Proposed Sections Before an agency may permanently adopt a new or amended section, or repeal an existing section, a proposal detailing the action must be published in the Texas Register at least 30 days before any action may be taken. The 30-day time period gives interested persons an opportunity to review and make oral or written comments on the section. Also, in the case of substantive sections, a public hearing must be granted if requested by at least 25 persons, a governmental subdivision or agency, or an association having at least 25 members. Symbology in proposed amendments. New language added to an existing section is indicated by the use of bold text. [Brackets] indicate deletion of existing material within a section. TITLE 1. ADMINISTRATION Part II. Texas Ethics Commission Chapter 5. Campaign Financing Subchapter A. Contribution and Expenditure Reports Penalty for Late Filing 1 TAC sec.5.1 (Editor's Note: The Texas Ethics Commission proposes for permanent adoption the new section it adopts on an emergency basis in this issue. The text of the new section is in the Emergency Rules section of this issue.) The Texas Ethics Commission proposes new sec.5.1, concerning penalties for late filings of contribution and expenditure reports. This section sets forth the civil penalty for failure to timely file such statement. Jim Mathieson, staff attorney, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Mathieson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be to comply with Title 15, by establishing a civil penalty. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Jim Mathieson, 1101 Camino La Costa, Austin, Texas 78752. The new section is proposed under Texas Civil Statutes, Article 6252-9d.1, which provides the Texas Ethics Commission with the authority to promulgate rules governing penalties for late filings of contribution and expenditure reports. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1992. TRD-9200439 Jim Mathieson Attorney Texas Ethics Commission Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 406-0100 Chapter 7. Personal Financial Disclosure Subchapter A. Disclosure Statements Penalty for Late Filing 1 TAC sec.7.1 (Editor's Note: The Texas Ethics Commission proposes for permanent adoption the new section it adopts on an emergency basis in this issue. The text of the new section is in the Emergency Rules section of this issue.) The Texas Ethics Commission proposes new sec.7.1, concerning penalty for late filing of personal financial statements. This section sets forth the civil penalty for failure to timely file such statements. Jim Mathieson, staff attorney, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Mathieson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be to comply with Texas Civil Statutes, Article 6252-9d.1 by establishing a civil penalty. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Jim Mathieson, 1101 Camino La Costa, Austin, Texas 78752. The new section is proposed under Texas Civil Statutes, Article 6252-9b.1, which provide the Texas Ethics Commission with the authority to promulgate rules governing penalties for late filings of personal financial statements. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1992. TRD-9200441 Jim Mathieson Attorney Texas Ethics Commission Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 406-0100 Chapter 10. Registration and Regulation of Lobbyists 1 TAC sec.sec.10.1, 10.3, 10.5, 10.7, 10.9, 10.11, 10.13, 10.15, 10. 17, 10.19. 10.21, 10.23, 10.25, 10.27, 10.29, 10.31, 10.33 (Editor's Note: The Texas Ethics Commission proposes for permanent adoption the new sections it adopts on an emergency basis in this issue. The text of the new sections is in the Emergency Rules section of this issue.) The Texas Ethics Commission proposes new sec.sec.10.1, 10.3, 10.5, 10.7, 10.9, 10.11, 10.13, 10.15, 10.17, 10.19. 10.21, 10.23, 10.25, 10.27, 10.29, 10.31, and 10.33 concerning registration and regulation of lobbyists. The new sections set forth guidelines, requirements, exceptions, penalties, and registration fees concerning lobbyists, and the required disclosure. Jim Mathieson, staff attorney, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. Mathieson also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be to comply with the Government Code by setting forth the requirements and guidelines to be followed by lobbyists. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Jim Mathieson, 1101 Camino La Costa, Austin, Texas 78752. Only written comments will be accepted. The new sections are proposed under Texas Civil Statutes, Article 6252-9d.1, which provides the Texas Ethics Commission with the authority to establish registration and regulation requirements concerning lobbyists. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200348 Jim Mathieson Attorney Texas Ethics Commission Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 406-0100 Chapter 15. Legislative Per Diem 1 TAC sec.15.1 (Editor's Note: The Texas Ethics Commission proposes for permanent adoption the new section it adopts on an emergency basis in this issue. The text of the new section is in the Emergency Rules section of this issue.) The Texas Ethics Commission proposes new sec.15.1, concerning legislative per diem. The legislative per diem is set by this rule in compliance with Article III, sec.24a and sec.24, and Article IV, sec.17 of the Texas Constitution. It establishes the legislative per diem for members of the legislative and the lieutenant governor for each legislative day in accordance with the constitutional guidelines. Jim Mathieson, staff attorney, has determined that for the first five-year period the section is in effect there will be fiscal implications as a result of enforcing or administering the section. The effect on state government for the first five-year period the section will be in effect will be an estimated reduction in cost of $295,200 in 1992; $984,000 in 1993; $295,200 in 1994; $984, 000 in 1995; and $295,200 in 1996. There will be no effect on local government for the first five-year period the section is in effect. Mr. Mathieson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be to comply with the provisions of the Texas Constitution, Article III, s24a and 24, and Article IV, sec.17, approved by the voters November 5, 1991. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Jim Mathieson, 1011 Camino La Costa, Austin, Texas 78752. The new section is proposed under the Texas Constitution, Article III, which provides the Texas Ethics Commission with the authority to set legislative per diem. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200312 Jim Mathieson Attorney Texas Ethics Commission Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 406-0100 Part IV. Office of the Secretary of State Chapter 81. Elections Campaign Reporting and Disclosure 1 TAC sec.sec.81.161-81.165 (EDITOR'S NOTE: In 1991, the 72nd Regular Session passed Senate Bill 1 which created the Texas Ethics Commission, therefore the following sections, which were under the Disclosure Filings Section of the Office of the Secretary of State, are being administratively repealed.) Chapter 89. Lobby Regulation Registration, Reporting, Termination 1 TAC sec.sec.89.1-89.6 (EDITOR'S NOTE: In 1991, the 72nd Regular Session passed Senate Bill 1 which created the Texas Ethics Commission, therefore the following sections, which were under the Disclosure Filings Section of the Office of the Secretary of State, are being administratively repealed.) Chapter 102. Health Spas Subchapter A. Statute and Definitions The Office of the Secretary of State proposes the repeal of sec.sec.102.1, 102. 10, 102.20, 102.30, 102.40, 102.41, 102.70-102.73, 102.80, 102.90 and 102.91, concerning the administration of health spas pursuant to the Health Spa Act, Texas Civil Statutes, Article 5221l (Vernon 1987, Supplement 1991). The sections are proposed for repeal because of the proposal for adoption of new rules to regulate such health spas. The new rules proposed for adoption are being contemporaneously published for comment in this issue of the Texas Register. Guy Joyner, staff attorney, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. Mr. Joyner also has determined that for each year of the first five years the repeals are in effect the public benefit anticipated as a result of enforcing the repeals will be to provide individuals and companies with a clarification of the procedure necessary to comply with registration, escrow, and security requirements prescribed by the Health Spa Act. Additionally, the sections prescribe a standard procedure for paying claims to members who have suffered losses as the result of the cessation of operation of a health spa. Such a procedure will provide an efficient means to help ensure members receive funds due them as quickly as possible. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. Comments on the proposal may be submitted to Guy Joyner, Staff Attorney, Statutory Documents Section, P.O. Box 12887, Austin, Texas 78711-2887. 278>1 TAC sec.102.1, sec.102.10

1 TAC sec.102.1 The new sections are proposed under the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, sec.4(a) (Vernon 1991) and the Health Spa Act, Texas Civil Statutes, Article 52211 (Vernon 1987, Supplement 1991), which provides the secretary of state with the authority to prescribe and adopt rules. sec.102.1. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Words and terms defined in the Health Spa Act (Texas Civil Statutes, Article 5221L) shall have the same meaning in this chapter. Act-The Health Spa Act, Texas Civil Statutes, Article 5221L (Vernon 1987, Supplement 1991). Closed, closes or closing-A condition where: (A) the facilities of a health spa are no longer available to its members and equivalent facilities within 10 miles of the closed facilities have not been made available to members of the closed facilities; or (B) the registrant has sold a registered location and the security required by the Health Spa Act, sec.10 has either been canceled, withdrawn, or is otherwise unavailable for the use of members; or (C) the registrant has sold a registered location and the new owner has neither adopted nor honored the contracts of existing members. Contract-an agreement by which one becomes a member of a health spa. Fully open or fully open for business -The date on which all services of the health spa that were advertised before the opening or promised to be made available are available for use by its members. Location-The physical site or place where health spa facilities are located. Prepayment-A payment for all services or the use of facilities made by members of a health spa before the first day the services or facilities are made available to the members. Obligor-A person other than a surety who is obligated to perform in the event of a registrant's default. Registrant-A person who has registered with the secretary and has been issued a health spa operator's certificate of registration. Secretary-The Texas secretary of state. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200334 Audrey Selden Assistant Secretary of State Office of the Secretary of State Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-5558 Subchapter B. Registration Procedures 1 TAC sec.sec.102.10, 102.13, 102.15, 102.17 The new sections are proposed under Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, sec.4(a) (Vernon 1991) and the Health Spa Act, Texas Civil Statutes, Article 5221L (Vernon 1987, Supplement 1991), which provides the secretary of state with the authority to prescribe and adopt rules. sec.102.10. Procedure for Filing Registration Statement. (a) Each health spa location shall file a registration statement containing the following information: (1) the health spa's name and physical location; (2) the name and address of any person who directly or indirectly owns or controls 10% or more of the issued and outstanding voting shares of a corporation, if the health spa is operated through that corporation; (3) the name and address of all the partners if the health spa is operated as a general partnership; (4) the name and address of each general partner if the health spa is operated by a limited partnership; (5) the name and address of each person deemed to be an owner if the health spa is operated as a sole proprietorship; (6) the name and address of any person or entity holding any direct or indirect ownership of the health spa, if that person or entity exercises direct control of the health spa; (7) a detailed disclosure of the proposed facilities and services; (8) the approximate square footage of the health spa; (9) a complete disclosure of any litigation, or any complaint filed with a governmental authority relating to the failure to open or the closing of a health spa brought against the owners, officers, or directors of the health spa filing the registration statement that was completed within the past two years or is currently pending; or a notarized statement which states that within the past two years there has been no litigation and no complaint filed with a governmental authority relating to the failure to open or the closing of a health spa brought against the health spa owners, officers, or directors for which the registration statement is being filed; and (10) the federal tax number of all owners and all operators of the health spa. If a corporation is the owner or the operator, the federal tax number of the corporation shall be provided. (b) The registrant shall amend the registration statement not later than the 90th day after the day on which a change in the information provided in the statement occurs. (c) The registration statement must be renewed one year from the original registration date and each year thereafter on the anniversary of the original registration date. (d) Each registration statement shall be notarized and sworn to by the person submitting it. sec.102.13. Fees. (a) A fee of $100 will accompany the registration statement. (b) The fee for filing a renewal statement is $100. (c) If an initial or renewal application is not complete before the 31st day after it is received incomplete, the file will be closed and the registration fee forfeited. sec.102.15. Exemptions. The following are exempt from registration with the secretary: (1) facilities owned by organizations that are tax exempt under 26 United States Code 501 et seq; (2) private clubs owned and operated by their members; (3) entities primarily operated for teaching dance or aerobic exercise; (4) entities primarily engaged in physical rehabilitation activity related to an individual's injury or disease; (5) an individual or entity engaged in an activity authorized under a valid license issued by this state; (6) activities conducted or sanctioned by a school operating under the Education Code. sec.102.17. Procedure for the Registration of Certain Exercise Facilities. (a) A registrant claiming the exemption from sec.10 security requirements of the Health Spa Act (the Act) for facilities described in the Act, sec.7A must file security with the secretary in the form described by the Act; and (b) A registrant must execute and file with the secretary a sworn document which states it does not: (1) require a participant to sign a contract or draw on a financial institution, or pay an initiation fee; (2) offer memberships, or require prepayment, for a term exceeding 31 days; (3) average more than 200 participants who are authorized to use its facilities in any one month; and (4) exceed $6,000 in monthly revenue from fees paid by participants. (c) A registrant must submit a registration statement for the facility. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200333 Audrey Selden Assistant Secretary of State Office of the Secretary of State Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-5570 Subchapter C. Escrow 1 TAC sec.102.20 The new section is proposed under the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, sec.4(a) (Vernon 1991) and the Health Spa Act, Texas Civil Statutes, Article 52211 (Vernon 1987, Supplement 1991), which provides the secretary of state with the authority to prescribe and adopt rules. sec.102.20. Procedure for Establishing and Releasing Escrow Accounts. (a) Unless exempted by the Health Spa Act, sec.9(e), a registrant or its assignee or agent that accepts prepayments for its membership shall deposit all of the funds in an escrow account established with a financial institution whose accounts are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, which shall hold the funds as escrow agent for the benefit of the members that prepay. (b) The registrant shall deposit prepayments received as often as biweekly and shall make the first deposit not later than the 14th day after the day on which the registrant or its agent accepts the first payment. (c) Not later than the 14th day after the day on which the first prepayment is received, the registrant shall give the secretary a notarized statement that identifies the financial institution in which the prepayments are held in escrow and the name in which the account is held, together with a signed statement on a form approved by the secretary of state which authorizes the secretary of state to make inquires of the financial institution regarding the funds in escrow. (d) The escrow agreement must contain the following provisions. (1) Prepayments must be deposited at least biweekly. (2) The secretary must be named as fiduciary for the prepayment members. (3) The prepayments shall remain in escrow until the 30th day after the date that the health spa fully opens for business. (4) If the health spa does not fully open for business before the 181st day after the registrant first sells a membership in the health spa, or if the health spa does not remain open for 30 days, the escrow agreement shall terminate and all prepayment deposits shall be refunded to the members. (5) Unless another health spa is operated by the same seller and is located not more than 10 miles from the proposed location of the new health spa and the person purchasing the membership is authorized to use these other facilities, the member of the new spa whose fees are held in escrow is entitled to receive a full refund of the membership fees from the escrow agent if the new health spa does not open before the 361st day after the date on which the new spa first sells a membership or if the new spa does not remain open for 30 days. (6) The registrant must provide the escrow agent proof that it has filed an affidavit with the secretary of state which certified that all obligations of the registrant for which a lien could be filed under the Property Code, Chapter 53, have been paid and whether any person is eligible to claim a lien under that chapter during the period the registrant or its agent accepts payments. (e) The escrow agreement shall identify the escrow officer, style of the deposit account, the financial institution, and any other information which will identify the escrow account into which the prepayment have been deposited. (f) The registrant shall file a copy of the escrow agreement with the secretary. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200332 Audrey Selden Assistant Secretary of State Office of the Secretary of State Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-5558 Subchapter D. Security 1 TAC sec.sec.102.30, 102.31, 102.35, 102.40, 102.45 The new sections are proposed under the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, sec.4(a) (Vernon 1991) and the Health Spa Act, Texas Civil Statutes, Article 5221l (Vernon 1987, Supplement 1991), which provides the secretary of state with the authority to prescribe and adopt rules. sec.102.30. Procedure for Determining Security Requirements. (a) All persons operating a health spa within the meaning of the Health Spa Act (the Act), sec.6(3) shall file a surety bond or post other security as required by the Act, sec.10 except that persons who qualify under the Act, sec.7A shall post the security required by that section. (b) The secretary may not issue a certificate of registration unless the applicant first files a surety bond or posts other security as required by the Act, either sec.7A or sec.10. (c) The particular security required to be filed under the Act, sec.10 is dependent upon whether a health spa was in operation prior to September 1, 1989. Health spas which were in operation prior to September 1, 1989 are required to post the security identified in sec.102.31(a) of this title (relating to Security Requirements-General). Health spas which are new or which were in operation on or after September 1, 1989 are required to post the security identified in sec.102.31(b). (d) To qualify for sec.102.31(a) treatment with respect to the posting of security, the applicant or registrant must demonstrate to the satisfaction of the secretary that: (1) the health spa for which registration is sought was in operation prior to September 1, 1989; (2) the legal entity whether it be a sole proprietorship, partnership, or corporation which owned the health spa that was in operation prior to September 1, 1989 is the same legal entity which seeks registration; (3) when there is a transfer of health spa ownership, save and except for the transfer of all the outstanding stock of a corporation, the successor is subject to the security requirements that are in effect at the time of the transfer. sec.102.31. Security Requirements-General. (a) The following is applicable to the owner of any health spa in operation before September 1, 1989, and any additional locations opened by the owner of that health spa on or after September 1, 1989. (1) On or before the 30th day after the date a health spa opens its facilities for the use of its members, the health spa shall file with the secretary a surety bond issued by a surety company licensed to do business in this state, or, in lieu of and in equal amount to the bond, a certificate of deposit, letter of credit, or other negotiable instrument issued by a financial institution in this state whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. The bond, certificate of deposit, letter of credit, or other instrument shall be payable in favor of the state and shall be held for the benefit of any members of the health spa who suffer financial losses due to the insolvency or cessation of operation of the health spa. "Financial losses" shall mean and be limited to any unused or unearned portion of such member's dues or fees. Such a member may bring an action based on the bond and recover against the surety regardless of the number of claimants or claims filed against the bond, but the liability of the surety may not exceed the aggregate amount of the bond. If the claims filed against the bond exceed the amount of the bond, the surety shall pay the amount of the bond to the secretary for distribution to the claimants on a pro rata basis. The surety or obligor is relieved of liability on payment of the amount of the bond or other security to the secretary. (2) The amount of the security required under paragraph (1) of this subsection is 20% of the total value of the prepayments received by the health spa. However the amount of the security may not be less than $20,000 or more than $50,000. (3) The health spa shall maintain the security in the amount provided in paragraph (2) of this subsection in effect for two years after the date the security is filed with the secretary. Thereafter, the health spa shall continuously maintain security in the amount of $5,000. (b) The following is applicable to any health spa opened on or after September 1, 1989, other than those hereinafter described in subsection (a) of this section. (1) On or before the 30th day before the date a health spa opens a location for the use of its members, the health spa shall file with the secretary a surety bond issued by a surety company licensed to do business in this state. In lieu of, and in equal amount to the bond, the spa may submit a certificate of deposit, or a letter of credit, or other negotiable instrument issued by a financial institution in this state whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. The bond or other security deposit shall be payable in favor of the state and shall be held for the benefit of any members of the health spa who suffer financial losses due to the insolvency or cessation of operation of the health spa. "Financial losses" shall mean and be limited to any unused or unearned portion of such member's dues or fees. Such a member may bring an action based on the bond and recover against the surety regardless of the number of claimants or claims ruled against the bond, but the liability of the surety may not exceed the aggregate amount of the bond. If the claims filed against the bond exceed the amount of the bond, the surety shall pay the amount of the bond to the secretary of state for distribution to the claimants on a pro rata basis. The surety or obligor is relieved of liability on payment of the amount of the bond or other security to the secretary. (2) The amount of the security required under paragraph (1) of this subsection is $20,000. If a claim is paid from the bond or other security deposit, the health spa must post additional security, not later than the 20th day after the date on which the claim is paid, to restore the amount of the security to $20,000. (3) The health spa shall maintain the bond or other security deposit in the amount provided in paragraph (2) of this subsection in effect for two years after the date on which the health spa ceases business or until the secretary of state determines that each claim to which the bond or other security deposit is subject has been satisfied or foreclosed by law. (c) The following provision shall be applicable to all bonds filed with the secretary regardless of when the owner first opened a health spa. (1) Regardless of the number of years the bond shall continue in force or the number of premiums payable or paid, the limit of the surety's liability stated in the bond shall not be cumulative from year to year or period to period. (2) The surety shall not be liable through a bond for punitive damages or for civil or criminal penalties assessed against a health spa, its individual owners, or its employees. (3) The bond written by a surety hereunder shall be continuous until canceled by the surety or terminated by the health spa only upon giving 90 days' prior notice to the secretary of such cancellation. (4) A surety hereunder shall not be liable for any claim brought or suit filed against a bond if the claim or filing of a suit occurs more than two years from the last effective date of the bond. sec.102.35. Adjudication of Claims. (a) Within 20 days of receiving notice that a health spa has ceased operations or is insolvent, the secretary shall make a preliminary determination regarding whether any of the spa's members have suffered financial loss within the meaning of the Health Spa Act (the Act) and these rules. If the secretary determines that financial losses have in fact occurred he shall within 20 days of making the determination notify the surety or obligor that: (1) the health spa has ceased operations or is insolvent; (2) members of the health spa have suffered financial losses within the meaning of the Act and these rules; (3) the secretary intends to: (A) publish a display advertisement in a newspaper of general circulation in the county or nearest county in which the health spa is located notifying the public of the fact that the health spa is closed and that a health spa member has 90 days from the date of the first notice to perfect a claim under the security posted; or (B) use any other reasonable method, to include regular mail, deemed by the secretary to provide sufficient notice to members of the health spa of the fact that the health spa is closed and that a member has 90 days from the date of the notice to perfect a claim under the security posted; (4) the secretary intends to perfect a claim against the bond or other security for the reasonable expenses incurred in providing notice to the members. The maximum amount of such expenses shall not exceed $3, 000. (b) Unless the surety or obligor as the case may be, timely contests the preliminary determination of the secretary pursuant to the Administrative Procedure and Texas Register Act (Texas Civil Statutes, Article 6252-13a (Vernon Supplement 1991)), the secretary shall proceed to publish the notice. (c) Within 45 days from the date the secretary first discovers that a health spa has closed, the secretary shall initiate the notice process. (1) If it is decided to publish in a newspaper, the secretary shall publish a display advertisement in a newspaper of general circulation in the county or nearest county in which the health spa is located notifying the public of the fact that the health spa is closed and the member has 90 days from the date of the first notice to perfect a claim under the security posted pursuant to the Act, sec.10. The notice shall be published for 2 consecutive Saturdays and Sundays and shall inform those affected of the procedures for perfecting a claim against the security. The secretary shall have a claim against the security for reasonable expenses incurred in publishing the notice which shall not exceed $3, 000. (2) Regardless of the method utilized for notice to the members, all claims received by the secretary after 90 days following the date of the last notice are barred and shall not be considered by the secretary. If the total of claims evidencing actual financial loss exceed the amount of the security, the secretary shall adjudicate the claims on a pro rata basis by dividing the amount of the security, after first deducting the actual costs for publication of the notice, by the total amount of the claims in order to ascertain a percentage to be applied to each claim. (d) In order to perfect a claim, a claimant must submit a copy of the contract that forms a basis of the claim together with documentation or a sworn affidavit indicating the total of payments made pursuant to the contract. In the event the claimant does not submit adequate documentation, the secretary shall promptly inform the claimant of this fact together with notice that adequate documentation must be received by the bar date in order for the claim to be considered. (e) The secretary shall timely present claims together with supporting documentation for the approval of payment by the surety or obligor. (f) Actual financial loss shall mean and be limited to those sums which have been paid under a health spa contract to a registrant or a registrant's assignee and which at the time the health spa is closed are unearned. Actual financial losses shall be calculated by multiplying the gross monthly payment by the total of months or partial months remaining on a contract at the time of closing minus any payments not made. For the purposes of this section the terms used shall mean the following. (1) Closed-The condition wherein the facilities of a health spa are no longer available to its members and equivalent facilities within 10 miles of the closed facility have not been made available to the members of the closed facilities; or where a registrant has sold a registered location and the security required in section of the Act has not been transferred to the new owner or the new owner has neither adopted nor honored the contracts of existing members. (2) Gross monthly payment-The gross monthly payment shall be calculated by determining the total of payments, including down payments and initiation fees required by the contract, divided by the total number of months in the term of the contract. (3) Calculation of dates-The date of closing and the date of the contract expiration shall be rounded to the nearest full month. The total months remaining on the contract shall be calculated by subtracting the date of closing from the expiration date of the contract. The result will be expressed in whole months. (g) If the members' claims do not exceed the amount of the security, the registrant shall arrange for the direct payment of the claims to the members. (h) The surety or obligor shall provide the secretary proof of payment of the members' claims. (i) In the event the total of claims exceed the amount of the security the claims shall be paid on a pro-rata basis by dividing the amount of the security, after first deducting the secretary's cost of publication of the notice, by the total amount of the claims. This percentage shall be applied to each claim. sec.102.40. Procedure for Filing Letters of Credit as Security Under the Health Spa Act, sec.10. (a) If a registrant posts a letter of credit as the security under the Health Spa Act, sec.10, the letter of credit must be maintained as a current negotiable instrument issued by a financial institution in this state whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. (b) The letter of credit shall be on the financial institution's letterhead and in the format provided by the secretary's sample form. (c) In the event a health spa ceases operations and the members' claims exceed the amount of the letter of credit, the following procedure shall be followed by the secretary. (1) The secretary shall within 90 days after discovering the health spa has closed draw upon the letter of credit for the benefit of the members. (2) The proceeds shall be deposited in the Texas State Treasury until distribution can be made to the members. sec.102.45. Procedure For Filing Certificates of Deposit as Security Under the Health Spa Act, sec.10. (a) If the registrant provides a certificate of deposit as security under the Health Spa Act, sec.10, the certificate of deposit must be issued by a financial institution in this state whose deposits are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation. (b) The original certificate of deposit must be filed along with an executed assignment form. The assignment form can be obtained from the Statutory Documents Section of the Office of the Secretary of State, P.O. Box 12887, Austin, Texas 78711-2887, (512) 463-5559. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200331 Audrey Selden Assistant Secretary of State Office of the Secretary of State Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-5558 Subchapter E. General Information 1 TAC sec.102.50 The new section is proposed under the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, sec.4(a) (Vernon 1991) and the Health Spa Act, Texas Civil Statutes Article 5221l (Vernon 1987, Supplement 1991), which provides the secretary of state with the authority to prescribe and adopt rules. sec.102.50. Forms. Forms shall be provided by the Office of the Secretary of State for the purposes of complying with the Health Spa Act and this chapter. The forms are hereby adopted by reference and may be obtained from the Office of the Secretary of State, Statutory Documents Section, P.O. Box 12887, Austin, Texas 78711-2887. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200330 Audrey Selden Assistant Secretary of State Office of the Secretary of State Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-5558 Part X. Department of Information Resources Chapter 201. Planning and Management of Information Resources Technologies 1 TAC sec.201.5 The Department of Information Resources proposes an amendment to sec.201.5, concerning procedures for state agency planning of information resources technologies. The amendment provides instructions and formats to be used by an agency in the preparation and submission of its initial and final operating plans. Larry Lehmann, business manager, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Lehmann also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be more timely preparation and review of agency information resources plans and greater emphasis on the effective use of information resources technologies to support state government activities. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted as follows: Comments on Rule Changes, P.O. Box 13564, Austin, Texas 78711, Attention: Martin J. Cassano. The outside of the envelope must be clearly marked "Comments on Rule Changes." All comments received after 5 p.m. February 17, 1992, will not be considered and will be returned unopened to the sender. Only comments provided in writing will be considered. The amendment is proposed under Texas Civil Statutes, Article 4413(32j) sec.9, which provide the Department of Information Resources with the authority to adopt rules as necessary to carry out its responsibilities under this article. sec.201.5. Agency Planning. (a) (No change.) (b) Initial operating plans. (1) (No change.) (2) Contents. An agency's initial operating plan must contain information in the format specified by the department in the initial operating plan instructions. These instructions are adopted by reference. Copies may be obtained in person or in writing at the Office of the Department of Information Resources, P.O. Box 13564, Austin, Texas 78711

    . [: [(A) state how the requested appropriations for the management, operation, and procurement of information resources would be spent; [(B) contain a summary of the agency's needs for information resources technologies and the estimated cost of meeting those needs during the next biennium; [(C) list the existing and proposed projects for the agency, including the anticipated benefits of those projects; the major resources required to complete the projects; the estimated total cost of each project by legislative program; the cost and implementation schedule for each project; the number, type, approximate cost, and planned method of acquisition for major procurements associated with each project; and the estimated internal development costs for each project; [(D) provide an estimate of the percentage of existing and proposed information resources technologies that will be required after proposed projects are implemented.] (3) (No change.) (c)-(f) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1992. TRD-9200435 Debra J. Williams Policy Analyst Department of Information Resources Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 475-4744 TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 23. Substantive Rules General Rules 16 TAC sec.23.3 The Public Utility Commission of Texas proposes an amendment to sec.23.3, concerning recreational vehicle parks. The proposed amendment is necessary to recognize changes made by the 72nd Legislature to the definition of public utility in the Public Utility Regulatory Act. In addition, the rule clarifies that the intent of a recreational vehicle park owner to recover shortfalls if future legislative changes allow such will not be considered action that makes the recreational vehicle park owner a utility even though the legislation passed by the 72nd Legislature does not allow a surcharge to recover shortfalls in revenues. However, the recreational vehicle park owner is required to keep a record of shortfalls if he has such intent and otherwise comply with the requirements of Texas Civil Statutes, Article 1446d-2. Bret J. Slocum, deputy general counsel, has determined that for the first five- year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Slocum also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be the elimination of any inconsistency between the Public Utility Regulatory Act and the commission's rules. There will be no effect on small businesses as a result of enforcing the section. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Bret J. Slocum has also determined that for each year of the first five years the section is in effect, there will be no impact on employment in the geographical areas affected by implementing the requirements of the section. Comments on the proposal (13 copies) may be submitted to Mary Ross McDonald, Secretary of the Commission, Public Utility Commission of Texas, 7800 Shoal Creek Boulevard, Suite 232S, Austin, Texas 78757. Comments should be submitted within 30 days after publication of the proposed section and should refer to Project Number 10803. The amendment is proposed under the Public Utility Regulatory Act, sec.16(a), which provides the Public Utility Commission of Texas with the authority to make and enforce the rules reasonably required in the exercise of its powers and jurisdiction. sec.23.3. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Public utility -The definition of public utility is that definition given in the Public Utility Regulatory Act, Article I, sec.3(c). A recreational vehicle park owner who intends to recover any shortfall of revenues collected from the recreational vehicle occupants if legislative amendments are made to Texas Civil Statutes, Article 1446-2, that would allow the recovery of such shortfall will still not be considered a public utility if such owner otherwise complies with Article 1446d-2 and keeps a record of such shortfall.
      [However, the metered sale of electricity shall not be considered the provision of electric shall not be considered the provision of electric service for compensation is each of the following conditions are met: The electricity is consumed in a recreational vehicle, as defined in the Texas Commercial Driver's License Act, Texas Civil Statutes, Article 6687b-2, (Supplement 1991), that is located in a recreational vehicle park; the park owner can show that he does not recover from the recreational vehicle occupants through metered charges more than the utility has charged the park owner including recognition of fuel refunds on an annual basis for the electric service that is being submetered to the recreational vehicle occupants. In order to make such a showing, the park owner must maintain records of the utility bills and the electricity charges collected from the recreational vehicle occupants including consumption records; such electricity is charged by the use of a fixed rate per kwh that is fixed over an annual period and is computed by totaling last year's bill's from the utility and dividing by the total kwh consumed during that last year, rounded to the nearest cent. If the supplying utility has had a rate increase since or during the last annual period, the park owner may recompute last year's bills from the utility using the utility's current tariff. If the supplying utility has had a rate decrease since or during the last annual period, the park owner shall recompute last year's bills from the utility using the utility's current tariff. The fixed rate can only be adjusted once annually; if at the end of a year the park owner determines that he has collected an amount different than he has been charged by the utility, the park owner must refund any overcollection and may surcharge any undercollection over the next year; no electric utility bills or costs for common areas are included in the costs to be recovered through a metered charge from the recreational vehicle occupants.] This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200920 Mary Ross McDonald Secretary of the Commission Public Utility Commission of Texas Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 458-0100 TITLE 22. EXAMINING BOARDS Part XXV. Structural Pest Control Board Chapter 593. Licenses 22 TAC sec.593.21, sec.593.22 The Structural Pest Control Board proposes new sec.593.21 and sec.593.22, concerning licensing standards and requirements for technicians and technician- apprentices. The new sections create specific testing and training requirements include new fees and a board-approved technician training course. Benny M. Mathis, Jr. executive director, has determined that for the first five- year period the sections are in effect there will be fiscal implications for state government as a result of enforcing or administering the sections. The effect on state government for the first five-year period the sections are in effect will be an estimated additional cost of $50,000 for fiscal year fy 1992 and $30,000 for fys 1993-1996; and an estimated increase in revenue of $50,000 for fy 1992 and $30,000 for fys 1993-1996. There will be no effect on local government. Mr. Mathis also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be increased professionalism and proficiency among licensed pest control technicians. The effect on small businesses as compared to the largest businesses affected by the sections based on cost per employee is as follows: technician exam-$60 per year; technician-apprentice-$18 per year; training manual-$7.50 as needed; technician license -$36 per year. The anticipated economic cost to persons who are required to comply with the sections as proposed will be technician license -for fys 1992-1996; and technician apprentice-for fys 1992-1996. Comments on the proposals may be submitted to Roger B. Borgelt, 9101 Burnet Road, Suite 201, Austin, Texas 78758. The new sections are proposed under Texas Civil Statutes, Article 135b-6, which provide the Structural Pest Control Board with the authority to establish standards for testing, licensing, and regulating persons engaged in the structural pest control business. sec.593.21. Technician-apprentice License Standards. (a) An employee desiring to become a technician-apprentice must file a technician-apprentice application on the initial date of employment. The application must include the following information: (1) applicant's full name; (2) applicant's home address; (3) applicant's date of employment; (4) applicant's social security number; (5) applicant's driver's license number; (6) applicant's birthdate; (7) a fee of $18. (b) applicants for a technician-apprentice license shall not perform pest control work without the physical presence of a licensed technician or certified applicator. (c) In order to receive a technician-apprentice license, an applicant must: (1) file a technician-apprentice application with the board; (2) be at least 16 years of age; (3) receive general training of at least 20 hours of verifiable classroom training that shall include at least two hours in each of the following subject areas: (A) federal and state laws regulating structural pest control and pesticide application; (B) recognition of pest and pest damage; (C) pesticide labels and label comprehension; (D) pesticide safety; (E) environmental protection; (F) application equipment and techniques; (G) pesticide formulator and actions; (H) emergency procedures and pesticide cleanup; (I) procedures for the immediate reporting of spills and misapplications; (J) basic principles of mathematics, chemistry, toxicology, and entomology; (K) nonchemical pest control techniques, including biological, mechanical, and prevention techniques; (4) be able to read and write the English language; (5) receive 60 hours of verifiable on-the-job training and 10 hours of classroom training in each category technician-apprentice. The on-the-job training means work licensed performed that includes education and training in each category for which the technician-apprentice is to become licensed and should include, but not be limited to, the subject areas listed in subsection (c)(3)(A)-(K) of this section. (d) The business license holder and certified commercial applicator shall certify to the board in writing that the applicant has completed the required training and has demonstrated competency in each category in which he is to provide pest control service. A technician-apprentice license will then be issued. (e) The business training records for each technician-apprentice in the company files for at least one year after termination of employment. The training records shall be kept on a form prescribed by the board and shall include, but not be limited to, the following: date training is received, number of hours of training, subject of training, name and license number of trainer, designation of on-the-job or classroom training and competency evaluation by the certified commercial applicator. (f) When a technician-apprentice changes employers the employer who provided the verifiable training shall make the training record available to the technician- apprentice or the new employer upon written request. (g) It is a violation of this section for a business licensee to allow a technician-apprentice to perform work in a category in which he has not been properly trained. technician-apprentice and technician must have personal contact with the certified commercial applicator of record at least three days per week. sec.593.2. Technician License Standards. (a) technician-apprentice may become a licensed technician by taking the approved technician training courses for the general category and the category of licensure desired and passing the technician examination. The technician examination application must be accompanied by a fee of $30 per category. technician-apprentice may take the technician examination as many times as necessary but shall maintain a technician-apprentice license for a maximum of six months out of any 12-month period. Technicians who were licensed on or before September 1, 1991 must verify that they have completed the board-approved technician training course before September 1, 1996. Failure of a licensed technician to complete the technician training courses shall be a violation of this section. (b) The Technician Training Manual for each category may be obtained from the board for a fee of $7.50 per manual. (c) An individual must pass the subject area examination for each category of structural pest control in which the individual wishes to become licensed. Reexamination is not necessary if the license is renewed annually by the technician. (d) Examinations shall be given at dates and at locations to be at the discretion of the board. A fee of $30 per examination category shall be paid by the applicant. (e) All other testing procedures shall be governed by sec.sec.593.5(c)(3)-(11), and (13), and (14) of this title (relating to Examinations) except that a technician-apprentice may retest at any time. (f) Persons who make a passing grade and qualify for a technician license must make application to obtain a license within six months of the exam ate or be retested. (g) Each technician-apprentice license application shall be accompanied by a fee of $18. (h) Each technician license application shall be accompanied by a fee of $36. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 10, 1992. TRD-9200426 Benny M. Mathis, Jr. Executive Director Structural Pest Control Board Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 835-4066 TITLE 28. INSURANCE Part I. Texas Department Of Insurance Chapter 1. General Administration Subchapter A. Rules of Practice and Procedure. Subpoenaing Witnesses and Materials 28 TAC sec.1.36 The State Board of Insurance of the Texas Department of Insurance proposes an amendment to sec.1.36, concerning subpoenaing witnesses and materials in investigations. House Bill 62, enacted during the Second Called Session of the 72nd Legislature, and effective January 1, 1992, amends Article 1.19-1 to require that the commissioner and a board member sign investigative subpoenas. The amendment to sec.1.36(b) is necessary to eliminate language in the rule which conflicts with Article 1.19-1 as amended. The amendment also changes references to the State Board of Insurance to reflect the agency's new name, the Texas Department of Insurance. William P. Harbeson, deputy commissioner for legal services, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section, and there will be no effect on local employment or local economy. Mr. Harbeson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be consistency between the language in the rule and the language of the statute. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to William P. Harbeson, Deputy Commissioner for Legal Services, Mail Code 110-1A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The amendment is proposed under the Insurance Code, Article 1.04, which authorizes the State Board of Insurance to determine rules and regulations for the conduct and execution of the duties and functions of the Texas Department of Insurance, and under the Insurance Code, Article 1.19-1, which specifies procedures for issuance of investigative subpoenas, as amended by House Bill 62, Second Called Session, 72nd Legislature. sec.1.36. Subpoenaing Witnesses and Materials. (a) (No change) (b) Investigations. The commissioner and at least one member of the board must
        [deputy insurance commissioner for legal and compliance, the director of legal services, the general counsel to the board, and the chief clerk may] sign any [and issue] subpoenas in the course of an investigation. A subpoena includes a subpoena duces tecum. (1) (No change.) (2) Service of subpoena. A subpoena shall be addressed to and served by any sheriff, constable, or Texas Department of Insurance
          [State Board of Insurance] investigator of the State of Texas. For the purposes of this paragraph, a Texas Department of Insurance
            [State Board of Insurance] investigator includes any insurance specialist or insurance director employed in the legal services or unauthorized insurance divisions of the Texas Department of Insurance
              [State Board of Insurance]. (3) (No change.) (4) Receipt of testimony and materials. The testimony of a subpoenaed witness shall be taken in the presence of a certified shorthand reporter having the authority to lawfully administer an oath pursuant to the Government Code, sec.52.025(b). The shorthand reporter's fee shall be paid by the Texas Department of Insurance
                [State Board of Insurance]. Any materials received from a witness shall be properly marked and noted by the shorthand reporter. A witness may make originals available for copying instead of relinquishing originals, provided that the originals remain available for comparison. (5) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200304 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Chapter 3. Life, Accident, and Health Insurance and Annuities Subchapter T. Minimum Standards for Medicare Supplement Policies 28 TAC sec.3.3311 (Editor's note: The text of the following section proposed for repeal will not be published. The section may be examined in the offices of the State Board of Insurance or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The State Board of Insurance of The Texas Department of Insurance proposes the repeal of sec.3.3311, concerning the consumer hotline for medicare supplement insurance information. The repeal of this section will eliminate the redundancy which could result with the amendment of sec.1.601, notice of policyholder complaint procedure, which is being considered for publication for comment. Bill Maschal, acting associate commissioner for consumer services, has determined that for the first five-year period the repeal is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeal. Mr. Maschal also has determined that for each year of the first five years the repeal is in effect the public benefit anticipated as a result of enforcing the repeal will be the elimination of duplicate notices concerning medicare supplement insurance information. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeal as proposed. Comments on the proposal may be submitted to Bill Maschal, Acting Associate Commissioner for Consumer Services, Mail Code 111-1A, Texas Department of Insurance, P.O. Box 149091, Austin, Texas 78714-9091. The repeal is proposed under the Insurance Code, Article 1.04, which provides the Texas Department of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Insurance Code, Article 1.35 and 1.35D which require the board to promulgate the proper wording for a notice of complaint procedure and require the department to maintain a toll-free telephone number to provide information and take complaints. sec.3.3311. Notice of Consumer Hotline. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200305 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Chapter 5. Property and Casualty Insurance Subchapter F. Inland Marine Insurance Definition and Classification of Inland Marine Insurance 28 TAC sec.5.5001 The State Board of Insurance of the Texas Department of Insurance proposes an amendment to sec.5.5001, concerning the definition and classification of inland marine insurance. The amendment is necessary to delete reference to the regulatory status designated as " fire and e.c.." The designation of "fire and e. c." indicates that those classes or subclasses of inland marine insurance for which rules, rates, and forms are not required to be filed and approved by the State Board of Insurance, must be written at rates in excess of the maximum rates promulgated for fire and extended coverage by the State Board of Insurance. The Insurance Code, Article 5.13-2, implements a new file and use rating system for commercial property insurance thereby eliminating the promulgation of maximum fire and extended coverage rates by the State Board of Insurance. In the absence of promulgated maximum fire and extended coverage rates, insurers cannot comply with the Texas definition of inland marine insurance for those classes or subclasses subject to the regulatory status of "fire and e.c.." Reference to "fire and e.c." as a regulatory status is eliminated from the classification procedures contained in the Texas definition of inland marine insurance. Lyndon Anderson, deputy commissioner, property division, has determined that, for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section and there will be no effect on local employment or local economy. Mr. Anderson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be the continued ability of insurers to offer inland marine policies for classes or subclasses of inland marine insurance that were previously in conflict with the application of the proper rating method. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed section. Comments on the proposal may be submitted to Lyndon Anderson, Deputy Commissioner for Property Division, Mail Code 103-A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The amendment is proposed under the Insurance Code, Article 5.53, which authorizes the State Board of Insurance to adopt a definition and classification of inland marine insurance. sec.5.5001. Purpose and Classification Procedure. (a) (No change.) (b) The regulatory status of each class (or subclass where indicated) is noted by the language "filed," or "non-regulated," [or "fire and e.c."] as specifically applied to each class or subclass and which shall be interpreted as follows. (1)-(2) (No change.) [(3) "Fire and e.c." indicates those classes or subclasses for which rules, rates, and forms are not subject to filing requirements but for which the premium for the inland marine policy must be in excess of the premium which would be otherwise produced by the applications of approved fire and extended coverage rates if the inland marine policy insures against the perils of fire and extended coverage. "Approved rates" as used in this paragraph, are the maximum fire and extended coverage rates published by the State Board of Insurance.] (c) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200456 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17 ,1992 For further information, please call: (512) 463-6327 28 TAC sec.5.5002 The State Board of Insurance of the Texas Department of Insurance proposes an amendment to sec.5.5002, concerning the definition and classification of inland marine insurance. The amendment is necessary to eliminate reference to the regulatory status of "fire and e.c." from the Texas definition of inland marine insurance for the bailee customers class, cold storage locker plant class, fine arts dealers subclass, installation risks or builders' risk class, stamp and coin commercial risks subclass, and self-service storage customer class. The regulatory status of "fire and e.c." is no longer applicable since the State Board of Insurance will not promulgate maximum fire and extended coverage rates. In the absence of promulgated maximum fire and extended coverage rates, insurers cannot comply with the requirement that the previously mentioned classes or subclasses be subject to a premium charge in excess of State Board of Insurance promulgated fire and extended coverage rates. With the elimination of the regulatory status of "fire and e.c.," a regulatory status of "nonregulated" is assigned to the previously mentioned classes or subclasses of inland marine insurance indicating rules, rates, and forms are not required to be filed for these classes or subclasses, with the exception of self-service storage customer class, which would indicate only rates, to be "nonregulated" since forms and rules are required to be filed. In addition, amendments are made to the jeweler's block class and musical instrument dealers class to correct printing errors in the previous Texas Register publication. Lyndon Anderson, deputy commissioner, property division, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section and there will be no effect on local employment or local economy. Mr. Anderson also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be the continued ability of insurers to offer inland marine policies for classes or subclasses of inland marine insurance that were previously in conflict with the application of the proper rating method. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed section. Comments on the proposal may be submitted to Lyndon Anderson, Deputy Commissioner Property Division, Mail Code 103-A, Texas Department of Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104. The amendment is proposed under the Insurance Code, Article 5.53, which authorizes the State Board of Insurance to adopt a definition and classification of inland marine insurance. sec.5.5002. Texas Definition of Inland Marine Insurance.
                  Inland marine insurance is defined and classified as follows: (1)-(4) (No change.) (5) Other inland marine risks. (A)-(B) (No change.) (C) Bailee customers policies (non-regulated)
                    [(fire and e.c.)]. Covering property in the custody of bleacheries, throwsters, fumigatories, dyers, cleaners, laundries, needle workers, and other bailees for the purpose of storage or performing work thereon. Such policies shall include coverage while in transit but shall not cover bailee's property at his or her premises. (D) Block policies. Block policies presently approved under this section are: (i)-(iii) (No change.) (iv) jeweler's block:
                      [;] (I) retailers with average inventories of less than $250,000 (filed); and (II) all other classes (non-regulated); (v) musical instrument dealers (filed). [:] [(I) retailers with average inventories of less than $250,000 (filed); and [(II) all other classes (non-regulated).] (E) Cold storage locker plant policies (non-regulated)
                        [(fire and e.c.)]. Covering merchandise of customers such as meats, game, fish, poultry, fruit, vegetables, and property of a similar nature. (F)-(I) (No change.) (J) Fine arts policies covering objects of art such as pictures, bronzes, and antiques, rare manuscripts and books, articles
                          [Articles] of virtu, etc: (i) (No change.) (ii) dealers (non-regulated)
                            [fire and e.c.); and (iii) (No change.) (K)-(O) (No change.) (P) Installation risks or builders' risk (non-regulated)
                              [(fire and e.c.)]. Covering loss to owner, seller, or contractor on account of physical damage to machinery, equipment, building materials, or building supplies being used with and during the course of installation, testing, building, renovating, or repairing of dwelling, commercial, or industrial construction. Such policies may cover at points or places where work is being performed, while in transit, and during temporary storage or deposit of property designated for and awaiting specific installation, building renovating, or repairing. In no event shall any policy cover such properties while contained in stock of merchandise held for sale to the public by dealers and such coverage shall be limited to installation risks or builders' risks where perils in addition to fire and extended coverage are to be insured. If written for account of owner, the coverage shall cease upon completion and acceptance thereof or if written for account of a seller or contractor, the coverage shall terminate when the interest of the seller or contractor ceases. (Q)-(GG) (No change.) (HH) Stamp and coin floaters: (i) (No change.) (ii) commercial risks (non-regulated)
                                [(fire and e.c.)]: (II) self-service storage customer floater polices (filed for policy forms and endorsements; non-regulated
                                  [fire and e.c.] for rates) may be issued to a tenant of a self-storage facility and covering property stored at such facility. Coverage is limited to property in storage for the perils set forth in the policies, which must include coverage for property while in transit. Coverage may not be provided for any motor vehicles subject to motor vehicle registration and inspection. It is not intended that this coverage definition will allow coverage of property stored in any facility where the lessor issues a warehouse receipt, bill of lading, or other document of title relating to the stored property, or in facilities other than storage facilities that have multiple storage units. Accordingly, the terms "self-service storage facility" and "tenant" shall have the meaning prescribed by the Texas Property Code, sec.59. 000, i.e., self-service storage facility means real property that is rented to be used exclusively for storage of property and is cared for and controlled by the tenant. Tenant means a person entitled under a rental agreement to the exclusive use of storage space at a self-service storage facility. (JJ)-(OO) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200455 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Plan of Operation of the Texas Market Assistance Program (MAP) 28 TAC sec.sec.5.6601-5.6603, 5.6605-5.6615 (Editor's note: The text of the following sections proposed for repeal will not be published. The sections may be examined in the offices of the State Board of Insurance or in the Texas Register office, Room 245, James Earl Rudder Building, 1019 Brazos Street, Austin.) The State Board of Insurance of the Texas Department of Insurance proposes the repeal of sec.sec.5.6601-5.6603, 5.6605-5.6615, concerning the plan of operation of the Texas Market Assistance Program (MAP). The current sections were adopted in 1990. The repeal of these sections are proposed pursuant to the Texas Insurance Code, Article 5.76-2, which gives the State Board of Insurance authority to establish a voluntary market assistance program to reduce the number of risks insured by the employer's rejected risk fund; and in response to House Bill 62, sec.18.16, which amends the Texas Insurance Code, Article 5.76-2, to provide that any fees established and collected for market assistance review are dedicated to the Texas Workers' Compensation Insurance Facility (TWCIF). It is anticipated TWCIF will propose an amended plan of operation, through its rulemaking procedures, for the Market Assistance Program to the Texas Department of Insurance. The rules are proposed for repeal pursuant to the transfer of the MAP from the Texas Department of Insurance to TCWIF. W. R. (Dusty) Rhodes, map coordinator for workers' compensation, has determined that for the first five-year period the repeals are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the repeals. W. R. (Dusty) Rhodes also determined that for each year of the first five years the repeals are in effect the public benefit anticipated as a result of the repeals will be compliance with the Texas Insurance Code, Article 5.76-2, sec.5.01. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the repeals as proposed. Comments on the proposal may be submitted to W. R. (Dusty) Rhodes, Workers' Compensation, Mail Code 202-1A, Texas Department of Insurance, P.O. Box 149091, Austin, Texas 78714-9091. The repeals are proposed under the Texas Insurance Code, Article 5.62, which provides the Texas Department of Insurance with the authority to make such rules and regulations as are necessary to carry out the provisions of sec.5.6601. Definitions. sec.5.6602. Effective Date. sec.5.6603. Application Fee. sec.5.6605. Data Collection Responsibilities of the MAP Coordinator. sec.5.6606. Additional Responsibilities of the MAP Coordinator. sec.5.6607. Types of Statistical Information Maintained. sec.5.6608. Use of Data. sec.5.6609. Eligibility. sec.5.6610. Review Process. sec.5.6611. Participating Insurers. sec.5.6612. Confidentiality. sec.5.6613. Policy Forms and Terms. sec.5.6614. Request for Market Search Forms. sec.5.66l5. Agents. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200457 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Subchapter B. Insurance Holding Company System Regulatory Act 28 TAC sec.sec.7.201-7.205, 7.209-7.213 The State Board of Insurance of the Texas Department of Insurance proposes amendments to sec.sec.7.201-7.205 and 7.209-7.213, concerning administrative regulation under the Insurance Holding Company System Regulatory Act (the Insurance Code, Article 21.49-1). The amendments are necessary to provide editorial changes and clarifications and to reflect statutory amendments to Article 21.49-1 enacted by passage of House Bill 2, 72nd Legislature, 1991. The amendment to sec.7.201 removes the availability to incorporate by reference on the completely restated registration statement required by sec.7.203(g) and remove the availability of an extension of time to provide information which is available but impractical to furnish at the time required to be filed. The amendment to sec.7.202 expands the definition of affiliate, commissioner, control, and insurer and provides a definition for immediate family. The amendment to sec.7.203 removes the exemption provided in the total reinsurance of a mutual assessment company by a stipulated premium insurance company; provides that a disclaimer may be filed provided the person filing is in compliance with the Act, sec.5(a)-(c); requires dividends and distributions to shareholders to be noticed, utilizing Form HCDividend as adopted by reference; and, makes dividends to shareholders subject to applicable provisions of the Insurance Code. The amendment to sec.7.204 broadens the scope for certain transactions requiring notice or approval and provide that the calculation of extraordinary dividends or distributions shall be based on the declaration date(s) of such dividends or distributions. The amendment to sec.7.205 provides that a change or substitution of an attorney-in-fact of a Lloyd's or reciprocal or interinsurance exchange is subject to the Act, sec.5; provides for the docketing of a contested case for the purpose of pre-hearing matters and motions; provides that mergers contemplated by the Insurance Code, Article 21.28-A, sec.1, are subject to the Act, sec.5(c); and sets forth additional violations and sanctions. The amendment to sec.7.209 deletes a previous exemption. The amendment to sec.7.210 requires disclosure of certain additional transactions and removes a previous exemption. The amendments to sec.7.211 and sec.7.212 are editorial changes. The amendment to sec.7.213 deletes a previous exemption. Copies of Form HCDividend may be obtained from the Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. Copies are also filed with the secretary of state. William L. Doolittle, deputy commissioner, holding company division, has determined that for the first five-year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the sections. Mr. Doolittle also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be more efficient administrative regulation under the Insurance Code, Article 21.49-1. The effect on small businesses will be the same as the anticipated economic cost to persons required to comply with the proposed sections. There is no anticipated difference in cost of compliance between small and large businesses based on cost per hour of labor. There is no anticipated economic cost to persons who are required to comply with the proposed amendments other than for the minimal cost of completing forms reporting on certain occurrences and transactions. Comments on the proposal may be submitted to William L. Doolittle, Deputy Commissioner, Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104. The amendments are proposed under the Insurance Code, Article 21.49-1, sec.11, which authorizes the Texas Department of Insurance to issue such rules, regulations, and orders as shall be consistent with and shall carry out the provisions of the Insurance Holding Company System Regulatory Act and to govern the conduct of its business and proceedings under the Insurance Code, Article 21. 49-1. sec.7.201. Forms Filings. (a) General requirements. (1) The forms that are specified in sec.sec.7.209-7.213 of this title (relating to Form A, Form B, Form C, Form D, and Form E) are intended to be guides in the preparation of the statements, notices, and applications required by the Insurance Code, Article 21.49-1. They are to provide notice of the information required and the location in which it will be expected to be found. In preparing any statement, notice, or application, the text of the form need not be repeated so long as there is clear identity of the matter to which the answer or material applies. Unless expressly provided otherwise, if any item is inapplicable or the answer thereto is in the negative, an appropriate statement to that effect shall be made. The forms specified in sec. s7.209-7.213 are also referred to in this subchapter as Forms A-E. Form A is also referred to as the acquisition statement, Form B as the registration statement, Form C as a disclaimer, Form D as an extraordinary dividend, and Form E as an exemption statement. For use in accordance with sec.7.210(e), the Texas Department
                                    [State Board] of Insurance adopts by reference the biographical affidavit form published by and available from the Texas Department
                                      [State Board] of Insurance. Copies of this form may be obtained from the Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe
                                        [Corporate Activities Division, State Board of Insurance, 1110 San Jacinto Boulevard], Austin, Texas 78714-9104
                                          [78701-1998]. (2) Three complete originally signed copies of each statement, notice, or application, including exhibits and all other papers and documents filed as a part thereof, in connection with any acquisition statement filed under sec.7.209, and one complete originally signed copy of every other statement, notice, or application, including exhibits and all other papers and documents filed as a part thereof, shall be filed with the commissioner by personal delivery or by mail addressed to: Holding Company Division, Mail Code 304- 2A, Texas Department of Insurance, P.O. Box 149104
                                            [Corporate Activities Division, State Board of Insurance, 1110 San Jacinto Boulevard], Austin, Texas, 78714-9104
                                              [78701-1998]. Each statement, notice, or application shall be subject to the appropriate filing fee provided for in s7.1301 of this title (relating to Regulatory Fees). The appropriate filing fee shall be forwarded to the Holding Company
                                                [Corporate Activities] Division of the Texas Department
                                                  [State Board] of Insurance under separate cover along with a copy of the letter transmitting the statement, notice, or application. (3)-(4) (No change.) (b) Incorporation by reference, summaries, and omissions. (1) (No change.) (2) The right to incorporate by reference does not apply to sec.7.209 and sec.7.213 , or to a completely restated up-to-date registration statement filed in accordance with sec.7.203(g) of this title (relating to Registration of Insurers) and sec.7.210. (3)-(4) (No change.) (c)-(d) (No change.) (e) Information unknown or unavailable [and extension of time to furnish]. [(1)] Information required need be given only insofar as it is known or reasonably available to the person filing the statement. If any required information is unknown and not reasonably available to the person filing, either because the obtaining thereof would involve unreasonable effort or expense, or because it rests peculiarly within the knowledge of another person not affiliated with the person filing, the information may be omitted, subject to the following conditions. (1)
                                                    [(A)] The person filing shall give such information on the subject as he possesses or can acquire without unreasonable effort or expense, together with the sources thereof. (2)
                                                      [(B)] The person filing shall include a statement either demonstrating that unreasonable effort or expense would be involved or indicating the absence of any affiliation with the person within whose knowledge the information rests and stating the result of a request made to such person for the information. [(2) If any required information, document, or report is available but impractical to furnish at the time it is required to be filed, there may be filed with the commissioner as a separate document or as a part of the application an appropriate statement: [(A) identifying the information, document, or report in question; [(B) stating why the filing thereof at the time required is impractical; and [(C) requesting the waiving of the requirement for filing the information, document, or report to a specified date. The application shall be deemed granted unless the commissioner within 30 days after receipt thereof, shall enter an order denying the application or granting an extension for a period other than that requested in the application.] sec.7.202. Definitions. (a) The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. (1) Act-(No change.) (2) Affiliate-An affiliate of, or person affiliated with, a specific person, is a person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, the person specified. If such controlling person includes a member of the immediate family of such person, any other person that is an affiliate of such family member shall be deemed to be an affiliate of such controlling person. (3) (No change.) (4) Commissioner-The commissioner of insurance of the State of Texas, the commissioner's deputies, or the State Board of Insurance, as appropriate
                                                        . (5) Control-The term "control," including the terms "controlling," "controlled by," and "under common control with," means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract other than a commercial contract for goods or nonmanagement services, or otherwise, unless the power is the result of an official position with or corporate office held by the person. Control shall be presumed to exist if any person, directly or indirectly, or with members of the person's immediate family,
                                                          owns, controls, or holds with the power to vote, or if any person other than a corporate officer or director of a person
                                                            holds [irrevocable] proxies representing 10% or more of the voting securities or authority of any other person, or if any person by contract or agreement is designated as an attorney-in-fact for a Lloyd's plan insurer under the Insurance Code, Article 18.02 or for a reciprocal or interinsurance exchange under the Insurance Code, Articles 19.02 and 19.10
                                                              . This presumption may be rebutted by a showing made in the manner provided by the Act, sec.3(j)
                                                                [(i)], that control does not exist in fact and that the person rebutting the presumption is in compliance with the Act, sec.5(a)-(c)
                                                                  . The commissioner may determine, after furnishing all persons in interest notice and opportunity to be heard and making specific findings of fact to support such determination, that control exists in fact, notwithstanding the absence of a presumption to that effect, where a person exercises directly or indirectly either alone or pursuant to an agreement with one or more other persons such a controlling influence over the management or policies of an authorized insurer as to make it necessary or appropriate in the public interest or for the protection of the policyholders [or stockholders] of the insurer that the person be deemed to control the insurer. (6)-(11) (No change.) (12) Immediate family-A person's spouse, father, mother, children, brothers, sisters, and grandchildren, the father, mother, brothers, and sisters of the person's spouse, and the spouse of the person's child, brother or sister, mother, father, or grandparent. (13)
                                                                    [(12)] Insurance holding company system-Consists of two or more affiliated persons, one or more of which is an insurer. (14)
                                                                      [(13)] Insurer-Includes all insurance companies organized or chartered under the laws of this state, or licensed to do business in this state, including capital stock companies, mutual companies, farm mutual insurance companies,
                                                                        title insurance companies, fraternal benefit societies, local mutual aid associations, local mutual burial associations, statewide mutual assessment companies, county mutual insurance companies, Lloyds' plan companies, reciprocal or interinsurance exchanges, stipulated premium insurance companies and group hospital service companies, and any other entity which is made subject to the Insurance Code, Article 21.49-1, by applicable law, except that it shall not include agencies, authorities, or instrumentalities of the United States, its possessions and territories, the Commonwealth of Puerto Rico, the District of Columbia, or a state or political subdivision of a state. (15)
                                                                          [(14)] Person-An individual, a corporation, a partnership, an association, a joint stock company, a trust, an unincorporated organization, any similar entity or any combination of the foregoing acting in concert, but shall not include any securities broker performing no more than the usual and customary broker's function. (16)
                                                                            [(15)] Security holder -Of a specified person is one who owns any security of such person, including common stock, preferred stock, debt obligations, and any other security convertible into or evidencing the right to acquire any of the foregoing. The term "debt obligation" shall not include trade, commercial, or open accounts, matured claims, or agents' commissions. (17)
                                                                              [(16)] Subsidiary-Of a specified person is an affiliate controlled by such person directly or indirectly through one or more intermediaries. (18)
                                                                                [(17)] Ultimate controlling person-That person which is not controlled by another person (as defined in this subsection). (19)
                                                                                  [(18)] Voting security -Any security or other instrument giving or granting to the holder the power to vote at a meeting of shareholders of a person for or against the election of directors or any other matter involving the direction of the management and policies of such person, or any other security or instrument which the Texas Department
                                                                                    [State Board] of Insurance deems to be of similar nature including, but not limited to, those described in such rules and regulations as the Texas Department
                                                                                      [State Board] of Insurance may prescribe in the public interest as a voting security. (b) (No change.) sec.7.203. Registration of Insurers. (a)-(d) (No change.) (e) Amendments to registration statements. Each registered insurer shall keep current the information required to be disclosed in its registration statement by reporting all material changes or additions (whether single transactions or cumulative in total). Such amendment shall be in accordance with sec.7.210 of this title (relating to Form B), the registration statement, the cover page requirements of sec.7.201(d) of this title (relating to Forms Filings), and with a positive statement as to the items of the form not being amended instead of setting out such unamended portions. Such amendment shall be filed within 15 days after the end of the month in which the registered insurer learns of each such change or addition [; provided, however, that subject to the provisions of these sections, relating to notice of declaration of extraordinary dividends and distributions each registered insurer shall so report to the commissioner all dividends and other distributions to shareholders within two business days following the declaration thereof]. Within 60 days after the effective date of these sections, each insurer shall amend its registration statement to comply with these sections.
                                                                                        [Provided, however, that any] Any
                                                                                          transaction that is formally approved by official order of the commissioner under any of the following enumerated provisions shall be deemed to be an amendment to the registration statement without further action or filing: (1)-(9) (No change.) (10) [the Insurance Code, Article 22.15;] [(11)] the Insurance Code, Article 22.19, provided that the reinsurance is a total direct reinsurance; and (11)
                                                                                            [(12)] any other transaction formally approved by official order of the commissioner under authority authorized by any other provisions of the Insurance Code. (f) Material changes. The following occurrences shall, without limitation on the meaning of the phrase "material changes," be deemed to be material changes for the purposes of filing an amendment to the registration statement: (1)-(5) (No change.) (6) any transaction with an affiliate or affiliates which, when taken together with all other transactions with affiliates (excluding those transactions approved under sec.7.204(a)(1) of this title (relating to Commissioner's Approval Required) and those transactions for which notification is given under sec.7.204(a)(2) occurring within 12 months next preceding, in the aggregate or cumulatively involve the lesser of
                                                                                              [either] 1/2 of 1.0% or more of an insurer's admitted assets, or 5.0% or more of an insurer's surplus, calculated
                                                                                                [determined by whichever is the lesser,] as of the 31st day of December next preceding. In such case, sec.7.210(c) and (f) shall be made current together with a report of all transactions with affiliates regardless of size within 12 months next preceding. After such transactions are reported and the filings pursuant to sec.7.210(c) and (f) are made current, each subsequent transaction with an affiliate which, when taken together with those transactions which occurred within the 12 months next preceding, were reported pursuant to this subsection and which aggregately or cumulatively involve the lesser of
                                                                                                  [either] 1/2 of 1.0% or more of an insurer's admitted assets, or 5.0% or more of an insurer's surplus, calculated
                                                                                                    [determined by whichever is the lesser,] as of the 31st day of December next preceding, shall be reported pursuant to sec.7.203(e) of this title (relating to Registration of Insurers). (g)-(j) (No change.) (k) Exemptions. The provisions of this section shall not apply to any insurer, information, or transaction if and to the extent that the commissioner or
                                                                                                      board by rule, regulation, or order shall exempt the same. (l) Disclaimer. Any person may file with the commissioner a disclaimer of control or affiliation with any insurer, or such a disclaimer may be filed by such insurer or any member of an insurance holding company system. The disclaimer shall be in accordance with sec.7.211 of this title (relating to Form C) and shall disclose all material relationships and bases for affiliation between such persons and such insurer as well as the basis for disclaiming such affiliation. A copy of any disclaimer filed with the commissioner, if the affected insurer is not a party thereto, shall also be furnished by the applicant to the insurer at the same time it is filed with the commissioner. The insurer shall, within 15 business days after receipt thereof, unless the time is extended by the commissioner for good cause, respond to the matters raised in the disclaimer [if it does not have a current registration statement on file with the commissioner]. After a disclaimer has been filed, the insurer shall be relieved of any duty to register or report under subsection (a) of this section which may arise out of the insurer's relationship with such person unless and until the commissioner disallows such a disclaimer. A disclaimer filed under this subsection does not relieve a person of the duty to comply with the requirements of the Act, sec.5(a)-(c).
                                                                                                        The commissioner shall disallow such a disclaimer only after furnishing all parties in interest with notice and opportunity to be heard and after making specific findings of fact to support such disallowance. After a disclaimer of control or affiliation has been filed by any person, any acquisition, in any manner, directly or indirectly, of a voting security of the domestic insurer by such person shall be subject to the Act, sec.5, in absence of the filing, within five business days, of an amendment which shall make current the disclaimer of control or affiliation previously filed pursuant to this subsection. (m) (No change.) (n) Dividends and distributions. Each registered insurer shall, by personal delivery or by mail addressed to: Holding Company Division, Mail Code 304-2A, Texas Department of Insurance, P.O. Box 149104, 333 Guadalupe, Austin, Texas 78714-9104, provide notice to the commissioner of all dividends and other distributions to shareholders within two business days following the declaration thereof in the form prescribed by the commissioner and adopted herein by reference as Form HCDividend and such notice shall be deemed an amendment to the registration statement without further action or filing. See sec.7.204(d) of this title (relating to Commissioner's Approval Required) for requirements regarding extraordinary dividends and distributions. All dividends and distributions to shareholders are subject to the applicable provisions of the Insurance Code, Articles 3.11, 21.31, 21.32 and 21.32A. sec.7.204. Commissioner's Approval Required. (a) Prior approval and notice. (1) (No change.) (2) The following transactions between a domestic insurer and any person in its holding company system may not be entered into unless the insurer has notified the commissioner in writing of its intention to enter into any such transaction at least 30 days prior thereto, or such shorter period as he may permit, and he has not disapproved it within such period: (A) (No change.) (B) reinsurance treaties or agreements or modifications to those treaties or agreements, including those agreements that may require as consideration the transfer of assets from an insurer to a nonaffiliate, if an agreement or understanding exists between the insurer and nonaffiliate that any portion of the assets will be transferred to one or more affiliates of the insurer
                                                                                                          ; (C) (No change.) (D) management or service agreements, cost sharing agreements, rental or leasing agreements; (E) agreements to consolidate federal income tax returns; (F) transactions with affiliated financial institutions, other than fully insured demand deposits; and (G)
                                                                                                            [(D)] any material transactions which the commissioner has determined after notice may adversely affect the interest of the insurer's policyholders [or stockholders] or of the public [including, but not limited to, management or service agreements, cost sharing agreements, rental or leasing agreements, agreements to consolidate federal income tax returns, and transactions with affiliate financial institutions]. (3) A domestic insurer may not enter into transactions that are part of a plan or series of similar transactions with persons within the holding company system to avoid the statutory threshold amount and thus avoid review. If the commissioner determines that the transactions were entered into over any 12- month period for that purpose, the commissioner may consider the series of transactions with regard to their cumulative effect and may apply the applicable statutory thresholds or the commissioner may apply sanctions under the Code. (4)
                                                                                                              [(3)] Nothing herein contained shall be deemed to authorize or permit any transactions which, in the case of a noncontrolled insurer, would be otherwise contrary to law. (5)
                                                                                                                [(4)] The commissioner, in reviewing transactions hereunder, shall consider whether the transactions comply with the standards set forth in subsection (c) of this section and whether they may adversely affect the interest of policyholders. Any disapproval by the commissioner of any such transactions shall set forth the specific reasons for such disapproval. (6)
                                                                                                                  [(5)] The approval of any transaction under this subsection shall be deemed an amendment under sec.7.203(e) of this title (relating to Registration of Insurers) to an insurer's registration statement without further filing. (b) Transactions. Requests for approval of transactions pursuant to subsection (a)(1) of this section and notices of proposed transactions pursuant to subsection (a)(2) of this section, shall be accompanied by descriptions of the essential features of such transactions which are reasonably adequate to permit proper evaluation thereof by the commissioner. Such descriptions shall in all cases include at least the following: the nature and purpose of the transaction; the nature and amounts of any payments or transfers of assets between the parties; the identities of all parties to such transactions; whether any officers or directors of a party are pecuniarily interested therein, and copies of any proposed contracts, agreements, or memoranda of understanding between the parties relating to the transaction along with sufficient competent documentation evidencing compliance with the standards specified in the Act, sec.4(a), and evidencing that the transaction will not adversely affect the interest of policyholders. An agreement to consolidate federal income taxes shall provide that a domestic insurer will be adequately indemnified in the event the Internal Revenue Service levies upon the insurance company's assets for unpaid taxes in excess of the amount paid under the agreement.
                                                                                                                    No such request or notice shall be deemed filed with the commissioner until the date all such material has been provided. (c) (No change.) (d) Extraordinary dividends
                                                                                                                      [Dividends] and other distributions. (1) (No change.) (2) For purposes of these sections, an extraordinary dividend or distribution includes any dividend or distribution of cash or other property, whose fair market value together with that of other dividends or distributions made within the preceding 12 months exceeds the greater of: (A) 10% (20% if such insurer is a title insurer) of such insurer's surplus as regards policyholders as of the 31st day of December next preceding; or (B) the net gain from operations of such insurer, if such insurer is a life or title insurer, or the net investment income, if such insurer is not a life or title insurer, for the 12-month period ending the 31st day of December next preceding, but shall not include pro rata distributions of any class of an insurer's own securities. (C) In determining the 12-month cumulative amount for dividends or distributions, the calculation shall be based on the declaration date(s) of such dividends or distributions
                                                                                                                        [is governed by the Act, sec.4>(c)(2)]. (3) (No change.) (e) (No change.) sec.7.205. Acquisition Statements -Filing Requirements. (a) Domestic insurer defined. Filing and other regulatory requirements for acquisitions of control and certain other matters as specified in the Act, sec.5(a), are governed by the Act, sec.5(a). For purposes of this subsection, a domestic insurer as defined in the Act, sec.5(a)(2), shall include any person controlling a domestic insurer unless such person is either directly or through its affiliates primarily engaged in business other than the business of insurance. A change or substitution of an attorney-in-fact of a Lloyd's or reciprocal or interinsurance exchange is subject to the Act, sec.5.
                                                                                                                          A failure to file complete and accurate information in all material respects is grounds for a denial by the commissioner under the Act, sec.5(c). (b) Form and content of statement. The statement required by subsection (a) of this section (elsewhere referred to as acquisition statement) shall be made in accordance with sec.7.209 of this title (relating to Form A), the acquisition statement. The acquiring party shall provide additional financial information in the form or substance as required by the commissioner which is material to the finding required by the Act, sec.5(c)(1)(iii). Any financial information required under the Act, sec.5(b)(3), may be waived by the commissioner if such information is not deemed material. No statement required by subsection (a) of this section shall be deemed filed with the commissioner until on the date all such material required and sufficient to constitute a full statement has been provided. At any time after the submission or resubmission to the commissioner of a statement filed under the Act, sec.5(a), regardless of whether the statement is complete and accurate, the matter may be placed on the commissioner's contested case docket to hear any prehearing matters and motions permitted under the Administrative Procedure and Texas Register Act (Texas Civil Statutes, Article 6252-13a). (c)-(e) (No change.) (f) Approval by commissioner; hearings. All mergers, acquisitions of control, and other matters as specified in the Act, sec.5(a), and mergers contemplated by the Insurance Code, Article 21.28-A, sec.1,
                                                                                                                            are subject to the Act, sec.5(c). The acquiring party shall have the burden of providing sufficient competent evidence for the commissioner to make the determinations required under the Act, sec.5(c)(1). (g)-(l) (No change.) (m) Additional violations. Each director or officer of an insurance company subject to these sections, or of an insurance holding company system subject to these sections, who knowingly and wilfully violates, participates in, or assents to or who knowingly and wilfully permits any of the officers, agents, or employees of the insurer or holding company system to engage in transactions or make investments that have not been properly reported or submitted under these sections or that knowingly and wilfully violate these sections, shall pay, in the person's individual capacity, a civil penalty of not more than $10,000 for each violation, after notice and an opportunity for hearing before the commissioner. In determining the amount of the civil penalty, the commissioner shall consider the appropriateness of the penalty with respect to the gravity of the violation, the history of previous violations, and any other matters that justice requires. (n) Additional sanctions. An entity that holds a certificate of authority granted by the Texas Department of Insurance or the commissioner and that violates the Insurance Code is subject to the sanctions authorized under the Insurance Code, Article 1.10, sec.7. sec.7.209. Form A. (a) Statement regarding the acquisition of control of a domestic insurer. _____________________________ name of domestic insurer by _____________________ name of acquiring person (applicant). Filed with the Texas Department
                                                                                                                              [State Board] of Insurance, date: , 19 . Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed: ___________________________________________________________ ________________________________________________________________________________ _______________________________________ ___________________________________________________________. (b)-(l) (No change.) (m) Financial statements and exhibits. (1) (No change.) (2) [Subject to sec.7.201(e) of this title (relating to Forms Filings), the] The
                                                                                                                                financial statements shall include the annual financial statements of the persons identified in subsection (c)(3) of this section for the preceding three fiscal years (or for such lesser period as such applicant and its affiliates and any predecessors thereof shall have been in existence), and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that such unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by the Act, sec.3, from the date of the financial statement to the date of the affidavit or certification. Such statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business. Unless exempted by the commissioner, the annual financial statements of the applicant shall be made in accordance with generally accepted auditing standards and accompanied by the certificate of an independent certified public accountant to the effect that such statements present fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If such certificate is not available, then such financial statement shall be sworn to by the applicant as correctly reflecting its financial condition, and in such case, the commissioner of insurance at the commissioner's discretion may require such financial statement to be certified by an independent public accountant. If the applicant is an insurer which is actively engaged in the business of insurance and licensed to do business in this state, it may provide financial statements which conform to the annual statements of the insurer filed with the insurance department of the insurer's domiciliary state and which are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the domiciliary state. If the applicant is an individual person, such person shall provide a reviewed financial statement accompanied by the certificate of an independent public accountant that he is not aware of any material modifications that should be made to the accompanying financial statement in order for it to be in conformity with generally accepted accounting principles and shall provide a balance sheet as of a date not earlier than 120 days prior to the filing of the statement and balance sheets for the second and third fiscal years preceding the filing of the statement accompanied by affidavit or certification that each balance sheet is true and correct as of its date. (3)-(4) (No change.) (n) (No change.) sec.7.210. Form B. (a) Insurance holding company system registration statement. Filed with the Texas Department
                                                                                                                                  [State Board] of Insurance by (name of registrant) on behalf of the following insurance companies. Name, address ___________________________________________________________ date: , 19 . Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed: ____________________________________________________________ ____________________________________________________________ ____________________________________________________________ ___________________________________________________________. (b) (No change.) (c) Organizational chart. Furnish a chart or listing clearly presenting the identities of and interrelationships among all affiliated persons within the insurance holding company system , including all affiliated persons as defined in sec.7.202(a)(2) of this title (relating to Definitions)
                                                                                                                                    . The chart or listing should show the percentage of each class of voting securities of each affiliate which is owned, directly or indirectly, by another affiliate. If control of any person within the system is maintained other than by the ownership or control of voting securities, indicate the basis of such control. As to each person specified in such chart or listing indicate the type of organization (e.g., corporation, trust, partnership) and the state or other jurisdiction of domicile. (d) (No change.) (e) Biographical information. Furnish biographical data for the ultimate controlling person(s) if such person is an individual, or for the directors and executive officers of the ultimate controlling person if the ultimate controlling person is not an individual, with such biographical data in the form of the biographical affidavit form adopted by reference under sec.7.201(a)(1) of this title (relating to Forms Filings). Copies of this form are available from the Holding Company
                                                                                                                                      [Corporate Activities] Division, Mail Code 304- 2A, Texas Department
                                                                                                                                        [State Board] of Insurance, P.O Box 149104, 333 Guadalupe
                                                                                                                                          [1110 San Jacinto Boulevard], Austin, Texas 78714-9104
                                                                                                                                            [78701-1998]. (f) Transactions, relationships, and agreements. (1) Briefly describe the following agreements in force, relationships subsisting, and transactions currently outstanding between the registrant and its holding company, its subsidiaries, and its affiliates: (A)-(E) (No change.) (F) reinsurance agreements covering all or substantially all of one or more lines of insurance of the ceding company; [and] (G) all dividends and other distributions to shareholders; (H) agreements with affiliates to consolidate federal income tax returns; (I) all transactions with affiliated financial institutions; (J)
                                                                                                                                              [(G)] any affiliated transaction not disclosed previously which is subject to the Act, sec.4(d); and (K) any pledge of an insurer's stock, including stock of any subsidiary or controlling affiliate, for a loan made to any member of its insurance holding company system
                                                                                                                                                . (2) (No change.) (g) (No change.) (h) Financial statements and exhibits. (1) (No change.) (2) The financial statements shall include the annual financial statements (including profit and loss) of the ultimate controlling person in the insurance holding company system as of the end of the person's latest fiscal year and all subsidiaries of the registrant. Such financial statements may be prepared on either an individual basis, or unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business. [Unless the commissioner otherwise permits pursuant to sec.7.201(e) of this title (relating to Forms Filings), the] The
                                                                                                                                                  annual financial statements shall be accompanied by the certificate of an independent public accountant to the effect that such statements present fairly the financial position of any ultimate controlling person (other than a natural person) and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If the ultimate controlling person is an insurer which is actively engaged in the business of insurance, the annual financial statements need not be certified, provided they are based on the annual statement of such insurer filed with the insurance department of the insurer's domiciliary state and are in accordance with requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of such state. Exhibits shall include copies of the latest annual reports to shareholders of the ultimate controlling person and proxy material used by the ultimate controlling person; and any additional documents or papers required by regulation. (i)-(j) (No change.) sec.7.211. Form C. (a) Disclaimer of control or affiliation filed with the Texas Department
                                                                                                                                                    [State Board] of Insurance by ________________________ (name of applicant). Name of company or companies whose relationship is disclaimed: ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ __________, date: ____________, 19__. Name, title, address, and telephone number of individual to whom notices and
                                                                                                                                                      correspondence concerning this statement should be addressed: ____________________________________________________________________ ___________________________________________________________ ___________________________________________________________. (b)-(f) (No change.) sec.7.212. Form D. (a) Notice of declaration of extraordinary dividend. Filed with the Texas Department
                                                                                                                                                        [State Board] of Insurance by ________________ (name of insurer), date: , 19 . Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed :
                                                                                                                                                          [.] ______________________________________________________________________________ ___________________________________________________________ ___________________________________________________________. (b)-(p) (No change.) sec.7.213. Form E. (a) Statement regarding the exemption from approval of the acquisition of control of a domestic insurer.
                                                                                                                                                            [:] Name of domestic insurer: ______________________ Name of acquiring person (applicant):____________________. Filed with the Texas Department
                                                                                                                                                              [State Board] of Insurance, date: ____________, 19__. Name, title, address, and telephone number of individual to whom notices and correspondence concerning this statement should be addressed: ___________________________________________________________ ___________________________________________________________ ___________________________________________________________ ___________________________________________________________. (b)-(g) (No change.) (h) Financial statements and exhibits. (1) (No change.) (2) [Subject to sec.7.201(e) of this title (relating to Forms Filings), the] The
                                                                                                                                                                financial statements shall include the annual financial statements of the persons identified in subsection (c)(1) of this section for the preceding fiscal year, and similar unaudited financial information as of a date not earlier than 120 days prior to the filing of the statement, accompanied by affidavit or certification of the chief financial officer of the applicant that such unaudited financial statement is true and correct, as of its date, and that there has been no material change in financial condition, as defined by Act, sec.3, from the date of the financial statement to the date of the affidavit or certification. Such statements may be prepared on either an individual basis, or, unless the commissioner otherwise requires, on a consolidated basis if such consolidated statements are prepared in the usual course of business. Unless exempted by the commissioner, the annual financial statement of the applicant shall be made in accordance with generally accepted auditing standards and accompanied by the certificate of an independent certified public accountant to the effect that such statement presents fairly the financial position of the applicant and the results of its operations for the year then ended, in conformity with generally accepted accounting principles or with requirements of insurance or other accounting principles prescribed or permitted under law. If such certificate is not available, then such financial statement shall be sworn to by the applicant as correctly reflecting its financial condition, and in such case, the commissioner of insurance at the commissioner's discretion may require such financial statement to be certified by an independent public accountant. If the applicant is an insurer which is actively engaged in the business of insurance and licensed to do business in this state, it may provide financial statements which conform to the annual statement of the insurer filed with the insurance department of the insurer's domiciliary state and which are in accordance with the requirements of insurance or other accounting principles prescribed or permitted under the law and regulations of the domiciliary state. If the applicant is an individual person, such person shall provide for the preceding fiscal year a reviewed financial statement accompanied by the certificate of an independent public accountant that he is not aware of any material modifications that should be made to the accompanying financial statement in order for it to be in conformity with generally accepted accounting principles and a balance sheet as of a date not earlier than 120 days prior to the filing of the statement accompanied by affidavit or certification that the balance sheet is true and correct as of its date. Any financial information required by this subsection may be waived by the commissioner if such information is not deemed material. (3) (No change.) (i) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200453 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Chapter 21. Trade Practices Subchapter C. Unfair Claims Settlement Practices 28 TAC sec.sec.21.202-21.204 The State Board of Insurance of the Texas Department of Insurance proposes amendments to sec.sec.21.202-21.204 concerning unfair claims settlement practices. The amendments are necessary to implement Legislative amendments to the Insurance Code, Article 21.21-2. The enactment of the new Insurance Code, Article 21.55, relating to the prompt payment of claims establishes a new standard for claim payments. Failure to meet the standard is being proposed as an additional unfair claims practice. Amendments to the Insurance Code, Article 21.21-2, require deletion of language in sec.21.202 of this title, limiting the application of the Unfair Claims Settlement Practices law to insurers operating under Subchapter C of Chapter 3 or Subchapter A, B, and C of Chapter 5 of the Insurance Code; repeal of language in sec.21.203 of this title requiring defined acts to be committed without cause and with frequency in order for the acts to be considered unfair claims settlement practices. Bill Maschal, acting associate commissioner for consumer services, Texas Department of Insurance, has determined that, for the first five-year period the proposed amendments will be in effect, there will not be fiscal implications as a result of enforcing or administering the amendments. Mr. Maschal also has determined that for each year of the first five years the amendments are in effect, the public benefit anticipated as a result of enforcing the amendments will be fair settlement of claims. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the proposed amendments. Comments on the proposal may be submitted to Bill Maschal, acting associate commissioner for consumer services, Mail Code 111-1A, Texas Department of Insurance, P.O. Box 149091, Austin, Texas 78714-9091. The amendments are proposed under the Insurance Code, Article 1.04, which provides the Texas Department of Insurance with the authority to determine policy and rules in accordance with the laws of this state; and under the Insurance Code, 21.21-2, which provides the State Board of Insurance with the authority to adopt regulations defining unfair claims settlement practices. sec.21.202. Definitions. The following words or phrases, as used in these regulations, shall have the meanings placed opposite them, unless the explicit wording of a regulation shall otherwise direct. Business day-A day other than a Saturday, Sunday, or holiday recognized by this state. Claim-A request or demand reduced to writing and filed by a Texas resident with an insurer for payment of funds or the providing of services under the terms of a policy, certificate, or binder of insurance. Claimant-A person making or having made a claim. Complaint-Any written communication, not solicited by an insurer, primarily expressing a grievance relating to an unfair claims settlement practice as defined in sec.21.203 of this title (relating to Unfair Claims Settlement Practices). First-party coverage -Benefits and other rights provided by an insurance contract to an insured. Insurer-Any person, or persons acting in concert, doing or licensed to do business in Texas under the Insurance Code or performing any act subject to regulation by the Texas Department of Insurance
                                                                                                                                                                  [Chapter 3, Subchapter G, or the Insurance Code, Chapter 5, Subchapters A, B, or C, as amended], and including (when applicable) proprietorships, partnerships, corporations, and unincorporated associations, and: (A) a domestic or foreign, stock and mutual, life, health, or accident insurance company; (B) a domestic or foreign, stock or mutual, fire and casualty insurance company; (C) a Mexican casualty company; (D) a domestic or foreign Lloyd's plan insurer; (E) a domestic or foreign reciprocal or insurance exchange; (F) a domestic or foreign fraternal benefit society; (G) a stipulated premium insurance company; (H) a nonprofit legal service corporation; (I) a statewide mutual assessment company; (J) a local mutual aid association; (K) a local mutual burial association; (L) an association exempt under Article 14.17 of this code; (M) a nonprofit hospital, medical, or dental service corporation, including a company subject to Chapter 20 of this code; (N) a county mutual insurance company; (O) a farm mutual insurance company; (P) a risk retention group; (Q) a purchase group; and (R) a surplus lines carrier
                                                                                                                                                                    [stock and mutual life, health, accident, fire, casualty, fire and casualty, hail, storm, title, and mortgage guarantee companies; mutual assessment companies; local mutual aid associations; local mutual burial associations; statewide mutual assessment companies; stipulated premium companies; fraternal benefit societies; group hospital service organizations; county mutual insurance companies; Lloyds; reciprocal or interinsurance exchanges; and farm mutual insurance companies] when transacting such business. Policyholder-The owner of a policy, certificate, or binder of insurance, and any insured, named insured, or obligee under a bond. Third-party coverage -Benefits and other rights provided by an insurance contract to any person other than the insured. sec.21.203. Unfair Claim Settlement Practices. No insurer shall engage in unfair claim settlement practices. Unfair claim settlement practices means committing or performing [with such frequency as to indicate a general business practice] any of the following: (1) (No change.) (2) Failing to acknowledge with reasonable promptness pertinent communications with respect to claims arising under its policies, provided that "pertinent communications" shall exclude written communications that are direct responses to specific inquiries made by the insurer after initial report of a claim. An acknowledgement within 15 business
                                                                                                                                                                      [working] days is presumed to be reasonably prompt. (3)-(5) (No change.) (6) failure of any insurer to maintain a complete record of all complaints which it has received during the preceding three years or since the date of its last examination by the Commissioner of Insurance, whichever time is shorter. This record must [shall] indicate the total number of complaints, their classification by line of insurance, the nature of each complaint, the disposition of these complaints, and the time it took to process each complaint. [A record of such complaints maintained in substantially the form as indicated on Exhibit A attached hereto will be presumed to be in compliance with this requirement, but Exhibit A shall not be considered as the exclusive method to record such complaints. Exhibit A is incorporated herein by reference. A copy of Exhibit A may be obtained from the Business Practices and Enforcement Division, State Board of Insurance, 1110 San Jacinto Street, Austin, Texas 78786.] (7)-(9) (No change.) (10) Failing to affirm or deny coverage of a claim to a policyholder within a reasonable time after proof of loss statements have been completed. [The taking of a nonwaiver agreement or the submission of a reservation of rights letter by an insurer to the policyholder within a reasonable time is deemed compliance with the provisions of this paragraph.] (11) (No change.) (12) Attempting to settle a claim for less than the amount to which a reasonable person would have believed she/he was entitled [by reference to written or printed advertising material accompanying or made part of an application]. (13)-(17) (No change.) (18) Failing to comply with the requirements of the Insurance Code, Article 21.55. (19) Requiring a claimant, as a condition of settling a claim, to produce the claimant's federal income tax returns for examination or investigation by the insurer unless the claimant is ordered to produce those tax returns by a court of competent jurisdiction, the claim involves a fire loss, or the claim involves a loss of profits or income. sec.21.204. Special Claim Reports and Statistical Plan.
                                                                                                                                                                        If it should be found by the Texas Department of Insurance
                                                                                                                                                                          [State Board of Insurance] based on complaint
                                                                                                                                                                            or complaints of unfair claim settlement practices as described in sec.21.203 of this title (relating to Unfair Claims Settlement Practices), that an insurer [is substantially out of line and] should be subjected to closer supervision with respect to such practices, it may require such insurer to file a report at such periodic intervals as the board deems necessary. [For purposes of this section, the term "substantially out of line" means "a patently disproportionate number of complaints to indicate the existence of a pattern of unfair claim settlement practices as that term is defined in sec.21.203 of this title (relating to Unfair Claims Settlement Practices").] Such periodical reports shall contain the following information: (1)-(5) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200454 Linda von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 Chapter 25. Insurance Premium Finance Subchapter H. Annual Reports, Examinations, and Assessments 28 TAC sec.25.716 The State Board of Insurance of the Texas Department of Insurance proposes new sec.25.716, concerning the general administrative expense assessment of insurance premium finance companies in fiscal year 1992. This section is proposed to provide a rate of assessment sufficient to meet the expenses of performing the department's statutory responsibilities for examining, investigating, and regulating insurance premium finance companies. Under s25. 716, the department levies a rate of assessment to cover fiscal year 1992's general administrative expense and collects from each insurance premium finance company on the basis of a percentage of total loan dollar volume for the 1991 calendar year. Kenneth J. Ramoin, director of accounting, has determined that for the first five-year period the section is in effect there will be a fiscal impact equivalent on small businesses as on large businesses per $1.00 of loan volume, or a $250 minimum payment, for companies required to comply with this section. The fiscal impact on state government will be income estimated at $153,978 to the department's fund 036. However, there is no fiscal implication for local government as a result of enforcing or administering the proposed new section. Mr. Ramoin also has determined that for each year of the first five years the new section is in effect the public benefit anticipated as a result of enforcing the section will be the facilitation in the collection of an assessment to cover the general administrative expense connected to the regulation of insurance premium finance companies. There is no anticipated economic cost to persons as the assessment is imposed on business entities. Comments may be submitted to Kenneth J. Ramoin, director of accounting, Mail Code #108-3A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. The new section is proposed under the Texas Insurance Code, Article 24.06(c) and Article 24.09. Article 24.06(c) provides that each insurance premium finance company licensed by the department shall pay an amount assessed by the department to cover the direct and indirect cost of examinations and investigations and a proportionate share of general administrative expense attributable to regulation of insurance premium finance companies. Article 24.09 authorizes the department to adopt and enforce rules necessary to carry out provisions of the Texas Insurance Code concerning the regulation of insurance premium finance companies. sec.25.716. General Administrative Expense Assessment, Fiscal Year 1992. On or before April 1, 1992, each insurance premium finance company holding a license issued by the Texas Department of Insurance under the Texas Insurance Code, Chapter 24, shall pay to the department an assessment made by the department to cover the general administrative expenses attributable to the regulation of insurance premium finance companies. Payment shall be made to the Texas Department of Insurance, 333 Guadalupe Street, Mail Code #105-2A, Austin, Texas 78701-3938. The assessment to cover general administrative expenses shall be computed and paid as follows. (1) The amount of the assessment shall be computed as 0.01012 of 1.0% of the total loan dollar volume of the company for the calendar year 1991. (2) If the amount of assessment computed under paragraph (1) of this section is less than $250, a minimum assessment of $250 shall be levied and collected. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200303 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part XVII. Texas State Soil and Water Conservation Board Chapter 519. Technical Assistance Subchapter A. Technical Assistance Program 31 TAC sec.519.8 The Texas State Soil and Water Conservation Board proposes an amendment to sec.519.8, concerning eligible pay rates for soil and water conservation district technicians. William C. Neiser, director of programs, has determined that for the first five- year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Neiser also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be maintenance of quality technical assistance personnel. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Robert G. Buckley, Executive Director, Texas State Soil and Water Conservation Board, P.O. Box 658, Temple, Texas 76503. The amendment is proposed under Chapter 201.020, Agriculture Code, which provides the Texas State Soil and Water Conservation Board with the authority to adopt rules as necessary for the performance of its functions under the Agriculture Code. sec.519.8. Eligible Pay Rates. The state board hereby establishes maximum pay rates of $7.50
                                                                                                                                                                              [$6.50] per hour or $15,580
                                                                                                                                                                                [$13, 500] per year and maximum hours per week of 40 hours. With the prior approval of the state board a district may exceed the maximum pay rate or maximum hours per week. Expenditures for wages or salaries that are above the maximum pay rate or expenditures for hours over the maximum hours per week will not otherwise be eligible for reimbursement. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Temple, Texas, on January 7, 1992. TRD-9200296 Robert G. Buckley Executive Director Texas State Soil and Water Conservation Board Earliest possible date of adoption: February 17, 1992 For further information, please call: (817) 773-2250 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter X. Pari-Mutuel Wagering Racing Revenue 34 TAC sec.3.641 The Comptroller of Public Accounts proposes an amendment to sec.3.641, concerning pari-mutuel wagering. The purpose of the amendment is to revise and clarify the responsibilities of horse and greyhound racing associations licensed by the Texas Racing Commission with regard to collection, deposit, reporting, and accounting for the state portion of pari-mutuel wagering revenues and related funds; minimum standards for pari-mutuel wagering equipment used to compute the state share of pari-mutuel wagering revenues to reflect amendments to the Texas Racing Act enacted by the 72nd Legislature, 1991. Tom Plaut, chief revenue estimator, has determined that for the first five-year period the proposed section will be in effect there will be no significant revenue impact on the state or local government as a result of enforcing or administering the section. This section is adopted under the Tax Code, Title 2, and does not require a statement of fiscal implications for small businesses. Dr. Plaut also has determined that for each year of the first five years the section is in effect there will be no significant public cost or benefit. There is no anticipated economic cost to persons who are required to comply with the proposed section. Comments on the proposal may be submitted to Cril Payne, General Counsel, P.O. Box 13528, Austin, Texas 78711. The amendment is proposed under Texas Civil Statutes, Article 179e, sec.4.03, which provides the comptroller with the authority to adopt rules relating to the administration and enforcement of the provisions of the Texas Racing Act. sec.3.641. Pari-Mutuel Wagering. (a) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Association-A horse or greyhound association licensed by the commission to conduct races with pari-mutuel wagering or the authorized agent of such an association. (A) -(C) (No change.) (D) Class 4 association -An association licensed by the commission as a Class 4 association for the purpose of conducting horse races with pari-mutuel wagering. (E)
                                                                                                                                                                                  [(D)] Greyhound association -An association licensed by the commission for the purpose of conducting greyhound races with pari-mutuel wagering. (F) Receiving association-A licensed racetrack association in this state that has been allocated live dates simulcasting or a simulcast race meeting, or a facility not located in this state that is authorized to conduct wagering under the law of the jurisdiction in which it is located. (G) Sending association-A licensed association for racing in this state or out-of-state from which a race is transmitted. (2) (No change.) (3) Common pool-A pool in which the wagers received at a receiving location are combined with the wagers received at a sending racetrack. (4) Communications facilities -Facilities which include all wire, radio, optical, satellite, or other electromagnetic systems and the modems, phone systems and other equipment used to transmit voice, data, and images. (5)
                                                                                                                                                                                    [(3)] Comptroller-The Comptroller of Public Accounts or an authorized agent of the Comptroller of Public Accounts. (6) Live pari-mutuel Pool -The total amount of money wagered by patrons on the result of a particular live race or combination of live races within the enclosure of the racetrack association where the race is being run. (7) Simulcast-The telecast or other transmission of live audio and visual signals of a race, transmitted from a sending track to a receiving location, for the purpose of wagering conducted on the race at the receiving location. (8) Simulcast pari-mutuel pool-The total amount of money wagered by patrons at a licensed racetrack association in Texas on the result of a particular simulcast race or combination of simulcast races. (9) Simulcast race meeting-The dates to conduct simulcast pari-mutuel wagering only, while conducting no live races. (10)
                                                                                                                                                                                      [(4)] State approved depository-A bank approved as a depository of state funds by the state depository board. (11)
                                                                                                                                                                                        [(5)] Totalisator company-A company selling, leasing, servicing, maintaining, or operating automated electronic computer hardware and software to calculate, record, display, and store pari-mutuel wagering information. (b) Collection/deposit of the state's share from live and simulcasting
                                                                                                                                                                                          [state portion of] pari-mutuel wagering revenues; reports to the comptroller. (1) Reporting and payment of the state's share of simulcast pari-mutuel pools shall be in accordance with this subsection. (A) The sending association is responsible for reporting and payment of the state's share from pari-mutuel wagering revenues derived from simulcast intrastate common pools. (B) Each association is responsible for reporting and payment of the state's share from pari-mutuel wagering revenues derived from simulcast intrastate separate pools and simulcast interstate, separate, or common pools. (C) The sending track must provide a copy of each simulcasting agreement or amendment(s) to the comptroller within 72 hours after such agreement or amendment(s) is approved by the commission. If interstate simulcasting is involved, the agreement or amendment(s) must be provided by the association located in Texas. (2)
                                                                                                                                                                                            [(1)] In each locality with licensed Class 1, Class 2, or greyhound associations, the State Treasurer has agreed to open an interest- bearing account in a local state-approved depository to be used for deposit of the state share of pari-mutuel wagering proceeds. (3)
                                                                                                                                                                                              [(2)] After each racing day, a representative of a Class 1, Class 2, or greyhound association shall deposit to the state account by 10 a.m. of the next banking day the state's
                                                                                                                                                                                                [state] total share from the live and simulcasting
                                                                                                                                                                                                  [of the] pari-mutuel pools
                                                                                                                                                                                                    [pool] for all races on which wagers were placed
                                                                                                                                                                                                      [conducted] since the last deposit. (4)
                                                                                                                                                                                                        [(3)] All deposits to the state account must be in cash or by check drawn on an association account in the state-approved depository bank or by telephone transfer from an association account in the state-approved depository bank. (A) (No change.) (B) Class 3 and Class 4
                                                                                                                                                                                                          associations must transmit a check covering the amount of the state's share to the comptroller by 10 a.m. of the next banking day after the performance by express mail for one day delivery. The check must be attached to the performance pari-mutuel summary report. (5)
                                                                                                                                                                                                            [(4)] After each racing performance, information must be reported to the comptroller. (A) Live pari-mutuel pools.
                                                                                                                                                                                                              At the close of each racing performance, the association shall complete the Texas Pari-Mutuel Performance Summary Report
                                                                                                                                                                                                                [performance pari-mutuel summary report]. This report shall be filed for each racing date authorized by the commission even if no races are held. (B) Interstate simulcast pools. At the close of each racing performance, if the association is receiving the races from an out-of-state destination, the pari-mutuel wagering revenues derived from these races shall be reported on the Texas Pari-Mutuel Performance Summary Report and the Texas Pari-Mutuel Performance Supplemental Report. This report shall be filed for each racing day authorized by the commission even if no races are held. (C) Intrastate simulcast common pools. At the close of each racing performance, the sending association shall report the pari-mutuel wagering revenues on the Texas Pari-Mutuel Performance Summary Report and the Texas Pari- Mutuel Supplemental Report. The receiving association shall also complete the Texas Pari-Mutuel Performance Supplemental Report. The pari-mutuel wagering revenues shall be derived from simulcast intrastate combined pari-mutuel pools. These reports shall be filed for each racing day authorized by the commission even if no races are held. (D) Intrastate simulcast separate pools. At the close of each racing performance, the receiving association shall complete the Texas Pari-Mutuel Performance Summary Report and the Texas Pari-Mutuel Performance Supplemental Report. This report shall be filed for each racing date authorized by the commission even if no races are held. (E)
                                                                                                                                                                                                                  [(B)] Class 1, Class 2, and greyhound associations shall transmit a copy of the completed reports
                                                                                                                                                                                                                    [performance pari-mutuel summary report] to the comptroller by facsimile equipment no later than 10 a.m. of the next banking day following a performance. Class 3 and Class 4
                                                                                                                                                                                                                      associations must transmit the
                                                                                                                                                                                                                        [a] completed report(s)
                                                                                                                                                                                                                          [performance pari- mutuel summary report] to the comptroller along with the payment of the state's share by 10 a.m. of the next day by overnight or express mail. (6)
                                                                                                                                                                                                                            [(5)] If problems exist in telephone transmission or other breakdown in the facsimile equipment and copies of the reports cannot be transmitted by telephone transmission and facsimile equipment because of these problems, then associations shall send such reports to the comptroller by overnight mail or overnight private delivery service. (7)
                                                                                                                                                                                                                              [(6)] Originals of the reports of which copies have been transmitted to the comptroller by facsimile equipment shall be preserved in chronological order with other association records. Class 3 and Class 4 associations
                                                                                                                                                                                                                                [tracks] shall preserve copies of the reports that have been mailed to the comptroller, in chronological order, at association offices located at the track or at such other location as may be agreed to in writing by the comptroller. These reports shall be available for audit inspection. [Anytime the information on the reports does not reconcile with the amount deposited, the comptroller will take prompt action to protect the state's interest.] (c) Associations with pari-mutuel wagering to post bond or other security. (1) Associations will be responsible for the state's
                                                                                                                                                                                                                                  [state] share of the pari-mutuel pool from the time a ticket is sold and the money is collected until the money is deposited to the state account. (2) All associations shall be bonded or otherwise secured in an amount estimated by the comptroller to be five times the highest daily state's
                                                                                                                                                                                                                                    [state] share of the pari-mutuel pool for the period covered by the bond. The bond will cover the state's
                                                                                                                                                                                                                                      [state] share of the pari-mutuel pool. (3) (No change.) (4) The bond or other security shall be approved by and filed with the comptroller. (A) The comptroller may require the posting of new or additional bond or security if: (i) the comptroller determines the amount of bond or other security deposited to be inadequate; or (ii) the comptroller determines that an association is delinquent in payment of an amount due; or (iii) [if] a surety gives the comptroller written notice of its intent to withdraw as surety. (B)-(D) (No change.) (5)-(7) (No change.) (d) Equipment required; responsibilities of companies contracting to provide equipment. (1) Each association licensed for pari-mutuel wagering shall use totalisator company equipment and software that satisfies the record-keeping and reporting requirements of the comptroller. The association must provide a copy of the totalisator contract or amendment(s) to the comptroller within 72 hours after such contract or amendment(s) is approved by the commission. (A) (No change.) (B) The association must install two separate devices which will cause the tote system to stop betting. The primary device will be installed accessible to association stewards or judges to be used to issue the stop betting command during normal operations. The second device (backup) is to be installed in the totalisator room
                                                                                                                                                                                                                                        [pari-mutuel manager's office] and used by the pari- mutuel manager or the totalisator operator
                                                                                                                                                                                                                                          to issue the stop betting command in cases where hardware malfunction or human error does not cause the tote system to stop betting at the appropriate time. (C) The totalisator system must have the capability of restricting the
                                                                                                                                                                                                                                            [restrict] cancelling of wagers to the last four tickets issued by a machine (to be cancelled by that machine). If the ticket is not in the last four it must be cashed through designated cash/sell terminals only with the appropriate approvals. All manually cashed wagers, cancelled wagers, and refunds issued, must be recorded by the totalisator system for each cash/sell terminal. A detailed printed report of these transactions must be generated upon request of the comptroller, including a summary of each transaction type. (D)-(G) (No change.) (H) A waiver may be granted from these requirements for totalisator systems temporarily installed at Class 3 and Class 4 associations
                                                                                                                                                                                                                                              [tracks] upon a showing to the comptroller's satisfaction that unnecessary expense would be incurred in complying with the requirements, and that the system can be made to function properly without meeting these requirements. (2)-(3) (No change.) [(4) The comptroller may, at any time, inspect or have inspected totalisator company equipment and software which is or which has been on location at a Texas association. The association and the totalisator company shall permit such inspection without prior notice.] (4)
                                                                                                                                                                                                                                                [(5)] Totalisator equipment and software
                                                                                                                                                                                                                                                  must be installed on-site and a series of system checkout programs designated by the comptroller must be executed by the totalisator company. At Class 1, Class 2, and greyhound associations
                                                                                                                                                                                                                                                    [tracks] this shall occur at least 48 hours before the start of each racing meeting. No changes shall be made in the programming after the tests are completed without the permission of the comptroller. (5) In addition to the information referenced in subsection (d)(4) of this section, the comptroller may at any time, without prior notice, test or have tested the totalisator equipment or software and the communications facilities. (6) Any malfunction of equipment hardware,
                                                                                                                                                                                                                                                      [or] software, or communications facilities
                                                                                                                                                                                                                                                        which results in loss or delay of required report data and any processor down time, regardless of whether it results in loss or delay of required report data, shall immediately be reported by the association to the comptroller when the performance pari-mutuel summary report form is filed. (7)-(8) (No change.) (e) Audit; appeal of audit findings. (1)-(2) (No change.) (3) All computer tapes, computer programs, and books and records used to record, display, calculate, or report the state's share shall be
                                                                                                                                                                                                                                                          [funds due the state] maintained by the association or the totalisator company and shall be stored in chronological order in a disaster-proof environment to insure the integrity of the data and made available for inspection in a format compatible with the comptroller's equipment at any time without advance notice. Class 1, Class 2, and greyhound associations shall maintain their records at an association office at the track. Class 3 and Class 4 associations
                                                                                                                                                                                                                                                            [tracks] shall preserve the originals of these records at association offices located at the track or at such other location as may be agreed to in writing by the comptroller. (4)-(5) (No change.) (f) Sanctions. (1) The comptroller will immediately certify to the commission the violation by the association or its agents of a rule promulgated by the comptroller; the failure or refusal of an association to pay all or any part of funds due the state or to file reports when due; the failure or refusal of an association to allow inspection of reports and
                                                                                                                                                                                                                                                              [,] records ;
                                                                                                                                                                                                                                                                [, or computer equipment or software; or] the failure or refusal of an association to allow testing of the totalisator equipment or software or the communications facilities; the failure or refusal of an association to
                                                                                                                                                                                                                                                                  post bond in the amount required; or the failure or refusal of an association to keep and retain the records required by the comptroller. (2)-(3) (No change.) (g) Each association shall notify the comptroller in writing of any makeup or replacement race date(s) approved by the commission prior to that date. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 13, 1992. TRD-9200448 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-4028 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 85. Admission and Placement Commitment and Reception 37 TAC sec.85.3, sec.85.5 The Texas Youth Commission (TYC) proposes amendments to s85.3 concerning admission process; and sec.85.5 concerning assessment/evaluation. The amendments reflect changes in procedure for making placement assignments of youth committed to the agency. The south region placement function is being discontinued. All youth will be evaluated at the Statewide Reception Center in Brownwood. John Franks, director of fiscal affairs, has determined that for the first five- year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Franks also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be a more efficient evaluation of each youth's needs and risk. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Gail Graham, Policy and Manuals Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, Austin, Texas 78765. The amendments are proposed under the Human Resources Code, sec.61.071 which provides the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules governing the study. sec.85.3. Admission Process. (a) Policy. Intake activities, including receipt of the youth from the committing county and orienting the youth to new surroundings, are performed by Texas Youth Commission (TYC) [intake programs mobile diagnostic team and the] statewide reception center. [Each newly committed youth is assigned an official TYC registration number by the statewide reception center.] (b) Rules. [(1) Admission by the Mobile Diagnostic Team. [(A) The South Texas mobile diagnostic team serves youth committed by the following counties: [graphic] [(B) Committed youth are held by the committing county until the mobile diagnostic team arrives to conduct assessments and take receipt of youth except youth sent directly to the statewide reception center including any youth: [(i) sentenced; or [(ii) committed or a violent offense; or [(iii) committed by a county unable to detain the youth until the mobile diagnostic team can arrive. [(C) The team conducts initial assessment of the youth in the detention center except for physical examinations. [(D) Orientation to the admission process and the TYC system is provided and documented as required in GOP.53.03 section sec.87.55 relating to Youth Orientation. [(E) The youth is transported to his or her assigned placement by the committing county. [(F) Mobile diagnostic staff identifies the home parole officer through the agency assignment system based on zip code area. The staff forwards to the home parole officer, within five working days of admission, the following: [(i) copy of the court order; [(ii) copy of the Common Application (CCF-002); [(iii) county social summary; and [(iv) immediate notification when a youth is stating that he or she refuses to live at home when residential placement is complete. [(G) The placement program completes the following admission activities. [(i) Each youth and his possessions are searched. [(ii) Youth property is inventoried. [(iii) Each youth showers and receives hair care and treatment as needed. [(iv) Clothing is inventoried and laundered if necessary. Clothing is issued as necessary in compliance with GOP.55.03 section sec.87.73 relating to Clothing. [(v) Personal hygiene articles are made available as needed. [(H) Immediately following placement, the youth's parents are advised of the placement and are provided information on mail procedures and advised to contact the placement for visiting procedures. (I) The region notifies the parole officer, judge, prosecuting attorney, chief probation officer, and others as needed of the placement. [(2) Admission to the Statewide Reception Center.] (1)
                                                                                                                                                                                                                                                                    [(A)] The statewide reception center in Brownwood, receives youth committed to TYC five days per week, between 8 a.m. and 5 p.m. Youth may be received after 5 p.m. only if prior arrangements are made. (2)
                                                                                                                                                                                                                                                                      [(B)] Youth are allowed to have a limited number of personal possessions while at the reception center. Personal items beyond basic necessities are inventoried and returned to the county transporter. The transporter is asked to sign a receipt for items returned to his care. Items a youth is allowed to keep are inventoried and a receipt issued to the transporter. (3)
                                                                                                                                                                                                                                                                        [(C)] Parents are notified of youth's admission and advised of procedures for mail and visits. (4) Each youth is assigned an official TYC registration number. (5)
                                                                                                                                                                                                                                                                          [(D)] Staff completes personal data and commitment information. (6)
                                                                                                                                                                                                                                                                            [(E)] A youth is assigned to a dormitory and caseworker. (7)
                                                                                                                                                                                                                                                                              [(F)] Orientation to the admissions process and the TYC system is provided and documented as required in General Operating Policy (GOP) 53.05 sec.87.55 of this title (relating to Youth Orientation). (8)
                                                                                                                                                                                                                                                                                [(G)] Routine admission procedures include but are not limited to the following. (A)
                                                                                                                                                                                                                                                                                  [(i)] Each youth and his possessions are searched. (B)
                                                                                                                                                                                                                                                                                    [(ii)] Youth property including clothing is inventoried. (C)
                                                                                                                                                                                                                                                                                      [(iii)] Each youth showers, is screened for pediculosis, and receives treatment as needed. (D)
                                                                                                                                                                                                                                                                                        [(iv)] Clothing is laundered if necessary. Clothing is issued as necessary. (E)
                                                                                                                                                                                                                                                                                          [(v)] Personal hygiene articles are made available as needed. (F)
                                                                                                                                                                                                                                                                                            [(vi)] Initial health screening is performed for each youth. (9)
                                                                                                                                                                                                                                                                                              [(H)] In addition to assessment and placement activities, the statewide reception center provides a program including recreation, education and counseling. (10)
                                                                                                                                                                                                                                                                                                [(I)] Reception staff identifies the home parole officer according to the agency assignment system based on zip code area and county
                                                                                                                                                                                                                                                                                                  . The staff forwards to the home parole officer, within five working days of admission, the following: (A)
                                                                                                                                                                                                                                                                                                    [(i)] copy of the court order; (B)
                                                                                                                                                                                                                                                                                                      [(ii)] copy of the Common Application (CCF-002); (C)
                                                                                                                                                                                                                                                                                                        [(iii)] county social summary; and (D)
                                                                                                                                                                                                                                                                                                          [(iv)] immediate notification when a youth is stating that he or she refuses to live at home when residential placement is complete. (11)
                                                                                                                                                                                                                                                                                                            [(J)] Reception staff transports youth to their initial placements and not the [youth's] families, the region parole officer, judge, prosecuting attorney, chief probation officer, and others as needed of the placement location. sec.85.5. Assessment/Evaluation. (a) Policy. The Texas Youth Commission (TYC) youth assessment process includes summarizing admission information, conducting diagnostic evaluations, identifying classification and developing an initial placement category recommendation by [either the mobile diagnostic team or] the classification panel at the statewide reception center. The youth assessment process is completed within two weeks of receipt of the youth by TYC. (b) Rules. [(1) Statewide reception center.] Staff at the statewide reception center conduct the following routine evaluations: (1)
                                                                                                                                                                                                                                                                                                              [(A)] completion of the Common Application (CCF-002)
                                                                                                                                                                                                                                                                                                                [commitment summary]; (2)
                                                                                                                                                                                                                                                                                                                  [(B)] social summary; (3)
                                                                                                                                                                                                                                                                                                                    [(C)] risk/needs assessment; (4)
                                                                                                                                                                                                                                                                                                                      [(D)] family involvement assessment; (5)
                                                                                                                                                                                                                                                                                                                        [(E)] religious preference assessment; (6)
                                                                                                                                                                                                                                                                                                                          [(F)] recreation interest; (7)
                                                                                                                                                                                                                                                                                                                            [(G)] psychological evaluation (if one has not been completed within the last year and mental status exam within six months prior to residential treatment center placement
                                                                                                                                                                                                                                                                                                                              ); (8)
                                                                                                                                                                                                                                                                                                                                [(H)] physical and dental examinations (within six months prior to placement in a halfway house)
                                                                                                                                                                                                                                                                                                                                  ; (9)
                                                                                                                                                                                                                                                                                                                                    [(I)] educational assessment; (10) substance abuse screening and assessment; (11)
                                                                                                                                                                                                                                                                                                                                      [(J)] vocational interests and experience; (12)
                                                                                                                                                                                                                                                                                                                                        [(K)] psychiatric interview of youth sentenced or committed for murder, capital murder, and voluntary manslaughter (Type A violent offenses) and other youth as referred by the professional staff; and (13)
                                                                                                                                                                                                                                                                                                                                          [(L)] assessment of behavior while at the reception center. [(2) Mobile diagnostic team. Staff of the mobile diagnostic team conduct directly or provide for immediately following placement in the south region all the following evaluations. All other assessments are preformed at the statewide reception center for youth referred by the mobile diagnostic team. Evaluations include: [(A) completion of the commitment summary; [(B) social summary; [(C) risk/needs assessment; [(D) family involvement assessment; [(E) religious preference assessment; [(F) recreation interest; [(G) psychological evaluation if one has not been completed within the last year; [(H) educational assessments; and [(I) physical and dental examinations (within 30 days of placement).] This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200339 Ron Jackson Executive Director Texas Youth Commission Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 483-5244 Chapter 91. Discipline and Control Disciplinary Practices 37 TAC sec.sec.91.7, 91.9, 91.11 The Texas Youth Commission (TYC) proposes amendments to s91.7, concerning reclassification consequence, sec.91.9, concerning parole revocation consequence, sec.91.11, concerning disciplinary transfers and assigned minimum length of stay consequences, and sec.91.69, concerning detention. The amendments add one possible exception to the statement that TYC will not hold a revocation hearing on a youth so long as criminal charges are pending. The amendments also reflect changes in procedure for making placement assignments of youth committed to the agency. The south region placement function is being discontinued. All youth will be evaluated at the Statewide Reception Center in Brownwood. John Franks, director of fiscal affairs, has determined that for the first five- year period the sections are in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Franks also has determined that for each year of the first five years the sections are in effect the public benefit anticipated as a result of enforcing the sections will be a more consistent, effective evaluation of each youth's needs and risk. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the sections as proposed. Comments on the proposal may be submitted to Gail Graham, Policy and Manuals Coordinator, Texas Youth Commission, 4900 North Lamar Boulevard, P.O. Box 4260, Austin, Texas 78765. The amendments are proposed under the Human Resources Code, sec.61.071, which provides the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules for governing the study. sec.91.7. Reclassification Consequence. (a) (No change.) (b) Rules. (1) Restrictions. (A) With approval of the institutional superintendent or regional director a Level I hearing may be requested. (B) The primary service worker requesting the hearing may cancel at anytime prior to the beginning of the hearing. (C) A Level I hearing will not be held if TYC staff receive information that criminal or delinquent proceedings against the youth are planned or anticipated by local authorities. Exceptions may be made in writing by the deputy executive director or designee when the behavioral incident considered for discipline is clearly separate from the behavioral incident considered by the court, and when justified by the staff requesting the hearing. [(D) Specific training school placements are the responsibility of the Statewide Reception Center. Evins Regional Juvenile Center placements are the responsibility of the regional assessment team. All other placements are the responsibility of centralized placement.] (D)
                                                                                                                                                                                                                                                                                                                                            [(E)] High risk offense is any major rule violation which may result in a classification other than general or violator of CINS probation. (2) (No change.) (3) Disposition. (A) When a youth on parole status is reclassified for a high risk offense, the youth's parole is revoked. (B) Specific training school placements responsibility of the Statewide Reception Center. All other placements including Evins Regional Juvenile Center are the responsibility of centralized placement. (C)
                                                                                                                                                                                                                                                                                                                                              [(B)] A sentenced offender may be assigned to any appropriate placement, including a maximum restriction facility, following a disciplinary hearing. The appropriate placement is selected according to the totality of the circumstances, including the youth's age, sentencing offense, length of time and progress in TYC custody, and the nature of the misconduct for which the youth is being disciplined. The Statewide Reception Center
                                                                                                                                                                                                                                                                                                                                                [statewide reception center] superintendent, at his or her discretion, determines whether to return the youth to the reception center for full reassessment and placement or to designate placement directly. If he or she determines that a community placement is most appropriate, placement selection is made by the centralized placement unit. sec.91.9. Parole Revocation Consequence. (a) Policy. Parole may be revoked when a youth's behavior presents an unacceptable risk to the safety of the youth or the community. Parole revocation is considered a major consequence and requires a Level I hearing. (b) Rules. (1) Restrictions. (A) With approval of the regional director, a Level I hearing may be requested. (B) The primary service worker requesting a hearing may cancel at any time prior to the commencement of the hearing. (C) A Level I hearing will not be held if TYC staff receive information that criminal or delinquent proceedings against the youth are planned or anticipated by local authorities. Exceptions may be made in writing by the deputy executive director or designee when the behavioral incident considered for discipline is clearly separate from the behavioral incident considered by the court an when justified by the staff requesting the hearing. [(D) Specific training school placements are the responsibility of the Statewide Reception Center. Evins Regional Juvenile Center placements are the responsibility of the regional assessment team. All other placements are the responsibility of centralized placement.] (D)
                                                                                                                                                                                                                                                                                                                                                  [(E)] If a felony offense is found but reclassification to chronic serious offender is not justified, the finding of a felony must be documented in the casework subfile. (E)
                                                                                                                                                                                                                                                                                                                                                    [(F)] A high risk offense is any major rule violation which may result in a classification other than general or violator of CINS probation. (2) (No change.) (3) Disposition. (A) Placements are made according to classifications. (See General Operating Policy (GOP) 63.07, sec.91.7 of this title (relating to Reclassification Consequences)). (B) If criteria for revocation are not established at a level I hearing, the youth remains on parole status, but lesser disciplinary consequences may be imposed for any rule violations which are proved at the hearing. (C) Specific training school placements are the responsibility of the Statewide Reception Center. All other placements including Evins Regional Juvenile Center are the responsibility of centralized placement. (D)
                                                                                                                                                                                                                                                                                                                                                      [(C)] If a youth is on parole from another state and is being supervised by Texas Youth Commission (TYC) under agreement with the other state, a parole revocation hearing is held by TYC and the youth returned to the sending state, coordinated by the interstate compact administrator and general counsel. (E)
                                                                                                                                                                                                                                                                                                                                                        [(D)] If a TYC parolee commits an offense in another state, the return of such youth is coordinated by the interstate compact administrator and the general counsel. A parole revocation hearing is coordinated by and held at the request of the assigned parole officer. sec.91.11. Disciplinary Transfer/Assigned Minimum Length of Stay Consequence. (a) (No change.) (b) Rules. (1) Restrictions. (A)-(B) (No change.) (C) A Level II hearing will not be held if TYC staff receive information that criminal or delinquent proceedings against the youth are planned or anticipated by local authorities. Exceptions may be made in writing by the deputy executive director or designee when the behavioral incident considered for discipline is clearly separate from the behavioral incident considered by the court and when justified by the staff requesting the hearing. (D) If a felony offense is found at a Level II hearing, it must be documented in the hearing manager's report which is filed in the casework subfile. (E) A Level II hearing should be held prior to a disciplinary transfer. When good cause compels a prehearing movement of the youth, the hearing shall be held within three consecutive days after the movement. (F) A high risk offense is any major rule violation which may result in a classification other than general or violator of CINS probation. (2) Criteria. A youth may be transferred or assigned a minimum length of stay if it is found at a Level II hearing that the youth has committed: (A) a high risk offense; (B) a felony offense; (C) any major rule violation and has previously been classified for a high risk offense; (D)
                                                                                                                                                                                                                                                                                                                                                          [(C)] any major rule violation causing substantial bodily injury; (E)
                                                                                                                                                                                                                                                                                                                                                            [(D)] the sum of two or more major rule violations within 30 days at the most recent permanent placement and any subsequent temporary placement; or (F)
                                                                                                                                                                                                                                                                                                                                                              [(E)] the sum of three or more major rule violations at the most recent permanent placement and any subsequent temporary placement. (3) Disposition. (A)-(B) (No change.) (C) Specific training school placements
                                                                                                                                                                                                                                                                                                                                                                [assignments] are the responsibility of the Statewide Reception Center. All other placements including Evins Regional Juvenile Center
                                                                                                                                                                                                                                                                                                                                                                  [assignments] are the responsibility of centralized placement. (4) Assigned minimum length of stay. (A)-(B) (No change.) (C) Following a Level II hearing at which a youth is assigned a minimum length of stay, the institutional superintendent or regional director shall request executive director approval for assignment of a minimum stay. (i) The institutional superintendent or regional director submits the following to the director of institutions or director of community services: (I) hearing manager's report of a Level II hearing: (II) cover memo including the administrator's recommended minimum length of stay; and (III) background information on the youth; (-a-) date of arrival; (-b-) committing offense; (-c-) grounds for the hearing (explain); (-d-) current classification; (-e-) description of precipitating incident; (-f-) youth's adjustment in the program; (-g-) net impact on length of stay if in an institution. (ii) The director of institutions or director of community services reviews the material, comments, and provides a recommendation and all information to the executive director or designee. (iii) The executive director or designee reviews the assigned stay and may approve, disapprove, or modify the[,] length of stay. Materials submitted for review are returned to the appropriate central office program director to be forwarded to the field along with the decision of the executive director or designee. (D) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 7, 1992. TRD-9200337 Ron Jackson Executive Director Texas Youth Commission Earliest possible date of adoption: February 7, 1992 For further information, please call: (512) 483-5244 Control 37 TAC sec.91.69 The amendment is proposed under the Human Resources Code, sec.61.071, which provides the Texas Youth Commission with the authority to examine and make a study of each child and to establish rules for governing the study. sec.91.69. Detention. (a) (No change.) (b) Rules. (1)-(2) (No change.) (3) Community detention. (A) TYC provides detention facilities office and home telephone numbers of staff to contact when TYC youth are detained. (B) Upon notification by detention staff, a TYC staff confirms whether the youth is under TYC authority and notifies the assigned placement facility of the detention, if appropriate, and the regional director of the allegations regarding behavior. (C) If TYC staff receives information that criminal or delinquent proceedings against the youth are planned,
                                                                                                                                                                                                                                                                                                                                                                    pending, or anticipated by local authorities, TYC shall no longer hold the youth in detention and will cease any plans for a hearing until further notice of deferral to TYC by local authorities. Exceptions may be made in writing by the deputy executive director or designee when the behavioral incident considered for discipline is clearly separate from the behavioral incident considered by the court and when justified by the staff requesting the hearing. (D)-(J) (No change.) (4) (No change.) This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 7, 1992. TRD-9200338 Ron Jackson Executive Director Texas Youth Commission Earliest possible date of adoption: February 7, 1992 For further information, please call: (512) 483-5244 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 15. Division of Transportation Planning Research and Planning Contracts 43 TAC sec.15.13 The Texas Department of Transportation proposes new sec.15.13, concerning new product evaluation. The new section provides procedures for the evaluation of new products and processes which may be of benefit to the department. The new section outlines the purpose, application procedures, evaluation procedures, vendor notification, and restrictions. Al Luedecke, Jr., P.E., director of transportation planning, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section. Mr. Luedecke has certified that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the section. Mr. Luedecke also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be a more uniform and cost-effective procedure for evaluating new products and processes. There will be no effect on small businesses as a result of enforcing the section. There is no anticipated economic cost to persons who are required to comply with the section as proposed. Comments on the proposal may be submitted to Al Luedecke, Jr., P.E., Division of Transportation Planning, 125 East 11th Street, Austin, Texas 78701-2483. The new section is proposed under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to promulgate rules and regulations for the conduct of the work of the Texas Department of Transportation. sec.15.13. New Product Evaluation. (a) Purpose. The purpose of this section is to provide for the evaluation of new products and processes which may be of benefit to the Texas Department of Transportation in carrying out its statutorily authorized functions and responsibilities. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Department-The Texas Department of Transportation. (2) New product-A product or process currently available on the market for immediate acquisition, for which the department does not have a current specification or which appears superior to existing products covered by a specification. (3) Product Evaluation Committee (PEC)-The standing committee of the department responsible for coordinating product evaluation. (4) Specification-An engineering description of acceptable materials and processes for department activities, adopted by the department's specification committee. (5) Specification committee-A standing committee of the department appointed by the executive director to approve and adopt specifications for department materials and operations. (6) Vendor-A person or organization outside the department which submits a product for evaluation. (c) Application. (1) To submit a product for evaluation, a vendor shall submit an application in a form prescribed by the department. (2) The department may request the vendor to submit additional information, such as test reports, engineering reports, or other data citing the economic, environmental, or engineering advantages of the product. (3) A vendor who submits a patented product shall provide the department with a written certification that the vendor is the holder of the patent, or has market rights to the product under license by the patent holder. (4) Application forms may be obtained from the Texas Department of Transportation, Research and Development Section, P.O. Box 5051, Austin, Texas 78763, or from any district office of the department. (d) Evaluation procedures. (1) After receipt of the application and any required additional information, the PEC will conduct a preliminary examination of a product to: (A) determine whether the product is a new product; and (B) coordinate with appropriate department organizational units to determine if an evaluation of the product is feasible. (2) If, pursuant to paragraph (1) of this subsection, the PEC determines that the product is a new product that may be useful in the department's operations, and is one which the department may wish to procure, the department may, if determined to be appropriate, test the product under laboratory conditions or trial usage. (e) Vendor notification. The department will advise the vendor, in writing, of the results of the evaluation. (f) Restrictions. (1) Any department determination of product acceptability does not: (A) obligate the department to procure the product or require any of its contractors to procure the product for use on department projects; or (B) constitute endorsement or finding of suitability of use other than for the department. (2) A vendor shall not represent a determination of product acceptability as an endorsement or a finding of suitability. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on January 8, 1992. TRD-9200289 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Earliest possible date of adoption: February 17, 1992 For further information, please call: (512) 463-8630