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 1. Administration Part II. Texas Ethics Commission Chapter 10. Practice and Procedure Subchapter D. Miscellaneous 1 TAC sec.10.311 The Texas Ethics Commission adopts new sec.10.311, previously proposed as sec.13.1, concerning substitution or replication of forms, with changes to the proposed text as published in the May 5, 1992, issue of the Texas Register (17 TexReg 3209). The section number has been renumbered as previously indicated. The new section concerns the substitution or replication of forms. This section allows the executive director to approve substitute forms adopted by commission rules and the guidelines therefore. The section will prevent the unnecessary duplication of forms by those persons required to file reports with the Texas Ethics Commission. The change in the section number is due to an inadvertent filing of other sections under section numbers previously assigned to the Governor's Office. The new section will ease the burden of filing reports with the commission by allowing alternative filing forms which are substantially similar to those forms adopted by commission rule. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning those provisions of the law administered by the commission. sec.10.311. Substitution or Replication of Forms. (a) A report filed with the commission shall be filed on the appropriate form adopted by commission rule, or: (1) on a report, form, or format established by other applicable statute or rule; or (2) on a substitute form or format that has been approved and certified under subsections (b) and (c) of this section. (b) The executive director may approve and certify a form or format for filing reports with the commission if he or she finds that the form or format: (1) provides for disclosure of all the information required or requested on the form adopted by commission rule; (2) is substantially similar in paper size and color, layout, and format to the form adopted by commission rule; (3) the executive director determines that use of the substitute form or format will not be confusing to those who obtain information from that form. (c) The approval and certification of a form or format by the executive director shall be written, signed by the executive director, include the effective date of the certification, and state that certification may be revoked if the form adopted by commission rule is revised and the substitute form no longer qualifies for approval and certification under subsection (b) of 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 July 31, 1992. TRD-9210563 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 5, 1992 For further information, please call: (512) 463-5800 Chapter 20. Campaign Financing 1 TACsec.20.2 The Texas Ethics Commission adopts new sec.20.2, previously proposed as sec.6.13, concerning reporting forms, without changes to the proposed text as published in the May 8, 1992, issue of the Texas Register (17 TexReg 3331). The section number has been renumbered as indicated above. The new section establishes the form for appointing a state chair candidate's campaign treasurer in accordance with Title 15 of the Election Code. The change in the section number is due to an inadvertent filing of other sections under a section numbers previously assigned to the Governor's Office. The new section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. 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 July 31, 1992. TRD-9210564 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-5800 Subchapter B. Reporting Forms 1 TAC sec.20.4 The Texas Ethics Commission adopts new sec.20.4, previously proposed as sec.6.14, concerning reporting forms, without changes to the proposed text as published in the May 8, 1992, issue of the Texas Register (17 TexReg 3331). The section number has been renumbered as indicated above. The new section establishes the form for the reporting of contributions and expenditures by a candidate or officeholder for state chair of a political party in accordance with Title 15 of the Election Code. The change in the section number is due to an inadvertent filing of other sections under a section numbers previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. 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 July 31, 1992. TRD-9210565 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.6 The Texas Ethics Commission adopts new sec.20.6, previously proposed as sec.6.15, concerning reporting forms, without changes to the proposed text as published in the May 8, 1992, issue of the Texas Register (17 TexReg 3331). The section number has been renumbered as indicated above. The new section establishes the form for designating a final report by a candidate for state chair of a political party in accordance with Title 15 of the Election Code. The change in the section number is due to an inadvertent filing of other sections under a section numbers previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. 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 July 31, 1992. TRD-9210566 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-5800 1 TAC sec.20.8 The Texas Ethics Commission adopts new sec.20.8, previously proposed as sec.6.17, concerning reporting forms, with changes to the proposed text as published in the May 8, 1992, issue of the Texas Register (17 TexReg 3331). The changes were not substantive; they reflect corrections of typographical errors, and minor changes as to form. Additionally, the section number has been renumbered as previously indicated. The new section establishes the form for the reporting of contributions and expenditures by political parties accepting contributions from corporations and labor unions in accordance with Title 15 of the Election Code. The form has been corrected to aid the Texas Ethics Commission in processing it. Typographical errors have been corrected and minor revisions as to form to correct erroneous requirements were made. The change in the section number is due to an inadvertent filing of the other sections under section numbers previously assigned to the Governor's Office. This section will provide the public with the form necessary to comply with Title 15 reporting requirements. No comments were received regarding adoption of the new section. The new section is adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.8. Political Party Sworn Report of Contributions and Expenditures. The Texas Ethics Commission adopts by reference the Political Party Sworn Report of Contributions and Expenditures form prescribed by the commission on April 23, 1992. This form is available from the Texas Ethics Commission, P.O. Box 12070, Austin, Texas 78711-2070. 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 July 31, 1992. TRD-9210567 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 8, 1992 For further information, please call: (512) 463-5800 Subchapter C. Rules Concerning Reports 1 TAC sec.20.27, sec.20.29 The Texas Ethics Commission adopts new sec.20.27 and sec.20.29, previously proposed as sec.6.27 and sec.6.29 concerning rules concerning reports, with changes to the proposed text as published in the May 5, 1992, issue of the Texas Register (17 TexReg 3209). The changes were not substantive; the section numbers have been renumbered, as indicated above. 27> The new sections concern the setting of guidelines, requirements, and exceptions in regard to campaign reports required to be filed by political parties accepting corporate or labor union contributions, and the reporting schedule for a candidate for state chair, and the reporting schedule for a political committee supporting or opposing a candidate for state chair in accordance with Title 15 of the Election Code. The change in the section numbers is due to an inadvertent filing of other sections under section numbers previously assigned to the Governor's Office. The new sections will provide the public with guidelines, requirements, and exceptions in regard to campaign reports required to be filed with the Texas Ethics Commission by political parties, and by candidates seeking the state chair of a political party. These sections provide information as to filing, the time for filing, and how to file by mail. No comments were received, regarding adoption of the new sections. The new sections are adopted under Texas Civil Statutes, Article 6252-9d.1, which provide the Texas Ethics Commission with the authority to promulgate and adopt rules concerning the statutory requirements of Title 15 of the Election Code. sec.20.27. Reporting Schedule of a Political Party Accepting Corporate Or Labor Union Contributions. (a) Beginning of period. The beginning day of the period that the reports required by this rule are to cover is the later of: the stated date; the day the political party began accepting corporate or labor union contributions; or the first day after the period covered by the last required report. (b) Reports. A political party that has accepted corporate or labor union contributions authorized by the Texas Election Code, sec.253.104, shall file the following reports on the following dates until the political party is no longer accepting corporate or labor union contributions and the acceptance and expenditure of all such funds has been reported. (1) Semiannual report. A semiannual report shall be filed not later than July 15, covering the period beginning January 1 and continuing through June 30. A report shall be filed not later than January 15, covering the period beginning July 1 and continuing through December 31. (2) Primary election report. A report shall be filed for each primary election held by the political party. The report shall be filed not later than the 8th day before the primary election, covering the period beginning January 1st and continuing through the 10th day before the primary election. (3) General election report. One report shall be filed for the general election for state and county officers. The report shall be filed not later than the 50th day before the general election, covering the period beginning July 1 and continuing through the 61st day before the general election for state and county officers. (c) Forms. The political party shall use the reporting forms prescribed by sec.20.8 of this title, (relating to Political Party Sworn Report of Contributions and Expenditures). (d) Filing of reports by mail. The Texas Election Code, sec.251.007, which authorizes the mailing of a report or other document by the deadline for filing such document, applies to any report filed by a political party accepting corporate or labor union contributions. sec.20.29. Reporting Schedule for a Candidate for State Chair, and for a General-Purpose or Specific-Purpose Political Committee Supporting or Opposing such a Candidate. (a) Beginning of period. The beginning day of the period that the reports required by this rule are to cover is the later of: the stated date; the day after the period covered by a previous report by a committee; or the day of the initial appointment of campaign treasurer for the candidate or committee. (b) Reporting forms. A candidate for state chair shall use the reporting form prescribed by sec.20.4 of this title (relating to State Chair Candidate/Officeholder Sworn Report of Contributions and Expenditures). A committee shall use the reporting form required under the Election Code, Chapter 254. (c) Filing of reports by mail. Texas Election Code, sec.251.007, which authorizes the mailing of a report or other document by the deadline for filing such document, applies to campaign treasurer appointments by state chair candidates and to reports of contributions and expenditures to be filed by state chair candidates and committees under this rule. (d) Semiannual reports by candidates for state chair. A candidate for state chair of a political party with a nominee on the ballot in the most recent gubernatorial general election shall file semiannual reports. A report shall be filed not later than July 15, covering the period beginning January 1 and continuing through June 30. A report shall be filed not later than January 15, covering the period beginning July 1 and continuing through December 31. (e) Semiannual reports by committees supporting or opposing candidates for state chair. A general-purpose political committee or a specific-purpose political committee supporting or opposing a candidate for state chair of a political party shall include all contributions accepted and all expenditures made for such a candidate on its semiannual reports required by the Texas Election Code, sec.254.123 and sec.254.153 which are due January 15 and July 15. (f) Reports. Each candidate for state chair and each general-purpose political committee or specific-purpose political committee supporting or opposing a candidate for state chair of a political party shall file the following reports covering the following periods. (1) Thirtieth day before convening of convention report. Each candidate and each political committee supporting or opposing a candidate for state chair of a political party shall file a report not later than the 30th day before the convening of the state convention. The report covers the period beginning the 1st day after the period covered by the last period required to be reported by this rule and continuing through the 40th day before the convening. (2) Eighth day before convening of convention report. Each candidate and each political committee supporting or opposing a candidate for state chair of a political party shall file a report not later than the 8th day before the convening of the state convention. The report covers the period beginning the 39th day before the convening of the state convention and continuing through the 10th day before the convening. 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 July 31, 1992. TRD-9210568 Jim Mathieson Assistant General Counsel Texas Ethics Commission Effective date: August 24, 1992 Proposal publication date: May 5, 1992 For further information, please call: (512) 463-5800 TITLE 16. ECONOMIC REGULATION Part I. Railroad Commission of Texas Chapter 11. Surface Mining and Reclamation Division Subchapter E. Quarry and Pit Safety 16 TAC sec.11.1004 The Railroad Commission of Texas adopts an amendment to sec.11.1004, concerning quarry and pit safety regulations, without changes to the proposed text as published in the June 23, 1992, issue of the Texas Register (17 TexReg 4511). The amendment eliminates potential misinterpretation of the safety provisions for abandoned pits and specifies the conditions which constitute an unacceptable unsafe location for a pit. The amendment provides for uniform regulation of active, inactive, and abandoned pits which are located within 200 feet of a public road right-of-way by requiring protective devices such as berms and barriers. Texas Utilities Services, Inc., commenting on behalf of Texas Utilities Electric Company, Texas Utilities Mining Company and Texas Utilities Fuel Company commented that the last sentence of the proposal should be replaced with "A quarry or pit in excess of 200 feet from a right-of-way of a public road shall not be considered an unacceptable unsafe location." Texas Department of Transportation requested clarification concerning the status of inactive pits under the proposal. Texas Department of Transportation commented in favor of adopting the amendment. Texas Utilities Services, Inc., Texas Utilities Electric Company, Texas Utilities Mining Company, and Texas Utilities Fuel Company comment against adopting the amendment. The commission disagrees with eliminating safety requirements for inactive or abandoned pits more than 200 feet from a public road. Each pit should be examined based on its particular circumstances. The amendment is adopted under the Texas Natural Resources Code, sec.233.011 which provides the Railroad Commission of Texas with the authority to adopt rules and regulations consistent with the Texas Aggregate Quarry and Pit Safety 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 August 3, 1992. TRD-9210628 Nolan Ward Hearings Examiner, Legal Division-General Law Railroad Commission of Texas Effective date: August 25, 1992 Proposal publication date: June 23, 1992 For further information, please call: (512) 463-6841 TITLE 22. EXAMINING BOARDS Part III. Texas Board of Chiropractic Examiners Chapter 71. Application and Applicants 22 TAC sec.71.10 The Texas Board of Chiropractic Examiners adopts an amendment to sec.71.10, concerning reexaminations and requirements for completing the remaining course of study for an examinee who passes the state board exam before he or she graduates, with changes to the proposed text as published in the February 4, 1992, issue of the Texas Register (17 TexReg 921). The amendment clarifies the board's position that a student who takes the exam prior to graduation, he or she must graduate within six months or he or she is required to retake and pass the exam prior to licensure. The board will monitor individuals who pass the boards before graduating from school and determine whether or not they completed the remaining course work in a timely manner as to ensure adequate qualifications. Comments were received in support of the proposed amendment. Texas Chiropractic Association and Texas Chiropractic College commented in favor of adopting the amendment. The amendment is adopted under Texas Civil Statutes, Article 4512b, which provide the Texas Board of Chiropractic Examiners with the authority to promulgate procedural rules as deemed necessary. sec.71.10. Reexaminations. (a)-(b) (No change.) (c) To be eligible for licensure, an examinee in his or her final semester of chiropractic school must satisfactorily complete the remaining course of study resulting in graduation from chiropractic college within six months from the date of successful completion of the examination for licensure. Failure to complete the course of study in the required time disqualifies the examinee for licensure until such time examinee retakes the examination and successfully passes all sections to once again be eligible for licensure. 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 August 3, 1992. TRD-9210644 Joyce Kershner Acting Executive Director Texas Board of Chiropractic Examiners Effective date: August 25, 1992 Proposal publication date: February 4, 1992 For further information, please call: (512) 343-1895 Chapter 73. Licenses and Renewals 22 TAC sec.73.3 The Texas Board of Chiropractic Examiners adopts new sec.73.3, concerning refresher courses and the requirements for continuing education, with changes to the proposed text as published in the February 11, 1992, issue of the Texas Register (17 TexReg 1170). The new section improves the professional standards of the board licensees. The increase in hours is to encourage licensees to keep abreast with changes in the profession. The licensees will be required to attend and complete additional continuing education. This will help ensure that the licensee will stay up to date on the latest treatments and procedures. Comments were received in support of the proposed new section. Texas Chiropractic Association and Texas Chiropractic College commented in favor of adopting the new section. The new section is adopted under Texas Civil Statutes, Article 4512b, new section which provide the Texas Board of Chiropractic Examiners with the authority to promulgate procedural rules as deemed necessary. sec.73.3. Refresher Courses. The following information is regarding continuing education courses for license renewal. (1) Requirements. (A) All licensees will annually attend and complete 16 hours of continuing education. (B) Fourteen hours of the continuing education may be completed at any course or seminar elected by the licensee, as long as it is sponsored by a state or national association or a chiropractic college which is accredited by the Council on Chiropractic Education and approved by the board. (C) Only those topics listed as authorized procedures in sec.75.7(a)-(c) of this title (relating to Authorized Practices, Techniques, and Procedures) shall be acceptable in these courses or seminars. (D) Two hours of the continuing education must be presented by the board and will be given at the following seminars: (i) Texas Chiropractic Association-Lubbock; (ii) Texas Chiropractic Association Convention; (iii) Chiropractic Society of Texas Annual Convention; (iv) Parker College of Chiropractic Homecoming; (v) Texas Chiropractic College Homecoming. (2) Verification. (A) Verification of the two-hour board presentation will be provided to the board office annually. The sponsoring organization will submit an alphabetical list showing the name of the attending doctor, license number, and number of hours completed. (B) Each doctor will be responsible for documenting verification of the additional 14 hours of continuing education. (C) Upon request by the board, the licensee will be responsible for providing verification of his continuing education for all years requested. (D) Should the licensee fail to submit verification upon request by the board, it will be considered a violation of Texas Civil Statutes, Article 4512b, sec.8b(a). 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 August 4, 1992. TRD-9210645 Joyce Kershner Acting Executive Director Texas Board of Chiropractic Examiners Effective date: August 25, 1992 Proposal publication date: February 11, 1992 For further information, please call: (512) 343-1895 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 31. Special Supplemental Food Program for Women, Infants, and Children 25 TAC sec.31.3 The Texas Department of Health (department) adopts under federal mandate an amendment to sec.31.3, concerning Special Supplemental Food Program for Women, Infants and Children (WIC). Section 31.3 adopts by reference the WIC Policy and Procedure Manual. The amendment is to both the text of the section and to the manual. The WIC Policy and Procedure Manual is part of the department's WIC State Plan of Operations which the United States Department of Agriculture (USDA) approves under authority of 7 Code of Federal Regulations Part 246. The manual incorporates all of the requirements of the federal regulations and federal management circulars into state policies and procedures. The manual is provided to and serves as the operating manual for the local health agencies that have contracts with the department to provide WIC services. The amendment in this adoption under federal mandate incorporates into the WIC Policy and Procedure Manual several USDA policy changes, the latest of which became effective on July 1, 1992. The latest USDA policy changes concern: nutrition education lessons; double issuance of food vouchers; exception formulas for specialized medical needs; Texas WIC Income Guideline; categorical classes; nutrition education for advance issuance; food packages/allowable foods; program benefits for homeless individuals; and issuance of dry beans/peanut butter. The amended policies provide the following. The nutrition education lessons policy provides that the agency may use department developed module lessons and/or approved locally developed lessons to provide nutrition education contacts to WIC participants. The policy on double issuance of WIC food vouchers provides that agency shall implement an issuance routine for all clinics/participants, except those for which a written waiver has been obtained from the department, such that a two month's entitlement of food vouchers is provided to participants at each clinic visit not to exceed each participant's total entitlement within his/her certification period. Using this method, approximately one-half of the clinic's certified participants should be seen each month. The policy on exception formulas for specialized medical needs provides that exception formulas are those formulas or medical nutritional products that are not listed on the food vouchers. These products can be issued if approved by the department or designated agency staff for special medical and feeding needs. The Texas WIC income guideline for the period of April 1, 1992 to March 31, 1993, for Texas will be 185% of the Office of Management and Budget (OMB) poverty guidelines. The categorical classes policy establishes that categorical classes will be provided by the agency for all participants receiving advance food vouchers. The nutrition education for advance issuance policy provides that the agency will provide approved nutrition education information in conjunction with issuance of advance food vouchers. The food packages/allowable foods policy provides that participants may receive only those foods allowed for their category, age, maternal status, and special dietary needs. All agency must issue the standard food packages unless a participant has individual nutritional needs which cannot by met by one of these packages. The program benefits for homeless individuals policy provides that the special homeless food package may be issued only to the participants who do not have access to refrigeration and food storage/preparation facilities. The issuance of dry beans/peanut butter policy provides that pregnant and breast- feeding women and children will be issued dry beans or peanut butter. However, children less than two years of age will not be issued peanut butter. The amendments are adopted under federal mandate for the following reasons. Under federal and state enabling legislation (The Federal Child Nutrition Act of 1966, Title 42 United States Code Annotated (USCA), sec.1786; the Commodity Distribution Reforms Act and WIC Amendments of 1987, Public Law 100-237; the Texas Omnibus Hunger Act of 1985, Acts 1985, 69th Legislature, Chapter 150, Title II, as amended by Acts 1989, 71st Legislature, Chapter 875, sec.1), the WIC program is governed by federal regulations and is 99% federally funded. Funds are made available to the department by a federal grant from the USCA. The federal statute (42 USCA 1786), the federal regulations (7 Code of Federal Regulations Part 246), and the federal grant (Federal-State Special Supplemental Food Program Agreement) authorize the USDA to make the funds available to the department to administer the WIC program in the State of Texas, provided that the department administers the program in accordance with USDA requirements. The latest changes in USDA requirements are the previously mentioned changes to the WIC Policy and Procedure Manual, the latest of which became effective on July 1, 1992. Therefore, the department is adopting the amendments under federal mandate on July 1, 1992. The amendment is adopted under the following statutes and regulations which provide the Texas Board of Health with the authority to adopt rules covering the Special Supplemental Food Program for Women, Infants and Children: the Texas Omnibus Hunger Act of 1985, Acts 1985, 69th Legislature, Chapter 150, Title II, as amended by Acts 1989, 71st Legislature, Chapter 875, sec.1; Texas Codes Annotated, Human Services Code, Chapter 33; the Health and Safety Code, sec.12.001, which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, the Texas Department of Health, and the Commissioner of Health; the Child Nutrition Act of 1966, 42 United States Code Annotated 1786; the Commodity Distribution Reforms Act and Amendments of 1987, Public Law 100-237); and 7 Code of Federal Regulations Part 246. sec.31.3. WIC Policy and Procedure Manual. (a) The Texas Department of Health adopts by reference the publication titled, "WIC Policy and Procedure Manual," which the department developed, as amended in August 1992 [October 1991]. (b) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 30, 1992. TRD-9210691 Robert A. MacLean, M.D. Deputy Commissioner Texas Department of Health Effective date: July 1, 1992 For further information, please call: (512) 458-7444 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 5. Property and Casualty Insurance Subchapter H. Cancellation, Denial, and Nonrenewal of Certain Property and Casualty Insurance Coverage 278>28 TAC sec.5.7016 The State Board of Insurance of the Texas Department of Insurance adopts new sec.5.7016, prohibiting insurers, under certain circumstances, from non-renewing an insured's personal automobile policy based on the insured's having incurred accidents or claims which occur outside of the insured's control. The section is adopted with changes to the proposed text as published in the May 12, 1992, issue of the Texas Register (17 TexReg 3450). An earlier version of the adopted section was published in the January 28, 1992, issue of the Texas Register (17 TexReg 615). Public comments on the earlier version of the section were received by the board and formally considered in a public hearing convened on April 22, 1992, and continued on April 29, 1992. At the public hearing April 22, the department staff presented revisions of the proposed section developed by the Office of Public Insurance Counsel (OPIC) with department staff assistance. The board recessed the April 22 hearing to allow industry representatives an opportunity to review and comment on the revisions to the proposed section. When the hearing reconvened on April 29, industry representatives, OPIC, and the department staff recommended revision of and republication of the proposed section. Following consideration of all comments and recommendations of staff, the board directed that the proposed section be revised as set forth in the alternate version supported by the staff, OPIC, and the industry and be republished for public comment. Following receipt of public comments on the revision of the proposed section which were formally considered in a public hearing held on June 24, 1992, and hearing the recommendations of department staff, the board adopted the proposed section with minor changes as noted in Paragraph 2. The State Board of Insurance adopted the section to remedy the inequities inherent in nonrenewal of an insured's private automobile policy for prior accidents or claims which were not the result of fault by the insured. The board and the department had received numerous complaints from policyholders whose private auto policies were not renewed because they had made claims for accidents which were not their fault. Many policyholders also complained that they had been unaware that making claims under their private auto policies would subject them to a greater risk of nonrenewal of their policies regardless of the size of their claims or their lack of fault in the accidents giving rise to the claims. The adopted section addresses some of these problems by prohibiting in subsection (a) insurers from non-renewing a private auto policy for four types of claims or accidents which are clearly not-at-fault claims regardless of the number of such claims made by an insured. Subsection (b) of the section also forbids nonrenewal of private auto policies for other accidents in which the insured cannot reasonably be considered to be at fault provided that the insured has no more than two such other non-at-fault accidents in a 12-month period. The board limited the latter nonrenewal provision in response to industry testimony that two or more other not-at-fault accidents occurring within 12 months may be an indicator of claims fraud. This subsection strikes a fair balance, in the department's opinion, between the potential for abuse by insurers in non-renewing policyholders for accidents which are not their fault with the potential for abuse by policyholders making fraudulent claims. Finally, to address the problem of policyholders making claims without being aware that their private auto policy may be non-renewed as a consequence, the section requires insurers to give notice of the contents of the adopted section within 60 days of the effective date of the section to their policyholders. Policyholders will be informed of the specific situations in which an insurer can nonrenew a policy for not-at-fault claims or accidents. The board made two minor changes to the section. The board changed the verb "does" to "do" in subsection (a)(1) so that the verb agrees with the subject. The board also changed the phrase "the insured" to "an insured" in the first line of subsection (b). Subsection (a) of the proposed section provides that none of the types of claims or accidents listed in that subsection may be used by an insurer as the sole basis for a refusal to renew a personal automobile policy. These accidents or claims involve: damage from a weather-related event that does not involve a collision; damage by contact with animals or fowls; damage caused by flying gravel, missiles, or falling objects, provided that upon renewal the insurer may increase the insured's deductible to the higher of $250 or the next higher available deductible in the event of three losses in any 36- month period; and towing and labor protection, although the insurer may eliminate this coverage in the event of four such claims in any 36-month period. Subsection (b) of the proposed section provides that an insurer may not use any other claims or accidents in which an insured cannot reasonably be considered to be at fault as the sole basis for nonrenewal of a policy, unless there are two or more such claims or accidents in any 12-month period. Subsection (c) of the proposed section requires that, 60 days after the rule's effective date, an insurer must provide a one-time written notice to the insured of the contents of this section, in a form approved by the State Board of Insurance, upon the issuance of each new policy or with the first renewal after the section's effective date. Finally, subsection (d) provides that "refusal to renew," as that term is used in the proposed section, means an insurer's refusal to renew a personal automobile policy in the same insurance company which originally issued the policy. The department received 16 letters of written comment on the adopted section. Eight of the letters commented directly on the section and basically supported the section, with five commenters saying the section should be strengthened in its protection of policyholders, two suggesting clarifying changes to the rule's language and the last suggesting limitations to the types of not-at-fault accidents for which insureds could not be non-renewed. There were five commenters who basically supported the section but thought it should go further in protecting consumers from the danger of nonrenewal for not-at-fault accidents. There were two commenters who supported the section but suggested revisions to the language of the rule to clarify its intent. The two commenters commented on on behalf of the Texas Automobile Insurance Service Office. A single commenter from Richardson supported the section but proposed more limitations on the types of claims for which policyholders could not be non- renewed. Eight of the letters received did not directly comment on the section, but were supportive of the basis for the section, arguing that it is inappropriate for an insurer to non-renew an insured for not-at-fault accidents. In addition, verbal comments were offered at the June 24 hearing by an individual on behalf of the Office of Public Insurance Counsel, who spoke in support of the section, and another individual from Huntsville spoke in support of the section but suggested its protections for the policyholder be strengthened. COMMENTS GENERALLY SUPPORTIVE OF THE CONCEPT OF LIMITING NONRENEWAL BECAUSE OF NOT-AT-FAULT CLAIMS: One commenter stated that insurance companies should only be able to refuse to write or raise rates if the violation is an endangerment to others, i.e., excessive speeding, habitually speeding, running stop lights, stop signs, etc. Another commenter stated that insurance companies are discriminating against policyholders for not-at-fault claims, which is unjustified. Another commenter stated that allowing an insurer to deny renewal because of no-fault claims is adverse selection against the insured. This commenter also stated that once a company declines to renew, other insurers look at the situation as a Red Flag and use it as an excuse to place an insured in a higher risk category. This commenter also stated those that have legitimate losses and file legitimate claims should not be penalized. One commenter questioned why the board and Texas Legislature allow companies to raise premiums for legitimate claims. This commenter also stated that is the purpose of insurance and asked, "Do the companies expect to collect the exorbitant premiums and never have to pay a claim?" Another commenter stated, "As long as we pay our premiums, we should not have to worry about some insurance company cancelling on us." Another commenter stated insurance underwriting decisions should be based on events within the drivers' control and not on bad luck, bad weather, or somebody else's bad driving. Another commenter stated the board is on the right track. The commenter believes insurance companies have so much power they can circumvent the Board's decisions. Once an insurance company gives you a bad name, it's a stigma with other companies. Another commenter stated, "Why don't the agents explain the jeopardy you are placed in if you file a claim? Since we are forced play by the rules, someone ought to at least have the decency to tell us what the rules are." RESPONSE: The department agrees that in many cases insurers have refused to renew policyholders based solely on accidents that were not the policyholder's fault. The proposed rule was developed to prevent those abuses. The department also agrees that policyholders need to know the rules of the game. The department believes this rule takes an initial step in that direction by requiring insurers to inform policyholders of the contents of this rule. Policyholders will be informed of the specific situations in which an insurer can nonrenew a policy for not-at-fault claims or accidents. The department believes, however, that at some point, insurers should be permitted to take into account the policyholder's experience over a given period when determining whether to renew a policy. COMMENTS GENERALLY SUPPORTIVE OF SECTION BUT SEEKING GREATER PROTECTION FOR POLICYHOLDERS: COMMENT: One commenter suggested subsection (b) should allow three or four not- at-fault claims or accidents before an insurer could refuse to renew an insured's policy and questioned how these accidents could be timed or governed. This commenter believed the rule is a good start but stated one no-fault accident is not a fair solution to this problem. RESPONSE: The department recognizes that developing a specific number is difficult and subject to discussion; however, TDI believes the number selected in subsection (b) coupled with the short 12-month timeframe is a good and reasonable approach. COMMENT: One commenter urged the board to adopt the rule. This commenter stated the provision for counting a not-at-fault accident against any driver is unfair. RESPONSE: The department believes the number and magnitude of claims paid under a policy may in some circumstances be proper issues for an insurer to consider when analyzing a risk. COMMENT: One commenter agreed with the principal provisions of the section but stated that the rule does not go far enough. The commenter stated that subsection (b) of the rule should be amended to provide that a company cannot refuse to renew a policy due to an accident caused by uninsured motorists. RESPONSE: The department believes the protections of this rule should extend beyond accidents involving uninsured motorists. If the accident is not the insured's fault, then the insured is protected by this rule, whether the other motorist does or does not have insurance. COMMENT: One commenter stated the rules do not go far enough to really help the automobile consumer. This commenter is disturbed by the fact that after two claims for not-at-fault accidents, the insurance company could refuse to renew. RESPONSE: The department believes the rule seeks to balance the improper assessment of a penalty for a not-at-fault accident with the potential for fraud and misrepresentation, or put another way, to balance the potential for abuse by insurers versus abuse by insureds. The department believes this rule strikes a good and reasonable balance. COMMENT: One commenter stated vandalism and hit and run accidents should be included under subsection (a). The commenter stated subsection (b) grants too much discretion to the insurer in determining what is reasonable and that insureds should not be penalized for being in the wrong place at the wrong time. RESPONSE: The department believes the rule must take into account the potential for fraudulent claims. TDI believes putting vandalism and hit and run accidents in subsection (a) would eliminate any control for this potential. With respect to abuse of discretion regarding what is reasonable, TDI believes it has authority to investigate such actions and initiate appropriate action to address the abuses. COMMENTS SUPPORTIVE OF THE SECTION BUT SUGGESTING CLARIFYING OR CORRECTIVE CHANGES TO THE TEXT: One commenter suggested revisions to subsection (b) of the section as it had been revised and republished and noted that language appeared to have been inadvertently left out of the draft presented for publication. Another commenter developed and urged adoption of a rewrite of the proposed rule. The rewrite offered to eliminate confusing phraseology and to align singular verbs with singular subjects and plural verbs with plural subjects. RESPONSE: The department offered the changes to subsections (a) and (b) for the board's consideration. Because of the process by which this rule was developed and the participation of many interested parties, the department staff was reluctant to simply recommend incorporation of the suggested changes by the previously mentioned two commenters. The board determined that the rewrite suggested by the second commenter contained substantive changes and should therefore not replace the published section text. However, the board made one grammatical change in subsection (a) inspired by this commenter's points. That change substituted "do" for "does" in subsection (a)(i) to align the verb with the subject of the subsection. The board decided that one of the two corrective changes suggested by the first commenter was non-substantive and grammatically less desirable but adopted the second proposed corrective change in subsection (b), by changing the reference to "the insured" to "an insured." COMMENT SUPPORTIVE OF THE SECTION BUT SUGGESTING LIMITATIONS ON THE TYPES OF NOT-AT-FAULT CLAIMS FOR WHICH AN INSURER COULD REFUSE TO RENEW A POLICY: One commenter believes the proposal is too open-ended as to time frame and number of occurrences. This commenter proposed limits to subsection (a)(1), (2) and (3) of three claims in a 24-month period. This commenter also proposed singling out auto theft with a limit of two such claims in any 36-month period. RESPONSE: The department believes the items listed in subsection (a) are clearly not-at-fault and no limitation is necessary. With respect to the dangers of fraudulent not-at-fault claims involving auto theft, the department believes subsection (b) strikes a balance between the potential for abuse by the insurer and by the insured by fairly ensuring protection to policyholders but also limiting the potential for consumer fraud that may occur in these claims. VERBAL COMMENTS MADE AT June 24, 1992 HEARING ON SECTION: COMMENTS FROM INDIVIDUAL OF OPIC: OPIC supports the section. OPIC worked hard on this section to reach a compromise with the industry and is happy it was able to reach that compromise. OPIC does not oppose two corrective changes proposed by an individual of Austin because that was language agreed to in compromise discussions with the industry. OPIC does oppose the changes to the text proposed by by an individual on behalf of the Texas Automobile Insurance Service Office because the individual had the opportunity to participate in the compromise negotiations and did not attend and because the changes are substantive in OPIC's opinion. However, OPIC supports the minor word changes suggested by the board in response to the individuals' comments. RESPONSE: The Board accepted Mr. Powers' comments. COMMENTS FROM AN INDIVIDUAL OF HUNTSVILLE: The individual stated that he grudgingly supports the section because he thinks it is still too weak and ought to be strengthened to protect policyholders from the fickle underwriting practices of insurers. He believes that insurers should be limited in their ability to cancel or non-renew a policy for one ticket or one accident, your fault or not. He thinks that if insurers want to cancel or non-renew policyholders who leave their cars out in hailstorms, they ought to give discounts to policyholders who have garages or carports to protect their cars. He contrasted the treatment of Texas drivers to that of California drivers, citing the example of a relative of his in California who had made a number of claims from not-at-fault accidents and was not cancelled and did not experience a rate increase. He argued that the board should put the brakes on rate increases by insurers. RESPONSE: The department notes that the section as adopted does limit insurers' ability to refuse to renew a personal auto policy for four types of not-at-fault claims, regardless of the number of such claims. The section also limits insurers' ability to refuse to renew for other types of not-at-fault claims unless an insured has more than two such claims in a 12-month period. The department thinks the latter limitation is necessary to strike a balance between the potential for abuse by insurers in non-renewing policyholders for claims outside their control and the potential for abuse by insureds in filing fraudulent claims. The department notes that the individual`s other comments touch on subjects not addressed by this section, such as ratemaking and regulation of underwriting generally, and thus makes no response to those comments in connection with this section. The new section is adopted under the Texas Insurance Code, Article 21.49-2B, which authorizes the State Board of Insurance to adopt rules relating to nonrenewal of motor vehicle insurance policies; the Insurance Code, Article 1. 04, which provides the board with the authority to determine policy and rules in accordance with the laws of this state; the Insurance Code, Article 5.01, which gives the board sole and exclusive authority to determine and prescribe just, reasonable, and adequate rates and rating plans for motor vehicle insurers; the Insurance Code, Article 5.09, which prohibits any insurer from making or permitting any distinction or discrimination in favor of any insured having a like hazard in the matter of the charge of premium for insurance; and the Insurance Code, Article 5.10, which authorizes the board to make and enforce rules and regulations not inconsistent with the provisions of Subchapter A (Motor Vehicle or Automobile Insurance) of Chapter 5 of the Insurance Code. The new section affects Subchapter E of Chapter 21 of the Insurance Code, including Article 21.49-2B, Chapter 1 of the Insurance Code, including Article 1.04, and Subchapter A of Chapter 5 of the Insurance Code, including Articles 5.01, 5.09 and 5.10, all as heretofore specified and discussed. The new section amends Chapter 5, Property and Casualty Insurance, Subchapter H, Cancellation, Denial and NonRenewal of Certain Property and Casualty Insurance Coverage, by adding a new sec.5.7016 thereto. sec.5.7016. Prohibition of NonRenewal for Not-at-Fault Accidents or Claims- Personal Auto Policy. (a) None of the types of claims or accidents listed in paragraphs (1)-(4) of this subsection may be used by any insurer as the sole basis for a refusal to renew a personal auto policy: (1) claims involving damage from a weather-related incident that do not involve a collision, such as, but not limited to, hail, flood, tornado, winds or hurricanes; (2) accidents or claims involving damage by contact with animals or fowls; (3) accidents or claims involving damages caused by flying gravel, missiles, or falling objects; provided, however, that upon renewal the insurer may increase the deductible to the higher of $250 or the next higher available deductible increment in the event of three losses in any 36-month period; or (4) towing and labor protection; however, the insurer may eliminate towing and labor protection in the event of four towing and labor claims in any 36-month period. (b) Any other claims or accidents in which an insured cannot reasonably be considered to be at fault may not be used by any insurer as the sole basis for a refusal to renew the insured's personal auto policy, unless there are two or more such claims or accidents in any 12-month period. (c) Beginning 60 days after the effective date of this rule, an insurer must provide a one-time written notice to the insured of the contents of this rule, in a form that has been approved by the board, upon issuance of each new policy or with the first renewal after the effective date of this rule. (d) "Refusal to renew" as used in this rule means an insurer's refusal to renew a personal auto policy in the same insurance company which originally issued the policy. 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 August 5, 1992. TRD-9210665 Linda K. von Quintus-Dorn Chief Clerk Texas Department of Insurance Effective date: August 26, 1992 Proposal publication date: May 12, 1992 For further information, please call: (512) 463-6327