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 IV. Texas Department of Licensing and Regulation Chapter 67. Auctioneers 16 TAC sec.sec.67.1, 67.20, 67.21, 67.40, 67.100-67.102 The Texas Department of Licensing and Regulation adopts the amendments to sec.sec.67.1, 67.20, 67.40, and 67.100 and new sec.sec.67.21, 67.101, and 67.102. Section sec.67.20 is adopted with changes to the proposed text as published in the November 19, 1991, issue of the Texas Register (16 TexReg 6677). Sections 67.1, 67.21, 67.40, and 67.100-67.102 are adopted without changes and will not be republished. The rules are a revision of the existing rules in order to simplify, clarify, and organize them to conform to the Auctioneer Act, Article 8700. No comments were received regarding adoption of the amendments and new sections. The new sections and amendments are adopted under Texas Civil Statutes, Article 8700 which provide the Texas Department of Licensing and Regulation with the authority to regulate auctioneers. sec.67.20. License Requirements-General. (a) Each license must be renewed within 30 days after expiration. A license not renewed within 30 days of the expiration date will not be issued without the applicant first taking and passing the written examination administered by the department. Any person who acts as an auctioneer within that 30-day period after expiration of the license is subject to the penalties under the Auctioneers Act, sec.11(a) (b) All licensees must report any change of address to the department. 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 March 26, 1992. TRD-9204293 Larry E. Kosta Acting Executive Director Texas Department of Licensing and Regulation Effective date: April 17, 1992 Proposal publication date: November 19, 1991 For further information, please call: (512) 463-3127 16 TAC sec.sec.67.10, 67.21-67.23, 67.30, 67.60, 67.61, 67.70, 67.91, 67.92, 67.101-67.105 The Texas Department of Licensing and Regulation adopts the repeals of sec.sec.67.10, 67.21-67.23, 67.30, 67.60, 67.61, 67.70, 67.91, 67.92, and 67.101-67. 105, without changes to the proposed text as published in the November 19, 1991, issue of the Texas Register (16 TexReg 6677). The repeal of these sections is to simplify, clarify, and organize the auctioneering rules to conform to the Auctioneer Act. No comments were received regarding adoption of the repeals. The repeals are adopted under Texas Civil Statutes, Article 8700 and 9100, which provide the Texas Department of Licensing and Regulation with the authority to regulate auctioneers. 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 March 26, 1992. TRD-9204292 Larry E. Kosta Acting Executive Director Texas Department of Licensing and Regulation Effective date: April 17, 1992 Proposal publication date: November 19, 1991 For further information, please call: (512) 463-3127 TITLE 22. EXAMINING BOARDS Part IX. Texas State Board of Medical Examiners Chapter 177. Certification of Nonprofit Health Corporations 22 TAC sec.177.1, sec.177.2 The Texas State Board of Medical Examiners adopts the repeal of sec.177.1 and sec.177.2 concerning certification of nonprofit health corporations, without changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1171). Extensive rewriting is necessary; therefore, repeal of the sections with simultaneous new chapter wording was submitted. The repeals are necessary in order to comply with House Bill 2478, enacted by the 72nd Legislature. The repeals will enable clarification of the rules by ommission. No comments were received regarding adoption of the repeals. The repeals are 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 March 25, 1992. TRD-9204228 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: April 15, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 834-4502 22 TAC sec.177.1 The Texas State Board of Medical Examiners adopts new sec.177.1 concerning certification of nonprofit health corporations, with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1171). The new section will comply with the mandate of House Bill 2478, enacted by 72nd Legislature. The new section will allow the employment of physicians in organizations operated as a migrant, community, or homeless health center. One comment was received from an attorney who recommended clarification of subsection (b)(2)(B). The suggestion was taken into consideration and a change in wording was adopted. 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.177.1. Certification of Nonprofit Health Corporations. (a) Any health organization formed solely by persons licensed by the board shall make application and present the documentation following to the executive director of the Texas State Board of Medical Examiners for certification. (1) A written request to the board by each health organization's chief executive officer will suffice as the application. (2) The following documentation shall be submitted: (A) a copy of the certificate of incorporation under the Texas Non-Profit Corporation Act; (B) proof that the entity is organized for any or all of the following purposes: (i) the carrying out of scientific research and research projects in the public interest in the fields of medical sciences, medical economics, public health, sociology, and related areas; (ii) the supporting of medical education in medical schools through grants and scholarships; (iii) the improving and developing of the capabilities of individuals and institutions studying, teaching, and practicing medicine; (iv) the delivery of health care to the public; (v) the engaging in the instruction of the general public in the area of medical science, public health, and hygiene and related instruction useful to the individual and beneficial to the community; and (C) proof that the entity is organized and incorporated by persons licensed by the board and that the directors and trustees of the organization and their successors in office shall be persons licensed by the board and actively engaged in the practice of medicine. The term "actively engaged in the practice of medicine" shall mean that the physician is engaged in full-time service of diagnosing or treating mental or physical ailments of human beings at least 40 hours per week. (b) Migrant, community, or homeless health centers who wish to employ physicians shall make application and present the required proof to the executive director of the Texas State Board of Medical Examiners for approval. (1) A written request to the board by each health center's chief executive officer will suffice as the application. (2) The following documentation shall be submitted: (A) a copy of the certificate of incorporation under the Texas Non-Profit Corporation Act; (B) written proof of a determination by the Internal Revenue Service that the organization is tax exempt under the Internal Revenue Code pursuant to sec.501(c)(3); (C) written proof of compliance with 42 United States Code, sec.254(b) or (c), or sec.256. (c) The board may, at its discretion, refuse to approve and certify any such health organization making application to the board if in the board's determination the applying nonprofit corporation is established or organized or operated in contravention to or with the intent to circumvent any of the provisions of the Medical Practice Act. (d) The board shall revoke an approval or certification if in the board's determination the nonprofit corporation is established, organized, or operated in contravention of or with the intent to circumvent any of the provisions of the Medical Practice 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 March 25, 1992. TRD-9204229 Homer R. Goehrs, M.D. Executive Director Texas State Board of Medical Examiners Effective date: April 15, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 834-4502 Part XXIII. Texas Real Estate Commission Chapter 537. Professional Agreements and Standard Contracts Standard Contract Forms 22 TAC sec.sec.537.11, 537.13, 537.23, 537.28, 537.29, 537.33 The Texas Real Estate Commission adopts amendments to sec. sec.537.11, 537.13, 537.23, 537.28, 537.29, and 537.33, concerning standard contract forms, without changes to the proposed text as published in the January 28, 1992, issue of the Texas Register (17 TexReg 612). Changes consist of modifications to the standard contract forms being adopted by reference. The amendments replace five existing real estate contract forms with revised forms which Texas real estate licensees will be required to use beginning September 1, 1992. The amendment to sec.537.11 also clarifies that reproductions of the forms must be on the same size of paper as that used by the commission in the promulgated versions. These actions are necessary to bring the standard contract forms used by Texas real estate licensees into conformity with current practice and law. A number of changes were made to the contract forms in response to written comments or testimony received by the commission in a hearing held on the proposed amendments on March 16, 1992. Several commenters requested modifications to the provisions for seller financing in form TREC Number 20-1 (One to Four Family Residential Earnest Money Contract; All Cash, Assumption, Third Party Conventional or Seller Financing) to permit the seller to determine the sufficiency of documentation submitted by the buyer to establish credit worthiness and to clarify that copies of the buyer's credit report would be provided to the seller at the buyer's sole expense. The commission concurred and made the requested changes to the form. Commenters also suggested that the provision in Paragraph 4 of TREC Number 20-1 relating to adjustment of the sales price due to a loan reduction should be deleted to afford an opportunity for negotiation by the parties. The commission concurred and made the requested change. A number of the commenters urged deletion of Paragraph 7C, which provided a right to terminate the contract based upon the condition of the property. Commenters maintained that such an option was inappropriate for a residential transaction and that the buyer was adequately protected by other inspection and repair provisions. The commission agreed and deleted Paragraph 7C in its entirety in form TREC Number 20-1 and form TREC Number 21-1 (One to Four Family Residential Earnest Money Contract; FHA Insured or VA Guaranteed Financing). The Texas Real Estate Broker-Lawyer Committee recommended a change to Paragraph 7 to clarify that the buyer may make repairs which the seller fails to make in addition to the other remedies provided in the contract. The committee also recommended that if the seller is unable without fault to complete noncasualty repairs by the closing date, the contract should permit the buyer to terminate the contract, extend the closing date, or accept the property with an assignment of any insurance proceeds. The commission agreed and modified TREC Number 20-1 and TREC Number 21-1 accordingly. Commenters also suggested that Paragraph 8 in both contracts be modified to delete a provision in which the broker's fee is inserted, for the reason that a separate agreement between the broker and the seller should address the broker's compensation. The commission concurred and made the requested change in both TREC Number 20-1 and TREC Number 21-1. In response to a comment, a change was made in Paragraph 12F of TREC Number 20-1 and TREC Number 21-1 to clarify that either party may pay an excess in costs. Commenters suggested the deletion of a portion of Paragraph 17 in TREC Number 20-1 and TREC Number 21-1 which required the escrow agent to disburse the earnest money to a single party making demand upon the escrow agent. The commenters asserted that escrow agents would decline to accept the transactions under such conditions. The commission agreed to modify Paragraph 17 in both forms accordingly. Many commenters suggested that a provision for mediation be deleted until the public and real estate industry become better informed about mediation procedures. The commission agreed in part and modified the Paragraph 21 in TREC Number 20-1 and TREC Number 21-1 to encourage use of mediation to resolve disputes, leaving the agreement for mediation to be set forth either in an addendum approved by the commission or an addendum required by the parties. Commenters suggested that federal tax numbers should not be revealed in the forms, so as to prevent unauthorized persons having access to the numbers. The commission agreed and modified TREC Number 20-1 and TREC Number 21-1 accordingly. In response to other suggestions, the commission made nonsubstantive changes to all five forms to add the fair housing logo and to emphasize the boxes which needed to be checked by the brokers and salesmen when completing the forms. A number of comments concerned the provisions of TREC Number 20-1 and TREC Number 21-1 relating to title. Commenters suggested that the 20-day period of time for providing the buyer with the commitment for title insurance should be extended to 30 days or made negotiable, that sellers should not be obligated to furnish a commitment in every transaction, that the time for providing the commitment should run from the title company's receipt of the contract, that the contract should not require copies of restrictive covenants to be furnished to the buyer, and that the contracts should specifically require the seller to provide proof of access. The commission did not concur with the suggestions for the reason that the proposed standard forms provide for early disclosure of material information relating to the title, including access, although the parties to the contract may modify the form to address the circumstances of individual transactions. Other commenters suggested that the cost of the owner title policy should be negotiable instead of being an expense of the seller. The commission declined to make the requested change for the reason that the cost of the owner policy is traditionally a seller's expense item, balanced against other expense items such as survey and mortgagee title policy, traditionally paid by the buyer. Commenters also suggested that all of the forms should be reproduced on legal- sized paper. The commission declined to make the requested change, noting the existence of a trend away from the use of legal-sized paper and restrictions in state law on purchase of legal-sized paper by the commission. A number of comments requested the commission to add language to the forms to the effect that brokers and salesmen are not responsible or liable for inspections and repairs. The commission declined to make the change since the proposed forms specified the responsibilities of the parties for such matters. Commenters also suggested that the provisions of TREC Number 20-1 and TREC Number 21-1 relating to survey should be revised to make the survey cost to the buyer refundable if the transaction did not close or to make the survey cost negotiable and to clarify the applicable flood plain designation. The commission declined to make the suggested changes because the proposed forms reflected traditional distribution of expenses and because a broad reference regarding flood plain designation increases the information made available to the buyer. One commenter suggested a late charge should be added to form TREC Number 26-1 (Seller Financing Addendum). The commission declined to make the suggested change for the reason that determination of an appropriate late charge should involve the advice of legal counsel to avoid usury. Commenters suggested that septic systems and the reference to pressure test of gas lines should be removed from form TREC Number 2-3 (Property Condition Addendum). The commission determined that the existing language was appropriate and declined to make the changes. No comments were received with regard to form TREC Number 12-1 (Addendum for Release of Liability). Comments suggesting changes and supporting adoption of the proposed amendments were received from the Texas Association of Realtors, the Houston Association of Realtors, and the New Braunfels/Canyon Lake Association of Realtors. The Fort Bend Association of Realtors, the McAllen Association of Realtors, the Lubbock Association of Realtors, and the Texas Real Estate Inspector Committee submitted comments recommending changes to the proposed forms but not specifically for or against adoption of the proposed amendments. The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.16, which provide the Texas Real Estate Commission with the authority to adopt rules and regulations requiring real estate brokers and salesmen to use contract forms which have been prepared by the Texas Real Estate Broker-Lawyer Committee and promulgated by the 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 March 27, 1992. TRD-9204371 Mark A. Moseley General Counsel Texas Real Estate Commission Effective date: September 1, 1992 For further information, please call: (512) 465-3900 TITLE 25. HEALTH SERVICES Part II. Texas Department of Mental Health and Mental Retardation Chapter 404. Protection of Clients and Staff Subchapter E. Rights of Persons Receiving Mental Health Services 25 TAC sec.sec.404.151-404.166 (Editor's note: The Texas Department of Mental Health and Mental Retardation filed with the Texas Register on March 30, 1992, adoptions to new sec.sec.404.151-404.166. Due to technical problems these rules will not be published in this issue of the Texas Register. These rules will be serialized beginning in the April 7, 1992, issue of the Texas Register. The effective date of these rules is April 20, 1992.) Chapter 405. Client (Patient) Care Subchapter L. Client Rights-Mental Health Services 25 TAC sec.sec.405.281-405.291 (Editor's note: The Texas Department of Mental Health and Mental Retardation filed with the Texas Register on March 30, 1992, adoptions to the repeals of sec.sec.405.281-405.291. Due to technical problems these repeals will not be published in this issue of the Texas Register. These repeals will be serialized beginning in the April 7, 1992, issue of the Texas Register. The effective date of these repeals is April 20, 1992. TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter D. Maintenance Tax for the Texas Workers' Compensation Commission and the Maintenance Tax Surcharge for the Texas Workers' Compensation Insurance Fund, 1992 28 TAC sec.1.411 The State Board of Insurance of the Texas Department of Insurance adopts new sec.1.411, concerning assessment of a maintenance tax for the Texas Workers' Compensation Commission and a maintenance tax surcharge which will be used to pay debt service on bonds issued to fund the Texas Workers' Compensation insurance fund, with changes to the proposed text as published in January 14, 1992, issue of the Texas Register (17 TexReg 297). In addition, the section contains procedures by which insurance companies may pass the maintenance tax surcharge through to policyholders. The procedures include two alternative methods of recoupment, the requirement that each insurer elect the method of recoupment, and special procedures for Texas Workers' Compensation Insurance Facility servicing companies. The section is adopted pursuant to a public hearing requested by American International Group and the Association of Fire and Casualty Companies in Texas and held on March 11, 1992. Subsections (a) and (b) of the new section concern the Texas Workers' Compensation Commission's maintenance tax and maintenance tax surcharge rates which are statutorily required to be set by the State Board of Insurance. Subsection (a) is unchanged from the proposed text published in the Texas Register. Subsection (b) was changed to allow the payment of the maintenance tax and the surcharge in two installments as is provided in the Insurance Code, Article 5.68. Under Texas Civil Statutes, Article 8308, sec.2.22 and sec.2.23, the Texas Workers' Compensation Commission annually establishes and certifies to the State Board of Insurance the rate of assessment for the maintenance tax which is authorized to pay the costs of administering the Texas Workers' Compensation Act. The Insurance Code, Article 5.76-5, added by Acts 1991, 72nd Legislative, 2nd Called Session, authorized the Texas Public Finance Authority to issue revenue bonds to pay certain costs associated with the Texas Workers' Compensation insurance fund. To pay the debt service on the bonds, Article 5.76- 5 assesses a maintenance tax surcharge against each insurance company writing workers' compensation insurance in the state, each certified self-insurer as provided in the Texas Workers' Compensation Act (Article 8308-3.51 et seq), and the Texas Workers' Compensation insurance fund. The statute requires that the maintenance tax surcharge, which must be set in an amount sufficient to pay all debt service on the bonds, be set by the State Board of Insurance in the same time and shall be collected on behalf of the fund in the same manner as provided under the Insurance Code, Article 5.68, which concerns workers' compensation insurance maintenance tax. The statute further provides that the fund and each insurance company may pass through the maintenance tax surcharge to each of its policyholders. Subsections (c), (d), and (e) were added to the new section in response to public comments suggesting that the procedures for passing the surcharge through to policyholders be included in the new section. Subsection (f) was added to provide for the severability of the subsections if any subsection was determined to be invalid. Subsection (a) provides the method and rate of assessment for the 1992 Texas Workers' Compensation Commission maintenance tax and the Texas Workers' Compensation insurance fund maintenance tax surcharge. Subsection (a) assesses a maintenance tax rate of .860% of the correctly reported gross workers' compensation premiums written by each company in calendar year 1991. In addition, subsection (a) establishes and assesses the 1992 maintenance tax surcharge at the rate of 1.140% of correctly reported gross workers' compensation insurance premiums for calendar year 1991, and an additional maintenance tax surcharge at the rate of .702% of correctly reported 1991 gross premiums. Subsection (b) provides for a twice-yearly method of payment of the assessments, except for those companies whose maintenance tax liability under Texas Insurance Code, Article 5.68 was less than $2,000 for the previous tax year. Subsection (c)(1) -(6) provides the two alternative methods by which an insurer may pass the surcharge through to policyholders, the procedure for electing the method of recoupment, and instructions for providing relevant information to the department. Subsection (c)(7) provides the effective date through which recoupment of the 1992 assessment may be made under subsection (c)(4). Subsection (c)(8) provides for the insurers to remit any excess recoupment collected from insureds to the department. Subsection (d) provides separate reimbursement procedures for the Texas Workers' Compensation Insurance Facility and its servicing companies. Subsection (e) provides that recoupment procedures under subsections (c) and (d) may be applied to new or renewed policies written for a 12-month period beginning with the effective date of June 1992. Subsection (f) provides for the severability of any subsection, which is held to be invalid. Three commenters addressed the assessment of the maintenance tax surcharge based on 1991 gross premiums. One commenter urged that if 1991 gross premiums are to be the basis for the maintenance tax surcharge, there should be a final adjustment at the end of the year to reflect the actual 1992 gross premiums. The department responds that such an adjustment is inappropriate because the tax surcharge is not prepaid on an estimated basis. The department will annually establish a surtax rate in the same manner as it does for the workers' compensation maintenance tax under the Insurance Code, Article 5.68. The method utilized will be to annually set the surcharge rate sufficient to cover the total bond debt service as set forth in the financing agreement after taking into account and deducting any amounts available in the interest and sinking fund at the time the rate is set. Since the department is directed to use the same method as provided by Article 5.68 to set and collect the surcharge, the process used will be similar to the process used to set and collect the workers' compensation maintenance tax. Two commenters expressed concerns that if the surcharge is imposed on 1991 gross premiums without a subsequent adjustment, the application will be unconstitutional as a retroactive tax. Two commenters stated that the surcharge was not retroactive because it was actually assessed in 1991 by the statute creating the surcharge which became effective in August 1991. The department's response is that the fact that the 1991 premiums are used as a basis for determining the amount of surcharge does not make it unconstitutionally retroactive. Maintenance taxes and privilege taxes on persons doing business, e.g. writing workers' compensation insurance, are rationally measured by the prior year's volume of business. The department believes that 1991 premiums provide the correct basis on which to compute the rate for 1992, because that basis is consistent with the manner of imposing the workers' compensation maintenance tax under Article 5.68. Two commenters were concerned that the amount of the surcharge is excessive because the amount of projected collections exceeds what will be required to fund the first year of bond debt service for the Texas Workers' Compensation Fund. One commenter argued that its calculations indicate that $67,500,000 should be collected to cover the bond debt service in the first year, rather than the $73,986,175 calculated by the department and shown on the schedule attached to the proposed rule. One commenter was concerned that collecting this larger figure is excessive, and unfair to consumers and insurers. Another commenter indicated that the amount to be collected as calculated by the department was consistent with the requirements under the bond documents. The department's response is that the amount of the surcharge is based on setting the surcharge rate sufficient to cover the total bond debt service, including establishment of a reserve as set forth in the financing agreement after taking into account and deducting any amounts available in the interest and sinking fund at the time the rate is determined. The department believes that its method is based on sound reasoning and that a change in the figure is not warranted. One commenter opposed imposition of the additional surcharge, arguing that the surcharge will have a negative fiscal impact on the operations of insurers writing Texas workers' compensation coverage. The department's response is that the imposition of the additional surcharge is legislative, not departmental. The department is required by law to implement the legislation providing for the surcharge. One commenter stated that since the imposition of the maintenance tax surcharge must comport with the method used under the Insurance Code, Article 5. 68, no other method is available, despite the obvious difference in Articles 5. 68 and 5.76-5 with respect to passing the surcharge through to policyholders. The department agrees and therefore describes the manner and method of the imposition of the surcharge in subsections (a) and (b) as adopted. Four commenters expressed concern that, although the Insurance Code, Article 5.76-5 sec.10(d), provides for the surcharge to be passed through to policyholders, the proposed section failed to clarify how the insurers would be able to do so. They were concerned that if an insurer could not recoup the surcharge from its 1991 policyholders, new policyholders would be assessed the pass-through for business written the previous year. Three commenters felt that the rule deprived them of the authority for the pass-through, since they have already collected premiums on the policies written in the early part of 1992. One commenter believed that the pass-through should be recognized and authorized by this section. The department responds by recommending the adoption and the board adopts subsection (c), which sets forth the procedure for passing the surcharge through to policyholders, subsection (d), which provides for reimbursement procedures for the Texas Workers' Compensation Insurance Facility and its servicing companies, and Subsection (e), which sets the effective period for a pass-through as a 12-month period beginning with policies written or renewed effective June 1, 1992. Three commenters urged the board to implement a straight pass-through for the maintenance tax surcharge where the surcharge would be applied as a separate charge from premiums on each policy written in 1992. Two commenters favored this method because the surcharge would not be part of gross premiums, nor subject to premium taxes, and would not affect expense "loadings." Two commenters stated that to do otherwise would result in a tax on a tax and would ultimately be unfair to the consumers. One commenter opposed including the surcharge as an expense in the rates because the surcharge would then be considered premium for all purposes. Another commenter urged the department to devise a method for the pass-through as is contemplated by Article 5.76-5, sec.10. The department has determined that because the statute does not mandate a specific method of recoupment, either a separately stated charge or an expense in the rates is permissible. The department recommends and the board adopts subsection (c)(2) which provides for companies to elect one of two alternative methods of recoupment. One method is through a separately stated charge, where the surcharge is not considered part of the premium. The other method is to include the surcharge as an expense in the rates to be used by the company and filed with the department. One commenter expressed concerns that the majority of the workers' compensation policies issued in 1992 were issued in January, and that therefore the insurers could not pass the surcharge through to insureds for those policies without having issued an endorsement notifying the insureds of the surcharge when the policy was issued. The department recommends and the board adopts subsection (e), which sets out a 12-month surcharge recoupment period beginning with policies effective on June 1, 1992. One commenter suggested that if a straight pass-through is not implemented, then the servicing carriers for the Texas Workers' Compensation Insurance Facility should be reimbursed by the Facility. The department recommends and the board adopts subsection (d)(1), providing that servicing companies paying the surcharge because of insurance business written for the Facility shall be reimbursed by the Facility. One commenter submitted a proposed endorsement to implement the surcharge pass- through. The proposal has been forwarded to the department's workers' compensation division for consideration as a promulgated endorsement. One commenter proposed a method of implementing the pass-through under which the insurers would collect the surcharge at the rate set by the department and remit any amount in excess of the amount of surcharge it paid to the department. The department would reimburse those insurers who would not have been fully reimbursed with the excess it collected. The department responds that the department cannot implement the pass-through in this manner. In addition, the proposed method would be extremely cumbersome and costly to implement. Therefore, the board adopts the pass-through methods provided in subsection (c). Two commenters requested a public hearing on this rule. Comments from seven sources were received on the rule. Four sets of comments, which are generally unfavorable, were submitted by the Association of Fire and Casualty Companies in Texas; Houston General Insurance Company; Small, Craig & Werkenthin, P.C., for Farmers Insurance Group of Companies; and DeLeon, Boggins, and Richards, P.C., for American International Group. Two sets of comments neither against or in support of the rule were submitted by Morehead, Jordan and Carmona, P.C., for the Texas Workers' Compensation Fund; and American International Companies. One set of comments in favor of the rule was submitted by Akin, Gump, Hauer & Feld, P.C., for the Texas Public Finance Authority. The new section is adopted under the Insurance Code, Articles 5.76-5, 5.76-3, 5.68, 1.04, 5.55, and 5.76-2 and Texas Civil Statutes, Articles 6252-13a, sec.4 and sec.5, and 8308, sec.2.22 and sec.2.23. Article 5.76-5 establishes the maintenance tax surcharge and provides for the pass-through of the surcharge to policyholders. Article 5.76-3 establishes the Texas Workers' Compensation insurance fund. Article 5.68 establishes the Texas Department of Insurance's maintenance tax based on premiums for workers' compensation coverage. Article 1. 04 authorizes the board to determine rules. Article 5.55 requires insurers authorized to write workers' compensation insurance to file rate information with the department. Article 5.76-2 contains statutory provisions concerning the Texas Workers' Compensation Insurance Facility. Article 5.76-2, sec.2.04 provides for the State Board of Insurance's continuing jurisdiction over rules and regulations of the Facility; sec.4.04 provides for methods of assessment of Facility operating deficits against insurance companies which are members of the Facility; sec.4.05 authorizes the State Board of Insurance to determine and fix rates and rating plans applicable to risks written through the Facility; sec.4.08 authorizes the use of servicing carriers to service Facility business, and sec.17. 09 of Acts 1989, 71st Legislature, 2nd Called Session, Chapter 1, continues in effect the servicing carriers of the Facility's predecessor, the Texas Workers Compensation Assigned Risk Pool, for a transition period. Texas Civil Statutes, Article 8308, sec.2.22 and sec.2.23 establish the Texas Workers' Compensation Commission maintenance tax for workers' compensation insurance companies. Texas Civil Statutes, Article 6252-13a, sec.4, authorize and require each state agency to adopt rules of practice setting forth the nature and requirement of available procedures; sec.5 prescribe the procedures for adoption of rules by a state administrative agency. sec.1.411. Assessment of Maintenance Tax for the Texas Workers' Compensation Commission and the Maintenance Tax Surcharge for Texas Workers' Compensation Insurance Fund, 1992. (a) The maintenance tax and the maintenance tax surcharge are assessed against each insurance company writing workers' compensation insurance in this state in the following manner: (1) the maintenance tax as set by the Texas Workers' Compensation Commission at the rate of .860% of the correctly reported gross workers' compensation insurance premiums for the calendar year 1991; (2) the maintenance tax surcharge at the rate of 1.140% of the correctly reported gross workers' compensation insurance premiums for the calendar year 1991 to cover debt service for bonds issued on behalf of the Texas Workers' Compensation insurance fund; and (3) an additional maintenance tax surcharge at the rate of .702% of the correctly reported gross workers' compensation insurance premiums for the calendar year 1991 to cover all additional debt service for bonds issued on behalf of the Texas Workers' Compensation insurance fund. (b) Except as specifically otherwise provided in this subsection, the maintenance tax and surcharges assessed under subsection (a) of this section shall be due and payable to the Texas Department of Insurance as follows: 50% on April 15, 1992 and 50% on October 15, 1992, provided that any insurance company may pay, at its option, the entire amount assessed on April 15, 1992. The maintenance tax and surcharges assessed for those insurers whose maintenance tax liability under the Insurance Code, Article 5.68, for the previous tax year was less than $2,000 are due and payable on April 15, 1992, and these insurers shall remit 100% of such taxes on April 15, 1992. (c) Issuers of workers' compensation coverage shall follow procedures outlined in paragraphs (1)-(8) of this subsection, as appropriate, to recover the maintenance tax surcharge. (1) Pursuant to the Insurance Code, Article 5.76-5, sec.10(d), an insurance company may recoup from its workers' compensation policyholders, as provided by this subsection, the amount paid as maintenance tax surcharges pursuant to subsection (a)(2) and (3) of this section, so long as the amount recouped is a uniform percentage of premiums for all of the company's individual workers' compensation policyholders. (2) An insurance company may recoup the surcharges by: (A) charging and collecting a separate charge, which is not considered premium for any purpose, and displaying that separate charge on the information page of the policy or an invoice for workers' compensation premiums, such charge being subject to adjustment of premium on final audit; or (B) including the surcharges paid by the insurance company as an expense in the rates to be used by the company filed with the Texas Department of Insurance pursuant to the Insurance Code, Article 5.55, sec.3. (3) Any insurance company which elects to pass through the maintenance tax surcharges imposed by subsection (a)(2) and (3) of this section must elect not later than June 1, 1992, which method of recoupment under paragraph (2) of this subsection that the company will use to recoup the surcharges. (4) Each insurance company, except to the extent it is acting as a servicing company, shall file with the Texas Department of Insurance not later than June 1, 1992, in the form and manner required by the department, the following information: (A) the method of recoupment elected by the company under paragraph (3) of this subsection; (B) the exact amount of surcharges that the company plans to recoup; and (C) any percentages and/or calculations made by the company to determine amounts to be recouped from each insured. (5) If an insurance company elects the method of recoupment provided by paragraph (2)(B) of this subsection, the insurance company can comply with paragraph (4) of this subsection by including the required information in its rate filing. (6) If an insurance company fails to timely file under paragraph (4) of this subsection, the company shall be deemed to have elected the recoupment method under paragraph (2)(B) of this subsection. (7) The method of recoupment elected by the company, the amount of recoupment, and the percentages and/or calculations for recoupment are effective for purposes of recoupment by the company through May 31, 1993, and the method of recoupment, amount of recoupment, and percentages and/or calculations for recoupment cannot be changed after a filing is made under paragraph (4) of this subsection including a rate filing under paragraph (5) of this subsection. (8) If an insurance company or the Texas Workers' Compensation Insurance Facility (Facility) collects from its insureds as recoupment an amount in excess of the amount actually paid as surcharges under subsection (a)(2) and (a)(3) of this section, the company shall pay this excess amount to the Texas Department of Insurance in the form and manner required by the department. The department shall deposit the excess amounts collected under this subsection in the same manner and in the same accounts as surcharges collected under subsection (a)(2) and (3) of this section and these amounts shall be used for the same purposes as those surcharges. (d) Servicing companies for the Facility shall follow procedures outlined in paragraphs (1)-(4) of this subsection with respect to maintenance tax surcharges and recovery. (1) A servicing company for the Facility which pays the maintenance tax surcharges imposed by subsection (a)(2) and (a)(3) of this section because of insurance business written for the Facility shall be reimbursed by the Facility for such payments. (2) A servicing company shall implement the pass-through authorized by the Insurance Code, Article 5.76-5, sec.10(d), in the manner provided by subsection (c)(2)(A) of this section and shall remit the entire amount attributable to the charge, as collected, to the Facility. (3) If the Facility should collect funds in excess of the total amount of the tax surcharges paid by all servicing companies, the Facility shall remit such excess funds as provided by subsection (c)(8) of this section. (4) The Facility may recover any deficiency between the total reimbursement it pays to or on behalf of all servicing companies and the amount collected from policyholders by the pass-through authorized by paragraph (2) of this subsection either as a portion of the rate determined and fixed by the Insurance Code, Article 5.76-2, sec.4.05, or as a deficit, if any remains, under the Insurance Code, Article 5.76-2, sec.4.04. (e) Subsections (c) and (d) of this subsection are applicable for a 12-month period for new and renewal policies with an effective date on or after June 1, 1992. (f) If any provision of this section or its application to any person or circumstance is held invalid for any reason, such invalidity shall not affect the other provisions or any other application of such provisions which can be given effect without the invalid provision or application. To this end, all provisions of this section are declared to be severable. 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 March 25, 1992. TRD-9204241 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 15, 1992 Proposal publication date: January 14, 1992 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Regulation Subchapter A. Examination and Financial Analysis 28 TAC sec.7.61 The State Board of Insurance of the Texas Department of Insurance adopts an amendment to sec.7.61, with changes to the proposed text as published in the November 15, 1991, issue of the Texas Register (16 TexReg 6643). Amended sec.7.61 concerns annual and quarterly statement blanks, other reporting forms and instructions to be used by insurers and certain other entities regulated by the board, and the requirement to file the completed statements and other reporting forms. These statement blanks and other reporting forms are required for reporting, in 1992, the financial condition and business operations and activities conducted during the 1991 and 1992 calendar years. The amended section is necessary to provide annual and quarterly statement blanks, other reporting forms and instructions that facilitate compliance with statutory requirements for insurers and other regulated entities to report annual and quarterly information concerning their financial conditions and business operations and activities. Amended sec.7.61 adopts by reference the annual and quarterly statements, other reporting forms and instructions necessary for insurers and certain other regulated entities to meet statutory filing requirements. The amended section also requires insurers and certain other regulated entities to file with the Texas Department of Insurance and the National Association of Insurance Commissioners, in 1992, annual and quarterly statements and other reporting forms which contain information relating to their financial condition and the business operations and activities conducted during 1991 and 1992. There was one comment against a provision in the "Annual Statement Instructions, for Property and Casualty". The provision would require an insurance company to deduct 10% of the amount carried on its books and records for unsecured accrued retrospective premiums before reflecting that item in its annual statement as an admitted asset. The commenter objected to the provision because it would apply retroactively to business already written and the amount deducted was not based on any credit criteria. Highlands Insurance Group commented against the section. There were no comments for the section. Since no statutory authority exists for the admission of unsecured receivables, the agency disagrees with the comment and with the provision in the "Annual Statement Instructions, for Property and Casualty" which would allow 90% of the amount receivable for an unsecured accrued retrospective premium as an admitted asset. Section 7.61(6) is changed to provide that unsecured accrued retrospective premiums shall be treated as they were in the 1990 annual statements. The amendment is adopted under the Insurance Code, Article 1.11, which provides the board with the authority to change the forms of the annual statements required of insurance companies and Article 1.04 which provides the board with the authority to determine policy and rules. sec.7.61. Annual and Quarterly Statement Blanks, Instructions, and Other Reporting Forms, 1991 and 1992 Operations. The State Board of Insurance adopts by reference the annual and quarterly statement blanks, instructions, and other reporting forms specified in this section for reporting operations and activities of the 1991 and 1992 calendar years. The annual and quarterly statements blanks, instructions, and other reporting forms are available from the Texas Department of Insurance, Financial Analysis, Mail Code 303-1A, P.O. Box 149099, Austin, Texas 78714-9099. Insurers and certain other regulated entities shall properly report to the Texas Department of Insurance and the National Association of Insurance Commissioners using the appropriate annual and quarterly statements blanks and other reporting forms and following applicable instructions. The adopted annual and quarterly statement blanks and other reporting forms and instructions are as follows: (1) 1991 annual statement blank (association edition, Form 1 and Form 1A), 12- inch by 19-inch size, and the 1992 quarterly statement blank (association edition) to be used by life and accident and health insurance companies, including instruction letters (L/FR/NP/91), (STIPPREM/91), and (Q92), and the Texas Life Supplement Monthly/Quarterly Financial Statement (Form L-92); (2) books of instructions entitled "Annual Statement Instructions, Life, Accident and Health," and "Accounting Practices and Procedures Manual, for Life, Accident and Health Insurance Companies," available through the National Association of Insurance Commissioners (NAIC), 120 West 12th Street, Suite 1100, Kansas City, Missouri 64105; (3) 1991 annual statement blank (association edition, Form 1-S), 12-inch by 19- inch size, for life and accident and health insurance company separate accounts; (4) a form entitled "SUPPLEMENTAL AND BALANCE SHEET DATA FROM 1991 ANNUAL STATEMENT" and further identified as TEXSPEC 46; (5) 1991 annual statement blank (association edition, Form 2), 12-inch by 19- inch size, and the 1992 quarterly statement blank (association edition) to be used by fire and casualty companies, including instruction letters (F&C/LL/R/RRG/91), (CM/91), (S/91), (MC/91), and (Q92), and the Texas Fire and Casualty Supplement Monthly/Quarterly Financial Statement (Form F&C-92); (6) books of instructions entitled "Accounting Practices and Procedures Manual, for Fire and Casualty Insurance Companies," and "Annual Statement Instructions, for Property and Casualty," provided, however, the treatment of accrued retrospective premiums shall be the same as the treatment given by the company in 1990, available through the NAIC, 120 West 12th Street, Suite 1100, Kansas City, Missouri 64105; (7) 1991 annual statement blank (association edition, Form 4), 12-inch by 19- inch size, and the 1992 quarterly statement blank (association edition) to be used by fraternal orders including instruction letters (L/FR/NP/91) and (Q92); (8) books of instructions entitled "Annual Statement Instructions, Fraternal," and "Accounting Practices and Procedures Manual, for Life, Accident and Health Insurance Companies," available through the NAIC, 120 West 12th Street, Suite 1100, Kansas City, Missouri 64105; (9) 1991 annual statement blank (association edition, Form 9), 12-inch by 19- inch size, and the 1992 quarterly statement blank (association edition) to be used by title insurance companies, including instruction letters (TITLE/91) and (Q92); (10) a form entitled "1991 Instructions for Completing Title Insurance Annual Statement Blank"; (11) 1991 annual and 1992 quarterly statement blanks (association edition) to be used by health maintenance organizations, including instruction letters (HMO/91) and (Q92); (12) books of instructions entitled "Annual Statement Instructions, Health Maintenance Organization," and "Accounting Practices and Procedures Manual, for Health Maintenance Organizations," available through the NAIC, 120 West 12th Street, Suite 1100, Kansas City, Missouri 64105; (13) a form entitled "SUPPLEMENT "A" TO SCHEDULE T, EXHIBIT OF MEDICAL MALPRACTICE PREMIUMS WRITTEN"; (14) a form identified as supplement pages 32-41 to the annual statement for health maintenance organizations; (15) a form designated as TEXAS PAGE 14TS, and further identified as Page 14TS of Form 2; (16) a form entitled "SCHEDULE SIS, STOCKHOLDER INFORMATION SUPPLEMENT," revised in 1985; (17) a form entitled "Insurance Expense Exhibit-1991"; (18) a form entitled "CREDIT LIFE AND ACCIDENT AND HEALTH EXHIBIT"; (19) a form designated as TEXAS PAGE 42TS, and further identified as Page 42TS of Form 9; (20) a form entitled "SCHEDULE DS" (Supplemental Schedule D) showing common stock of all subsidiaries owned December 31 of the current year for which the equity in undistributed income of the subsidiary is included in net gain from operations; (21) a form entitled "SCHEDULE DM" for bonds and preferred stock owned as of December 31; (22) a 1991 Texas annual statement blank, with instructions for the 1991 mutual assessment annual statement, to be used by statewide mutual assessment associations, local mutual aid associations, burial associations, and exempt associations, including instruction letters (MA/91) or (EB/91); (23) forms identified as ANALYSIS OF SURPLUS for use as a supplement to the NAIC Form 1, Form 1A, Form 2, Form 4 and Form 9; (24) a 1991 Texas annual statement blank, with instructions for the 1991 farm mutual annual statement, to be used by farm mutual insurance companies, including instruction letter (FM/91); (25) a form entitled "TEXAS OVERHEAD ASSESSMENT FORM" (for Texas Domestic companies only); (26) a 1991 Texas annual statement blank, with instructions for the 1991 prepaid legal services corporations annual statement, to be used by prepaid legal services corporations and corporations authorized to write prepaid legal service plans, including instruction letter (PPL/91); and (27) a form entitled "RELEASE OF CONTRIBUTIONS" to be filed by certain insurers and other entities. 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 March 30, 1992. TRD-9204352 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 20, 1992 Proposal publication date: November 11, 1991 For further information, please call: (512) 463-6327 Part II. Texas Workers' Compensation Commission Chapter 130. Impairment and Supplemental Income Benefits Subchapter A. Impairment Income Benefits 28 TAC sec.130.10 The Texas Workers' Compensation Commission adopts new sec.130.10, concerning periodic review by the agency, during the impairment income benefits period, of the employment status of injured workers with impairment ratings of 15% or greater, without changes to the proposed text as published ion the November 5, 1991, issue of the Texas Register (16 TexReg 6271). The new section is adopted to provide procedures for conducting employment status reviews, as required by Texas Civil Statutes, Article 8308-4.28(h). The only comment received did not suggest changes to the text of the section, but requested clarification of whether private providers of rehabilitation services would be permitted to perform the employment status review. The answer is yes, the "medical examinations, vocational assessments, and other necessary tests and diagnoses" conducted as part of review may be performed by private providers. Commenters were: Crawford & Company; Lopez-Kramberg, Inc.; North American Health & Rehabilitation Services; and the Texas Association of Rehabilitation Professionals in the Private Sector. The new section is adopted under the Texas Civil Statutes, Article 8308-2. 09(a), which authorize the commission to adopt rules necessary to implement and enforce the Texas Workers' Compensation 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 March 24, 1992. TRD-9204318 Ernest Boardman Acting General Counsel Texas Workers' Compensation Commission Effective date: April 17, 1992 Proposal publication date: November 5, 1991 For further information, please call: (512) 440-3971 Subchapter B. Supplemental Income Benefits 28 TAC sec.sec.130.101-130.110 The Texas Workers' Compensation Commission adopts new sec. sec.130.101-130.110, concerning supplemental income benefits. Sections 130.101-130.105 and 130.108 are adopted with changes to the proposed text as published in the November 5, 1991, issue of the Texas Register (16 TexReg 6272). Sections 130.106, 130. 107, 130.109, and 130.110 are adopted without changes and will not be republished. Section 130.101 defines terms relating to supplemental income benefits. The section was changed by substituting the word "information" for "documentation" in paragraph (5)(C); and, in response to public comment, by substituting the phrase "employee's average weekly earnings during a filing period are" for "employee has returned to work and is earning" in paragraph (7). Section 130.102 establishes that the commission will make the initial determination of entitlement to supplemental income benefits, and calculation of amount, and the carrier will make subsequent determinations and calculations; provides that determinations and calculations are made prospectively and quarterly; explains that either party may contest a determination or calculation; and sets out a calculation formula. Subsection (d) was changed in response to public comment by substituting the term "80%" for ".80." Section 130.103 sets out the criteria for initial entitlement to supplemental income benefits; and describes the commission's actions at the end of a potentially eligible worker's impairment income benefits period, including review of employment status to determine initial entitlement to supplemental income benefits, delivery of notice of determination to the parties, and possible referral to the Texas Rehabilitation Commission. Subsection (a) was changed in response to public comment by specifying that entitlement to supplemental income benefits begins when the claimant's impairment income benefits period terminates, not when the impairment income benefits terminate. Section 130.104 sets out the criteria for continuing entitlement to supplemental income benefits; requires the injured worker to report employment status every quarter to continue to receive supplemental income benefits; requires the carrier to send a statement for reporting employment status to each worker receiving supplemental income benefits every 90 days, to review the statement to determine continuing entitlement, and to send written notice of its determination to the worker and the commission. The section also establishes accrual dates for continuing supplemental income benefits. In response to public comment, the section was changed by substituting the word "modified" for "waived" in subsection (b), and, in subsection (g)(1), by inserting the phrase "the day after" before "the last day of the prior compensable quarter." Subsection (g)(2) was changed by substituting the phrase "date the statement is filed" for "day the employee files the statement." Section 130.105 sets out the criteria for reinstated or delayed entitlement to supplemental income benefits; requires the injured worker to request the carrier to determine entitlement; and requires the carrier to review the request and send written notice of its determination to the worker and the commission. The section also establishes an accrual date for reinstated or delayed supplemental income benefits. Subsection (g) was changed by substituting the phrase "filed with" for "postmarked to." Section 130.106 establishes that entitlement to supplemental income benefits is permanently lost under two conditions: when 401 weeks have elapsed since the date of injury; and, with certain exceptions, when an injured worker has not been entitled to supplemental income benefits for a period of 12 consecutive months. Section 130.107 sets out schedules for the carrier's payments of supplemental income benefits. Section 130.108 permits either party to request a benefit review conference to contest an entitlement determination or calculation of supplemental income benefits; provides that the carrier waives the right to contest if not raised timely; provides that a carrier who unsuccessfully contests supplemental income benefits is liable for the worker's attorney's fees. Subsection (b) was changed in response to public comment by adding the phrase "or within 10 days after receipt of the commission's initial determination, whichever is later." Section 130.109 provides for reinstatement of entitlement to supplemental income benefits after loss of entitlement for 12 consecutive months if a discharged worker can prove that the employer acted with intent to deprive of such benefits. The section additionally establishes an accrual date for benefits reinstated under these circumstances. Section 130.110 describes the commission review of the worker's employment status during the supplemental income benefits period to determine whether the worker's post-injury wage loss is the direct result of the injury. The review will be conducted annually on the commission's own motion, and at the request of either party, which may be made once a year. The section specifies the items to be reviewed, including periodic reports from the worker and the carrier, medical examinations, vocational assessments, and other necessary tests and diagnoses; and requires the commission to notify each party in writing of the results of the review. Comments concerning the proposal were filed by the Alliance of American Insurers and the Texas Association of Business. Changes made pursuant to public comment have been noted previously. Regarding sec.130.104, one commenter suggested changing subsection (g)(2) to tie the accrual date to the date the statement is postmarked to the carrier, as is done in sec.130.105. The commissioners agreed with the need for consistency between the sections, but decided instead to amend sec.130.105 to reflect the language in sec.130.104. Regarding sec.130.104 and sec.130.108, a commenter suggested modifying both sections to require the carrier to request a benefit review conference only when "the determination [to reduce benefits] is based on facts or allegations other than those documented in the employee's Statement of Employment Status." The commissioners preferred retaining the requirement of a conference whenever a reduction was to occur, and declined to incorporate these modifications. Regarding sec.130.109, one commenter suggested amending subsection (d) by changing the accrual date for supplemental income benefits reinstated upon proof that the claimant was discharged with intent to deprive from the day after discharge to the date the employee requested a contested case hearing on the issue. The commissioners disagreed and declined to incorporate the suggested change. The law and this rule provide only an exception to the general rule that entitlement to supplemental income benefits terminates permanently when the claimant fails to qualify for benefits for 12 consecutive months. If the claimant is able to prove discharge with intent to deprive of income benefits, the entitlement period reopens. But the claimant must still meet the other criteria to qualify to receive these benefits. The new sections are adopted under Texas Civil Statutes, Article 8308-2.09(a), which authorize the commission to adopt rules necessary to implement and enforce the Texas Workers' Compensation Act. sec.130.101. Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise. Compensable quarter -A period of 13 weeks of entitlement to supplemental income benefits. Filing period-A period of at least 90 days during which the employee's actual and offered wages, if any, are reviewed to determine entitlement to, and amount of, supplemental income benefits. Impairment income benefits period-The number of weeks computed under the Act, Article 8308-4.26(c)(1), for which the injured employee is entitled to receive impairment income benefits, starting with the date the employee reached maximum medical improvement. Offered wages-The wages of a bona fide position of employment, as defined in sec.129.5 of this title (relating to Bona Fide Offers of Employment). Statement of Employment Status-A commission-prescribed form filed with the carrier containing the following information: (A) a statement, with supporting documentation, that the employee has earned less than 80% of the employee's average weekly wage as a direct result of the impairment from the compensable injury; (B) the amount of the employee's earned and offered wages during the filing period; and (C) a statement, with supporting information, that the employee has in good faith sought employment commensurate with the employee's ability to work. Supplemental income benefits period-Those weeks for which the injured employee is entitled, or may become entitled, to supplemental income benefits. Underemployment-Occurs when the injured employee's average weekly earnings during a filing period are less than 80% of the employee's average weekly wage as a direct result of the impairment from the compensable injury. sec.130.102. Determination of Entitlement to Supplemental Income Benefits; Calculation of Amount. (a) Determination of entitlement and calculation of amount. (1) The commission will make the initial determination and calculation, as provided by sec.130.103 of this title (relating to Initial Entitlement to Supplemental Income Benefits). (2) The carrier will make subsequent determinations and calculations, as provided by sec.130.104 and sec.130.105 of this title (relating to Continuing Entitlement to Supplemental Income Benefits and Reinstated or Delayed Entitlement to Supplemental Income Benefits). (b) Entitlement. Entitlement to supplemental income benefits is determined prospectively for each potentially compensable quarter, based on criteria met by the injured employee during the prior filing period. Once determined, entitlement continues for the duration of the compensable quarter. (c) Amount. After entitlement is determined, the amount of the supplemental income benefits payment is calculated, based on the employee's actual wages, and offered wages as defined in sec.130.101 of this title (relating to Definitions), during the prior filing period. Since the Act requires supplemental income benefits to be paid monthly, the amount is calculated as a monthly payment. Once calculated, the monthly payment remains constant for each month of the compensable quarter. (d) Calculation. The monthly supplemental income benefit payment is calculated as follows: (1) add the claimant's actual and offered wages for each week of the filing period; (2) divide the total by the number of weeks in the filing period; (3) subtract the quotient from 80% of the claimant's average weekly wage; (4) multiply the remainder by .80, not to exceed the maximum weekly income benefit under the Act, Article 8308-4.11; and (5) multiply the product by 4.34821. (e) Contesting a determination or calculation. Either party may contest a determination of entitlement or calculation of amount, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits; Attorney Fees). sec.130.103. Initial Entitlement to Supplemental Income Benefits. (a) Initial entitlement criteria. An injured employee who received an impairment rating of 15% or greater, and who has not commuted any impairment income benefits, is entitled to receive supplemental income benefits upon termination of the impairment income benefits period if the employee: (1) has been unemployed, or underemployed as defined in sec.130.101 of this title (relating to Definitions), as a direct result of the impairment from the compensable injury; and (2) has made good faith efforts to obtain employment commensurate with the employee's ability to work. (b) Review of employment status. As provided by sec.130.10 of this title (relating to Review of Employment Status During the Impairment Income Benefits Period), not later than 10 days before the last day of the impairment income benefit period, the commission shall review the employment status of each injured employee who received an impairment rating of 15% or greater, and who has not commuted any impairment income benefits. (c) Notice of determination. Not later than the last day of the impairment income benefit period, the commission shall: (1) determine entitlement or non-entitlement to supplemental income benefits; and (2) send written notice of this determination to the injured employee and the carrier by first class mail or personal delivery. (d) Determination of entitlement. If the commission determines that the employee is entitled to supplemental income benefits, the notice shall: (1) state the beginning and end dates of the first compensable quarter; (2) specify the amount of the monthly payment; (3) specify the wages used to calculate the monthly payment; (4) advise the parties of the procedures for contesting the commission's determination and calculation of amount, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits); and (5) enclose instructions for filing the Statement of Employment Status, a filing schedule, and a description of the consequences of late filing and failing to file. (e) Referral to the Texas Rehabilitation Commission. If the commission determines that the employee may be materially assisted by vocational rehabilitation or training, the notice described in subsection (d) of this section shall additionally contain: (1) a referral to the Texas Rehabilitation Commission for appropriate services; and (2) a warning to the employee that refusing such services, or refusing to cooperate with such services, will result in loss of entitlement to supplemental income benefits. (f) Determination of non-entitlement. If the commission determines that the employee is not entitled to supplemental income benefits, the notice shall: (1) state the grounds for this determination; (2) advise the parties of the procedures for contesting the commission's determination, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits); and (3) enclose a Statement of Employment Status and filing instructions for claiming delayed entitlement to supplemental income benefits, as provided by sec.130.105 of this title (relating to Reinstated or Delayed Entitlement to Supplemental Income Benefits). sec.130.104. Continuing Entitlement to Supplemental Income Benefits. (a) Continuing entitlement criteria. An injured employee initially determined by the commission to be entitled to supplemental income benefits will continue to be entitled to supplemental income benefits for subsequent compensable quarters if the employee, during each filing period: (1) has been unemployed, or underemployed as defined in sec.130.101 of this title (relating to Definitions), as a direct result of the impairment from the compensable injury; and (2) has made good faith efforts to obtain employment commensurate with the employee's ability to work. (b) Statement of Employment Status. Unless this requirement has been expressly modified by the commission, an employee claiming continuing entitlement to supplemental income benefits must send the carrier a Statement of Employment Status. The carrier shall enclose a copy of the statement with the supplemental income benefit payment for the third month of the compensable quarter, accompanied by filing instructions and a description of the consequences of late filing and failing to file. (c) Filing the statement. The employee shall file the statement with the carrier by first class mail or personal delivery. To ensure no lapse in benefits, the statement should be filed no later than the 15th day after receipt of the statement. (d) Procedure for determining continuing entitlement and amount. Not later than 10 days after receiving the statement, the carrier shall determine continuing entitlement to supplemental income benefits, and send written notice of determination to the injured employee and the commission. (e) Determination of continuing entitlement and amount. If the carrier determines that the employee continues to be entitled to supplemental income benefits at an amount the same or greater than that paid during the prior compensable quarter, the notice shall: (1) state the beginning and end dates of the next compensable quarter; (2) specify the amount of the monthly payment; and (3) specify the wages used to calculate the monthly payment. (f) Determination of non-entitlement or reduced amount. If the carrier determines that the employee has lost entitlement to supplemental income benefits, or continues to be entitled at an amount less than that paid during the prior compensable quarter, the notice shall: (1) state the grounds for this determination; and (2) request the commission to set a benefit review conference, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits). (g) Accrual date. If the employee is entitled to supplemental income benefits under this section, the benefits begin to accrue on the later of: (1) the day after the last day of the prior compensable quarter; or (2) the date the statement is filed with the carrier. sec.130.105. Reinstated or Delayed Entitlement to Supplemental Income Benefit. (a) Reinstated entitlement criteria. Except as provided by sec.130.106 of this title (relating to Permanent Loss of Entitlement to Supplemental Income Benefits), an injured employee initially determined by the commission to be entitled to supplemental income benefits, but who thereafter loses entitlement, will regain entitlement if the employee, for one filing period: (1) is unemployed, or underemployed as defined in sec.130.101 of this title (relating to Definitions), as a direct result of the impairment from the compensable injury; and (2) has made good faith efforts to obtain employment commensurate with the employee's ability to work. (b) Delayed entitlement criteria. Except as provided by sec.130.106 of this title (relating to Permanent Loss of Entitlement to Supplemental Income Benefits), an injured employee initially determined by the commission not to be entitled to supplemental income benefits will become entitled if the employee, for one filing period: (1) is unemployed, or underemployed as defined in sec.130. 101 of this title (relating to Definitions), as a direct result of the impairment from the compensable injury; and (2) has made good faith efforts to obtain employment commensurate with the employee's ability to work. (c) Statement of Employment Status. An injured employee seeking reinstated or delayed entitlement to supplemental income benefits must send the carrier a Statement of Employment Status by first class mail or personal delivery. (d) Procedure for determining reinstated or delayed entitlement and amount. Not later than 10 days after receiving the statement, the carrier shall determine reinstated or delayed entitlement to supplemental income benefits, and send written notice of determination to the injured employee and the commission. (e) Determination of entitlement and amount. If the carrier determines that the employee is entitled to reinstated or delayed supplemental income benefits, the notice shall: (1) state the beginning and end dates of the compensable quarter; (2) specify the amount of the monthly payment; (3) specify the wages used to calculate the monthly payment; (4) advise the employee of the procedures for contesting the carrier's calculation of amount, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits); and (5) enclose instructions for filing the Statement of Employment Status, a filing schedule, and a description of the consequences of late filing and failing to file. (f) Determination of non-entitlement. If the carrier determines that the employee is not entitled to reinstated or delayed supplemental income benefits, the notice shall: (1) state the grounds for this determination; (2) advise the employee of the procedures for contesting the carrier's determination, as provided by sec.130.108 of this title (relating to Contesting Entitlement or Amount of Supplemental Income Benefits); and (3) enclose a Statement of Employment Status and filing instructions for claiming reinstated or delayed entitlement to supplemental income benefits, as provided by sec.130.105 of this title (relating to Reinstated or Delayed Entitlement to Supplemental Income Benefits). (g) Accrual date. If the employee is entitled to supplemental income benefits under this section, the benefits begin to accrue on the date the statement is filed with the carrier. sec.130.108. Contesting Entitlement or Amount of Supplemental Income Benefits; Attorney Fees. (a) The claimant or the carrier may request a benefit review conference to contest a determination of entitlement to or amount of supplemental income benefits. The request must be made as provided by sec.141. 1 of this title (relating to Requesting and Setting a Benefit Review Conference). (b) A carrier waives the right to contest the commission's initial determination of entitlement or amount for the first compensable quarter if the carrier fails to request a benefit review conference within 10 days after the expiration of the impairment income benefit period, or within 10 days after receipt of the commission's initial determination, whichever is later. (c) A carrier waives the right to contest continuing entitlement to amount of supplemental income benefits for that compensable quarter if the carrier fails to request a benefit review conference within 10 days after receipt of the employee's Statement of Employment Status. (d) A carrier who unsuccessfully contests a commission determination of entitlement or amount is liable for: (1) all accrued, unpaid supplemental income benefits, and interest on that amount; and (2) reasonable and necessary attorney's fees incurred by the employee as a result of the carrier's dispute. 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 March 27, 1992. TRD-9204319 Ernest Boardman Acting General Counsel Texas Workers' Compensation Commission Effective date: April 17, 1992 Proposal publication date: November 5, 1992 For further information, please call: (512) 440-3973 TITLE 34. PUBLIC FINANCE Part I. Comptroller of Public Accounts Chapter 3. Tax Administration Subchapter O. State Sales and Use Tax 34 TAC sec.3.329 The Comptroller of Public Accounts adopts an amendment of sec.3.329, concerning enterprise projects, without changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1377). Changes were made to the Tax Code, Chapter 151, by the 72nd Legislature, 1991, Second Called Session, that requires jobs created in enterprise projects to be permanent before a refund of taxes is allowed. Enterprise projects are subject to an assessment of a portion of the refunded amount, plus penalty and interest, if the correct level of employment is not maintained. Additionally, enterprise projects receiving their designation as a qualified project after August 31, 1991, may not apply for a refund until after August 31, 1992. No comments were received regarding adoption of the amendment. The amendment is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 27, 1992. TRD-9204316 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: April 17, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 463-4028 Subchapter Q. Franchise Tax 34 TAC sec.3.406 The Comptroller of Public Accounts adopts the repeal of sec.3.406, concerning doing business in Texas, without changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1378). This section is being repealed in order that it can be adopted under 34 TAC, Part I, Chapter 3, Subchapter V. This section will be replaced with a new 34 TAC sec.3.546, concerning nexus standards for the taxable capital component of the franchise tax. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 27, 1992. TRD-9204313 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: April 17, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 463-4028 34 TAC sec.3.410 The Comptroller of Public Accounts adopts the repeal of sec.3.410, concerning extensions for annual reports, without changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1378). This section is being repealed in order that it can be adopted under 34 TAC, Part I, Chapter 3, Subchapter V. The section will be replaced with a new 34 TAC sec.3.545, concerning extensions for annual reports No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 27, 1992. TRD-9204314 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: April 17, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 463-4028 34 TAC sec.3.415 The Comptroller of Public Accounts adopts the repeal of sec.3.415, concerning methods for estimating oil and gas reserves, without changes to the proposed text as published in the December 27, 1991, issue of the Texas Register (16 TexReg 7706). This section is being repealed in order that it can be adopted under 34 TAC, Part I, Chapter 3, Subchapter V. This section will be replaced with a new 34 TAC sec.3.553, concerning taxable capital: oil and gas reserves. No comments were received regarding adoption of the repeal. The repeal is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas on March 27, 1992. TRD-9204312 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: April 17, 1992 Proposal publication date: February 27, 1992 For further information, please call: (512) 463-4028 Subchapter W. Amusement Machine Regulation and Tax 34 TAC sec.3.602 The Comptroller of Public Accounts adopts an amendment to sec.3.602, concerning tax rates, without changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1379). The amendment reflects legislative changes required by House Bill 11, 72nd Legislature, 1991, First Called Session, increasing the tax rates applicable to machines first exhibited or displayed or permitted to be exhibited or displayed in this state in any quarter of the calendar year. The changes made by House Bill 11 are effective January 1, 1992. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 8807(1), which provide the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the Coin-Operated Services Law, Texas Civil Statutes, Article 8801-8817. 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 March 27, 1992. TRD-9204315 Martin Cherry Chief, General Law Section Comptroller of Public Accounts Effective date: April 17, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 463-4028 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part I. Texas Department of Public Safety Chapter 1. Organization and Administration Personnel and Employment Policies 37 TAC sec.1.28 The Texas Department of Public Safety adopts an amendment to sec.1.28, concerning fingerprinting, without changes to the proposed text as published in the February 21, 1992, issue of the Texas Register (17 TexReg 1455). The adoption of this amendment will ensure that the public is aware of the current organizational names of the various divisions of the department. The Identification and Criminal Records Division has been renamed Crime Records Division. The amendment revises the division name to be appropriately identified in the department organization. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Government Code, sec.411.004, which provides the Public Safety Commission with authority to organize the department and supervise its operation. Rulemaking authority is granted in this section. 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 March 24, 1992. TRD-9204370 James R. Wilson Director Texas Department of Public Safety Effective date: April 20, 1992 Proposal publication date: February 21, 1992 For further information, please call: (512) 465-2000 Inscription on Vehicles 37 TAC sec.1.151 The Texas Department of Public Safety adopts an amendment to sec.1.151, concerning exemption of inscription, without changes to the proposed text as published in the February 18, 1992, issue of the Texas Register (17 TexReg 1379). Adoption of this amendment more clearly defines the process used by the department to exempt vehicles from the application of Texas Civil Statutes, Article 6701m-1. In addition, this will enable the department to better protect its members from identification in situations where their safety may be compromised or the legitimate law enforcement activity which they are performing could be undermined. This amendment will add and delete language concerning exemption of inscription on vehicles because of their use in police and administrative activity as authorized by the director of the department. No comments were received regarding adoption of the amendments. The amendment is adopted under Texas Civil Statutes, Article 6701m-1 and the Texas Government Code, sec.411.006(4) which provide the Texas Department of Public Safety with the authority to adopt rules and to specify the primary use to which vehicles exempt from the requirements of this Act are devoted and the purpose to be served by not printing on them the inscriptions required by 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 March 24, 1992. TRD-9204369 James R. Wilson Director Texas Department of Public Safety Effective date: April 20, 1992 Proposal publication date: February 18, 1992 For further information, please call: (512) 465-2000 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 15. Medicaid Eligibility Subchapter A. General Information The Texas Department of Human Services adopts by federal mandate amendments to sec.15.100 and sec.15.451 and new sec.15.416 and sec.15.452, concerning earned income tax credits (EITC), in its Medicaid Eligibility chapter. These amendments and new sections are a result of Public Law 101-508. The amendments and new sections are justified because they comply with federal requirements. The amendments and new sections will function by excluding earned income tax credits as income in the month of receipt and as resources in the month following the month of receipt. 40 TAC sec.15.100 The amendment is adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapters 32, which authorizes the department to administer medical assistance programs. To comply with federal requirements, the amendment is adopted to be effective January 1, 1991. sec.15.100. Definitions. The following words and terms, when used in this chapter, have the following meanings unless the context clearly indicates otherwise. Earned income tax credit (EITC)-A special tax credit that reduces the federal tax liability of certain low-income working taxpayers. 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 March 26, 1992. TRD-9204260 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1991 For further information, please call: (512) 463-6327 Subchapter D. Resources 40 TAC sec.15.416 The new section is adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapters 32, which authorizes the department to administer medical assistance programs. To comply with federal requirements, the new section is adopted to be effective January 1, 1991. sec.15.416. Earned Income Tax Credits. Effective January 1, 1991, an unspent earned income tax credit (EITC) is excluded from resources for the month after the month the payment or refund is received. 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 March 26, 1992. TRD-9204261 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1991 For further information, please call: (512) 463-6327 Subchapter E. Income 40 TAC sec.15.451, sec.15.452 The amendment and new section are adopted under the Human Resources Code, Title 2, Chapter 22, which authorizes the department to administer public assistance programs, and Chapters 32, which authorizes the department to administer medical assistance programs. To comply with federal requirements, the amendment and new section are adopted to be effective January 1, 1991. sec.15.451. Sources of Earned Income. Earned income may be in cash or in-kind. Payment of earned income may be: (1)-(3) (No change.) (4) farm income. Farm income is earned income when either the client or spouse is doing the farming or operating the farm as a business; (5) royalties earned in connection with the publication of a client's work and honoraria received for services rendered. sec.15.452. Earned Income Tax Credits. Effective January 1, 1991, earned income tax credit payments are excluded from income, regardless of the tax year involved. 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 March 26, 1992. TRD-9204262 Nancy Murphy Agency liaison, Policy and Document Support Texas Department of Human Services Effective date: January 1, 1991 For further information, please call: (512) 450-3765 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 1. Administration Conditional Grant Program 43 TAC sec.sec.1.400-1.409 Texas Department of Transportation adopts new sec.sec.1.400-1.409, concerning a conditional grant program. Section 1.403 is adopted with changes to the proposed text as published in the December 27, 1991 issue of the Texas Register (16 TexReg 7681). Sections 1.400-1.402, 1.404-1.409 are adopted without changes and will not be republished. Senate Bill 352, 72nd Legislature, 1991, requires the Texas Department of Transportation to establish and administer a conditional grant program to provide financial assistance to minority students who exhibited in the student's secondary school performance an aptitude for engineering and who intend to become civil engineers and work for the department for two years following graduation. Senate Bill 352 requires the department to make conditional grants to eligible students for use beginning with the fall semester in 1992. The legislation also requires the department to adopt rules implementing the program not later than January 1, 1992. The Texas Transportation Commission has determined that providing financial assistance to minority students conditional upon recipients working for the department is in the public interest and furthers the statutory duties and responsibilities of the department by increasing the number of minority civil engineers qualified for employment with the department, encouraging minorities to enter public service and work for the department in a professional capacity, and providing greater racial and ethnic diversity among the department's professional staff. The conditional grant program will further serve to help remediate historical underrepresentation of minorities in civil engineering by encouraging minority students to enter public service and work for the department as civil engineers. Section 1.400 describes the department's intent which is to establish procedures for the administration of a conditional grant program; sec.1.401 describes the program, which is to provide financial assistance to eligible minority students who exhibit an aptitude for engineering, intend to become civil engineers and work for the department for two years after graduation; sec.1. 402 defines terms to be used under this undesignated head; sec.1.403 describes the eligibility requirements to receive financial aid; sec.1.404 describes how a student applies for a conditional grant; sec.1.405 requires eligible students to sign an agreement setting forth the terms and conditions of the grant; sec.1.406 describes the type and amount of financial assistance that eligible students may receive; sec.1.407 describes how a student may receive a stipend as part of a conditional grant; sec.1.408 describes how a student would be declared in default of the grant agreement; and sec.1.409 describes how a student who defaults will repay the conditional grant. On December 27, 1991, emergency and proposed new sec. sec.1.400-1.409 were published in the Texas Register. On January 9, 1992, a public hearing was held. Representatives of the University of Texas at Austin, Engineering Scholarship Office, and the Texas Alliance for Minorities in Engineering were in attendance and indicated they were in favor of the new rules. Other comments received were of a general nature and were neither for nor against the proposed rules. The following addresses all oral and written comments received. Concerning sec.1.402, the department received three comments asking why the definition of minority does not include white females. Not including women in the definition of minorities is consistent with definitions of minority found in Texas Civil Statutes, Article 6669a, relating to department hiring of women and minorities, in Title 23, Code of Federal Regulations, sec.230.305, relating to state highway agency equal employment opportunity programs, and the department's Human Resources Manual. Also concerning sec.1.402, a commenter suggested changing the definition of minority to exclude Asians and Pacific Islanders, asserting that they are not under represented in enrollment in civil engineering programs. The commenter suggested that the definition should be changed to read "the underrepresented minorities." Similarly, another commenter asserted that Pakistanis and Indians are not economically disadvantaged, and should, therefore, be excluded. The inclusion of these groups is consistent with the previously cited definition of minority, and therefore, the department will continue to include Asian and Pacific Islanders in its definition. Concerning sec.1.403, the department received a comment regarding the requirement that students take no fewer than 12-hours each semester. The commenter suggested that the department require the 12-hours to be toward their degree. The department had intended that the 12-hours be toward the student's degree and this requirement was impliedly understood in the proposed rules. To clarify this issue, sec.1.403(b)(3) is amended to state "receive credit for not fewer than 12-hours each semester toward the student's degree program." Also concerning sec.1.403, the department received a comment regarding the unavailability of math and science courses in secondary schools. Section 1.403(a) (2)(A) allows a student to substitute (1) mechanical or engineering drawing or related vocational educational courses, and letters of recommendations, if required math and science courses are not available. The commenter expressed a concern that a student qualifying for this substitution will find it difficult to adjust to the requirements of a civil engineering program. Civil engineering degrees are successfully pursued by students with many diverse secondary school backgrounds, but alternatives offered in this section are for the purpose of identifying those students with the greatest aptitude to satisfy one of the legislative criteria. Moreover, the department, feels that this alternative is necessary to provide an equal opportunity to students from school districts that have limited math and science curricula. Also concerning sec.1.403, a commenter suggested that the department not waive the 12-hour requirement for financial hardships. Section 1.403(c) allows the department to waive the 12-hour requirement if the student demonstrates hardship. The commenter expressed concern that a waiver for financial hardship would lower academic standards of the program and that scholarship funds should be available to meet any additional financial needs. First, the department believes that the hardship waiver will not lower academic standards. Only the 12-hour requirement is waived; the minimum grade point average will still apply. Second, this provision of the program seeks to allow some form of administrative review for students who withdraw due to extreme difficulty. The review process does not provide automatic waiver upon request, but gives the department flexibility to waive the requirement when appropriate. The department desires to give students the opportunity to demonstrate true hardship and the department needs the flexibility to retain quality students in the program who are suffering valid hardships. The department will, therefore, retain the present wording of this section. Concerning sec.1.405, one commenter suggested that the department limit the number of years that students may participate in the program so that students are not in the program indefinitely. The department, however, feels that the requirement that students must receive credit for 12-hours each semester toward the student's degree serves as an effective indirect control on the years of eligibility. The new sections are adopted under Texas Civil Statutes, Article 6666, which provides the Texas Transportation Commission with the authority to promulgate rules for the conduct of the work of the Texas Department of Transportation, and Senate Bill 352, 72nd Legislature, 1991, which requires the department to adopt rules implementing a conditional grant program. sec.1.403. Eligibility. (a) Initial eligibility. (1) To be initially eligible for a conditional grant, a student must: (A) be a Texas resident; (B) be a minority; (C) be ranked by the committee among the top number of applicants commensurate with the number of available grants, pursuant to sec.1.404 of this title (relating to Application); and (D) except as provided in paragraph (2) of this subsection, exhibit in secondary school performance an aptitude for engineering by receiving: (i) an overall grade or a minimum score of 850 on the SAT or 21 on the ACT; and (ii) a grade of at least "B" in no fewer than three laboratory science or higher mathematics courses. (2) A student, who by reason of course unavailability cannot satisfy the requirements under paragraph (1)(D)(ii) of this subsection, may substitute the following: (A) a grade of at least "B" in no fewer than two mechanical or engineering drawing or related vocational educational courses; and (B) letters of recommendation from two knowledgeable secondary school teachers or from one professional engineer indicating that the student has an aptitude for engineering. (b) Continued eligibility. In order to maintain eligibility, a student must: (1) be enrolled each semester in an institution in a course of instruction leading toward a degree in civil engineering; (2) maintain an overall institutional grade point average of at least 2. 50 on a 4-point scale; and (3) receive credit for not fewer than 12-hours each semester toward the student's degree program. (c) Waiver. The department may waive, upon approval of the executive director, the requirement that a student receive credit for not fewer than 12-hours each semester if a student demonstrates hardship. Hardship may involve serious illness, family emergency, or other extraordinary circumstances beyond the control of the student. 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 March 27, 1992. TRD-9204287 Diane L. Northam Legal Administrative Assistant Texas Department of Transportation Effective date: April 17, 1992 Proposal publication date: December 27, 1991 For further information, please call: (512) 463-8630 Texas Department of Insurance Exempt Filing Notification Pursuant to the Insurance Code, Chapter 5, Subchapter L (Editor's note: As required by the Insurance Code, Article 5.96 and Article 5.97, the Register publishes notices of actions taken by the State Board of Insurance pursuant to Chapter 5, Subchapter L, of the Code. Board action taken under these articles is not subject to the Administrative Procedure and Texas Register Act. These actions become effective 15 days after the date of publication or on a later specified date. The text of the material being adopted will not be published, but may be examined in the offices of the State Board of Insurance, 333 Guadalupe, Austin.) The State Board of Insurance has adopted on March 25, 1992, a filing by American Bankers Insurance Company of an Involuntary Unemployment Insurance Program forms and rates for monthly outstanding balance accounts. In accordance with the provisions of the Insurance Code, Article 5.97, a text of the proposed filing has been filed in the Office of the Chief Clerk of the State Board of Insurance of the Texas Department of Insurance. The proposed filing has been available for public inspection for 15 days and a public hearing was not requested by any party. House Bill 2, 72nd Legislature, added Article 21.79E, Credit Involuntary Unemployment Insurance, to the Texas Insurance Code, which authorizes casualty insurers to write group or individual credit involuntary unemployment insurance indemnifying a debtor for installment or other periodic payments on indebtedness while the debtor is involuntarily unemployed. New Article 21.79E further provides that rates and forms for such insurance may be filed with the board in accordance with Articles 5.14 and 5.15, Texas Insurance Code. The proposed filing covers an insured's scheduled minimum monthly revolving account payment to a creditor after the insured has been involuntarily unemployed for more than 30 consecutive days. Loss of employment must result from an involuntary loss of employment or temporary unemployment due to labor disputes, strikes or lockouts. Involuntary unemployment does not include retirement, normal seasonal unemployment, voluntary forfeiture of salary, disability, being notified either orally or in writing of pending unemployment or discharge of employment due to willful misconduct, forbidden acts, neglect of duty, violation of established policy or criminal misconduct. The benefit payments begin after the 30 day waiting period has been met and are retroactive to the first day of unemployment. Payments are subject to the limitations shown in the certificate and are based on the insured's balance on the date of involuntary unemployment. The benefit payments do not include any past due amounts or late charges and will not apply to any purchases, advances or interest charges made on or after the date of loss. In order for benefits to begin, an insured must provide proof that he is registered with a state unemployment office and a recognized employment agency, and must submit verification of employment by the employer. The registration with the state's unemployment office or employment agency must begin within 15 days after involuntary unemployment and must continue through the entire period of the claim. The benefit payments cease when one of the following occurs: insured becomes employed, outstanding balance has been paid, insured's limitation has been met, or the maximum amount of benefits has been paid. An insured becomes re-eligible for unemployment benefits following completion of payments under a claim, if the insured has been employed for a salary or wage on a full-time basis for 30 consecutive days for one employer. The premiums for this program are based on the account's previous month's balance; $ .20 per $100 per month for unlimited benefits and $ .16 per $100 per month for the 12-month benefit level with one of the following methods used: if the charge is per day -the daily rate multiplied by each day's balance. The sum of the daily charges during the prior month is then obtained; or, 12-month benefits-the average daily balance multiplied by the monthly rate or the ending billing multiplied by the monthly rate. This filing becomes effective on the 15th day after notice of this action is published in the Texas Register . This notice is filed pursuant to the Insurance Code, Article 5.97 which exempts it from the requirements of the Administrative Procedure and Texas Register Act. This notification is made pursuant to the Insurance Code, Article 5.97, which exempts it from the requirements of the Administrative Procedure and Texas Register 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 March 27, 1992. TRD-9204298 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: April 18, 1992 For further information, please call: (512) 463-6327