Adopted Sections An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 3. Oil and Gas Division Conservation Rules and Regulations 16 TAC sec.3.5 The Railroad Commission of Texas adopts amendments to sec.3.5, concerning applications to drill, deepen, plug back, or reenter, with changes to the proposed text as published in the December 6, 1991, issue of the Texas Register (16 TexReg 6989). The amendment will increase compliance with the Railroad Commission's safety and pollution rules, whose goal is to ensure clean water for Texas. The amendment requires that for an organization to be eligible to apply for a permit to drill, deepen, plug back, or reenter a well that the organization or any person in the organization who holds a position of ownership or control not have committed any violation of a commission rule, order, license, permit, or certificate that relates to safety or the prevention or control of pollution or the Texas Natural Resources Code, Title 3, within the last five years, which has not been corrected or penalties or costs of remedying said violation have not been paid. An applicant organization will also be required to file any relevant information requested by the Railroad Commission. The following is a summary of changes to the published version. The Railroad Commission has made four changes to the section, in subsection (a), (c), (f), and (i), in response to comments received. The first change was to reference Statewide Rule 40 (Assignment of Acreage to Pooled Development and Proration Units) in subsections (a) and (f) because it concerns the assignment of acreage to a well for drilling, development, and allowable purposes. Second, the last sentence of subsection (a) was amended to limit relevant information to information that is "necessary to determine compliance with this rule and state law." Third, in subsection (c)(2) the following language was added: "relating to a violation". Fourth, a form change in subsection (i). The following is a summary of comments. One commenter recommended that subsection (d)(1) be modified to allow organizations to file a blanket bond with conditions that the operator will plug and abandon all wells and control, abate, and clean up pollution associated with all of the operator's oil and gas activities, instead of placing a burden on operators to determine that their organization has no outstanding final orders and that no organization previously under the control of it's officers and directors have outstanding final orders. The commission disagrees with this comment because it does not comply with or aid in fulfilling the purposes of the Texas Natural Resources Code (TNRC), sec.91.110. Two commenters wanted clarification of the term "relevant information" in subsection (a) because they believe the term is too broad. The commission has added language which limits relevant information to information necessary to determine compliance with the section and state law. The commission has broad authority to request information under TNRC, sec.88.091. One commenter is opposed to subsection (c)(2), which imputes personal liability to all corporate officers formerly employed by an organization which has an outstanding final order against it. They commenter believes this provision is unfair, unreasonable, and arbitrary to employers who will have to continually screen employees, and to officers who did not have control of pollution violations. The commission disagrees with this comment. TNRC, sec.91.110 attributes responsibility for past violations of safety and pollution rules to persons holding positions of ownership or control in the subject organization and is intended to monitor persons who violate commission rules in order to obtain compliance with rules and orders of the commission. One commenter recommended that a provision be added to prevent any person, in violation of commission regulations, from securing any drilling permits by changing the name of the company or by other questionable practices. The rule already provides this. One commenter recommended that subsection (b)(5)(A) be amended to allow the permit moratorium to be held in abeyance if the operator is making a good-faith effort to correct the condition in accordance with a commission-approved plan. The commission disagrees with this comment. TNRC, sec.91.110 states that the commission may not accept an application if an organization has committed a safety or pollution violation unless the conditions that constituted the violation are corrected. Present commission practice does not warrant such an exception. The overwhelming majority of agreed orders are for immediate compliance or within a short period of time. One commenter is concerned that a permit may be invalidated after issuance by a subsequent commission order. The commission disagrees with this comment. A permit will not be revoked under this section for a subsequent outstanding final order relating to a violation. A permit may be revoked if at the time the certification is made it contains false statements. One commenter recommended that language be added to (c)(2) to clarify that "outstanding final order" relates to a violation. The commission agrees with this comment and has added the language. One commenter recommended the language in the emergency amendment for subsection (g) be used in subsection (i) of the current proposal. The commission agrees in part. "Application" is defined in subsection (b). Therefore, language was not added in subsection (g) to define "application." Non-substantive language was added to comply with Texas Register form requirements. The following commenters expressed general support for the proposal, although they suggested changes to various provisions: Exxon Company, U.S.A.; Permian Basin Petroleum Association; Rosewood Resources, Inc.; Texas Farm Bureau; Texas Independent Producers & Royalty Owners; and Texas Mid-Continent Oil & Gas The amendment is adopted pursuant to the Texas Natural Resources Code, sec.sec.85. 202, 85.2021, and 91.110, which provides the Railroad Commission of Texas with the authority to adopt rules for the filing of drilling permit applications and for drilling permit fees. sec.3.5. Application to Drill, Deepen, Reenter, or Plug Back. (a) Permit requirements for spacing, density, and units. An application for a permit to drill, deepen, plug back, or reenter any oil well, gas well, or geothermal resource well, shall be made under the provisions of sec.sec.3.37, 3.38, 3.39, and/or 3.40 of this title (relating to Statewide Spacing Rule; Well Densities; Proration and Drilling Units: Contiguity of Acreage and Exception Thereto; and Assignment of Acreage to Pooled Development and Proration Units) (Statewide Rules 37, 38, 39, and 40), or as an exception thereto, or under special rules governing any particular oil, gas, or geothermal resource field or as an exception thereto and filed with the commission on a form approved by the commission. An application must be accompanied by any relevant information, form, or certification required by the Railroad Commission or a commission representative necessary to determine compliance with this rule and state law. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (1) Application-Request by an organization on the appropriate form for a permit to drill, deepen, plug back, or reenter any oil well, gas well, or geothermal resource well. (2) Commission-The Railroad Commission of Texas. (3) Commission representative-A commission employee authorized to act for the commission. Any authority given to a commission representative is also retained by the commission. Any action taken by the commission representative is subject to review by the commission. (4) Organization-Any person, firm, partnership, joint stock association, corporation, or other organization, domestic or foreign, operating wholly or partially within this state, acting as principal or agent for another, for the purpose of performing operations within the jurisdiction of the commission. (5) Outstanding final order-Either a commission order against an organization finding that the organization has committed a violation and all appeals have been exhausted or an agreed order entered into by the commission and an organization relating to an alleged violation, where: (A) the conditions that constituted the violation or alleged violation have not been corrected; (B) all administrative, civil, and criminal penalties, if any, relating to the violation or agreed settlement relating to an alleged violation have not been paid; or (C) all reimbursements of costs and expenses, if any, assessed by the commission relating to the violation or to the alleged violation have not been collected. (6) Position of ownership or control-A person holds a position of ownership or control in an organization if the person is: (A) an officer or director of the organization; (B) a general partner of the organization; (C) the owner of an organization which is a sole proprietorship, (D) the owner of more than a 25% ownership interest in the organization; or (E) the designated trustee of the organization. (7) Violation-Non-compliance with the Texas Natural Resources Code, Title 3, or a commission rule, order, license, permit, or certificate relating to safety or the prevention or control of pollution. (c) Organization eligibility to file an application. The commission may not accept an application from an organization, if within the five years preceding the date on which the application is filed: (1) the applicant organization has any outstanding final orders against it; or (2) any person holding a position of ownership or control in the applicant organization also has held a position of ownership or control in any organization, including the applicant organization, registered with the commission that has an outstanding final order against it relating to a violation during that period of ownership or control. (d) Compliance certification. (1) The commission or a commission representative may require an applicant organization to file a compliance certification. The certification shall include a statement that within the last five years: (A) the applicant organization has no outstanding final orders against it; and (B) no person in a position of ownership or control of the applicant organization has held a position of ownership or control in any organization, including the named organization, that has an outstanding final order against it relating to a violation during that period of ownership or control. (2) Failure to file a required certification will delay or prevent approval of the application. Knowingly filing a false certification may be a violation of the Texas Natural Resources Code, sec.91.143 and may also subject a permit to denial or revocation. A permit that is issued on the basis of a certification statement that is later determined to be incorrect is also subject to revocation. (3) If the certification is signed by an agent of an applicant organization, the certification is binding on the agent and the organization as if signed by a person holding a position of ownership or control in the organization. (e) Commencement of operations. Operations of drilling, deepening, plugging back, or reentering shall not be commenced until the permit has been granted by the commission and the waiting period, if any, has terminated, or authorization has been granted pursuant to subsection (f) of this section. (f) Testing of existing wells in other reservoirs inside the casing. For an existing well, an operator may request authorization to commence operations to deepen inside the casing or plug back prior to the granting of a permit to deepen or plug back. (1) This authorization shall be requested by filing with the district office a letter of intent to deepen inside the casing or plug back. The letter shall include: (A) the operator name; (B) the lease name; (C) the lease number or gas identification number; (D) well number; (E) county; (F) field name; (G) a list of all reservoir(s) to be tested; (H) the casing setting depth and the depth of the deepest reservoir to be tested; (I) a plat showing the well location; and (J) a statement as to whether or not the well location would require an exception to sec.sec.3.37, 3.38, 3.39, and/or 3.40 if completed in any of the reservoirs to be tested. If an exception would be required, the letter of intent shall also include a statement that all affected offsets have been given written notice of the intent to test with the opportunity to witness the testing and the offsets shall be identified on the plat. (2) Operations of deepening inside the casing or plugging back shall not be commenced until the district office has reviewed and signed the letter of intent. Testing pursuant to this authorization shall be completed within 90 days from the date the district office signs the letter of intent. (A) No reservoir tested pursuant to the provisions of this subsection shall be tested for more than 15 days. (B) If the operator desires to place the well on production, the operator shall shut-in the well, with no production being sold, and file a permit application for the tested reservoirs with the appropriate fees. If the permit application for the tested reservoirs requires an exception to sec.sec.3.37, 3.38, 3.39, and/or 3.40, no consideration will be given by the commission to the cost of recompleting and testing the well in determining whether or not to grant the exception. (C) Within 30 days of completion of testing, the operator must either file an application for a permit to produce a reservoir tested pursuant to this subsection or file an amended completion report in accordance with sec.3.16 of this title (relating to Log and Completion of Plugging Report) (Statewide Rule 16) with a copy of the intent to test signed by the district office and a statement that a permit to produce a tested reservoir is not being sought, or if the well has been plugged and abandoned, a plugging report including reservoir and perforation data. If a permit is not obtained for the tested reservoirs and/or an allowable is not assigned, the producer shall report all test production in the producer's monthly report filed for the last permitted reservoir in which the well was completed and may request authorization to sell the test production. The test production may be sold after such authorization is granted. (g) Exploratory and specialty wells. An application for any exploratory well, cathodic protection well that penetrates the base of the fresh water strata, fluid injection well, injection water source well, disposal well, brine solution mining well, or underground hydrocarbon storage well shall be made and filed with the commission on a form approved by the commission. Operations for drilling, deepening, plugging back, or reentering shall not be commenced until the permit has been granted by the commission. For an exploratory well, an exception to filing such form prior to commencing operations may be obtained if an application for a core hole test is filed with the commission. (h) Exception permits. If an application for a permit presents a question of an exception to the applicable density rule as well as an exception to the spacing rule, the operator seeking a spacing and density exception must obtain such an exception as required under the applicable spacing and density rules. (i) Drilling permit fee. With each application or materially amended application, the applicant shall submit to the commission a nonrefundable fee as determined by sec.3.76 of this title (relating to Fees, Bonds, and Alternative Forms of Financial Security Required to be Filed) (Statewide Rule 78). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 3, 1992. TRD-9201681 Nolan Ward Hearings Examiner-General Law, Legal Division Railroad Commission of Texas Effective date: February 24, 1992 Proposal publication date: December 6, 1991 For further information, please call: (512)463-6941 16 TAC sec.3.14 The Railroad Commission of Texas adopts an amendment to sec.3.14, concerning well plugging, with changes to the proposed text as published in the November 12, 1991, issue of the Texas Register (16 TexReg 6524). The amendment shall take effect on March 1, 1992. Adoption of the amendment will: require that certain classes of wells be tested to ensure that they do not pose a threat to natural resources; establish the requirements for obtaining an extension of time within which a well must be plugged; and establish the plugging requirements for horizontal drainhole wells. Adoption of the amendment will increase the assurance that inactive wells will either be plugged or monitored to ensure that they do not pose a threat to natural resources, including surface and subsurface water, oil, and gas. Several commenters suggested that the time within which plugging operations must begin should not be reduced from the current one-year period to six months. The commission agrees. Several commenters suggested that the length of time that extensions under subsection (b)(2)(A) are effective should be stated in the rule. The Commission agrees. Extensions are effective for a period of one year, but are subject to review at any time. One commenter suggested that the extensions to the time within which plugging operations must begin should be two years. The commission disagrees. It is not necessary to provide for individual two-year extensions. Operators can obtain two years' worth of extensions by obtaining two consecutive annual extensions. Several commenters expressed concern over the limit of four extensions available under subsection (b)(2)(A)(i). The comments were as follows: do not limit the number of extensions; specify the elements necessary to prove waste or the confiscation of property; and allow for more than four extensions if an additional extension is necessary to provide for "other beneficial use" of the well. The commission agrees in part. In general, after a well has been the subject of four such extensions, it should be placed under a bond to ensure that financial resources are available to plug the well. However, subsection (b)(2)(D) provides that a well may be the subject of more than four extensions upon a showing that no pollution of surface or subsurface water could occur as a result of granting the extension. The exception is stated in broad terms in order to allow the exception to be administered under a wide range of circumstances. With regard to subsection (b)(2)(E), several commenters stated: a mechanical integrity test should not be required if there is no risk of harm to usable quality water, oil, gas, or other natural resources; specific alternatives to a mechanical integrity test should be listed; and the risk of harm to natural resources should dictate whether (and what type of) test is required. The commission agrees. Alternates to mechanical integrity tests are allowed in some cases. Fluid level tests are indicated as alternatives to mechanical integrity tests in many cases. The commission may require a mechanical integrity test if it appears that it is necessary to prevent the threat of harm to natural resources. Several commenters suggested that the specific requirements for mechanical integrity tests be set out in the rule. The commission disagrees. The rule sets out a sufficient standard in that the tests should be conducted to ensure that the casing is sound and not subject to leakage. Several commenters suggested that the minimum notification time for testing under subsection (b)(2)(E) and (F) be reduced from five days to one day. The commission disagrees. One day is too short a notification period for the commission to schedule personnel to be available to witness tests. However, the notification period has been reduced from five days to three days. With regard to paragraph (b)(3), there were various comments. commenters were split on their preference as to who should be presumed liable for plugging a well-the person designated on the most recent commission-approved producer's transportation authority and certificate of compliance or the person who most recently filed the certificate. This part of the rule will not be amended. The existing language is sufficient to establish plugging responsibility. Two commenters suggested deleting existing language that prohibits an employee of the service or cementing company hired to plug the well from being the operator's representative at the plugging. The commission disagrees. It is necessary to have an employee of the operator present when plugging the well because the service company is often ignorant of facts concerning the physical characteristics of the well such as the number of plugs, their location, and equipment in the hole that may inhibit proper plugging. The following commenters opposed adoption of the amendments as originally proposed: Texas Independent Producers and Royalty Owners Association, Texas Mid- Continent Oil & Gas Association, Permian Basin Petroleum Association, West Central Texas Oil & Gas Association, and North Texas Oil & Gas Association. The amendment is adopted pursuant to the sections of the Texas Natural Resources Code, Title 3, Chapters 85, 86, 89, and 91, that provides the Railroad Commission with authority to prevent pollution and other harm to natural resources. sec.3.14. Plugging. (a) Application to plug. (1)-(3) (No change.) (4) Before plugging any well, notice shall be given to the surface owner of the well site tract, or the resident if the owner is absent. If they so desire, a representative of the surface owner, in addition to the commission representative, may be present to witness the plugging of the well. Plugging shall not be delayed because of the inability to deliver notice to the surface owner or resident. (b) Plugging: commencement of operations, extensions, and responsibility. (1) (No change.) (2) Plugging operations on each dry or inactive well must be commenced within a period of one year after drilling or operations cease and shall proceed with due diligence until completed. For good cause, a reasonable extension of time in which to start the plugging operations may be granted pursuant to the following procedures. (A) The commission or its delegate may administratively grant an extension of time of one year if the well is in compliance with all other laws and commission rules relating to conservation and safety or the prevention or control of pollution, is not a pollution hazard; and (i) provided that the operator pays the proper fee as provided in sec.3.76, of this title (relating to Fees, Performance Bonds, and Alternate Forms of Financial Security Required to be Filed) (Statewide Rule 78), obtains a permit for this extension, and no more than three extensions have been granted after June 1, 1992 for the well under the provisions of this clause; or (ii) the operator files an individual or blanket performance bond as provided in sec.3.76, or a letter of credit. (B) Any administratively granted extension of time is subject to review by the commission or its delegate at any time. (C) If the commission or its delegate declines administratively to grant or to continue an extension of time, the operator shall plug the well or request a hearing on the matter. (D) The commission or its delegate may allow a well to be the subject of more than four extensions granted after June 1, 1992 under the provisions of subparagraph (A)(i) of this paragraph, upon written application and a showing that no pollution of surface or subsurface water could occur as a result of granting the extension. If such application is administratively denied, the commission may subsequently grant the extension. (E) All wells more than 25 years old that become inactive and subject to the provisions of this paragraph shall be plugged or tested annually to determine whether the well poses a potential threat of harm to natural resources, including surface and subsurface water, oil and gas. In general, a fluid level test is a sufficient test for purposes of this subparagraph. However, the commission or its delegate may require alternate methods of testing, and more frequent tests, if it is necessary to ensure the well does not pose a potential threat of harm to natural resources. Wells that are returned to continuous production, as evidenced by three consecutive months of production, within a year after the well becomes inactive need not be tested. Alternate methods of testing may be approved by the commission or its delegate by written application and upon a showing that such a test will provide information sufficient to determine that the well does not pose a threat to natural resources. No test shall be conducted without prior approval from the district office. The district office shall be notified at least three days before the test is conducted. The test results shall be filed with the district office, on a commission-approved form, within 30 days of the completion of the test. Fluid level tests shall be conducted on an annual basis according to the following schedule. (i) Wells that become both inactive and more than 25 years old after June 1, 1992 shall be tested within one year after the well becomes both inactive and more than 25 years old, unless the well has undergone a hydraulic pressure test within five years of the date a test is required under this clause and the results of such test are on file with the commission. (ii) Wells that are both inactive and more than 45 years old as of June 1, 1992 shall be tested before June 1, 1993. (iii) Wells that are both inactive and 35 to 45 years old as of June 1, 1992 shall be tested before June 1, 1994. (iv) Wells that are both inactive and 25 to 35 years old as of June 1, 1992 shall be tested before June 1, 1995. (F) As of January 1, 1997, all wells that are, or become, both more than 25 years old and inactive for more than 10 years, shall be tested for mechanical integrity so long as the well remains inactive. Such tests shall be conducted every five years. However, the commission or its delegate may require that a well undergo a mechanical integrity test more frequently than every five years if conditions indicate that more frequent testing is necessary to prevent the threat of harm to natural resources. A hydraulic pressure test is a sufficient mechanical integrity test for purposes of this section. Alternate methods of testing for mechanical integrity may be approved by the commission or its delegate upon written application and a showing that such alternate method of testing will provide information sufficient to determine that the casing is sound and not subject to leakage. No test shall be conducted without prior approval from the district office. The district office shall be notified at least three days before the test is conducted. The test results shall be filed with the district office, on a commission-approved form, within 30 days of the completion of the test. Wells for which mechanical integrity tests are conducted pursuant to this subparagraph are not subject to the annual test requirements of subparagraph (E) of this paragraph. (3) Proper plugging is the responsibility of the operator of the well. For purposes of plugging responsibility, the commission will presume that the operator designated on the most recent commission-approved producer's transportation authority and certificate of compliance was the person responsible for the physical operation and control of the well at the time the well was abandoned or ceased operation. This presumption may be refuted at a hearing called for the purpose of determining plugging responsibility. (c) General plugging requirements. (1) In plugging wells, it is essential that all formations bearing usable quality water, oil, gas, or geothermal resources be protected. All cementing operations during plugging must be performed under the direct supervision of the operator or his authorized representative, who shall not be an employee of the service or cementing company hired to plug the well. Direct supervision means supervision on location at the well site. (2)-(11) (No change.) (d)-(i) (No change.) (j) Plugging horizontal drainhole wells. All plugs in horizontal drainhole wells shall be set in accordance with subsection (c)(10) of this section. The productive horizon isolation plug shall be set from a depth 50 feet below the top of the productive horizon to a depth either 50 feet above the top of the productive horizon, or 50 feet above the production casing shoe if the production casing is set above the top of the productive horizon. If the production casing shoe is set below the top of the productive horizon, then the productive horizon isolation plug shall be set from a depth 50 feet below the production casing shoe to a depth that is 50 feet above the top of the productive horizon. In accordance with subsection (c)(6) of this section, the commission or its delegate may require additional plugs. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201749 Nolan Ward Hearings Examiner, Legal Division-General Law Railroad Commission of Texas Effective date: March 1, 1992 Proposal publication date: November 12, 1991 For further information, please call: (512) 463-6864 Conservation Rules and Regulations 16 TAC sec.3.76 The Railroad Commission of Texas adopts an amendment to sec.3.76, concerning conservation rules and regulations, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7613). The staff has determined for each year of the first five years the section as adopted is in effect the public benefit anticipated as a result of enforcing the section will be to increase compliance with the Railroad Commission's safety and pollution rules, the goal of which is to ensure clean water for Texas. Additionally, the requirement of up-front financial security for all persons performing commission-regulated operations will provide a source of funds for well-plugging, pollution control, and clean-up, with the anticipated benefit of fewer expenditures from the state oilfield cleanup fund for these purposes and will serve as an incentive to oil and gas operators to remain in compliance with the commission's safety and pollution rules. The anticipated economic cost to persons who are required to comply with the proposed section is determined by the fees set in the proposed section for each type of activity covered and by the particular activities of each persons, which may vary. Reference may be made to each provision in the section specifying required costs for fees or financial security. It is anticipated that those persons with an acceptable record of compliance with commission rules relating to safety and pollution will have a record or have an unacceptable record of compliance may have to bear the cost of a more expensive type of financial security option required by the Texas Natural Resources Code, Chapter 91. The rule amendment, adopted pursuant to Senate Bill 1103 (Chapter 603, 1991 Session Laws, 72nd Legislature), sets out the statutorily required fee amounts to be charged by the commission in order to drill, deepen, plug back, or reenter a well; to file for an extension of time to plug a well; to discharge to surface water; to renew a canceled certificate of compliance, and to haul oil and gas waste; the definition language relating to the fee for expediting a permit application is also deleted. The proposed amendment sets out the types of bonds or alternate forms of financial security required by Senate Bill 1103 of all persons performing oil and gas operations and regulated by the commission. Options include an individual or blanket performance bond, a nonrefundable $100 fee for those persons with acceptable records of compliance with commission safety and pollution rules, a nonrefundable fee of 3.0% of the bond that otherwise would be required, or a first lien on tangible oil and gas property. The proposed amendment establishes deadlines for filing financial security; eligibility for bonds and alternate forms of financial security; and bond requirements and conditions, including expiration of bond obligations. Under the proposed amendment, persons performing oil and gas operations may also be required to file a compliance certification in order to choose the nonrefundable $100 fee. Definitions of the terms "violation," "outstanding violation," and "acceptable record of compliance" are also provided. The following is a summary of comments; the following commenters expressed general support for the proposal, although they suggested changes to various provisions. Two comments were filed on this rule. On January 20, 1992, Texas Mid-Continent Oil and Gas Association (TMOGA) filed a comment regarding subsection (a)(2)(B)(i), recommending that the commission not consider a violation as "outstanding" if the commission has approved a plan to correct the violation and the operator is making a good faith effort to correct the violation. On January 24, 1992, the Texas Independent Producers and Royalty Owners Association (TIPRO) and the Permian Basin Petroleum Association (PBPA) filed comments. TIPRO and PBPA suggest that in subsection (a)(3) and paragraph (1)(1)(A), the commission treat an acceptable record of compliance as no pending proposal for decision containing a finding of violation or no outstanding violation. TIPRO and PBPA also expressed concern that the commission will include operators in an unacceptable record of compliance category when an enforcement action involves multiple parties and has not yet resulted in a proposal for decision. TIPRO and PBPA's second recommendation is that the commission allow operators to obtain an individual bond during the first year of operations. The Railroad Commission does not agree with the proposed changes recommended by Texas Mid-Continent Oil and Gas Association (TMOGA), Texas Independent Producers and Royalty Owners Association (TIPRO), and Permian Basin Petroleum Association (PBPA). The amendments will increase compliance with the Railroad Commission's pollution and safety rules, whose goal is to ensure clean water for Texas. The Railroad Commission disagrees with TMOGA's recommendation that the Railroad Commission should consider an acceptable record of compliance to include an approved plan and a good faith effort on the part of an operator overlooks the fact that such cases come to hearing after numerous contacts in the field with the commission relating to a problem. The suggested change would prolong and increase the cost of the intended function of Senate Bill Number 1103, to streamline the existing process. The Railroad Commission disagrees with TIPRO and PBPA's characterization of the proposed standard of acceptable record of compliance. Violations are tied to field inspections and entries of commission orders; these mechanisms allow the Railroad Commission in implementing this bill, to compel operators to avoid amassing violation records. When multiple parties are involved in cases, the controversy serves to encourage the innocent party to come forward with exculpatory evidence. The Railroad Commission disagrees with TIPRO and PBPA's recommendation concerning the filing of an individual bond during an operator's first year of operations. Filing an individual bond is not the only option allowed for first- year operators designating themselves with the Railroad Commission. The statute contemplates application only to existing well operators. Furthermore, when a new operator files a P-4, he or she has no record of property (wells) with the commission; therefore, the commission has no way to calculate the amount of an individual bond, which is measured at a rate of $2.00 for each foot of well depth per well. The amendment is adopted under the Texas Natural Resources Code, sec.81.052, which provides the Railroad Commission with the authority to adopt rules to govern and regulate persons and their operations under the jurisdiction of the Railroad Commission. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201682 Nolan F. Ward Hearings Examiner, Legal Division, General Law Section Railroad Commission of Texas Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 463-6918 Chapter 5. Transportation Division Subchapter H. Tariffs and Schedules 16 TAC sec.5.133 The Railroad Commission of Texas adopts an amendment to sec.5.133, concerning allowances prohibited, without changes to the proposed text as published in the October 1, 1991, issue of the Texas Register (16 TexReg 5377). The amendment, published pursuant to a petition filed by J. and H. Truck Service, Inc., will add provisions prohibiting allowances given by specialized motor carriers of sand and gravel commodities and affiliated shippers, producers, or distributors. The amendment is intended to prevent manipulations of the commission's rates and tariffs, and to deter business practices that have developed in the sand and gravel industry which interfere with the public's right to select a carrier of its choice. The amendment will require those materials suppliers that control affiliated motor carriers, and that quote combined prices for materials and transportation, to separate the quote into its two components, and honor the quoted price for materials when another unaffiliated carrier is used. Numerous comments were received regarding the proposed rule. Commenters in opposition to the proposed amendment questioned the commission's jurisdiction to enact rules which constitute a regulation of commodity pricing. Opponents also argue that the amendment will put them at a competitive disadvantage to suppliers with access to unregulated means of transportation, that many factors enter into the determination of a bid price, that the use of third-party carriers entails additional problems and difficulties, and that a producer cannot afford to supply materials below cost unless it can absorb that loss in trucking profits. Commenters in support of the proposed amendment argued that the proposed rules will eliminate a practice which is tantamount to illegal rate cutting, will reduce the competitive disadvantage of independent carriers and materials producers, and will aid owner-operators that bear the burden of the reduced rates. The Sand & Gravel Motor Carrier Association, Inc. commented in favor of the proposed amendment. The Associated General Contractors of Texas-Highway, Heavy Utilities & Industrial Branch commented in opposition. The commission disagrees with the comments received in opposition. Many of the practices which are asserted by the opponents are indistinguishable from charging below the tariff rate for the transportation provided. Such a practice is currently prohibited by commission rules, but the additional provisions are necessary to ensure that the spirit of the rules is not violated. While the new requirements and prohibitions may require some additional details and paperwork, such requirements have been made necessary by admitted practices which work to circumvent the commission's rules. The amendment is adopted under the Texas Motor Carrier Act, Texas Civil Statutes, Article 911b, sec.4(a)(1), which authorizes the commission to regulate the operations of motor carriers in all matters affecting the relationship between such carriers and the shipping public. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201680 Nolan F. Ward Hearings Examiner, Legal Division-General Law Railroad Commission of Texas Effective date: February 24, 1992 Proposal publication date: October 1, 1991 For further information, please call: (512) 463-7094 Subchapter AA. Rail Safety 16 TAC sec.5.625 The Railroad Commission of Texas adopts an amendment to sec.5.625, concerning hazardous materials reporting requirements, without changes to the proposed text as published in the December 6, 1991, issue of the Texas Register (16 TexReg 6991). The commission wants to harmonize reporting requirements under subsection (c) with federal law and wants to enhance and clarify hazardous materials reporting by railroads. The amendments will change reporting requirements under subsection (c) to harmonize those requirements with federal law, will require 24-hour operation of railroad dispatch telephones, will more accurately reflect the relative number of carloads of hazardous materials moving over railroad line segments identified within the state, will clarify peak density season reports, and will add a requirement that railroads report, for each identified line segment, the Texas counties and the railroad operating divisions traversed by that line segment. A comment was received from one railroad company, which company was generally opposed to the entire rule. No comments on the proposal were received from groups or associations. The commission disagrees with the comment because the commission believes the amended rule will improve rail safety regulation. The amendment is adopted pursuant to Texas Civil Statutes, Article 6419c, which authorize the commission to require hazardous materials reporting of railroad companies. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201685 Nolan F. Ward Hearings Examiner, Legal Division-General Law Railroad Commission of Texas Effective date: February 24, 1992 Proposal publication date: December 6, 1992 For further information, please call: (512) 463-7094 TITLE 22. EXAMINING BOARDS Part VIII. Texas Appraiser Licensing and Certification Board Chapter 151. Practice and Procedure 22 TAC sec.sec.151.1-151.30 The Texas Appraiser Licensing and Certification Board (the board) adopts new 22 TAC sec.sec.151.1-151.30, concerning practice and procedure for the licensing and certification of real estate appraisers, without changes to the proposed text as published in the November 19, 1991, issue of the Texas Register (16 TexReg 6679). These sections were previously adopted by the board on an emergency basis. The adopted sections help implement the Texas appraiser Licensing and Certification Act (the Act), Texas Civil Statutes, Article 6573a.2. The sections help permit real estate appraisers to become licensed or certified and thereby remain eligible to appraise in federally related transactions. Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) requires the use of state certified or licensed appraisers in connection with federally related transactions performed after December 31, 1992. These sections provide for a simple and efficient system of procedure before the board; to insure uniform standards of practice and procedure, public participation and notice of board actions; and a fair and expeditious determination of causes. Comments were received from one individual who subsequently withdrew the comments. The new sections are adopted under the Texas Appraiser Licensing and Certification Act, Texas Civil Statutes 6572a.2, provides the Texas Appraiser Licensing and Certification Board with authority of adopt rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 4, 1992. TRD-9201691 Renil C. Liner Commissioner Texas Appraiser Licensing and Certification Board Effective date: March 2, 1992 Proposal publication date: November 19, 1991 For further information, please call: (512) 465-3950 Chapter 153. Provisions of the Texas Appraiser Licensing and Certification Act 22 TAC sec.sec.153.1, 153.3, 153.5, 153.7, 153.9, 153.11, 153.13, 153.15, 153.17, 153.19, 153.21, 153.23 The Texas Appraiser Licensing and Certification Board (the board) adopts new 22 TAC sec.sec.153.1, 153.3, 153.5, 153.7, 153.9, 153.11, 153.13, 153.15, 153.17, 153.19, 153.21, and 153.23, concerning provisions of the Texas Appraiser Licensing and Certification Act, without changes to the proposed text as published in the November 19, 1991, issue of the Texas Register (16 TexReg 6682). These sections were previously adopted by the board on an emergency basis. The adopted sections implement the Texas Appraiser Licensing and Certification Act (the Act), Texas Civil Statutes, Article 6573a.2. The sections permit real estate appraisers become licensed or certified and thereby remain eligible to appraise in federally related transactions in compliance with the federal Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Comments were received from the American Society of Farm Managers and Rural Appraisers, Foundation Coalition Appraisers of Texas, Inc., Independent Bankers Association of Texas, National Association of Independent Fee Appraisers, Texas Bankers Association and from two individuals. Comments included limiting sponsorship of appraiser trainees to general certified appraisers; limiting sponsorship of appraiser trainees to general or residential certified appraisers; creating a "state certified real estate appraisal instructor" classification; requiring fees for educational course providers; requiring fees for each course submitted by educational providers; setting a fee for "state certified real estate appraisal instructors"; adding language regarding misrepresentation or falsification on various forms; concurring with the current 75% passing score on the competency examinations; assigning examinees to nearest examination site; adding to the types of calculators which may be used in the examinations; requiring a specific number of appraisal courses or a specific number of classroom hours of appraisal courses to meet the education requirements; listing specific college level courses which may receive partial credit for meeting the education requirements; listing those specific courses that must be completed to meet the education requirements; requesting clarification of continuing education requirements; requiring that no more than half of the required experience may be gained by teaching appraisal courses; using a formula (e.g. 1.5 times the actual number of hours spent in the actual performance or professional review of real estate appraisals) for bankers in meeting the experience requirements; adding more specifics to ad valorem tax appraisal definitions; requiring the use of a log and an affidavit for meeting experience requirements; requiring only the use of an affidavit for meeting experience requirements; limiting who may sign a joint affidavit; terminating a trainee's authorization if the sponsor's certification or license is revoked or suspended; requiring additional education for renewal of an appraiser trainee authorization; requiring an examination for renewal of appraiser trainee's authorization; limiting the number of renewals for appraiser trainees; providing for increased fees for each subsequent renewal by an appraiser trainee; and adding language concerning reciprocity with other states. After consideration of the public comments, the Texas Appraiser Licensing and Certification Board (the board) determined that the rules as published, which have been adopted as emergency rules under which the board has been operating, are functioning well and that additional time and experience should be allowed before changes should be made to those rules. Section 153.1 defines terms employed in the appraisal of real property or in sections relating to licensing and certification. Section 153.3 concerns the Texas Appraiser Licensing and Certification Board (the board), and establishes minimum number of meetings, establishes a quorum of five members, establishes board officers, and confirms that the meetings of the board are subject to the Texas Open Meetings Act. Section 153.5 establishes various fees for licensing and certification of appraisers, for appraiser trainees, for nonresident temporary registration, for the federal registry fee, and for changing a business address. Section 153.7 establishes two categories of certified appraisers, state certified general real estate appraiser and state certified residential real estate appraiser. Section 153.9 provides for the filing of applications; adopts application, experience verification, course approval, and change of address forms by reference; ground to disapprove applications; and provides for acceptance of applications transferred to the board pursuant to the Act, sec.24(d). Section 153.11 provides for examinations for licensing and certification; establishes a minimum passing score; provides for retaking of failed examinations after payment of another examination fee; provides for the administration of special examinations for those with physical limitations; and requires examinees to comply with instructions. Section 153.13 provides for the acceptance of education for meeting licensing and certification requirements; establishes minimum levels of education required, 165 classroom hours for certified general appraisers, 105 classroom hours for certified residential appraiser, and 75 classroom hours for state licenses appraisers; and provides for the prior approval of courses by educational providers. Section 153.15 establishes required appraisal experience for certification and licensing in accordance with the criteria established by the Appraiser Qualifications Board of the Appraisal Foundation and with the Act; and provides that applicants must submit experience on forms promulgated by the board. Section 153.17 establishes requirements for renewal of licensure and certification; provides a procedure for notifying appraisers and trainees to file renewal applications; and requires licensed or certified appraisers to complete 20 hours of approved continuing education in order to renew a license or certification. Section 153.19 establishes criminal offenses which are deemed to be directly related to the occupation of real estate appraisers. Section 153.21 provides for appraiser trainees under the sponsorship of a certified or licensed appraiser; hold the sponsoring licensed or certified appraiser responsible for the conduct of the appraiser trainee; and provide for notice and hearing for sanctions against the sponsoring licensed or certified appraiser. Section 153.23 provides for the certification and licensing of appraisers who met the requirements for certification under the previous law (Section 22, the Real Estate License Act, Texas Civil Statutes, Article 6573a. The new sections are adopted under the Texas Appraiser Licensing and Certification Act, Texas Civil Statutes, Article 6573a.2, which provides the Texas Appraiser Licensing and Certification Board with the authority to adopt rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 4, 1992. TRD-9201692 Renil C. Liner Commissioner Texas Appraiser Licensing and Certification Board Effective date: March 2, 1992 Proposal publication date: November 19, 1991 For further information, please call: (512) 465-3950 Chapter 155. Standards of Practice 22 TAC sec.155.1 The Texas Appraiser Licensing and Certification Board (the board) adopts new 22 TAC sec.155.1, concerning standards of practice for licensed and certified real estate appraisers, without changes to the proposed text as published in the November 19, 1991, issue of the Texas Register (16 TexReg 6686). The section was previously adopted by the board on an emergency basis. The new section helps implement the Texas Appraiser Licensing and Certification Act (the Act), Texas Civil Statutes, Article 6573a.2. The section helps permit real estate appraisers to become licensed or certified and thereby remain eligible to appraise in federally related transactions. Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) requires the use of state certified or licensed appraisers in connection with federally related transactions performed after December 31, 1992. The section adopts the "Uniform Standards of Professional Appraisal Practice" (USPAP) and requires written appraisal reports for federally related transactions. The provisions are consistent with Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). By December 31, 1991, appraisals performed in connection with federally related transactions must be performed only by persons licensed or certified in accordance with Title XI who adhere to the USPAP standards. Comments were received from the National Association of Independent Fee Appraisers which supported adoption of this section as published. The new section is adopted under the Texas Appraiser License and Certification Act, Texas Civil Statutes, Article 6573a.2, which provides the Texas Appraiser Licensing and Certification Board with authority to adopt rules and regulations necessary for the performance of its duties. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 4, 1992. TRD-9201693 Renil C. Liner Commissioner Texas Appraiser Licensing and Certification Board Effective date: March 2, 1992 Proposal publication date: November 19, 1991 For further information, please call: (512) 465-3950 Part IX. State Board of Medical Examiners Chapter 171. Institutional Permits 22 TAC sec.171.1 The Texas State Board of Medical Examiners adopts the repeal of sec.171.1, concerning institutional permits, without changes to the proposed text as published in the December 27, 1991, issue of the Texas Register (16 TexReg 7699). Extensive rewrite of the section was felt necessary; therefore, repeal with simultaneous new section was presented. The section will function by clarification of the rules. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201789 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: February 26, 1992 Proposal publication date: December 27, 1991 For further information, please call: (512) 834-4502 The Texas State Board of Medical Examiners adopts new sec.171.1, concerning institutional permits, with changes to the proposed text as published in the December 27, 1991, issue of the Texas Register (16 TexReg 7699). In order to expedite processing of institutional permit application and allow training programs to inspect documentation previously handled through the State Board of Medical Examiners, extensive rewrite of the section was felt necessary. The new section will clarify the rules and allow more efficient use of agency time. One written comment was received regarding the time frame in which the application and fee must be submitted. Verbal comments were made at the public hearing. The names of groups or associations making comments for and against the section are as follows: for: medical school training program; against: hospital training program. The number of days required to submit the application and fee prior to the beginning date of the program has been reduced from 90 to 45; further reduction would place under burden or processor. The new section is adopted under Texas Civil Statutes, Article 4495b, which provide the Texas State Board of Medical Examiners with the authority to make rules, regulations, and bylaws not inconsistent with this Act as may be necessary for the governing of its own proceedings, the performance of its duties, the regulation of the practice of medicine in this state, and the enforcement of this Act. sec.171.1. Institutional Permits. (a) Institutional permits may be issued to postgraduate training programs approved by the Accreditation Council for Graduate Medical Education, American Osteopathic Association, or the Texas State Board of Medical Examiners for interns, residents, and postresidency fellows. (1) An intern is a physician who is in a clearly defined and delineated first postgraduate year program. (2) A resident is a physician who is in a specialized, clearly defined, and delineated postgraduate program. (3) A postresidency fellow is a physician who is in a specialized, clearly defined, and delineated program, following completion of a delineated residency program, for additional training in a medical specialty or subspecialty delivered in a program approved by the Accreditation Council for Graduate Medical Education, the American Osteopathic Association, or in a program approved by the Texas State Board of Medical Examiners. (b) The executive director may, upon written request, approve training programs. If the executive director does note recommended approval, the program director may appeal to the full board for its consideration of the request. (c) Applicants who have graduated from a medical school approved by the Accreditation Council for Graduate Medical Education, or American Osteopathic Association must submit: (1) a completed application and fee 45 days prior to the beginning date of the program; and (2) certification by the director of medical education of the program that the internship, residency, or fellowship meets the appropriate definition. (d) Applicants who have graduated from a medical school outside the United State or Canada must submit: (1) a completed application and fee 45 days prior to the beginning date of the program; (2) a notarized copy of medical school diploma or 5th Pathway Certificate; (A) copies should be notarized as being a "true copy" of the original document. The notary public must sign, date, and affix his/her notary seal to the document; (B) if the document is in a foreign language, an official word-for-word translation must be furnished. The board's definition of an official translation is one prepared by a government official, official translation agency, or a college or university official, on official letterhead. The translator must certify that it is a "true translation to the best of his or her knowledge, that he or she is fluent in the language, and is qualified to translate." He or she must sign the translation with his or her signature notarized by a notary public. The translator's name and title must be typed/printed under the signature; (3) a notarized copy of a valid ECFMG document, or: (A) proof of an unrestricted license from another state in the United States or Canada; or (B) proof of citizenship in the United States and residency of the State of Texas prior to entering medical school as provided in Texas Civil Statutes, Article 4437(g); (4) certification by the direction of medical education that the internship, residency, or fellowship program meets the appropriate definition; (5) certification by the director of medical education that the original medical school diploma, certified medical school transcript from each medical school, valid ECFMG document, and an original dean's certification has been inspected. (e) The board's executive director may, on a case-by-case basis, allow substitute documents where exhaustive efforts have been made to secure the required documents. (f) Institutional permits are issued for a one-year period and may be renewed up to seven times depending upon the requirements of the physician's specialty training program. (g) Physicians holding an institutional permit must confine their practice of medicine to the designated teaching program. The permit may be cancelled if sec.3.08 or any other provision of the Medical Practice Act is violated; or if the permit is used to practice medicine outside the teaching program. (h) If the training is terminated for any reason other than illness or other reasons acceptable to the board, the permit is void and no additional permit will be issued. (i) Denial of a permanent Texas license is grounds for revoking or not issuing an institutional permit. (j) Failure of any hospital or medical institution to comply with these provisions shall be grounds for the denial of the institutional permit and any future permits for persons wishing to serve at that institution. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201788 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: February 26, 1992 Proposal publication date: December 27, 1991 For further information, please call: (512) 834-4502 Funeral Service Commission Chapter 203. Licensing and Enforcement-Specific Substantive Rules 22 TAC sec.203.4 The Texas Funeral Service Commission adopts an amendment to sec.203.4, concerning transfer of licenses, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7620). The amendment requires amended form be submitted on change of establishment name or change of funeral director in charge within 30 days of the date of change. The amendment insures change of establishment name or change of funeral director in charge is submitted on amended form within 30 days of the date of change. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 30, 1992. TRD-9201599 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 834-9992 22 TAC sec.203.6 The Texas Funeral Service Commission adopts an amendment to sec.203.6, concerning apprenticeships, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7620). The amendment will insure apprentices are fully informed all requirements of the apprenticeship program. In subsection (d) "(consisting)" is being deleted and in subsection (e) "(that individual)" is being deleted. The amendment insures apprentices are fully informed of apprenticeship program. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. sec.203.6. Apprenticeships. (a)-(b) (No change.) (c) A case report will be submitted on all cases performed each month by the apprentice. (1) The case report will be made on a form prescribed by the commission. (2) No more than two apprentices will receive credit due for work on the same body. (3) All case reports will be submitted to the commission by the 10th day of each succeeding month. (4) The apprentice shall report on at least one case each calendar month. In any month that the apprentice does not perform a case, a report shall be made to the commission, notwithstanding. Any month where a notwith- standing case report is submitted, will not be credited to the 12-month apprenticeship. (5) The commission may start an apprenticeship over any time the apprentice has submitted notwithstanding reports for two or more consecutive months. (6) The commission may start an apprenticeship over after the second time an apprentice has failed to either file a case report or has failed to file the case report in a timely manner. (7) Of the 40 cases required, at least 10 of the cases must be complete cases and reported during the last three months of the apprenticeship. A complete case is defined as a case where the apprentice takes the responsibility for the case and handles all major actions from the time of first call through interment or other disposition of the body. (8) The funeral director's and embalmer's apprenticeship must be served for a minimum of 12 consecutive months and may be served simultaneously. (9) Each case report submitted will be certified by the licensee under which the apprentice performed the work. The supervising licensee as well as the apprentice is subject to disciplinary action if the information submitted is misrepresented. (d) A student may register as a funeral director apprentice upon completion of a minimum of 60 quarter hours or 40 semester hours in an accredited college of mortuary science and achieving a minimum cumulative grade point average of 3.0. The student must be engaged in learning the practice of funeral directing in a licensed funeral establishment during regular employment, such employment, during the period of time the apprentice is enrolled in school, shall consist of a minimum of 20 hours per week. Upon completion of this required study, the student will receive credit not to exceed 10 required case reports and three months required apprenticeship. (e) Any funeral director apprentice that begins the apprenticeship during attendance at mortuary school will apply for and take the written examination given by the commission upon graduation from mortuary school unless the apprentice petitions the commission for authorization to delay taking the examination. (f) The commission may hear testimony or receive evidence as to why standards or requirements of apprenticeship cannot be met by an apprentice. Where, because of hardship, the applicant has been unable to meet such standards in spite of diligent effort, the commission can make a finding of substantial compliance by such apprentice. (g) An embalmer apprentice shall be required to assist in the embalming of six autopsied remains during the course of the embalming apprenticeship, with the provisions that a certificate from a mortuary college stating the number of autopsied eases had been completed during the course of the college program, would count towards the six required cases. However, any autopsied cases completed during the course of mortuary college, would not count towards the stated 40 cases required to complete the embalmer apprenticeship. (h) In order to ensure the maximum exposure possible to all aspects of funeral directing, the one-year funeral director apprenticeship will not be served in a commercial embalming establishment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 30, 1992. TRD-9201600 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 834-9992 22 TAC sec.203.7 The Texas Funeral Service Commission adopts an amendment to sec.203.7, concerning applicants for licensure, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7621). The amendment is adopted to satisfactorily demonstrate proficiency related to the duties of a funeral director and/or embalmer. The amendment will ensure funeral director and/or embalmer apprentice demonstrate proficiency related to their duties. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 30, 1992. TRD-9201601 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 834-9992 22 TAC sec.203.24 The Texas Funeral Service Commission adopts new sec.203.24, concerning apprentice sponsors, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7621). The new section sets requirements for apprentice sponsors. No comments were received regarding adoption of the new sections. The new section is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 30, 1992. TRD-9201602 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 834-9992 22 TAC sec.203.25 The Texas Funeral Service Commission adopts new sec.203.25, concerning establishment license, without changes to the proposed text as published in the December 24, 1991, issue of the Texas Register (16 TexReg 7622). The new section insures that all facilities can be properly identified, and that a revocation of license cannot be evaded. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 4582b, sec.5, which provide the Texas Funeral Service Commission with the authority to promulgate rules and regulations. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on January 30, 1992. TRD-9201603 Larry A. Farrow Executive Director Texas Funeral Service Commission Effective date: February 24, 1992 Proposal publication date: December 24, 1991 For further information, please call: (512) 834-9992 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 7. Corporate and Financial Regulation Subchapter A. Examination and Corporate Custodian and Tax 28 TAC sec.7.51 The State Board of Insurance of the Texas Department of Insurance adopts the repeal of 28 TAC sec.7.51, concerning preparation of 1982 tax returns, without changes to the proposed text as published in the December 6, 1991, issue of the Texas Register (16 TexReg 6992). The department adopts the repeal of 28 TAC sec.7.51 because the existing section is outdated and obsolete. The repeal of this section will delete obsolete requirements from the rules of this agency. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Insurance Code, Articles 1.04, 1.10 sec.9, 1.14-1, 4.07, 4.10, 4.11, 5.12, 5.24, 5.49, 5.68, 9.46, and 23.08; the Texas Health Maintenance Organization Act, 20A.22 and 20A.33; and Texas Civil Statutes, Article 6252-13a sec.4, and Article 8308 sec.2.22. The Texas Insurance Code, Article 1.04, places original jurisdiction for the adoption of rules in the Texas Department of Insurance. Article 1.10 sec.9, requires the department to furnish companies with blank forms for the statements required. Article 1.14- 1 requires payment of taxes on gross premiums written by unauthorized insurers. Article 4.07 specifies the charges for certain fees. The Texas Insurance Code, Articles 4.10 and 4.11; Texas Civil Statutes, Article 8308 sec.2.22; and the Texas Health Maintenance Organization Act, 20A.33 require payment of taxes on gross premiums by entities regulated by the department or on gross amounts of similar revenue by health maintenance organizations. The Texas Insurance Code, Articles 5.12, 5.24, 5.49, 5.68, 9.46, and 23.08 require the payment of maintenance taxes by certain entities regulated by the department. The Texas Insurance Code, Articles 4.10 and 4.11 and the Texas Health Maintenance Organization Act, 20A.22 give the department rulemaking authority. Texas Civil Statutes, Article 6252-13a, sec.4 requires and authorizes the department to adopt rules of practice setting forth the nature and requirements of all procedures available. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 5, 1992. TRD-9201797 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: February 26, 1992 Proposal publication date: December 6, 1991 For further information, please call: (512) 463-6327 The State Board of Insurance of the Texas Department of Insurance adopts new 28 TAC sec.7.51 concerning preparation of 1991 tax returns, with changes to the proposed text as published in the December 6, 1991, issue of the Texas Register (16 TexReg 6992). Section 7.51 concerns forms and instructions for the filing of tax returns by insurers and other entities required to file tax returns with the Texas Department of Insurance for the 1991 calendar year and those required to file quarterly premium tax returns with the department during the 1992 calendar year. This new section is necessary to provide forms and instructions to facilitate compliance with statutory requirements for reporting and paying of premium taxes, retaliatory taxes, filing fees and maintenance taxes to the Texas Department of Insurance. Changes to the introductory language of the proposed text were made to clarify the location and telephone number of the Texas Department of Insurance. Changes in the proposed text of the titles of the forms were made to clarify the identities of the forms to be adopted. In addition, proposed paragraphs (21), (22), (23), and (24) have been deleted because the Texas Insurance Code, Article 4.11A, the statute authorizing the tax to be collected by these paragraphs, was determined to be unconstitutional. New sec.7.51 adopts by reference forms and instructions for the preparation of annual and quarterly tax returns by insurers and other entities subject to premium taxes, retaliatory taxes, filing fees, and maintenance taxes. The new section provides insurers and other entities with the necessary forms and instructions for filing tax returns as required by statute. Commentors suggested clarification of the instructions for the assessment for the Office of Public Insurance Counsel for life, accident, and health companies and for health maintenance organizations. Such commentors were concerned that the proposed instructions were not clear regarding the application of the assessment to certificates of insurance issued to group plan participants and to renewal contracts. The department reworded the instructions to clarify the application of the assessment to policies and certificates of insurance. A commentor suggested that the General Instructions of each tax form include an explanation of the use of the Rapid Deposit Programs (Electronic Funds Transfer), also known as TexNet. Since the number of taxpayers who qualify for remittance through TexNet is small, the department routinely notifies qualifying taxpayers of the TexNet program. Since the department believes that mentioning the TexNet program would be confusing to many non-qualifying taxpayers, the department has not changed the instructions accordingly. A commentor suggested that the annual guaranty fund assessments, examination assessments, and overhead assessments be included in the retaliatory calculations related to the life, accident and health, property and casualty and title annual tax returns, since they constitute part of the aggregate burden of doing business in Texas. Another commentor stated that inclusion of the assessments in retaliatory calculations is not appropriate since the assessments are entirely recoupable through tax writeoffs. The commentor also expressed concern that inclusion of the assessments could result in greater tax liabilities for domestic companies operating in other states. The department modified the forms to include the assessments in the retaliatory calculations to the extent that the assessments will not be recouped as a writeoff. Another commentor suggested changes clarifying the annual title tax return regarding the guaranty fund calculation for tax writeoffs and the assessment for the Office of Public Insurance Counsel (OPIC). The department modified the form to streamline the guaranty fund calculation and to clarify the OPIC assessment. A final commentor suggested that the Workers' Compensation bond debt surcharge be removed from the maintenance tax exhibit of the annual property and casualty tax return. The concern was that this surcharge might be construed by other states as another fee or assessment that should be included in retaliatory tax calculations, thereby increasing the foreign tax liabilities of domestic companies doing business in other states. The department concurs with this suggestion, and has removed the bond debt surcharge calculation from the maintenance tax exhibit. Instead the bond debt surcharge will be collected by the department with a separate calculation form. All commentors were generally in favor of the proposed section with suggestions for changes to the tax forms or instructions. However, Highlands Insurance Group objected to the inclusion of the Workers' Compensation bond debt surcharge on the other maintenance tax exhibit of the annual property and casualty tax forms. The Texas Attorney General's Office and USAA Property and Casualty Insurance Company made comments regarding the inclusion of guaranty fund assessment and examination payments in the retaliatory calculations. The law firm of Johnson & Gibbs made comments in support of the 1991 annual title tax return and instructions with suggestions for minor changes to the title guaranty fund calculation for tax writeoffs and for the assessment for the Office of Public Insurance Counsel. Republic Life Insurance Company made supporting comments regarding the tax forms with specific suggestions regarding the assessment for the Office of Public Insurance Counsel and the Rapid Deposit Programs (TexNet). The Attorney General's Office advised the department to delete the 1991 Annual Tax Return and Instructions and the 1992 Quarterly Tax Returns and Instructions for Administrative Services Taxes due to the recent decision in the E-Systems case which declared the Administrative Service Tax Act unconstitutional. The new section is adopted under the Texas Insurance Code, Articles 1.04, 1. 10 sec.9, 1.14-1, 1.35B, 4.07, 4.10, 4.11, 4.11B, 4.11C, 4.17, 5.12, 5.24, 5.49, 5.68, 9.46, 9.48, 9.59, 21.07-6, 21.28-C, 21.28-D, 21.54, and 23.08; the Texas Health Maintenance Organization Act, Articles 20A.22 and 20A.33; and Texas Civil Statutes, Article 6252-13a, sec.4, and Article 8308, sec.2.22 and sec.11.09. The Texas Insurance Code, Article 1.04, places original jurisdiction for the adoption of rules in the department. Article 1.10 sec.9 requires the department to furnish companies required to report to the department with blank forms for the statements required. Article 1.14-1 requires payment of taxes on gross premiums written by unauthorized insurers. Article 1.35B imposes an assessment for support of the Office of Public Insurance Counsel. Article 4.07 specifies the charges for certain fees. The Texas Insurance Code, Articles 4.10, 4.11, 4. 11B, 4.11C, 9.59, and 21.54; Texas Civil Statutes, Article 8308, sec.2.22 and sec.11.09; and the Texas Health Maintenance Organization Act Article, 20A.33, require payment of taxes on gross premiums by entities regulated by the department or on gross amounts of similar revenue by health maintenance organizations. The Texas Insurance Code, Articles 9.48, 21.28-C, and 21.28-D provide for premium tax writeoffs based on guaranty fund association payments. The Texas Insurance Code, Articles 4.17, 5.12, 5.24, 5.49, 5.68, 9.46, 21.07-6, and 23.08, require the payment of maintenance taxes by certain entities regulated by the department. The Texas Insurance Code, Articles 4.10, and 4.11, and Texas Health Maintenance Organization Act, Article 20A.22, give the department rulemaking authority. Texas Civil Statutes, Article 6252-13a, sec.4, requires and authorizes the department to adopt rules of practice setting forth the nature and requirements of all procedures available. sec.7.51. Preparation of 1991 Tax Returns by Insurers and Other Entities. Forms and instructions for the preparation of tax returns and certain fees for insurance companies and other principals for the 1991 calendar year are adopted by reference. These instructions and forms are published by the Texas Department of Insurance and may be obtained from Tax Administration of the Texas Department of Insurance, William P. Hobby State Office, Tower One, Room 860, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104; (512) 322-4233. Each insurer or other entity shall follow such instructions and use and report on such forms as appropriate to its operations. The instructions and forms are more particularly identified as follows: (1) a form identified as the Instructions for Filing and Preparing the 1991 Texas Annual Tax Return-Domestic, Foreign, and Alien Carriers Transacting Life, Health, and Accident Business; (2) form identified as the 1991 Annual Tax Return for Domestic, Foreign, and Alien Carriers Transacting Life, Health, and Accident Business; (3) a form identified as the Instructions for Filing and Preparing the 1991 Texas Annual Tax Return-Domestic, Foreign and Alien Carriers, Lloyds, Reciprocal Exchanges and Miscellaneous Organizations Transacting Property and Casualty Business; (4) a form identified as the 1991 Annual Tax Return to be completed by Domestic, Foreign, and Alien Carriers, Lloyds, Reciprocals, and Miscellaneous Organizations Transacting Property and Casualty Business; (5) a form identified as the Instructions for Filing and Preparing the 1991 Texas Annual Tax Return for Health Maintenance Organizations; (6) a form identified as the 1991 Annual Tax Return to be completed by Health Maintenance Organizations; (7) a form identified as the 1991 Annual Tax Return to be completed by Prepaid Legal Organizations; (8) a form identified as the 1991 Annual Tax Return, to be completed by Local Mutual Aid Associations; (9) a form identified as the Instructions for Filing and Preparing the 1992 Texas Quarterly Premium Tax Return-Domestic, Foreign, and Alien Carriers Transacting Life, Health, and Accident Business; (10) a form identified as the 1992 Quarterly Tax Return for Life, Health, and Accident Insurance Carriers; (11) a form identified as the Specific Instructions for Preparing and Filing the 1992 Texas Quarterly Premium Tax Return-Domestic, Foreign, and Alien Carriers Transacting Property and Casualty Business; (12) a form identified as the 1992 Quarterly Tax Return for Property and Casualty Insurance Carriers; (13) a form identified as the Instructions for Filing and Preparing the 1992 Texas Quarterly Premium Tax Return-Health Maintenance Organizations; (14) a form identified as the 1992 Quarterly Tax Return for Health Maintenance Organizations; (15) a form identified as the Specific Instructions for Preparing and Filing the 1992 Texas Quarterly Premium Tax Return-Domestic, Foreign, and Alien Carriers Transacting Title Business; (16) a form identified as the 1992 Quarterly Tax Return for Title Insurance Carriers; (17) a form identified as the Instructions for Filing and Preparing the 1991 Texas Annual Tax Return-Foreign and Alien Life, Health and Accident Insurance Carriers operating under Articles 3.25 and 3.59, Texas Insurance Code; (18) a form identified as the 1991 Annual Tax Return to be completed by Foreign and Alien Life, Health and Accident Insurance Carriers operating under Articles 3.25 and 3.59; (19) a form identified as the 1991 Maintenance Tax Return, for Third Party Administrators, Certain Insurers, and Health Maintenance Organizations providing services of a Third Party Administrator; (20) a form identified as General Instructions for Filing the 1991 Maintenance Tax Return for Third Party Administrators; (21) a form identified as the Specific Instructions for Completing the 1991 Texas Annual Tax Return for Title Business; (22) a form identified as the 1991 Annual Tax Return to be completed by Domestic and Foreign Title Carriers; (23) a form identified as the Instructions for Filing Annual Tax Return of Insured Applicable to Independently Procured Insurance (FT-1); (24) a form identified as the Annual Tax Report of Insured Applicable to Independently Procured Insurance; (25) a form identified as the Instructions for Filing-Annual Purchasing Group Premium Tax Report; (26) a form identified as the Annual Purchasing Group Report; (27) a form identified as the Specific Instructions for Completing the 1991 Texas Annual and Quarterly Tax Returns for Registered Risk Retention Groups; and (28) a form identified as the 1991 Texas Workers' Compensation Maintenance Tax Surcharge. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 5, 1992. TRD-9201796 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: February 26, 1992 Proposal publication date: December 6, 1991 For further information, please call: (512) 463-6327 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 21. Division of Right of Way Control of Signs Along Rural Roads 43 TAC sec.21.441, sec.21.561 Texas Department of Transportation adopts the repeal of sec.21.441 and sec.21. 561, concerning control of signs along rural roads, without changes to the proposed text as published in the November 8, 1991, issue of the Texas Register (16 TexReg 6436). The department has determined that currently there is an inequity between the higher permit fees for signs along rural roads than for signs along interstate and primary highways and this could cause detrimental effects on the sign industry, Texas' economy, and the public welfare. The department has also determined that the sign permit fees should be adjusted and that the procedures should be expanded and clarified for permit periods, renewals, transfers, and cancellation and that requirements for removal of signs should be consolidated in one section. Therefore, the department is repealing the existing sections and simultaneously adopting on a permanent basis new sections which more accurately outline the updated procedures and requisites. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Texas Civil Statutes, Article 7784v-3, which provide the commission with the authority to adopt rules to regulate the orderly and effective display of outdoor advertising signs along rural roads and to prescribe permit fees in amounts sufficient to recover costs for enforcing that article. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201612 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: February 24, 1992 Proposal publication date: November 8, 1991 For further information, please call: (512) 463-8630 43 TAC sec.sec.21.441, 21.561, 21.572 The Texas Department of Transportation adopts new sec. sec.21.441, 21.561, and 21.572, concerning control of signs along rural roads, without changes to the proposed text as published in the November 8, 1991, issue of the Texas Register (16 TexReg 6437). The department has determined that currently there is an inequity between the higher permit fees for signs along rural roads than for signs along interstate and primary highways and this could cause detrimental effects on the sign industry, Texas' economy, and the public welfare. The department has also determined that the sign permit fees should be adjusted and that the procedures should be expanded and clarified for permit periods, renewals, transfers, and cancellation and that requirements for removal of signs should be consolidated in one section. Section 21.441 outlines applicability, application, and issuance, permit renewals, and permit fees. The section provides for a permit fee in the amount of $96 for one year; a permit renewal fee of $40 per year; and a transfer fee of $25. Section 21.561 consolidates the requirements for removal of signs into one section. Section 21.572 establishes procedures for notice and appeal. New section 21.441 and sec.21.561 replace existing sections which are simultaneously being repealed. On November 20, 1991, the department conducted a public hearing to receive data, comments, and views concerning the proposed new sections. No comments were received regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6666, which provide the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Texas Civil Statutes, Article 7784v-3, which provide the commission with the authority to adopt rules to regulate the orderly and effective display of outdoor advertising signs along rural roads and to prescribe permit fees in amounts sufficient to recover costs for enforcing that article. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on February 3, 1992. TRD-9201611 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: February 24, 1992 Proposal publication date: November 8, 1991 For further information, please call: (512) 463-8630