampling and analysis, production/throughput records, and test data. The CEM requirement for stacks and vents has been relaxed by additional wording which would allow alternative verification, such as fuel usage, fuel analysis, or stack tests. This change allows verification by methods other than CEMs. Other wording changes in paragraph (2) clarify and emphasize the importance of complete documentation of an emissions inventory used for fee calculations. San Miguel opposed the requirement for CEM measurement of actual emissions at a permitted account if the permit (or other instrument) does not stipulate monitors. The use of actual emissions for purposes of fee assessment is optional under the rule. Permitted allowables may be used instead. Many commenters objected to a provision in paragraph (2) which would allow the executive director to lower permitted allowable emissions rates if allowables historically appear to be significantly greater than the actual emissions. As LCRA stated, this provision could penalize those accounts which have been able to decrease emissions well below permitted levels by using "cleaner" fuels or by adding controls voluntarily. Also, some commenters pointed out that electric utility accounts need the flexibility to buy the most cost-effective fuel available at any particular time and to accommodate fluctuations in demand by increasing generation to near maximum levels. EPNG contended that adjusting or revising a permit during fee review is procedurally improper and that such a revision should be provided in 31 TAC Chapter 116, under permit continuance. The provision, as proposed, was not intended to reduce or impair the operational flexibility needed by electric utility and similar accounts nor is the agency intending to revise a permit improperly. Wording has been added to clarify that the agency will "institute proceedings" to revise a permit in accordance with the provisions of the TACB procedural rules and with established agency practices concerning permit revisions. Any specific determined need to change permitted allowables will be discussed with the permit holder on a case-by-case basis prior to the initiation of appropriate proceedings. Some commenters requested that the agency not consider the lowering of allowables until a permit is reviewed for renewal at the end of five years under an operating permit. The five-year cycle for operating permits is not expected to begin for some time, considering that the state must obtain EPA approval and delegation of the program prior to the issuance of any permits. The intent of this provision is to allow the agency to take necessary action in a more timely manner. TMOGA suggested replacement of the term "justification" in paragraph (2) with the more appropriate term "explanation." The staff agrees with the commenter and has made this change. EPA suggested that appropriate wording be added to subparagraph (B) of sec.101. 27(c)(2) to require documentation of calculations as in subparagraph (A). The staff supports this change and has added appropriate wording to sec.101.27(c)(2) (B). Paragraph (3) of subsection (c) defines the term "regulated pollutant" for purposes of emissions fee determinations. Many commenters opposed the inclusion of carbon monoxide (CO) as a regulated pollutant claiming that such inclusion would be contrary to a provision in the FCAA and EPA's proposed program requirements. While CO is not included in FCAA provisions relating to emissions fees, states are not precluded from considering CO. Since the FCAA allows the states flexibility in the establishment of program requirements and CO clearly is a regulated pollutant, the staff continues to support that inclusion. Furthermore, EPA does not appear to have used any technical justification for excluding CO from the fee base. Mobil Oil opposed the inclusion of "... any other air contaminant subject to requirements under TACB rules, regulations, permits, orders of the board, or court orders" in the definition of regulated pollutant. The commenter contended that this broad area of air pollutants generally is beyond the scope of the FCAA and that the assessment of fees on such pollutants is unrelated to the recovery of costs of an operating permit program. This wording does expand the base of regulated pollutants somewhat. However, those pollutants which are subject to court orders and TACB rules, permits, and board orders definitely are "regulated" and will impact agency resources in the implementation of FCAA activities, including Title V requirements. The Air Force requested that each individual regulated pollutant be listed in sec.101.27(c)(3). The staff does not believe that inclusion of a list of specific regulated pollutants in the rule would serve a useful purpose. The guidelines provided by the rule should suffice in most cases and avoid the difficulties of maintaining and revising such a list within the rule. The term "pollutant" replaces the term "contaminant" in subsection (c), as discussed earlier. The Air Force contended that a due date of December 1, 1991 in subsection (d) would create fiscal problems for accounts which owe emissions fees higher than their inspection fees and have not budgeted for the increases in FY-92. The commenter recommended a due date of late 1992. Again, the initial phase of emissions fees must be implemented quickly so that the state may begin development of resources to carry out FCAA activities, such as an approvable operating permit program. The initial fees, however, are much less than the $25 per ton which was authorized. Consequently, the financial impact for accounts which have failed to budget for fees should not be significantly greater than for inspection fees. The due date originally proposed was set for December 1, but that date has become impractical since very little time will remain between the effective date of the rule and December 1, 1991. Since adequate time is needed for affected accounts to calculate fees, the due date has been delayed 45 days to January 15, 1992. The relaxed due date, along with the recommended phase-in of fees, should help alleviate the fiscal problems anticipated by the Air Force and others. San Miguel argued that sec.101.27 is unnecessary in that there is no requirement for the TACB to collect fees so soon, prior to receipt of program delegation. The need for minimal fees to support the early development of a permit program was addressed earlier in this discussion. Also, the same commenter objected to the prospect of being assessed fees based on permitted allowables since San Miguel does not have a verifiable emissions inventory for 1990 emissions. The commenter claims to have had no way of knowing that air emissions would be assessed quantity-based fees and, therefore, did not plan to evaluate possible emission reduction options or to install monitoring equipment. According to the commenter, the rule is unfair because San Miguel will be assessed fees based on allowable levels which likely are much higher than current levels of actual emissions. The proposed amendments to the FCAA were available in draft form at least as early as the beginning of 1989. Also, this agency circulated proposals in early 1991 and initiated a series of fee workshops, beginning on April 5, 1991. San Miguel had the same opportunity as the other electric utilities and their association, ERCOT, to review the congressional proposals and to revise budgets and enact emission reduction programs. The recommended phase-in fee schedule should help ease the burden of unanticipated costs. No comments were received on subsection (e). However, the staff has added a sentence to state that the provisions of sec.101.27 shall remain effective for unpaid fees and that unpaid fees remain a continuing obligation. The sentence is consistent with a similar provision of sec.101.24(d), regarding the nonpayment of inspection fees. The new section is adopted under the Texas Clean Air Act (TCAA), sec.382.017, Texas Health and Safety Code (Vernon 1990), which provides the TACB with the authority to adopt rules consistent with the policy and purpose of the TCAA. sec.101.27. Emissions Fees. (a) Applicability. The owner or operator of each affected account shall remit to the Texas Air Control Board (TACB) an annual emissions fee. An account subject to both an emissions fee and a TACB inspection fee, pursuant to sec.101.24 of this title (relating to Inspection Fees), is required to pay only the greater of the two fees. If the applicable inspection fee has been paid already, the account must remit the difference between the fees if the emissions fee is greater than the inspection fee. A separate and single emissions fee is required for each affected account each fiscal year. For purposes of this section, an account shall be defined consistent with sec.101.24. The TACB will not initiate the combination or separation of accounts solely for fee assessment purposes. All regulated air pollutants, as defined in subsection (c) of this section, including, but not limited to, those from emissions point and fugitive sources during normal operations (with the exception of hydrogen, oxygen, carbon dioxide, water, nitrogen, methane, and ethane) are used to determine applicability of this section. In accordance with rules proposed by the United States Environmental Protection Agency (EPA) at 40 Code of Federal Regulations (CFR) 70, concerning the use of fugitive emissions in major source determination, fugitive emissions shall be considered toward applicability of this section only for those source categories listed at 40 CFR 51.166(b)(1)(iii). For purposes of this section, an affected account shall have met one or more of the following conditions: (1) the account has the potential to emit 100 tons per year or more of any air pollutant; (2) the account has the potential to emit 50 tons per year or more of volatile organic compounds (VOC) and is located in El Paso, Hardin, Jefferson, or Orange Counties; or any other serious ozone nonattainment area; (3) the account has the potential to emit 25 tons per year or more of VOC and is located in Brazoria, Chambers, Fort Bend, Galveston, Harris, Liberty, Montgomery, or Waller Counties; or any other severe ozone nonattainment area; (4) the account emits 10 tons per year or more of a hazardous air pollutant, as defined in the Federal Clean Air Act (FCAA) Amendments of 1990, Title III; (5) the account emits an aggregate of 25 tons per year or more of the hazardous air pollutants, as defined in the FCAA Amendments of 1990, Title III; (6) the account is subject to the National Emission Standards for Hazardous Air Pollutants that apply to non-transitory sources; (7) the account is subject to New Source Performance Standards; (8) the account is subject to prevention of significant deterioration requirements; or (9) the account is subject to acid deposition provisions in the FCAA Amendments of 1990, Title IV. (b) Payment. Fees shall be remitted to the TACB Austin office in the form of a check or money order made payable to the Texas Air Control Board. A completed emissions fee form shall accompany fees remitted. The emissions fee form shall include at least the company name, property address, TACB account number, the allowable levels and actual emissions (if used) of all regulated air pollutants at the account for the reporting period, and the name and telephone number of the person to contact in case questions arise regarding the fee payment. If an affected account is operated for any part of a fiscal year for which the fee is assessed, a full emissions fee is due and payable. In the event that an affected account is not operational during the entire fiscal year for which the fee is assessed, an emissions fee is not due, pro- vided TACB is notified in writing that the account is not and will not be in operation. If an affected account commences or resumes operation later during the fiscal year, a full emissions fee will be due and payable prior to resumption of operations. The fiscal year is defined as the period from September 1-August 31. (c) Basis for fees. (1) The emissions fee shall be based on allowable levels and/or actual emissions at the account during the last full calendar year preceding the beginning of the fiscal year for which the fee is assessed. The fee for fiscal year 1992 is set at $3.00 per ton of regulated pollutants at the affected account, including, but not limited to, those emissions from point and fugitive sources during normal operations. Although certain fugitive emissions are excluded for applicability determination purposes pursuant to subsection (a) of this section, all fugitive emissions must be considered for fee calculations after applicability of the account has been established. The fee for fiscal year 1993 is set at a minimum of $5.00 per ton. The fee for fis- cal year 1994 and later years is set at a minimum of $25 per ton. A maximum of 4,000 tons of each regulated pollutant will be used for fee calculations. (2) The emissions tonnage for the account for fee calculation purposes will be the sum of those allowable levels and/or actual emissions for individual emission points or process units at the affected account, as follows. (A) Where there is an enforceable document, such as a permit or board order, establishing allowable levels, actual emissions may be used if a complete emissions inventory for the account is submitted with the fee payment. For stacks or vents, the inventory must include verifiable data based on continuous emission monitor measurements, other continuously monitored values, such as fuel usage and fuel analysis, or stack testing performed during normal operations using EPA approved methods and quality-assured by TACB. Actual emission rates may be based upon calculations for fugitives, flares, and storage tanks. Actual production, throughput, and measurement records must be submitted, along with complete documentation of calculation methods. Thorough justification is required for all assumptions made and factors used in such calculations. If the actual emissions rate submitted for fee purposes is less than 60% of the allowable emission rate, an explanation of the discrepancy must be submitted. The executive director shall consider and, where appropriate, may institute proceedings pursuant to sec.103.31 of this title (relating to Calling the Hearing) and established agency procedures to lower allowable emissions contained in a permit if the executive director determines that the allowable levels appear to be significantly greater than the actual levels demonstrated during the facility's operational history. Where inadequate or incomplete documentation is submitted, the executive director may direct that the fee be based on allowable levels. Where a complete and verifiable inventory is not submitted, allowable levels shall be used. (B) Where there is not an enforceable document, such as a permit or a board order, establishing allowable levels actual emissions shall be used. Actual production, throughput, or measurement records must be submitted along with complete documentation of calculation methods. Thorough justification is required for all assumptions made and factors used in such calculations. (3) For purposes of this section, the term "regulated pollutant" shall include any VOC, any pollutant subject to the FCAA, sec.111, any pollutant listed as a hazardous air pollutant under the FCAA, sec.112, each pollutant for which a national primary ambient air quality standard has been promulgated (including carbon monoxide), and any other air pollutant subject to requirements under TACB rules, regulations, permits, orders of the board, or court orders. The term "normal operations" shall mean all operations other than those reported to TACB in response to the requirements of sec.101.6 of this title (relating to Notification Requirements for Major Upset) or sec.101.7 of this title (relating to Notification Requirements for Maintenance). (d) Schedule. Fees shall be due annually on or before January 15. (e) Nonpayment of fees. Each emissions fee payment must be received by the due date specified in subsection (d) of this section. Failure to remit the full emissions fee by the due date shall result in enforcement action under the Texas Clean Air Act, sec.382.088 or sec.382.082. The provisions of this section as first adopted, and as amended thereafter for any subsequent year, are and shall remain in effect for purposes of any unpaid fee assessments, and the fees assessed pursuant to such provisions as adopted or as amended remain a continuous obligation. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 13, 1991. TRD-9114274 Lane Hartsock Deputy Director, Air Quality Planning Texas Air Control Board Effective date: December 5, 1991 Proposal publication date: July 5, 1991 For further information, please call: (512) 908-1451 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter L. Motor Fuels Tax 34 TAC sec.3.173 The Comptroller of Public Accounts adopts an amendment to sec.3.173, concerning refunds on gasoline and diesel fuel tax, without changes to the proposed text as published in the October 11, 1991, issue of the Texas Register (16 TexReg 5720). The amendment discusses refunds for school districts as well as for sellers who pay the tax on fuel and them make tax-free sales to school districts. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114356 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 11, 1991 For further information, please call: (512) 463-4028 Subchapter N. County Sales and Use Tax 34 TAC sec.3.252 The Comptroller of Public Accounts adopts new sec.3.252, concerning collection and allocation of county tax, without changes to the proposed text as published in the October 11, 1991, issue of the Texas Register (16 TexReg 5720). The new section provides guidelines on how to allocate county sales tax when a retailer does business in one or more local taxing counties or in counties with and without county tax. No comments were received regarding adoption of the new section. The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114360 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 11, 1991 For further information, please call: (512) 463-4028 Subchapter O. State Sales and Use Tax 34 TAC sec.3.284 The Comptroller of Public Accounts adopts an amendment to sec.3.284, concerning drugs, medicines, medical equipment, and devices, without changes to the proposed text as published in the October 11, 1991, issue of the Texas Register (16 TexReg 5721). The amendment incorporates changes to the Tax Code, sec.151.313, made by the 72nd Legislature, 1991. The other amendment states the comptroller's position on dental devices. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114359 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 11, 1991 For further information, please call: (512) 463-4028 34 TAC sec.3.294 The Comptroller of Public Accounts adopts an amendment to sec.3.294, concerning rental and lease of taxable items, with changes to the proposed text as published in the October 4, 1991, issue of the Texas Register (16 TexReg 5499). The amendment makes the changes to the Tax Code provided by earlier sessions of the legislature to such areas as transportation and installation charges and repair and remodeling labor. The amendment also states comptroller policy on damage waiver fees, assignment of lease payments when legal title to the property is transferred, and other charges related to rental and lease agreements. Changes were made by the comptroller to subsections (d)(2), (d)(4), and (f)(3) (C) for clarity. Subsection (d)(2) addresses the taxability of leased items damaged by the lessee that the lessee is required to purchase. Subsection (d)(4) adds charges for supervision to the list of taxable labor charges. Subsection (f)(3)(C) puts an out-of-state lessor on notice that the lessor is "engaged in business" in Texas when the lessor has rental receipts from tangible personal property located in Texas. Comments on the proposed amendment were received from Milgrim Thomajan & Lee in Austin. They first suggested that lessors be allowed to pay sales tax up front on the cost of the equipment to be leased. The comptroller declined to accept this suggestion without a change in the Tax Code. Milgrim Thomajan & Lee then took exception to the amendment to subsection (h) requiring bona fide loan agreements when leases are assigned as loan collateral. They felt that several administrative hearings had set policy on this question that could not be changed by rule. Comptroller personnel reviewed these hearings and replied that while the administrative law judges (ALJs) had found the assignments in the hearings to be loan collateral, none of the ALJs had set out conclusions of law that were inconsistent with the section amendment. The law firm then asked if the section would be applied retroactively or prospectively. The comptroller replied that for lease assignments signed after the effective date of the section, the section was prospective. For lease assignments in effect both before and after the amendment, the ALJs would accept whatever proof they deem appropriate to determine loan assignments. Regarding the law firm's comment about allowing a deduction of finance charges from the tax base if the charges are reflected on the lessor's books, the comptroller declined to make this change. The Tax Code, sec.151.007(c), allows certain amounts to be excluded from the tax base only when "identified to the customer by such means as an invoice, billing, sales slip, ticket, or contract." The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.294. Rental and Lease of Tangible Personal Property. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Financing lease. (A) A written lease contract containing either of the following provisions or conditions at the inception of the contract: (i) (No change.) (ii) an option to purchase the property at a nominal price is available to the lessee at the end of the lease (a price is nominal which is, at the time the contract is executed, estimated to be less than 10% of the fair market value of the property at the time the option is to be exercised). (B) A written lease contract containing either of the following provisions or conditions at the inception of the contract will be presumed to be a financing lease: (i) the lease term is equal to 75% or more of the estimated economic life of the property and the contract makes no provisions for the return of the property to the lessor. For used property, this section does not apply if the beginning of the lease term falls within the last 25% of the total estimated economic life of the lease property; or (ii) the residual value of the leased property is less than 10% of the property's fair market value at the inception of the lease and the contract makes no provisions for the return of the property to the lessor. (C) The presumption outlined in subparagraph (B) of this paragraph that the contract is a financing lease may be rebutted by showing that the contract is not merely a security device, that the property will be usable for its intended purpose at the end of the lease term, and that the lessor in good faith intends to reclaim possession of the property at the end of the lease term or to sell the property at the fair market value or to lease it for its fair market rental value. (2) Lease or rental-A transaction, by whatever named called, in which possession but not title to tangible personal property is transferred for a consideration. In this section, the words lease and rental are used interchangeably. (3) Operator-A person who actively guides, drives, pilots, or steers tangible personal property. A person who provides maintenance, repair, or supervision only is not an operator for the purposes of this section. (4) Operating lease-A lease contract which gives the lessee use of the leased property for a certain period. For the purposes of the sales and use taxes, a written contract in the legal form of a lease will be treated as an operating lease unless it meets the definition of a financing lease. All oral leases will be treated as operating leases. (b) Leases. Tax must be collected from the lessee on all charges contained in the lease unless the charge is separately stated and is nontaxable as provided by this section. See subsection (f) of this section for imposition of tax and time for reporting. (c) Tangible personal property leased with and without an operator. (1) Receipts from the lease of tangible personal property without an operator are taxable. (2) The furnishing of tangible personal property with an operator for which a single charge is made to the customer shall be presumed to be the performance of a service and no tax may be charged to the customer, unless the service is taxable under other provisions of the Tax Code, Chapter 151. Sales or use taxes will be due on the original purchase price of the tangible personal property. (A) The presumption set forth in subsection (c)(2) of this section may not be rebutted solely by one party to the transaction. The presumption may be rebutted by the following criteria which establish a lease of tangible personal property: (i) the customer exercised direct control or supervision over the operator of the tangible personal property; and (ii) the intent of the agreement was to lease a piece of tangible personal property and separately furnish an operator. (B) If it is established that a lessor who made a single charge to customers did in fact make a lease of tangible personal property, the tax will be due on the fair market rental value of the tangible personal property. If this cannot be determined, the tax will be due on the total charge reduced by the charge attributable to the operator determined from lessor's records. If the charge for the operator cannot be determined from the lessor's records or if it seems unreasonable, the comptroller will make a determination of a reasonable operator charge. (3) A transaction in which tangible personal property is furnished with an operator, and the customer is charged separately for tangible personal property and operator, shall be presumed to be the lease of tangible personal property and the separate furnishing of an operator; the receipts from the separate charge for the tangible personal property are taxable. The separate charge for the operator will not be taxable unless a taxable service is being provided. (A) If a nontaxable service is being provided and it is established that the separate charge for the lease of tangible personal property is lower than the tangible personal property's fair market rental value, sales tax will be assessed on the fair market rental value unless the lessor presents convincing evidence to the comptroller as to why the rental charge should be lower than fair market rental value. (B) If it is established that a lessor who separated charges for tangible personal property and operator nevertheless used the tangible personal property to perform a service, sales tax will be assessed on the fair market rental value if the property was purchased under a valid resale certificate. See subsection (i) of this section. (d) Other charges related to lease agreements. Operating and financing lease agreements and related billings may contain a variety of charges in addition to the basic rental/lease charges, including charges that occur subsequent to the rental. All charges related to a lease agreement are taxable unless excluded from tax by this section. Some of these charges and their tax consequences are as follows. (1) Separately stated charges for labor or services rendered in installing, applying, remodeling, servicing, maintaining, or repairing the item being leased are subject to tax. (2) Damage waiver fees are subject to tax. A charge after the rental for repair to the damaged rental item is subject to tax as a taxable service. See sec.3.292 of this title (relating to Repair, Remodeling, Maintenance, and Restoration of Tangible Personal Property). Charges for items destroyed or lost by a lessee are not taxable. However, if a lessee is required to purchase an item damaged by the lessee, the charge for the damaged item is taxable. (3) All transportation charges billed by the lessor to the lessee related to the leased property are taxable. Charges for transportation billed directly to the lessee by third-party carriers are not taxable. See sec.3. 303 of this title (relating to Transportation and Delivery Charges). (4) Charges in the lease agreement for labor, such as charges for supervision, set-up, hook-up, assembly or disassembly, erection, and dismantling, are included in the lease price and are taxable. (5) A charge imposed for the early termination of the lease is included in the lease price and is taxable. (6) Under an operating lease, any interest charges will be taxable whether or not separately stated unless the interest charge is clearly imposed for late payment or other defaults under the lease. (7) Under a financing lease, charges for interest by the lessor to the lessee will be taxable unless the rate of interest or the actual interest charged is separately stated in a contract, invoice, billing, sales slip, or ticket to the customer. (e) Tangible personal property rented for use on residential and nonresidential jobs. (1) Persons renting equipment for use in the performance of contracts to construct new nonresidential real property or to construct, repair, or remodel residential real property owe tax to the equipment rental company. Tax may not be collected from their customers on a separately stated charge for this reimbursable expense item even if the equipment charges to the customer are separately stated from operator charges. See sec.3.291 of this title (relating to Contractors). (2) Persons renting equipment for use in the performance of contracts to repair or remodel nonresidential real property owe tax to the equipment rental company. Tax must also be collected from their customers on the total charge for the job including the amount paid for the equipment rental. (3) When both remodeling and new construction are being performed under the same contract, the tax to be collected from customers on the rental charges should be determined as provided by sec.3.357(b) (7) of this title (relating to Real Property Repair and Remodeling). (f) Imposition of taxes; time for filing; credits. (1) Leases subject to sales tax. (A) An operating lease executed while the property is within the state is subject to sales tax. Tax will be due on the total lease amount for the entire term of the lease regardless of where the property is used if the lessee takes delivery in the state. Any renewal of the contract, extensions, or options exercised while the tangible personal property is outside the state will not be subject to Texas tax unless the property reenters the state. (B) A financing lease executed while the property is within the state is subject to sales tax if the lessee takes delivery in the state. Tax will be due on the total amount of the contract regardless of where the property received in Texas is used during the lease. (2) Leases subject to use tax. Property brought or shipped into the state for use under the terms of a financing lease or an operating lease will be presumed to be subject to use tax. See sec.3.346 of this title (relating to Use Tax). The use tax will be due on the lease price for the entire term of an operating lease regardless of where the initial contract was executed. Credit will be allowed against any sales or use tax legally imposed and paid to another state. See sec.3.340 of this title (relating to Multistate Tax Credits). (3) Method and time for filing reports. (A) Under an operating lease, a lessor must report the rental charges in the period in which they are considered income under the lessor's method of reporting. Under the accrual method of reporting, the rental charges are considered income when the lease amount becomes due under the rental agreement. If the lessor does not collect the tax, the lessee must report the tax in the period in which each lease amount becomes due under the rental agreement. (B) Under a financing lease, the lessor must collect all tax due under the lease at the time the lessee takes possession of the property or when first payment is due from the lessee, whichever is earlier. Tax must be reported on or before the 20th day of the month following the reporting period in which the tax is collected. If the lessor does not collect the tax, the lessee must report the tax due when the lessee takes possession of the property or when first payment is due, whichever is earlier. (C) An out-of-state lessor deriving rental receipts from tangible personal property located in Texas is engaged in business in Texas and is required to collect Texas use tax. Under an operating lease, the use tax must be reported by the lessee if the lessor fails to collect it. The tax must be reported by the lessee based upon the lessee's accounting method used for regular books and records. Under a financing lease, the use tax must be reported by the lessee when the lessee takes possession of the property or when the first payment is due, whichever is earlier. (g) Sales of leased property under operating leases; credit allowed. (1) When a lessee buys the property that the lessee was renting under the terms of an operating lease and the lessor allows credit against the sales price for all or part of the lease payments previously made by the lessee on the same property, tax is not due on the amount allowed as credit if the lessor has collected and remitted tax on the prior rental payments. The lessor must collect the tax on the balance of the sales price based on its method of accounting for sales and use tax purposes. (2) When the lessor sells property to a third party who was not the lessee of that property and allows the third party credit against the sales price for all or part of the lease payments previously made by the former lessee, tax may not be refunded on the amount allowed as credit. The lessor must also collect and report the tax on the sales price of the property to the third party based on its method of accounting for sales and use tax purposes. (h) Assignment of lease payments under operating leases. A lessor may factor or assign to a third party the lessor's right to receive all lease payments due under the agreement with the lessee. At the time the lease agreement is factored or assigned, tax is due on all lease amounts not yet reported. The lessor is responsible for reporting the tax to the comptroller's department in the report period the lease agreement is assigned or factored. No deduction in the amount of tax due and payable by the lessor is allowed if a transfer at a discount is made to a third party. No tax liability is incurred by the purchaser of the lease agreement. This section does not apply to the pledge of lease contracts by a lessor to a third party as loan collateral under the terms of a bona fide loan agreement. (i) Assignment of lease payments and property under operating leases. A lessor may assign to a third party the lessor's right to receive all lease payments due under an agreement with the lessee and, in the same transaction, transfer title to the property covered by the lease. At the time the operating lease contract is assigned and title to the property is transferred to the third party, the third party purchaser must begin collecting and remitting tax on the full amount of the taxable rental charges remaining in the lease. The third party purchaser may issue a resale certificate to the lessor as provided by subsection (j) of this section. Tax must be reported by the third party purchaser as provided by subsection (f)(3)(A) of this section. (j) Sales for resale; resale certificates. (1) The purchaser of property which is to be held for lease within the United States of America, its territories and possessions, may issue a resale certificate in lieu of the sales or use tax at the time of purchase. However, if the lessor subsequently uses the property in any manner other than the leasing of it, or display or demonstration of it, the lessor becomes liable at the time of the use for sales tax based on the fair market rental value for the period of time used. The fair market rental value is the amount that a lessee would pay on the open market to rent the item for use. If the fair market rental value of the property cannot be ascertained, tax is due on the original purchase price of the property. (2) At any time, the lessor using the property purchased under a resale certificate may stop paying tax on the fair market rental value and instead pay sales tax on the original purchase price. When the lessor elects to pay sales tax on the purchase price, credit will not be allowed for taxes previously paid on the fair market rental value. See sec.3.285 of this title (relating to Resale Certificate; Sales for Resale). (3) A resale certificate may be issued by a retailer for a repair or replacement part to be placed on a motor vehicle to be rented under the provisions of the Tax Code, Chapter 152. A resale certificate may not be issued for repair or replacement parts for leased vehicles. In this paragraph, the terms "rental" and "lease" are defined by the Tax Code, Chapter 152, rather than by subsection (a)(2) of this section. (k) Lease of real property with tangible personal property. (1) If a contract for the lease or rental of real property includes the lease or rental of tangible personal property (such as furniture) as part of the agreement, no sales tax is due on the amount charged the tenant for the lease or rental of the tangible personal property. A resale certificate may not be issued and sales or use tax must be paid at the time the tangible personal property is purchased. (2) Sales or use tax is due on the separate lease or rental of tangible personal property by a person or entity not owning or managing the real property in which the tangible personal property is or will be situated. A resale certificate may be issued in lieu of paying the tax at the time of purchase of the tangible personal property for subsequent lease or rental. (l) Other taxes. For information pertaining to tax on motor vehicle rental receipts, refer to sections promulgated under the Motor Vehicle Sales and Use Tax Act. (m) Local tax. For proper collection and allocation of city and transit sales taxes, see sec.3.374 of this title (relating to Imposition of the Sales Tax; Collection by Retailer; Bracket System Formula; Determining City Tax) and sec.3. 424 of this title (relating to Imposition of Sales Tax). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114402 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 4, 1991 For further information, please call: (512) 463-4028 34 TAC sec.3.338 The Comptroller of Public Accounts adopts an amendment to sec.3.338, concerning allowance of credit for tax paid to suppliers, with changes to the proposed text as published in the September 13, 1991, issue of the Texas Register (16 TexReg 5057). The amendment reflects differences between credits for tax paid to suppliers by sellers, persons providing taxable services, and contractors. The paragraphs under subsection (b) have be renumbered due to a numbering error in the proposed version of the rule. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.338. Allowance of Credit for Tax Paid to Suppliers. (a) Sellers, taxable service providers, and persons other than contractors. (1) Except as provided in paragraphs (2) and (3) of this subsection, credit may be claimed on the purchaser's return for tax paid to suppliers if the taxable items were resold prior to making a taxable use of the items. See sec.3. 285 of this title (relating to Resale Certificate; Sales for Resale). (A) Before taking credit on a return, the taxpayer must have a receipt from a Texas retailer or other seller authorized to collect the Texas sales and use tax. The receipt must reflect the tax paid and the selling price of the taxable items. (B) Credit may be claimed on a return for a later reporting period or by filing an amended return for the reporting period in which the tax was accrued and paid in error. (2) Credit may not be claimed on a purchaser's return for tax paid to a supplier on items on which tax is not due or at rates in excess of the rate that the supplier is required to pay. The tax must be recovered from the seller. (3) Tax paid to a supplier on taxable items which the purchaser does not resell may not be claimed as a credit on the purchaser's return. Such tax must be recovered from the seller. The following are examples. (A) Tangible personal property necessarily used or consumed during an actual manufacturing, processing, or fabricating operation is not "resold" when the end product of the manufacturing process is itself sold. Therefore, tax paid on tangible personal property which is subsequently used or consumed in an actual manufacturing, processing, or fabricating operation may not be claimed as a credit on the purchaser's (manufacturer's) return. (B) Wrapping, packing, or packaging materials used for the purpose of expediting or furthering in any way the sale of tangible personal property is not "resold" when the tangible personal property is itself sold. Therefore, tax paid on the wrapping, packing, or packaging materials may not be claimed as a credit on the purchaser's return. (4) Local sales and use tax credit may also be claimed but only when the tax paid to the supplier was for the same local taxing jurisdiction to which the taxpayer (purchaser) is required to remit tax. Local sales or use tax paid to a supplier in a local taxing jurisdiction other than the one in which the taxable items are subsequently resold must be recovered from the supplier. Local tax due the same local taxing jurisdiction may be reduced by the amount of previously paid tax. (b) Credit for tax paid to suppliers by certain contractors and repairmen. For the definition of contractor and separated contracts, see sec.3.291 of this title (relating to Contractors). (1) A contractor improving real property under a separated contract may claim credit on the contractor's return for Texas sales and use tax paid to a supplier on taxable items incorporated into the property being improved. No credit may be taken on the contractor's return when no sales or use tax liability is incurred in the subsequent incorporation of the taxable items into real property. For example, no sales or use tax liability is incurred when the contract is with an exempt organization. Therefore, tax paid to a supplier for taxable items may not be claimed as a credit on the contractor's return. (2) Local sales and use tax credit may also be claimed but only when the tax paid to the supplier was for the same local taxing jurisdiction to which the contractor is required to remit tax. Local sales or use tax paid to a supplier in a local taxing jurisdiction other than the one in which the taxable items are subsequently resold must be recovered from the supplier. Local tax due the same local taxing jurisdiction may be reduced by the amount of previously paid tax. (3) Credit for tax paid to supplier will be limited to the amount of tax otherwise due to be reported by the contractor on the subsequent incorporation of the same tangible personal property on which tax was paid to the supplier into real property upon which an improvement is performed. (4) Before taking credit on the contractor's return, the contractor must have receipts from a Texas retailer or other seller licensed to collect the Texas sales or use tax. The receipt must reflect the tax paid and the selling price of the taxable items. (5) Credit may be claimed on a return for a later period or by filing an amended return for tax accrued and paid in error by the contractor. (c) Responsibilities of persons repairing motor vehicles and private aircraft. For details on the tax responsibilities of persons repairing motor vehicles and private aircraft, see sec.3.359 of this title (relating to Motor Vehicles and Private Aircraft). Persons repairing motor vehicles and private aircraft may claim credit on their returns for tax paid to suppliers only if the repairs are performed under separated contracts. (d) Effect of ruling on taxpayer's rights to other deductions. Nothing in this section shall be construed as limiting the taxpayer's right to the deductions for bad debts, repossessions, returned sales, or renegotiated selling price as provided in the statutes or other sections. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114403 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: September 13, 1991 For further information, please call: (512) 463-4028 34 TAC sec.3.356 The Comptroller of Public Accounts adopts an amendment to 3.356, concerning real property service, with changes to the proposed text as published in the October 4, 1991, issue of the Texas Register (16 TexReg 5502). An amendment is needed to put businesses on notice as to the comptroller's definition and responsibilities of management companies. In addition, the amendment adds an exemption from the tax for landscaping and yard maintenance charges performed by individuals 65 years old or older who have total receipts for these services of $5,000 or less for the four most recent quarters. Definitions of temporary help services, which have been exempted from the tax, have been added. Language in the resale subsection (c) has been reworded for clarity or to conform to other sections. Subsection (k) has been amended to reflect the change in the application of local sales and use tax to garbage or solid waste removal services. A portion of subsection (i)(3) has also been revised to change the examples of unrelated services which may be excluded from the tax base. Other changes and additions reflect comptroller policy. The additional exemptions took effect October 1, 1989, by action of the 71st Legislature, 1989. The changes to the proposed amendment were made to subsection (a)(3)(C)and (E) . The citations were changed to reflect the new cites in the Health and Safety Code. Comments on the amendments were received from Lone Star Energy of Dallas. Lone Star Energy felt that the amendment to the section created an arbitrary distinction between companies managing rental properties and companies managing other properties for the purpose of imposition of sales tax on real property services. Lone Star Energy felt that companies managing property other than rental property should be allowed to separate charges for taxable services from charges for unrelated nontaxable services and collect sales tax only on the charges for taxable services. Lone Star Energy felt that the section should be amended further to allow specifically for the exclusion of these nontaxable charges. The comptroller declined to accept the suggestion that the definition of management companies be broadened to include all property managers. The comptroller did point out, however, that subsection (i), covering unrelated services, already accomplishes what Lone Star Energy requested, i.e., the separation of taxable from nontaxable charges and tax being due on only the taxable portion. The comptroller declined to further elaborate on this subject in this section. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. sec.3.356. Real Property Service. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Employee-A person providing services for another for consideration where the employer has the right to control and direct the employee in the material details of how the work is to be performed, both under the contract of employment and in fact. The term also includes personnel provided by a temporary help service, as defined in paragraph (10) of this subsection. (2) Employer-In determining which of several persons is the employer of an individual, factors which will be considered include: (A) who exercises direct control over the details of how the work is performed by the employee; (B) who pays the employee's salary; (C) who withholds applicable federal taxes from the employee's salary; (D) who provides employment-related benefits such as health insurance, eligibility to participate in a retirement plan, sick leave, vacation, etc., to the employee; and (E) who has the right to terminate the employment of the individual employee. (3) Garbage or other solid waste-Waste; refuse; sludge from a waste treatment plant, a water supply treatment plant, or an air pollution control facility; and other discarded material, including solid, liquid, semisolid, or contained gaseous material, resulting from residential, industrial, municipal, commercial, mining, and agricultural operations, and resulting from community and institutional activities. The term does not include any of the following: (A) solid or dissolved material in domestic sewage; or solid or dissolved material in irrigation return flows; or industrial discharges subject to regulation by permit issued pursuant to the Texas Water Code, Chapter 26; (B) waste materials which result from activities associated with the exploration, development, or production of oil, gas, geothermal resources, or any other substance or material regulated by the Railroad Commission of Texas pursuant to the Natural Resources Code, sec.91.101; (C) any waste which requires specific licensing under the Health and Safety Code, Chapter 401, and the rules adopted by the Texas Board of Health under that law, which for the purposes of this section shall be referred to as radioactive waste; (D) hazardous waste, as identified or listed as a hazardous waste by the administrator of the United States Environmental Protection Agency or by other appropriate federal or state agency; or (E) industrial solid waste, as that term is defined in the Health and Safety Code, Chapter 361, with the exception of industrial solid waste which meets the definition of garbage or municipal solid waste. (4) Landscaping-The activity of arranging and modifying areas of land, natural scenery, and other areas, such as indoor or outdoor patios, for aesthetic effect, considering the use to which the land is to be put. The term includes adding, removing, or arranging natural forms, features, and plantings, including vegetation, and other features to fulfill aesthetic requirements. It includes the application of soil, soil additives, and amendments to prepare or maintain the planting area. Some examples are garden planting or maintenance, arborist services, ornamental bush or shrub planting, tree planting or removal, tree surgery, pruning or spraying, and lawn sodding. The term does not include the addition of sprinkler systems, retaining walls, ponds, pools, or fences, or other construction activities or services provided by landscape designers or landscape architects such as consultation, research, preparation of general or specific design or detail plans, studies, specifications, or supervision, or any other professional services or functions within the definition of the practice of engineering or architecture. Landscaping services performed by landscape designers or landscape architects are taxable. (5) Lawn and yard maintenance-Mowing, trimming, fertilizing, watering, and any other treatment or service which may be performed on private or commercial yards or lawns. It also includes maintenance of trees and plants whether inside or outside a building. The term does not include clearing land for buildings, power line rights-of-way, pipeline rights-of-way, or maintenance on land belonging to a governmental entity when the service is required by the governmental entity. (6) Property management company-A person who, for consideration, operates and manages all the activities at a property held by the owner for purposes of rental, such as: an office building, mall or other retail or office complex, an apartment complex, duplex, or home. In the context of this section, the responsibilities of a property management company must include, but are not limited to, securing tenants, hiring and supervising employees for operation or upkeep of the property, receiving and applying revenues, and incurring and paying expenses derived from the operation of the property as directed by the owner. The term does not include a person performing taxable services at a manufacturing facility or at a property held by the owner for purposes other than rental. (7) Residential or nonresidential building or grounds cleaning, janitorial, or custodial services-The activities of keeping the inside and outside premises of a building clean, orderly, and functional, including performing minor adjustments, maintenance, or repairs. Examples include, but are not limited to: window washing; floor, wall, and ceiling cleaning; collection of waste on the premises, whether from inside a building or on the grounds; chimney or duct cleaning; lighting maintenance, such as bulb and fuse replacement; the cleaning, disinfecting, and restocking of restrooms or lounge areas; cleaning or washing sidewalks, parking garages, or parking lots; and pool cleaning and maintenance. The term does not include activities such as painting; wallpapering; or performing significant repairs; nor domestic services such as those of a baby- sitter, maid, or cook employed by a private household to provide domestic services for the benefit of the household. (8) Structural pest control services-Activities performed for the purpose of identifying, preventing, controlling, or eliminating, by use of chemical or mechanical means, infestation of any of the following: (A) insects, spiders, mites, ticks, ants, bees, and other related pests, wood infesting organisms, rodents, weeds, nuisance birds, or any other obnoxious or undesirable animals which may infest households, railroad cars, ships, docks, trucks, airplanes, or other structures or their contents; (B) pests or diseases of trees, shrubs, or other plantings in a park or adjacent to a residence, business establishment, industrial plant, institutional building, or street; and (C) the term "structural pest control services" includes related activities, such as inspection or evaluation concerning the nature or extent of an infestation; reports; or performance of services to control pest or insect infestation. (9) Surveying of real property-Activities performed to determine or confirm the boundaries of real property, or to determine or confirm the location of structures or other improvements in relation to the boundaries of the property by the use of relevant elements of law, research, measurement, analysis, computation, mapping, and land description. Examples include, but are not limited to, boundary recovery, residential surveying, lot surveying, title surveying, as-built title surveying, and right-of-way surveying. The term does not include activities performed after taxable surveying has been completed to search the surveyed area for items of archaeological or historic significance. (10) Temporary help service-An individual, company, or corporation covered by Industry Group 7363, Group 736, Major Group 73 of the Standard Industrial Classification Manual, 1989, and includes an individual, company, or corporation that supplies personnel on a temporary basis to supplement a customer's existing work force. In the context of this section, such temporary personnel must perform a service that is normally performed by the customer's own employees; the customer must provide all supplies and equipment necessary; and the temporary personnel must be under the direct or general supervision of the customer to whom the help is furnished. (b) Responsibilities of persons providing real property services on both residential and nonresidential real property. With the exception of terms defined by subsection (a)(6) and (10) of this section, persons providing services defined in subsection (a) of this section are performing real property services. Persons performing real property services must obtain a tax permit and collect and remit sales or use taxes on all charges for real property services. (c) Resale certificates. (1) A properly completed resale certificate may be used to purchase tangible personal property tax free if the care, custody, and control of the property is transferred to the customer as part of the real property service. For example, a taxpayer purchases paper products to be left at the customer's premises when providing janitorial services, or garbage dumpsters to leave on the customer's premises as a part of the garbage collection service. Taxpayer may purchase the paper products and dumpsters tax free by issuing a resale certificate. Tax is due on the total amount charged the customer, including amounts for the paper products, dumpster, and for the services. (2) A properly completed resale certificate may be issued for a service if the buyer intends to transfer the service as an integral part of a taxable service. A service will be considered an integral part of a taxable service if the service purchased is essential to the performance of the taxable service and without which the taxable service could not be rendered. See sec.3.285 of this title (relating to Resale Certificate; Sales for Resale). (3) A properly completed resale certificate may be issued to purchase a taxable service tax free if the buyer intends to incorporate the service into tangible personal property which will be resold. If the entire service is not incorporated into the tangible personal property, it will be presumed the service is subject to tax and the service will only be exempt to the extent the buyer can establish the value of that portion of the service actually incorporated into the tangible personal property. If the buyer does not intend to incorporate the entire service into the tangible personal property, the buyer may not issue a resale certificate but he may claim credit at the time of sale of the tangible personal property for the portion of the service that was actually incorporated into the tangible personal property. (d) Exemption certificates. Persons providing real property services may accept a properly completed exemption certificate in lieu of tax when the service is purchased by an exempt entity. See sec.3.322 of this title (relating to Exempt Organizations), sec.3.287 of this title (relating to Exemption Certificates) and sec.3.288 of this title (relating to Direct Payment Procedures and Qualifications). (e) Landscaping, lawn, and yard maintenance provided by persons under 18 years old or by persons 65 years old or older. Charges for the performance of landscaping, lawn, and yard maintenance services (subsection (a)(4) and (5) of this section) are exempt if performed by: (1) a self-employed person under 18 years of age whose total receipts from providing landscaping, lawn, or yard maintenance are $1,000 or less during either the preceding calendar quarter or the same calendar quarter of the preceding year; or (2) an individual 65 years of age or older whose total receipts from providing landscaping or yard maintenance are 5, 000 or less for the four most recent quarters. (f) Landfill charges connected with garbage collection services. Persons providing garbage collection services may not separate in the bill to their customers the charge for garbage collection from the charge for use of the landfill for the purpose of reducing the amount upon which tax must be collected. The charge paid by the service provider for access to the landfill, while not taxable to the service provider, is a necessary expense in providing the garbage collection service and is not excludable from the fee to the service provider's customer for garbage collection. (g) Garbage removal facilities. When a city, county, or any other entity provides a facility where garbage may be left and which will, at another time, be moved to a landfill, the fee charged to persons depositing garbage into such a facility is considered to be a charge for garbage collection and is taxable. (h) Garbage collection services that may be excluded from tax. Persons providing collection services for customers having waste excluded from the definition of "garbage or other solid waste" may accept an exemption certificate from the customer in lieu of tax. The exemption certificate must state the type of waste being excluded, and that either the waste to be collected is totally excludable or that the customer has both taxable and nontaxable waste and the customer will be responsible for accruing tax on that portion of the charge which represents taxable services. The customer may use any reasonable allocation for reporting tax on taxable services which is supportable by books and records. (i) Unrelated services. (1) A service will be considered as unrelated if: (A) it is not a real property service, nor a service or labor taxable under another provision of the Tax Code, Chapter 151; (B) it is not provided as a part of the taxable service and is of a type which is commonly provided on a stand-alone basis; and (C) the performance of the unrelated service is distinct and identifiable. Examples of an unrelated service which may be excluded from the tax base include maintenance charges meeting the definition in sec.3.357 of this title (relating to Real Property Repairs and Remodeling), engineering studies, and architectural or landscaping designs. (2) When nontaxable unrelated services and taxable services are sold or purchased for a single charge and the portion relating to taxable services represents more than 5.0% of the total charge, the total charge is presumed to be taxable. The presumption may be overcome by the service provider at the time the transaction occurs by separately stating to the customer a reasonable charge for the taxable services. A customer may presume that a separately stated charge from a service provider for taxable services is reasonable, in the context of this section. The service provider's books must support the apportionment between exempt and nonexempt activities based on the cost of providing the service or on a comparison to the normal charge for each service if provided alone. If the charge for exempt services is unreasonable when the overall transaction is reviewed, considering the cost of providing the service or a comparable charge made in the industry for each service, the comptroller will adjust the charges and assess the service provider the additional tax, penalty, and interest on the taxable services. (3) Charges for services or expenses directly related to or incurred while providing the taxable service are taxable and may not be separated for the purpose of excluding these charges from the tax base. Examples include charges for meals, telephone calls, hotel rooms, or airplane tickets. (j) Governmental entities. When garbage collection services are provided by a governmental entity without a specific charge being assessed, such as when this service is provided as a basic part of services funded by a tax or a set fee structure of the governmental entity, sales or use taxes are not due. This section does not apply if the fee changes each billing period based on quantity of consumption of tangible personal property or service provided individual service recipients. (k) Local taxes. With the exception of garbage or other solid waste removal services, local sales and use taxes apply to services in the same way as they apply to tangible personal property. Generally, service providers must collect local sales taxes if their place of business is within a local taxing jurisdiction, even if the service is actually provided at a location outside that jurisdiction. However, transit sales taxes do not apply to services provided outside the boundaries of the transit area. If the service provider's place of business is outside a local taxing jurisdiction but the service is provided to a customer within a local taxing jurisdiction, local use taxes apply and the service provider is required to collect them. Local taxes for garbage or other solid waste removal services are allocated to the local taxing jurisdiction in which the garbage or other solid waste is located when its collection or removal begins. (1) For general information on the collection and reporting responsibilities of providers and purchasers of taxable services, see sec.sec.3.286, 3.374, 3.375, 3.424, and 3.425 of this title (relating to Seller's and Purchaser's Responsibilities; Imposition of the Sales Tax; Collection by Retailer; Bracket System Formula; Determining City Tax, Administration of Use Tax; Collection by Retailer, Imposition of Sales Tax, and Administration of Use Tax; Imposition and Collection). (m) Use tax. If a seller of a taxable service is not doing business in Texas or a specific local taxing jurisdiction and is not required to, or does not voluntarily, collect and report the applicable Texas tax, it is the Texas customer's responsibility to report and pay the use tax directly to this office. (n) Property management companies. (1) Employees permanently assigned to one rental property are considered employees of that property when the property manager is reimbursed by the property owner on a dollar-for-dollar basis. On managed rental properties, the employees remain assigned to the property while employed by successive owners or management companies. The reimbursement charge for taxable services performed on a managed rental property by management company employees assigned to it will not be taxable. However, if these same employees provide real property services for other properties, the property manager must collect tax on the total charge for those services. The management company owes tax on the purchase price of all taxable items purchased and provided to the employees providing services on managed rental property. (2) Property management companies whose employees provide taxable services as part of their overall management and operation of a rental property need not collect tax on those services if their value is insignificant. (A) Such taxable services will be considered insignificant in any billing period in which their value is 5.0% or less of the amount charged by the management company for services. The amount charged by the management company for taxable services is to be determined by deducting from the management company's total charge any mortgage payments made by the management company for the property owner and any amounts paid to persons other than employees of the management company for goods and services. (B) If the value of the taxable services exceeds the 5.0% limit, the entire amount charged by the management company will be considered taxable unless charges for taxable services are separately itemized and taxed. (3) Purchases by the property management company for use by the property owner of taxable goods, labor, or services from third-party suppliers may be handled in either of the following ways: (A) the management company may issue a resale certificate to the supplier and collect tax from the property owner on the itemized charge for the goods, labor, or service; or (B) the management company may pay tax to the supplier and collect from the property owner an amount equal to the total of the amount paid by the management company for the goods, labor, or services and the tax paid. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114400 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 4, 1991 For further information, please call: (512) 463-4028 Subchapter P. Municipal Sales and Use Tax 34 TAC sec.3.374 The Comptroller of Public Accounts adopts an amendment to sec.3.374, concerning imposition of the sales tax; collection by retailer; bracket system formula; determining city tax, without changes to the proposed text as published in the October 11, 1991, issue of the Texas Register (16 TexReg 5722). Subsections of the section were rewritten for clarity. Subsections were also added concerning allocation of city tax imposed on telecommunications services, amusement, garbage, and cable television services. The "bracket formula" was deleted from the section. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114358 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 11, 1991 For further information, please call: (512) 463-4028 Subchapter R. Transit Sales and Use Tax 34 TAC sec.3.424 The Comptroller of Public Accounts adopts an amendment to sec.3.424, concerning imposition of sales tax, without changes to the proposed text as published in the October 11, 1991, issue of the Texas Register (16 TexReg 5724). Subsections were deleted which did not pertain to the allocation of transit sales tax. The bracket formulas were also deleted. Subsections were also added concerning allocation of transit sales tax imposed on telecommunications services, garbage, and cable television services. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 15, 1991. TRD-9114357 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: December 6, 1991 Proposal publication date: October 11, 1991 For further information, please call: (512) 463-4028 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 49. Child Protective Services Subchapter F. Release Hearings 40 TAC sec.49.601, sec.49. 603 The Texas Department of Human Services (DHS) adopts amendments to sec.49.601 and sec.49.603. The amendment to sec.49.601 is adopted with changes to the proposed text as published in the August 6, 1991, issue of the Texas Register (16 TexReg 4277). The amendment to sec.49.603 is adopted without changes text and will not be republished. The justification for the amendments is to change DHS's rules concerning hearings involving suspected abuse and neglect of children. The term DHS now uses for these hearings is "release hearings" instead of "expunction hearings." DHS also is adopting related amendments in Chapters 79 and 85 in this issue of the Texas Register. The sections as amended will function by containing current terminology in DHS's rules concerning abuse and neglect of children. No comments were received regarding adoption of the amendments; however, DHS is adopting sec.49.601 with a change to clarify the definition of release hearing to be consistent with the definition in DHS's Chapter 79, Legal Services. The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. sec.49.601. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Release hearing -An administrative hearing provided under the Administrative Procedure and Texas Register Act, Texas Revised Civil Statutes, Article 6252- 13a, to give an opportunity for individuals found to have abused or neglected a child to correct the abuse or neglect finding in the official records. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114295 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765 Chapter 79. Legal Services Subchapter Q. Contract Appeals 40 TAC sec.79.1611, sec.79. 1612 The Texas Department of Human Services (DHS) adopts amendments to sec.79. 1611 and sec.79.1612, with changes to the proposed text as published in the August 16, 1991, issue of the Texas Register (16 TexReg 4449). The justification for the amendments is to make procedural changes to DHS's rules concerning depositions to perpetuate testimony and taking testimony using telephonic means. The sections as amended will function by clarifying procedures necessary to enable DHS to more efficiently prosecute administrative hearings involving abuse of public assistance programs. No comments were received regarding adoption of the amendments; however, DHS is adopting sec.79.1611(f)(1)(f)(1)(A), and (f)(2) and sec.79.1612(4) with changes to simplify and clarify the rules. The editorial clarifications do not constitute changes in the intent or requirements of the rules. The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. sec.79.1611. Prehearing Procedure. (a)-(e) (No change.) (f) Depositions to perpetuate testimony. (1) Request. When the Texas Department of Human Services (DHS) expects to initiate an adverse proceeding, that is a proceeding which may result in adverse action, and DHS desires to preserve the testimony of any witness so that the testimony may be used in the adverse proceeding or in an appeal from that proceeding, DHS's representative may file a request with the Hearings Department to take the deposition of the witness. The request must include: (A) a statement that DHS expects to initiate an adverse proceeding as the result of an investigation being made; (B) a short statement of the subject matter of the investigation; (C) the names and residences, if known, or a description of the persons whose interest in the matter is expected to be adverse to DHS; (D) the names and addresses of the persons to be deposed and DHS's reasons for desiring to perpetuate the testimony; and (E) a request for an order from the Hearings Department authorizing the taking of the deposition. (2) Order. If satisfied that the perpetuation of testimony may prevent a failure or delay of justice, the administrative law judge will make an order authorizing the taking of the deposition and will state whether the deposition will be taken upon oral examination or written questions. The time and place at which the depositions are to be taken may be stated in the order or by means of notice as provided for depositions generally. The taking, signing, returning, objections to, and use of the depositions are subject to the deposition rules in the Texas Rules of Civil Procedure, provided that those rules are consistent with this section. sec.79.1612. Evidence and Depositions. (a) Rules of evidence. (1)-(3) (No change.) (4) DHS or any other party to an administrative hearing may apply for permission to obtain the testimony of a witness by telephone when it is impossible or impractical to obtain the physical presence of a witness in the hearing room due to the witness's age, illness, custodial restrictions, or residence more than 100 miles from the site of the hearing. (A) Application. Application for permission to secure testimony by telephone must be made to the presiding administrative law judge. Other parties must be notified of the application at least 10 days prior to the date of the administrative hearing. The application must state the reasons for the request. If the presiding administrative law judge finds that good cause exists to permit testimony to be obtained by telephone, he must grant the application and immediately advise the parties. The administrative law judge must rule on the application at least five days prior to the administrative hearing. (B) Testimony. If testimony by telephone is allowed, the hearing room must be equipped with a speaker phone or other telephone equipment which will allow all parties, including the administrative law judge and the court reporter, to hear the statements of the witness simultaneously and will also allow the witness to hear all parties and the administrative law judge. The witness must be sworn and his testimony taken as if he were physically present at the hearing. (b)-(f) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114296 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 16, 1991 For further information, please call: (512) 450-3765 Subchapter R. Release Hearings 40 TAC sec.sec.79.1701, 79.1702, 79.1704, 79.1709, 79.1713, 79.1714 The Texas Department of Human Services (DHS) adopts amendments to sec.sec.79. 1701, 79.1702, 79.1704, 79.1709, 79.1713, and 79.1714. The amendments to sec.79. 1713 and sec.79.1714 are adopted with changes to the proposed text as published in the August 6, 1991, issue of the Texas Register (16 TexReg 4277). The amendments to sec. sec.79.1701, 79.1702, 79.1704, and 79.1709 are adopted without changes to the proposed text and will not be republished. The justification for the amendments is to make minor procedural changes to DHS's rules concerning hearings involving suspected abuse and neglect of children. The term DHS now uses for these hearings is "release hearings" instead of "expunction hearings." DHS also is adopting in this issue of the Texas Register related amendments in Chapters 49 and 85 of this title. The amendments will function by simplifying procedures necessary to enable DHS to prosecute administrative hearings involving abuse and neglect of children. No comments were received regarding adoption of the amendments; however, DHS is adopting sec.79.1713(f)(1), (f)(1)(A), and (f)(2) and sec.79.1714(4) with changes to simplify and clarity the rules. The editorial clarifications do not constitute changes in the intent or requirements of the rules. The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. sec.79.1713. Prehearing Procedure. (a)-(e) (No change.) (f) Depositions to perpetuate testimony. (1) Request. When the Texas Department of Human Services (DHS) expects to initiate an adverse proceeding, that is a proceeding which may result in adverse action, and DHS desires to preserve the testimony of any witness so that the testimony may be used in the adverse proceeding or in an appeal from that proceeding, DHS's representative may file a request with the Hearings Department to take the deposition of the witness. The request must include: (A) a statement that DHS expects to initiate an adverse proceeding as the result of an investigation being made; (B) a short statement of the subject matter of the investigation; (C) the names and residences, if known, or a description of the persons whose interest in the matter is expected to be adverse to DHS; (D) the names and addresses of the persons to be deposed and DHS's reasons for desiring to perpetuate the testimony; and (E) a request for an order from the Hearings Department authorizing the taking of the deposition. (2) Order. If satisfied that the perpetuation of testimony may prevent a failure or delay of justice, the administrative law judge will make an order authorizing the taking of the deposition and will state whether the deposition will be taken upon oral examination or written questions. The time and place at which the depositions are to be taken may be stated in the order or by means of notice as provided for depositions generally. The taking, signing, returning, objections to, and use of the depositions are subject to the deposition rules in the Texas Rules of Civil Procedure, provided that those rules are consistent with this section. sec.79.1714. Evidence and Depositions. (a) Rules of evidence. (1)-(3) (No change.) (4) DHS or any other party to an administrative hearing may apply for permission to obtain the testimony of a witness by telephone when it is impossible or impractical to obtain the physical presence of a witness in the hearing room due to the witness's age, illness, custodial restrictions, or residence more than 100 miles from the site of the hearing. (A) Application. Application for permission to secure testimony by telephone must be made to the presiding administrative law judge. Other parties must be notified of the application at least 10 days prior to the date of the administrative hearing. The application must state the reasons for the request. If the presiding administrative law judge finds that good cause exists to permit testimony to be obtained by telephone, he must grant the application and immediately advise the parties. The administrative law judge must rule on the application at least five days prior to the administrative hearing. (B) Testimony. If testimony by telephone is allowed, the hearing room must be equipped with a speaker phone or other telephone equipment which will allow all parties, including the administrative law judge and the court reporter, to hear the statements of the witness simultaneously and will also allow the witness to hear all parties and the administrative law judge. The witness must be sworn and his testimony taken as if he were physically present at the hearing. (b)-(f) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114297 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765 Chapter 85. General Licensing Procedures The Texas Department of Human Services (DHS) adopts the repeal of sec.85. 4050, new sec.85.4050, and amendments to sec. sec.85.4013, 85.4021, and 85.4051 through 85.4057. The amendments to sec.85.4013 and sec.85.4021 are adopted with changes to the proposed text published in the August 6, 1991, issue of the Texas Register (16 TexReg 4278). The repeal of sec.85.4050, new sec.85.4050, and amendments to sec. sec.85.4051-85.4057 are adopted without changes to the proposed text and will not be republished. The justification of the repealed, new, and amended sections is to make minor procedural changes to DHS's rules concerning hearings involving suspected abuse and neglect of children. The term DHS now uses for these hearings is "release hearings" instead of "expunction hearings." DHS also is adopting related amendments in Chapters 49 and 79 of this title in this issue of the Texas Register. The sections will function by simplifying procedures for prosecuting administrative hearings involving abuse and neglect of children. No comments were received regarding adoption of the repealed, new, and amended sections; however, DHS is adopting sec.85.4013(d)(2), (k)(1)(A), (2), and sec.85.4021(b)(3) and (c)(4) with changes to simplify and clarify the rules. The editorial clarifications do not constitute changes in the intent or requirements of the rules. Subchapter OO. Appeals of Licensing Staff Decisions 40 TAC sec.85.4013, sec.85.4021 The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. sec.85.4013. Rules of Evidence. (a)-(c) (No change.) (d) Judicially known facts and telephonic testimony may be recognized as follows: (1) Official notice may be taken of all facts judicially known. Also, notice may be taken of generally recognized facts within the area of the department's specialized knowledge. Parties must be notified either before or during the hearing, or by reference in preliminary reports or otherwise, of the material officially noticed, including any staff memoranda or data. Parties must be given an opportunity to contest material officially noticed. The special skills or knowledge of the department staff may be used in evaluating the evidence. (2) DHS or any other party to an administrative hearing may apply for permission to obtain the testimony of a witness by telephone when it is impossible or impractical to obtain the physical presence of a witness in the hearing room due to the witness's age, illness, custodial restrictions, or residence more than 100 miles from the site of the hearing. (A) Application. Application for permission to secure testimony by telephone must be made to the presiding administrative law judge. Other parties must be notified of the application at least 10 days prior to the date of the administrative hearing. The application must state the reasons for the request. If the presiding administrative law judge finds that good cause exists to permit testimony to be obtained by telephone, he must grant the application and immediately advise the parties. The administrative law judge must rule on the application at least five days prior to the administrative hearing. (B) Testimony. If testimony by telephone is allowed, the hearing room must be equipped with a speaker phone or other telephone equipment which will allow all parties, including the administrative law judge and the court reporter, to hear the statements of the witness simultaneously and will also allow the witness to hear all parties and the administrative law judge. The witness must be sworn and his testimony taken as if he were physically present at the hearing. (e) -(j) (No change.) (k) Depositions to perpetuate testimony are as follows. (1) Request. When the Texas Department of Human Services (DHS) expects to initiate an adverse proceeding, that is a proceeding which may result in adverse action, and DHS desires to preserve the testimony of any witness so that the testimony may be used in the adverse proceeding or in an appeal from that proceeding, DHS's representative may file a request with the Hearings Department to take the deposition of the witness. The request must include: (A) a statement that DHS expects to initiate an adverse proceeding as the result of an investigation being made; (B) a short statement of the subject matter of the investigation; (C) the names and residences, if known, or a description of the persons whose interest in the matter is expected to be adverse to DHS; (D) the names and addresses of the persons to be deposed and DHS's reasons for desiring to perpetuate the testimony; and (E) a request for an order from the Hearings Department authorizing the taking of the deposition. (2) Order. If satisfied that the perpetuation of testimony may prevent a failure or delay of justice, the administrative law judge will make an order authorizing the taking of the deposition and will state whether the deposition will be taken upon oral examination or written questions. The time and place at which the depositions are to be taken may be stated in the order or by means of notice as provided for depositions generally. The taking, signing, returning, objections to, and use of the depositions are subject to the deposition rules in the Texas Rules of Civil Procedure, provided that those rules are consistent with this section. sec.85.4021. Appeal Hearing General Procedures. (a) (No change.) (b) For hearings on licenses or certifications only, the following apply. (1)-(2) (No change.) (3) If an adverse action against a licensed or certified facility involves also an issue of the appropriateness of a finding of child abuse or neglect and is also the subject of an appeal from an anticipated release of CANRIS information, the administrative law judge may hear the issue of the appropriateness of the release of CANRIS information and the accuracy of the CANRIS category at the same time that the panel considers the adverse action on the license or certification. However, the judge's consideration and determination must be made separately from the panel's findings on the issues submitted to them for consideration, even though the subject matter may partly or wholly overlap. If there is a conflict in the findings of the panel and the administrative law judge on these issues, the review committee is responsible for reconciling the conflict. (c) For hearings on registrations only, the following apply: (1)-(3) (No change. ) (4) If an adverse action against a registered family home is based upon a finding of child abuse or neglect and the adverse action is also the subject of an appeal from an anticipated release of CANRIS information, the administrative law judge may hear both issues in the same hearing. The judge's judgement must reflect a determination on the issues of revocation, the appropriateness of the release of CANRIS information, and the accuracy of the CANRIS category of entry. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114298 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765 Subchapter PP. Release Hearings 40 TAC sec.85.4050 The repeal is adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. sec.85.4050. Expunction Hearings. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114299 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765 The new section is adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114300 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765 40 TAC sec.sec.85.4051-85.4057 The amendments are adopted under the Human Resources Code, Title 2, Chapter 22, which provides the department with the authority to administer public assistance programs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 14, 1991. TRD-9114301 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1992 Proposal publication date: August 6, 1991 For further information, please call: (512) 450-3765