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 7. BANKING AND SECURITIES 
 Part VII. State Securities Board 
  Chapter 101. General Administration 
  
  7 TAC sec.101.5 
 
  The State Securities Board adopts amendments to sec.101.5, concerning an 
increase in the cost of copies of public records made available pursuant to the 
open records provisions of the Texas Government Code, Title 5, Chapter 552, with 
changes to the proposed text as published in the August 10, 1993, issue of the 
Texas Register (18 TexReg 5293). The citation to the Open Records Act contained 
in the proposal was changed to reflect its codification in the Texas Government 
Code effected by Senate Bill 248, 73rd Legislature, 1993. 
 The rule will now reflect the increased cost for copies of public records 
mandated by House Bill 1009, 73rd Legislature, 1993. 
 The rule will place persons on notice of the costs associated with obtaining 
copies of public records. 
 No comments were received regarding adoption of the amendment. 
 The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. 
Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. 
 
 
  sec.101.5. Cost of Copies of Public Records.  The cost to any person 
requesting photocopied reproductions of any readily available records of the 
State Securities Board, comprised of pages up to legal size, which are subject 
to public examination pursuant to the open records provisions of the Texas 
Government Code, Title 5, Chapter 552, shall be as follows. 
 
  (1)  For noncertified copies: 
 
  (A) $ .12 per page for requests totaling 50 pages or less; 
   
  (B) $ .98 for the first page and $ .17 for each additional page for requests 
totaling 51 pages or more. 
     
  (2) For certified copies the charge shall be $1.15 per page plus a $5.00 
certification fee. 
   
  (3) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 29, 1993. 
 TRD-9332774 
  Denise Voigt Crawford 
 Securities Commissioner 
 State Securities Board 
    Effective date: December 20, 1993 
 Proposal publication date: August 10, 1993 
 For further information, please call: (512) 474-2233 
         
 Chapter 109. Transactions  
 Registration 
           
  7 TAC sec.109.17 
 
  The State Securities Board adopts an amendment to sec.109.17, concerning the 
meaning of the term "savings banks" under the Securities Act, sec.5.L., without 
changes to the proposed text as published in the August 10, 1993, issue of the 
Texas Register (18 TexReg 5293). 
 The amendment adds Texas chartered savings banks to the list of financial 
institutions recognized in the Securities Act,  sec.5.L, which is appropriate in 
view of the enactment of the new Texas Savings Bank Act as set forth in Senate 
Bill 396, 73rd Legislature, 1993. 
 The rule will give parity of treatment for purposes of the Securities Act, 
sec.5.L, to savings banks chartered under the new Texas Savings Bank Act, and 
will accord them the same treatment as state chartered savings and loan 
associations for purposes of the exemption. 
 No comments were received regarding adoption of the amendment. 
 The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. 
Section 28-1 provide the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 29, 1993. 
 TRD-9332778 
  Denise Voigt Crawford 
 Securities Commissioner 
 State Securities Board 
    Effective date: December 20, 1993 
 Proposal publication date: August 10, 1993 
 For further information, please call: (512) 474-2233 
         
         Chapter 123. Open-End Investment Companies 
  
  7 TAC sec.123.3 
 
  The State Securities Board adopts an amendment to sec.123.3, concerning a 
conditional exemption for money market funds, with changes to the proposed text 
as published in the August 10, 1993, issue of the Texas Register (18 TexReg 
5293). Changes were made to the proposed text to correct grammar. Subsection 
(b)(8)(A) was changed to facilitate reliance on the exemption by two-tier money 
market funds. 
 The rule provides a conditional exemption for money market funds which takes 
into account current rules of the Securities and Exchange Commission (SEC) and 
the National Association of Securities Dealers (NASD) as they relate to the 
Securities Commissioner's designation of open-end investment companies as "money 
market funds." 
 Open-end investment companies designated by the Securities Commissioner as 
"money market funds" pursuant to the rule are subject to reduced registration 
fees. 
 Two comments were received on the rule proposal. The Investment Company 
Institute commented in favor of the rule proposal. Federated Investors submitted 
a comment urging the Board to reconsider the appropriateness of using service 
fee levels as the criterion for access to the reduced fee structure. 
 The Agency disagrees with the comment concerning the use of service fee levels 
and believes that using service fee levels as the criterion for access to the 
reduced fee structure is consistent with both the original intent of the rule 
and with recent SEC and NASD interpretations regarding no-load money market 
funds. 
 The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. 
Section 28-1 provides the Board with the authority to adopt rules and 
regulations necessary to carry out and implement the provisions of the 
Securities Act, including rules and regulations governing registration 
statements and applications; defining terms; classifying securities, persons, 
and matters within its jurisdiction; and prescribing different requirements for 
different classes. 
 
 
  sec.123.3. Conditional Exemption for Money Market Funds. 
 
  (a)  (No change.) 
   
  (b) Definition. In this section, a "money market fund" or "fund" is an open-
end investment company which must meet all of the following conditions. 
 
  (1) The fund must engage in a continuous offering of its securities. 
   
  (2) The fund must hold itself out to be a money market fund or an equivalent 
to a money market fund and must be in compliance with the Investment Company Act 
of 1940, Rule 2a-7, as made effective in Securities and Exchange Commission 
Release Number IC-13380 and as amended in Release Numbers IC-14606, IC-14983, 
IC-18005, and IC-18177. 
   
  (3) The fund must not pay or charge sales commissions or redemption fees 
except nominal exchange fees which may not be used for sales expenses or in lieu 
of initial sales charges or redemption fees. 
   
  (4) The fund's total charges against net assets for sales distribution 
activities and/or the servicing of shareholder accounts must not be in excess of 
.25% of average net assets per annum. 
   
  (5) With the exception of mergers, consolidations, or acquisitions of assets, 
or as noted in paragraph (6) of this subsection, the fund's investments in other 
investment companies must be limited to: 
 
  (A) 10% of the fund's total assets; 
   
  (B) other investment companies with substantially similar investment 
objectives; and 
   
  (C)  other investment companies with charges and fees substantially similar to 
those set forth in paragraphs (3) and (4) of this subsection. 
     
  (6) In the case of a master/feeder fund structure: 
 
  (A) feeder fund(s) must meet, or invest in a master fund which meets, 
paragraphs (1)-(4) of this subsection; 
   
  (B) when viewed together, the master/feeder fund(s) must meet paragraphs (3) 
and (4) of this subsection; and 
   
  (C) all feeder funds must have investment objectives substantially similar to 
those of the master fund. 
     
  (7) A currently registered fund which has been granted money market status is 
not required to comply with this subsection until the fund files its Year End 
Report of Sales by a Money Market Fund on Form 133.27, but it is required to 
comply with the subsection as it was in effect at the time that the fund was 
designated a money market fund for purposes of this section. 
     
  (c) Request for Determination. 
 
  (1) At the time an applicant applies for registration of securities issued by 
an open-end investment company under the Act, sec.7, or at any time thereafter, 
the applicant may request the Commissioner to determine that the issuer is a 
money market fund as defined in this rule. The request shall be made in writing 
on Form 133.26, of this title (relating to Request for Determination of Money 
Market Fund Status). The Commissioner shall review the request and any other 
information the Commissioner deems relevant and shall determine if the issuer is 
a money market fund for purposes of this section. 
   
  (2) If the request is made after the issuance of the fund's original permit, 
an amendment fee of $10 will be required. Additional sales information also will 
be required since only the securities registered and sold after the date the 
Commissioner determines that the issuer is a money market fund will be subject 
to the reduced registration fees under subsection (d) of this section. 
     
  (d)-(f) (No change.) 
   
  (g) Year End Reports. All funds must file a Year End Report of Sales on Form 
133.27 of this title (relating to Year End Report of Sales by Money Market Fund) 
in January of each year which reflects the amount of securities sold in the 
previous year, the balance of fees paid for registration of any unsold balance 
in the previous year and the recalculated balance of authorized securities at 
the beginning of the current year. In calculating fees applied to sales during 
the previous year, fees will first be applied at the higher rates specified in 
the reduced registration fee schedule in subsection (d)(5) of this section, and 
then at more reduced rates as sales volume increases, and not vice versa. Funds 
should consult the examples contained in Form 133.27 in determining how to 
compute fees. 
   
  (h) -(j) (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 29, 1993. 
 TRD-9332777 
  Denise Voigt Crawford 
 Securities Commissioner 
 State Securities Board 
    Effective date: December 20, 1993 
 Proposal publication date: August 10, 1993 
 For further information, please call: (512) 474-2233 
         
             Chapter 133. Forms 
  
  7 TAC sec.133.26 
 
  The State Securities Board adopts new sec.133.26, concerning requests for 
determination of money market fund status, with changes to the proposed text as 
published in the August 17, 1993, issue of the Texas Register (18 TexReg 5439). 
Changes were made to the form to mirror the changes made to sec.123.3. 
 The new form will make it easier to request money market status determination 
from the Securities Commissioner. 
 The new rule provides the form on which an applicant may request determination 
of money market fund status from the Securities Commissioner. 
 No comments were received regarding adoption of the new section. 
 The new rule is adopted under Texas Civil Statutes, Article 581, sec.28-1. 
Section 28-1 provide the Board with the authority to adopt rules and regulations 
necessary to carry out and implement the provisions of the Securities Act, 
including rules and regulations governing registration statements and 
applications; defining terms; classifying securities, persons, and matters 
within its jurisdiction; and prescribing different requirements for different 
classes. 
 
 
  sec.133.26. Request for Determination of Money Market Fund Status.  The State 
Securities Board adopts by reference the request for determination of money 
market fund status form. Changes were made to the form to mirror the changes 
made to sec.123.3. This form is available from the State Securities Board, P.O. 
Box 13167, Austin, Texas 78711. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 29, 1993. 
 TRD-9332776 
  Denise Voigt Crawford 
 Securities Commissioner 
 State Securities Board 
    Effective date: December 20, 1993 
 Proposal publication date: August 17, 1993 
 For further information, please call: (512) 474-2233 
         
               
  TITLE 16. ECONOMIC REGULATION 
 Part II. Public Utility Commission 
  Chapter 23. Substantive Rules 
  
  Rates 
 
  16 TAC sec.23.21 
 
  The Public Utility Commission of Texas adopts an amendment to sec.23.21, with 
changes to the proposed text as published in the September 14, 1993, issue of 
the Texas Register, (18 TexReg 6176). The amendment makes a number of minor 
changes and clarifications to the existing rule concerning billing adjustments 
made pursuant to House Bill 11, 72nd Legislature, First Called Special Session. 
First, the amendment would clarify that a utility may make a mid-course 
correction to its billing adjustment factor. Second, the amendment authorizes 
rolling a surcharge or refund into the following year's true-up if the refund or 
surcharge is small. Third, the amendment clarifies a reference to the interest 
rate to be used. Fourth, the amendment clarifies how interest on the refund or 
surcharge is to be calculated. Fifth, the amendment moves a misplaced sentence. 
Sixth, the amendment delays the true-up filing by two and one-half months in 
order to allow utilities to have year-end numbers. Finally, the amendment 
deletes a reference to dominant carriers. 
 The amendment is adopted under Texas Civil Statutes, Article 1446c, sec.16(a), 
which provide the Public Utility Commission of Texas with the authority to make 
and enforce the rules reasonably required in the exercise of its power and 
jurisdiction. 
 Comments were filed by the Texas Statewide Telephone Cooperative, Inc. (TSTCI), 
Central and South West Corporation (CSW) on behalf of Central Power and Light 
Company, Southwestern Electric Power Company, West Texas Utilities Company, and 
Houston Lighting and Power Company (HL&P). All three commenters supported the 
amendment, but recommended some minor changes to the language. 
 CSW commented that the rule should provide for any under- or over- refund or 
surcharge resulting from the true-up to be rolled into the next year's true-up. 
The Commission disagrees and believes that it is unnecessary to true-up the 
true-up. The Commission is confident that any difference between the actual 
refund or surcharge and what should have been refunded or surcharged as a result 
of the true-up will be inconsequential. 
 CSW also commented that the true-up filing should be delayed another month from 
that proposed, February 1, until the first business day after March 1. The 
Commission finds merit in this proposal, but is concerned that a utility may not 
be able to make a timely refund or surcharge to seasonal customers if the true-
up filing is not done until March. In response to CSW's comment and this 
concern, the language of the proposal has been changed to require the true-up 
filing "on or before the first working day after March 1." This will allow 
additional time and also give the flexibility to utilities that need to file 
earlier. The earliest possible date for the hearing has also been changed to 
recognize the flexibility in the filing. Rather than specifying a date, the 
language has been changed to "no earlier than 45 days after the filing of the 
utility's testimony". 
 HL&P suggested that the language allowing a utility to carry forward a small 
refund or surcharge should be changed so as to allow the carry forward to go on 
until the utility has a refund or surcharge greater than $ .50 per customer. The 
Commission agrees and the language has been modified; however, HL&P's proposed 
language has been changed slightly to show that the refund or surcharge can be 
carried forward until a year in which the cumulative refund or surcharge is 
greater than $ .50 per customer as opposed to that particular year's refund or 
surcharge. TSTCI suggested that the amount of the true-up that qualifies to be 
carried forward to the next year be changed from "less than $ .50 per customer" 
to "less than $10,000." 
 TSTCI urged this change because some of the small local exchange companies 
would be required to refund or surcharge amounts so small that it would cost 
more to perform the refund or surcharge than the amount of the surcharge. The 
Commission finds merit in the proposal, but believes $10,000 is too high a 
threshold because it could lead to carry-forwards of several dollars per 
customer. The amount of $5,000 is more appropriate. The language has been 
changed to allow a carryforward if "the refund or surcharge amount is less than 
either $5,000 in total or $ .50 per customer...." 
 The statutes affected by the adopted section are Texas Civil Statutes, Article 
1446c, sec.sec.16, 17, 37, 38, and the Government Code, sec.2001.004. 
 
 
  sec.23.21. Cost of Service. 
 
  (a)-(c) (No change.) 
   
  (d)  Adjustment for House Bill 11, Acts of 72nd Legislature, First Called 
Special Session 1991. 
 
  (1) Each utility that is subject to the commission's rate setting 
jurisdiction, pays state franchise taxes, and has not had a rate proceeding 
under the Act, sec.42 or sec.43, in which the effects of House Bill 11 were 
considered in the setting of rates shall be subject to this subsection. Except 
as provided in the following sentence, on or before December 1 of each year, 
each utility subject to this subsection shall file with the commission a tariff 
sheet, or tariff sheets, applicable to each rate class setting forth an interim 
House Bill 11 tax adjustment factor. If a utility chooses not to request an 
increase under this subsection or if the utility has otherwise limited itself by 
agreement to recovering tax changes that are the subject of this subsection by a 
method different from that prescribed in this subsection, the utility need not 
file tariff sheets but shall make an informational filing showing its 
calculations, including an explanation and all underlying supporting 
documentation showing the effect of House Bill 11 on its taxes. If the 
adjustment is a decrease that amounts to less than $ .50 cents per customer for 
electric utilities or access line for telephone utilities on an annual basis, 
the tariff shall not include a factor, but shall state that the reduction will 
be applied against the adjustment for future years. In all other tariffs, the 
factors set forth in the tariff sheets shall be calculated as set forth in the 
following paragraphs. Utilities that are required to file tariff sheets shall 
include an explanation of how the interim factor was calculated as well as 
showing all the calculations. For state taxes to be paid during 1992, all 
utilities subject to this subsection shall make the initial filing as soon as 
practical, but no later than 90 days, after the adoption of this rule. 
   
  (2) If the adjustment is a decrease requiring a factor or the utility 
affirmatively requests that an adjustment be made to its billings to account for 
the effect of House Bill 11 on its state taxes, the tariff filing will be 
docketed and will automatically go into effect on January 1 of the year 
following the filing. If the adjustment is a decrease being carried forward to 
future years, the filing will be treated as a tariff filing except that it shall 
take effect on January 1 of the year following the filing. A utility may amend a 
tariff filed under this subsection to make mid-course corrections as necessary. 
For all amended filings, all tariffs will take effect on the date specified by 
the utility, but in no event earlier than ten days after the filing. 
   
  (3) The interim House Bill 11 tax adjustment factor shall be calculated by 
allocating the effect on the utility's state taxes for the next calendar year of 
House Bill 11 as provided in paragraph (6) of this subsection. The effect on the 
utility's state taxes for the coming calendar year shall be calculated by 
subtracting the estimated state taxes that would be attributable to the calendar 
year if the law prior to House Bill 11 was still in effect from the estimated 
state taxes that will be due or are attributable to the calendar year under 
House Bill 11. In calculating the state taxes that would be due during the 
calendar year if the law prior to House Bill 11 was still in effect, four-
twelfths of the franchise tax paid or that would have been paid in the previous 
year and eight-twelfths of the franchise tax that would have been paid in the 
calendar year in question will be considered attributable to the calendar year 
in question. For 1992 alone, the taxes attributable to the calendar year under 
House Bill 11 shall also include four-twelfths of the franchise taxes paid in 
1991. In performing the calculation, the various fees imposed by House Bill 11 
will not be considered taxes. In calculating the taxes that are estimated to be 
paid, changes resulting from audits or amended returns for previous periods that 
were covered by this rule shall be considered. The state franchise tax imposed 
by House Bill 11 will be considered to be a franchise tax and not an income tax 
regardless of the method of calculation. 
   
  (4) If an interim factor goes into effect, it shall be subject to surcharge or 
refund to the extent it differs from the factor finally set by the commission. 
If a surcharge or refund is necessary, a credit or surcharge will be made to the 
existing customers' bills. If the refund or surcharge amount is less than either 
$5,000 in total or $ .50 per customer, calculated by dividing the total refund 
or surcharge by the total number of customers, the utility may make the refund 
or surcharge by carrying it forward until a year when the cumulative total 
refund or surcharge is not less than either $5,000 or $ .50 per customer. Simple 
interest will be added to the amount due at the rate set by the commission for 
overbillings and underbillings starting at the beginning of the month in which 
the obligation accrued and ending on the last day of the month preceding the 
refund or surcharge. The month, or months, in which the obligation accrues will 
be determined by comparing the collections each month under the tariff filed by 
the utility with the amount that should have been collected had the utility been 
able to precisely predict its tax bill and its sales. The number of days in each 
month shall be considered for purposes of the interest calculation. Interest 
will be added to decreases that are carried to future years and will be 
calculated by the same method. 
   
  (5) The utility shall file, on or before the first business day after March 1 
of the year following the year that a particular factor was in effect, testimony 
supporting the final adjustment factor that it is requesting to account for the 
effect of House Bill 11 on its state taxes for that year. The utility's filing 
will include a copy of the Franchise Tax Return filed with the Comptroller's 
Office and the details of their computation of the tax that would have been due 
had House Bill 11 not been enacted. The hearing on the merits for purposes of 
setting the final factor, if necessary, shall be convened no earlier than 45 
days after the filing of the utility's testimony and shall be strictly limited 
to issues under this subsection. For purposes of administrative efficiency, the 
hearings examiner assigned to a case may grant a utility's request that the 
final hearing on a particular year's factor be delayed for up to three years; 
however, if such a request is granted, any interest to be paid by the utility 
shall be at the utility's cost of capital as determined in the utility's last 
rate case. 
   
  (6) The billing adjustment should apply over the entire year; however, if the 
adjustment necessary to account for the effect of House Bill 11 is so small that 
it would be difficult to apply on a monthly basis, the utility may make the 
billing adjustment during a single month. Cost allocation and rate design are as 
follows. 
 
  (A) Electric utilities. For electric utilities, if the adjustment factor 
results in a lower cost to the ratepayers, the revenue decrease shall be 
allocated to the customers on the same basis as the franchise taxes were 
allocated in the utility's last rate case. If the adjustment factor results in a 
greater cost to the ratepayers, the revenue increase will be allocated to the 
customers in the same manner as were federal income taxes in the utility's last 
rate case. The factor for each customer within a class will then be calculated 
based on expected kilowatt-hour (kwh) sales and charged on a per kwh basis, 
except that the factor for each customer within an industrial class served at 
transmission-level voltage will be calculated as a percentage of the base 
revenues (excluding fuel, any applicable PCRF charges, and add-on revenue taxes) 
received from that class during the most recent 12-month period. 
   
  (B) Telephone utilities. Any increase or decrease will be allocated to each 
customer class and service based on the revenues from that class or service. For 
purposes of determining revenues, the period to be used will be the same as that 
for the federal tax return used to compute the state taxes. The adjustment 
factor will be billed as a percentage of the customer's bill except that coin 
telephone local calling shall not be billed any adjustment. Such percentage 
shall be determined by computing the ratio of a class's or service's allocated 
franchise tax to its historic revenues. The adjustment on the customer bill will 
be rounded to the nearest cent. 
     
  (7) The utility shall separately list the adjustment on each customer's bill 
and label the adjustment "cost of service surcharge" if the adjustment is an 
increase or "cost of service credit" if the adjustment is a decrease. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 30, 1993. 
 TRD-9332842 
  John M. Renfrow 
 Secretary of the Commission 
 Public Utility Commission of Texas 
    Effective date: December 21, 1993 
 Proposal publication date: September 14, 1994 
 For further information, please call: (512) 458-0100 
         
             
  16 TAC sec.23.23 
 
  The Public Utility Commission of Texas adopts an amendment to sec.23.23, with 
changes to the proposed text as published in the September 14, 1993, issue of 
the Texas Register, (18 TexReg 6177). The amendment requires utilities to use a 
commission application when filing fuel factor and reconciliation cases. Also, 
it allows the presiding officers to set a schedule of longer than a year for a 
reconciliation case if deadlines result in a number of utilities filing 
contemporaneously. Finally, the amendment corrects an error regarding the 
effective date of the January, 1993, amendments. 
 The amendment is adopted pursuant to sec.16(a), of the Public Utility 
Regulatory Act, which provides the Public Utility Commission of Texas with the 
authority to make and enforce the rules reasonably required in the exercise of 
its powers and jurisdiction. 
 Comments were filed by Southwestern Public Service Company (SPS), Houston 
Lighting and Power Company (HL&P), the Lower Colorado River Authority (LCRA), 
the Office of Public Utility Counsel (OPC), Texas Utilities Electric Company 
(TUEC) and the Central and South West Corporation operating companies that 
operate in Texas, that is, Central Power and Light Company, Southwestern 
Electric Power Company, and West Texas Utilities Company (CSW). TUEC and SPS 
limited their comments to the proposed filing packages. 
 None of the commenters opposed the changes in the proposed amendment that 
provided for a fuel factor and reconciliation filing packages; however, several 
offered changes to the proposed filing packages. The filing packages and the 
comments on them are being addressed concurrently, but separately, from the 
amendments to sec.23.23(b). 
 OPC suggested that the language that allows the presiding officer to set a 
schedule that takes more than one year be expanded to allow the presiding 
officer to allow for more than a year to process a reconciliation case under 
three other circumstances: complex issues that require additional discovery, 
complex issues that require more hearing time, and staff and intervenor workload 
demands. The Commission agrees that the circumstance identified by OPC are 
instances in which it may be appropriate to take more than a year to process a 
reconciliation case. OPC is correct that already under the rule the Commission 
may, when presented with an appeal, set a schedule for a reconciliation that 
will take more than a year. Furthermore, the circumstances identified by OPC may 
constitute good cause for waiver of the rule. However, notwithstanding whatever 
merit OPC's suggestions may have, the Commission believes that OPC's proposal's 
so expands the published amendment that it would be inappropriate to adopt the 
OPC's proposal at this time. Interested parties were only on notice that the 
Commission may make amendments to address the workload problem caused by the 
deadline; they were not on notice that the Commission may make other exceptions 
to the one-year requirement. 
 HL&P and CSW offered different solutions and language to address the potential 
workload problem of a number of utilities filing reconciliation proceedings at 
the same time. HL&P expressed concern that unreasonable delays may result under 
the proposed language in the processing of a reconciliation case, and toward 
that end, suggested that either a schedule for filings be specified by the rule 
or a deadline of 455 days be set for processing cases in which the one year 
limitation of the rule would not apply. HL&P also suggested that the Commission 
specify the number of utilities that must file within 45 days of each other in 
order to trigger the authority of the presiding officer to set a longer 
schedule. CSW commented that a more appropriate way of addressing the problem 
would be to require the General Counsel to negotiate a schedule for the filing 
of reconciliations and to extend the deadline for their filing until December 1, 
1994. The Commission believes that there is merit to specifying a schedule, but 
CSW's proposal, and any such schedule, effectively changes another provision of 
the rule, the transition provision. Because no changes were proposed to that 
provision of the rule, it would be inappropriate to adopt CSW's proposal. 
 HL&P's suggestion to impose a deadline of 455 days does not adequately address 
the problem. The additional 90 days may not be enough to allow coordination of 
the cases that may be filed. 
 The Commission declines to adopt the suggestion of HL&P that a trigger number, 
i.e. "4," should be specified. The number of utilities that file at a time is 
less important than the total magnitude of the cases filed in the aggregate. In 
other word, two reconciliation cases may represent far more work than four other 
reconciliation cases. 
 The Commission finds the original proposal to be the best solution at this 
time. It is within the scope of the original publication and allows the 
Commission the flexibility to schedule the workload as needed depending on what 
filings are made. However, if a schedule can be developed that will allow the 
utilities, staff, and intervenors to better address the reconciliations, the 
Commission would be receptive to considering either another amendment adopting 
the schedule or a petition seeking a declaration of a good cause exception to 
the deadline. 
 The LCRA commented that there is an inconsistency between sec.23.23(b)(2)(C) 
and sec.23.23(b)(2)(E) in that the former specifies that a fuel factor petition 
must be filed on the first business day of the month and the latter says during 
the first five business days. LCRA suggests that the latter was what was 
intended by the Commission. The Commission agrees with LCRA, but declines to 
correct the matter because no change was originally proposed to sec.23.23(b) 
(2)(C). This correction will have to be made at a latter date. 
 Similarly, LCRA recommends the deletion of sec.23.23(b)(3)(A)(i) because it is 
unnecessary given the filing packages. Whatever merit there might be to that 
comment, the Commission does not believe it would be appropriate to delete the 
sentence when such was not originally proposed. 
 The Statutes affected by the adopted section are Texas Civil Statutes, Article 
1446c, sec.sec.16, 17, 37, and 38, and the Government Code, sec.2001.004. 
 
 
  sec.23.23. Rate Design. 
 
  (a) (No change.) 
   
  (b) Recovery of Fuel and Purchased-Power Costs. 
 
  (1) Purpose. The commission will set an electric utility's rates at a level 
that will permit the utility a reasonable opportunity to earn a reasonable 
return on its invested capital and to recover its reasonable and necessary 
expenses, including the cost of fuel and purchased power. The commission 
recognizes in this connection that it is in the interests of both utilities and 
their ratepayers to adjust customer charges in a timely manner to account for 
changes in certain fuel and purchased-power costs. Pursuant to The Public 
Utility Regulatory Act (the Act), sec.43(g)(2), this subsection establishes a 
procedure for setting and revising fuel factors and purchased-power cost 
recovery factors and a procedure for regularly reviewing the reasonableness of 
the fuel expenses recovered through fuel factors. 
   
  (2) Fuel factors. 
 
  (A) Use and calculation of fuel factors. A utility's fuel costs will be 
recovered from the utility's customers by the use of a fuel factor that will be 
charged for each kilowatt-hour (kwh) consumed by the customer. 
 
  (i) Fuel factors are determined by dividing the utility's projected net 
eligible fuel expenses, as defined in subparagraph B of this paragraph, by the 
corresponding projected kilowatt-hour sales for the period in which the fuel 
factors are expected to be in effect. Fuel factors must account for system 
losses and for the difference in line losses corresponding to the type of 
voltage at which the electric service is provided. A utility may have different 
fuel factors for different times of the year to account for seasonal variations. 
A different method of calculation may be allowed upon a showing of good cause by 
the utility. 
   
  (ii) A utility may initiate a change to its fuel factor as follows: 
 
  (I) A utility may petition to adjust its fuel factor as often as once every 
six months according to the schedule set out in subparagraph (E) of this 
paragraph. 
   
  (II) A utility may petition to change its fuel factor at times other than 
provided in the schedule if an emergency exists as described in subparagraph (G) 
of this paragraph. 
   
  (III) A utility's fuel factor may be changed in any general rate proceeding. 
     
  (iii) Fuel factors are in the nature of temporary rates, and the utility's 
collection of revenues by fuel factors is subject to the following adjustments: 
 
  (I) The reasonableness of the fuel costs that a utility has incurred will be 
periodically reviewed in a reconciliation proceeding, as described in paragraph 
(3) of this subsection, and any unreasonable costs incurred will be refunded to 
the utility's customers. 
   
  (II) To the extent that there are variations between the fuel costs incurred 
and the revenues collected, it may be necessary or convenient to refund 
overcollections or surcharge undercollections. Refunds or surcharges may be made 
without changing a utility's fuel factor, but requests by the utility to make 
refunds or surcharges may only be made at the times allowed by this paragraph. A 
utility may petition to make refunds or surcharges at the specified times that 
these rules allow a utility to change its fuel factor irrespective of whether 
the utility actually petitions to change its fuel factor at that time. A utility 
shall petition for a surcharge at the next date allowed for setting a fuel 
factor by the schedule set out in subparagraph (E) of this paragraph when it has 
materially undercollected its fuel costs and projects that it will continue to 
be in a state of material undercollection. A utility shall petition to make a 
refund at any time that it has materially overcollected its fuel costs and 
projects that it will continue to be in a state of material overcollection. 
"Materially" or "material", as used in this paragraph, shall mean that the 
cumulative amount of over- or under-recovery, including interest, is 4.0% of the 
annual estimated fuel cost figure most recently adopted by the commission, as 
shown by the utility's fuel filings with the commission. 
       
  (B) Eligible fuel expenses. Eligible fuel expenses include expenses properly 
recorded in the Federal Energy Regulatory Commission Uniform System of Accounts, 
numbers 501, 503, 518, 536, 547, 555, and 565, as modified in this subparagraph, 
as of September 30, 1992 and the items specified in clause (vi) of this 
subparagraph. Any later amendments to the System of Accounts are not 
incorporated into this subparagraph. Subject to the commission finding special 
circumstances under clause (v) of this subparagraph, eligible fuel expenses are 
limited to: 
 
  (i) For any account, the utility may not recover, as part of eligible fuel 
expense, costs incurred after fuel is delivered to the generating plant site, 
for example, but not limited to, operation and maintenance expenses at 
generating plants, costs of maintaining and storing inventories of fuel at the 
generating plant site, unloading and fuel handling costs at the generating 
plant, and expenses associated with the disposal of fuel combustion residuals. 
Further, the utility may not recover maintenance expenses and taxes on rail-cars 
owned or leased by the utility, regardless of whether the expenses and taxes are 
incurred or charged before or after the fuel is delivered to the generating 
plant site. The utility may not recover an equity return or profit for an 
affiliate of the utility, regardless of whether the affiliate incurs or charges 
the equity return or profit before or after the fuel is delivered to the 
generating plant site. In addition, all affiliate payments must satisfy the Act, 
sec.41(c)(1). 
   
  (ii) For Accounts 501 and 547, the only eligible fuel expenses are the 
delivered cost of fuel to the generating plant site excluding fuel brokerage 
fees. For account 501, revenues associated with the disposal of fuel combustion 
residuals will also be excluded. 
   
  (iii)  For Accounts 518 and 536, the only eligible fuel expenses are the 
expenses properly recorded in the Account, excluding brokerage fees. For Account 
503, the only eligible fuel expenses are the expenses properly recorded in the 
Account, excluding brokerage fees, return, non-fuel operation and maintenance 
expenses, depreciation costs, and taxes. 
   
  (iv) For Account 555, the utility may not recover demand or capacity costs. 
   
  (v)  Upon demonstration that such treatment is justified by special 
circumstances, a utility may recover as eligible fuel expenses fuel or fuel 
related expenses otherwise excluded in clauses (i)-(iv) of this subparagraph. In 
determining whether special circumstances exists, the commission shall consider, 
in addition to other factors developed in the record of the reconciliation 
proceeding, whether the fuel expense or transaction giving rise to the 
ineligible fuel expense resulted in, or is reasonably expected to result in, 
increased reliability of supply or lower fuel expenses than would otherwise be 
the case, and that such benefits received or expected to be received by 
ratepayers exceed the costs that ratepayers otherwise would have paid or 
otherwise would reasonably expect to pay. 
   
  (vi) In addition to the expenses designated above, unless otherwise specified 
by the commission, eligible fuel expenses shall include: 
 
  (I) revenues from steam sales included in Accounts 504 and 456 to the extent 
expenses incurred to produce that steam are included in Account 503; and 
   
  (II) revenues from wheeling transactions; and 
   
  (III)  revenues from off-system sales in their entirety. 
       
  (C) Petitions to revise fuel factors. On the first business day of the months 
specified in subparagraph (E) of this paragraph, each utility using one or more 
fuel factors may file a petition requesting revised fuel factors. A copy of the 
filing shall also be delivered to the General Counsel and the Office of Public 
Utility Counsel. Each petition must be accompanied by the commission prescribed 
fuel factor application and supporting testimony that includes the following 
information: 
 
  (i) for each month of the period in which the fuel-factor has been in effect 
up to the most recent month for which information is available; 
 
  (I) eligible fuel expenses incurred, listed by the types of fuel used; 
   
  (II) purchased power and energy delivered to the utility, listed by source and 
showing the demand component and energy and/or fuel-expense component associated 
with the purchases; 
   
  (III)  kilowatt-hour sales to system utility customer classes; 
   
  (IV) generation by plant, and if available, by unit; 
   
  (V)  off-system kilowatt-hour sales, and associated fuel costs and revenues; 
   
  (VI) the revenues collected pursuant to fuel factors by customer class; 
   
  (VII) any other items that to the knowledge of the utility have affected fuel 
factor revenues and eligible fuel expenses; and 
   
  (VIII) the difference, by customer class, between the revenues collected 
pursuant to fuel factors and the eligible fuel expenses incurred. 
     
  (ii) For each month of the period for which the revised fuel factors are 
expected to be in effect: 
 
  (I) estimated eligible fuel expenses, listed by the types of fuel expected to 
be used; 
   
  (II)  estimated purchased-power and energy deliveries, listed by source and 
showing the demand component and energy and/or fuel-expense component associated 
with the estimated purchases; 
   
  (III) estimated kilowatt-hour sales by customer class; 
   
  (IV) generation by plant, and if available, by unit; 
   
  (V) estimated off-system kilowatt-hour sales, and associated fuel costs and 
revenues; and 
   
  (VI) system energy input and sales, accompanied by the calculations underlying 
any differentiation of fuel factors to account for differences in line losses 
corresponding to the type of voltage at which the electric service is provided. 
       
  (D) Fuel factor revision proceeding. Burden of proof and scope of proceeding 
are as follows: 
 
  (i) In a proceeding to revise fuel factors, a utility has the burden of 
proving that: 
 
  (I) the expenses proposed to be recovered through the fuel factors are 
reasonable estimates of the utility's eligible fuel expenses during the period 
that the fuel factors are expected to be in effect; 
   
  (II) the utility's estimated monthly kilowatt-hour system sales and off-system 
sales are reasonable estimates for the period that the fuel factors are expected 
to be in effect; and 
   
  (III) the proposed fuel factors are reasonably differentiated to account for 
line losses corresponding to the type of voltage at which the electric service 
is provided; 
     
  (ii) The scope of a fuel factor revision proceeding is limited to the issue of 
whether the petitioning utility has appropriately calculated its estimated 
eligible fuel expenses and load. 
     
  (E) Schedule for filing petitions to revise fuel factors. A petition to revise 
fuel factors may be filed with any general rate proceeding. Otherwise, except as 
provided by subparagraph (G) of this paragraph, which addresses emergencies, 
petitions by a utility to revise fuel factors may only be filed during the first 
five business days of the month in accordance with the following schedule: 
 
  (i) January and July: El Paso Electric Company and Central Power and Light 
Company; 
   
  (ii) February and August: Texas Utilities Electric Company and Brazos Electric 
Power Cooperative, Inc.; 
   
  (iii) March and September: West Texas Utilities Company and Gulf States 
Utilities Company; 
   
  (iv) April and October: Houston Lighting and Power Company and Southwestern 
Electric Power Company; 
   
  (v) May and November: Southwestern Public Service Company and Lower Colorado 
River Authority; and 
   
  (vi) June and December: Texas-New Mexico Power Company, South Texas Electric 
Cooperative, Inc., San Miguel Electric Cooperative, Inc., and any other electric 
utility not named in this subparagraph that uses one or more fuel factors. 
     
  (F) Procedural schedule. Upon the filing of a petition to revise fuel factors 
in a separate proceeding, the presiding officer shall set a procedural schedule 
that will enable the commission to issue a final order in the proceeding as 
follows: 
 
  (i) within 60 days after the petition was filed, if no hearing is requested 
within 30 days of the petition; and 
   
  (ii) within 90 days after the petition was filed, if a hearing is requested 
within 30 days of the petition. If a hearing is requested, the hearing will be 
held no earlier than the first business day after the 45th day after the 
application was filed. 
     
  (G) Emergency revisions to the fuel factor. If fuel curtailments, equipment 
failure, strikes, embargoes, sanctions, or other reasonably unforeseeable 
circumstances have resulted in a material under-recovery of eligible fuel costs, 
the utility may file a petition with the commission requesting an emergency 
interim fuel factor. Such emergency requests shall state the nature of the 
emergency, the magnitude of change in fuel costs resulting from the emergency 
circumstances, and other information required to support the emergency interim 
fuel factor. The commission shall issue an interim order within 30 days after 
such petition is filed to establish an interim emergency fuel factor. If within 
120 days after implementation, the emergency interim factor is found by the 
commission to have been excessive, the utility shall refund all excessive 
collections with interest calculated on the cumulative monthly ending under- or 
over-recovery balance in the manner and at the rate established by the 
commission for overbilling and underbilling in sec.23.45(g) of this title 
(relating to Billing). If, after full investigation, the commission determines 
that no emergency condition existed, a penalty of up to 10% of such over- 
collections may also be imposed on investor-owned utilities. 
     
  (3) Reconciliation of fuel expenses. Utilities shall file petitions for 
reconciliation on a periodic basis so that any petition for reconciliation shall 
contain a maximum of three years and a minimum of one year of reconcilable data 
and will be filed no later than six months after the end of the period to be 
reconciled. However, notwithstanding the previous sentence, a reconciliation 
shall be requested in any general rate proceeding under the Act, sec.43, and may 
be performed in any general rate proceeding under the Act, sec.42. Upon motion 
and showing of good cause, a fuel reconciliation proceeding may be severed from 
or consolidated with other proceedings. 
 
  (A) Petitions to reconcile fuel expenses. In addition to the commission 
prescribed reconciliation application, a fuel reconciliation petition filed by a 
utility must be accompanied by supporting testimony that includes the following 
information: 
 
  (i) for the period being reconciled, historical data corresponding to the 
monthly data required to be included in petitions to revise fuel factors; 
   
  (ii) summaries of all contracts under which the utility or a fuel-supplying 
affiliate of the utility purchased fuel, power, and/or energy during the 
reconciliation period, the costs of which are includible in the utility's 
eligible fuel expenses. Each contract summary must include the following 
information: 
 
  (I) the name of the supplier, the contract number or other designation, and 
the type of fuel or purchased power involved; 
   
  (II) the date on which the contract was originally signed and the dates on 
which any amendments were signed; 
   
  (III) the date on which the fuel or purchased-power was first supplied 
pursuant to the contract; 
   
  (IV) the term of the contract; 
   
  (V) the pricing mechanism under the contract; 
   
  (VI)  the provisions of any take-or-pay obligations under the contract; 
   
  (VII) the maximum amount of deliveries available under the contract; 
   
  (VIII) the terms of any economic-out provisions in the contract; 
   
  (IX) the delivery points under the contract; 
   
  (X) the provisions for transportation of the fuel or transmission of the 
purchased power under the contract; and 
   
  (XI) the quality or measurement of the fuel or purchased power under the 
contract. 
     
  (iii) the quantities purchased and the unit prices and total prices paid under 
any contract during the reconciliation period; 
   
  (iv) if the utility's eligible fuel expenses for the period included an item 
or class of items supplied by an affiliate of the utility, the prices charged by 
the supplying affiliate to the utility were reasonable and necessary and no 
higher than the prices charged by the supplying affiliate to its other 
affiliates or divisions or to unaffiliated persons or corporations for the same 
item or class of items; 
   
  (v) a summary description of all generating-unit outages and partial outages 
during the reconciliation period. The utility must make available information 
stating in detail the reason or cause for any outage, the beginning and ending 
time and date of the outage or partial outage, and the amount of capacity 
reduction during any partial outage; 
   
  (vi)  a summary of significant, atypical events that occurred during the 
reconciliation period that constrained the economic dispatch of the utility's 
generating units, including but not limited to transmission line constraints, 
fuel use or deliverability constraints, unit operational constraints, and system 
reliability constraints; 
   
  (vii) a general description of typical constraints that limit the economic 
dispatch of the utility's generating units, including but not limited to 
transmission line constraints, fuel use or deliverability constraints, unit 
operational constraints, and system reliability constraints; and 
   
  (viii) the reasonableness and necessity of the utility's eligible fuel 
expenses and its mix of fuel used during the reconciliation period. 
     
  (B) Fuel reconciliation proceedings. Burden of proof and scope of proceeding 
are as follows: 
 
  (i) In a proceeding to reconcile fuel factor revenues and expenses, a utility 
has the burden of showing that: 
 
  (I) its eligible fuel expenses during the reconciliation period were 
reasonable and necessary expenses incurred to provide reliable electric service; 
   
  (II) if its eligible fuel expenses for the reconciliation period included an 
item or class of items supplied by an affiliate of the utility, the prices 
charged by the supplying affiliate to the utility were reasonable and necessary 
and no higher than the prices charged by the supplying affiliate to its other 
affiliates or divisions or to unaffiliated persons or corporations for the same 
item or class of items; and 
   
  (III) it has properly accounted for the amount of fuel-related revenues 
collected pursuant to the fuel factor during the reconciliation period. 
     
  (ii) The scope of a fuel reconciliation proceeding includes any issue related 
to determining the reasonableness of the utility's fuel expenses during the 
reconciliation period and whether the utility has over- or under-recovered its 
reasonable fuel expenses. The scope does not include those issues precluded by 
subsection (a)(7) of this section. 
     
  (C) Refunds. All refunds and surcharges shall be made using the following 
methods. 
 
  (i) Interest will be calculated on the cumulative monthly ending under- or 
over-recovery balance in the manner and at the rate established by the 
commission for overbilling and underbilling in sec.23.45(g) of this title. 
   
  (ii) Rate class as used in this subparagraph shall mean all customers taking 
service under the same tariffed rate schedule, or a group of seasonal 
agricultural customers as identified by the utility. 
   
  (iii) Interclass allocations of refunds and surcharges, including associated 
interest, shall be developed on a month-by-month basis and shall be based on the 
historical kilowatt-hour usage of each rate class for each month during the 
period in which the cumulative under- or over-recovery occurred, adjusted for 
line losses using the same commission-approved loss factors that were used in 
the utility's applicable fixed or interim fuel factor. 
   
  (iv) Intraclass allocations of refunds and surcharges shall depend on the 
voltage level at which the customer receives service from the utility. Retail 
customers who receive service at transmission voltage levels, all wholesale 
customers, and any groups of seasonal agricultural customers as identified by 
the utility shall be given refunds or assessed surcharges based on their 
individual actual historical usage recorded during each month of the period in 
which the cumulative under- or over-recovery occurred, adjusted for line losses 
if necessary. All other customers shall be given refunds or assessed surcharges 
based on the historical kilowatt-hour usage of their rate class. 
   
  (v) Unless otherwise ordered by the commission, all refunds and surcharges 
shall be made through a one-time bill credit or charge. However, refunds may be 
made by check to municipally-owned utility systems if so requested. Retail 
customers who receive service at transmission voltage levels, all wholesale 
customers, and any groups of seasonal agricultural customers as identified by 
the utility shall be given a lump-sum credit or assessed a lump-sum surcharge. 
All other customers shall be given a credit or assessed a surcharge based on a 
factor which will be applied to their kilowatt-hour usage over a one-month 
period. This factor will be determined by dividing the amount of refund or 
surcharge allocated to each rate class by forecasted kilowatt-hour usage for the 
class during the month in which the refund or surcharge will be made. 
     
  (D)  Procedural schedule. Upon the filing of a petition to reconcile fuel 
expenses in a separate proceeding, the presiding officer shall set a procedural 
schedule that will enable the commission to issue a final order in the 
proceeding within one year after a materially complete petition was filed. 
However, if the deadlines imposed by paragraph (6) of this subsection result in 
a number of utilities filing cases within 45 days of each other, the presiding 
officers shall schedule the cases in a manner to allow the commission to 
accommodate the workload of the cases irrespective of whether such procedural 
schedule enables the commission to issue a final order in each of the cases 
within one year after a materially complete petition is filed. 
     
  (4) Notice of fuel proceedings. In addition to the notice required by the 
Administrative Procedure Act (APA) to be given by the commission, the utility is 
required to give notice of fuel proceeding at the time the petition is filed. 
 
  (A) Method of notice. Notice of fuel proceedings will be given by the utility 
as follows: 
 
  (i) Notice in all proceedings involving refunds, surcharges, or a proposal to 
change the fuel factor, shall be by one-time publication in a newspaper having 
general circulation in each county of the service area of the utility or by 
individual notice to each customer; 
   
  (ii) Notice in all reconciliation proceedings shall be by publication once 
each week for two consecutive weeks in a newspaper having general circulation in 
each county of the service area of the utility and by individual notice to each 
customer; 
   
  (iii) Notice of proceedings solely involving the certification of long-term 
fuel contracts is covered by subsection (a) of this section. 
     
  (B) Contents of notice. Notice whether by publication or by individual notice 
to each customer shall state the date the petition was filed and include a 
general description of the customers, customer classes, and territories affected 
by the petition; and the relief requested. Notices to revise fuel factors must 
also state the proposed fuel factors by type of voltage and the period for which 
the proposed fuel factors are expected to be in effect. Notices to revise fuel 
factors, to refund, or to surcharge must contain the statement that, "these 
changes will be subject to final review by the commission in the utility's next 
reconciliation," unless, in the case of refunds or surcharges, the change is a 
result of a reconciliation proceeding. Notices to reconcile fuel expenses must 
also state the period for which final reconciliation is sought. In addition, all 
notices must state: "Persons who wish to intervene in the proceeding or comment 
upon the action sought should contact the Public Utility Commission of Texas, 
7800 Shoal Creek Boulevard, Austin, Texas 78757, or call the Commission's Public 
Information Office at (512) 458-0256 or (512) 458-0221 (telecommunications 
device for the deaf)." 
   
  (C) Proof of notice may be demonstrated by appropriate affidavit. In fuel 
proceedings initiated by a person other than a utility, the notice required in 
this paragraph must be provided in accordance with a schedule ordered by the 
presiding officer. 
     
  (5) Reports; confidentiality of information. Matters related to submitting 
reports and confidential information will be handled as follows: 
 
  (A) The commission will monitor each utility's actual and projected fuel-
related costs and revenues on a monthly basis. Each utility shall maintain and 
provide to the commission, in a format specified by the commission, monthly 
reports containing all information required to monitor monthly fuel-related 
costs and revenues, including generation mix, fuel consumption, fuel costs, 
purchased power quantities and costs, and system and off-system sales revenues. 
   
  (B)  Contracts for the purchase of fuel, fuel storage, fuel transportation, 
fuel processing, or power are discoverable in fuel proceedings, subject to 
appropriate confidentiality agreements or protective orders. 
   
  (C) The utility shall prepare a confidentiality disclosure agreement to be 
included as part of the fuel reconciliation petition. The format for the 
agreement shall be the same as that contained in the commission approved rate 
filing package. In addition to the agreement itself, Attachment 1 of the 
agreement shall present a complete listing of the information required to be 
filed which the utility alleges are confidential. Upon request and execution of 
the confidentiality agreement, the utility shall provide any information which 
it alleges is confidential. If the utility fails to file a confidentiality 
agreement, the deadline for a commission final order in the case is tolled until 
a protective order is entered or a confidentiality agreement is filed. Use of 
the confidentiality disclosure agreement does not constitute a finding that any 
information is proprietary and/or confidential under law, or alter the burden of 
proof on that issue. The form of agreement contained in the commission-approved 
rate filing package does not bind the examiner or the commission to accept the 
language of the agreement in the consideration of any subsequent protective 
order that may be entered. 
   
  (D) A party that cannot view a confidential document without receiving 
advantage as a competitor or bidder may hire outside counsel and consultants to 
view the document subject to a protective order. 
     
  (6) Effective date of the January, 1993, amendments; transition period. The 
January, 1993, amendments to this subsection are effective May 1, 1993. However, 
with respect to individual utilities, all fuel-related revenues collected 
through a fuel factor in effect before the effective date of a fuel factor 
established under the 1993 amendments shall be reconciled under commission rules 
and orders in effect before the effective date of the 1993 amendments. 
Notwithstanding paragraph (3) of this subsection, no utility shall be required 
to file a separate fuel reconciliation petition earlier than one year after the 
effective date of this subsection, and utilities for which fuel expenses have 
been reconciled for any of the 18 months preceding the effective date of this 
subsection shall not be required to file a separate fuel reconciliation petition 
earlier than two years after the effective date of this subsection. The 
definition of eligible fuel expense in this section shall apply except to the 
extent the definition is inconsistent with a commission order signed (before or 
after promulgation of this rule) in connection with a case filed before the 
effective date of this section, in which case such order shall apply to fuel 
expenses incurred until a final order is signed in the utility's first base rate 
case after the effective date of this section. 
   
  (7)-(8) (No change.) 
     
  (c)-(e)  (No change.) 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 30, 1993. 
 TRD-9332843 
  John M. Renfrow 
 Secretary of the Commission 
 Public Utility Commission of Texas 
    Effective date: December 21, 1993 
 Proposal publication date: September 14, 1993 
 For further information, please call: (512) 458-0100 
         
                 Part VIII. Texas Racing Commission 
  Chapter 311. Conduct and Duties of Individual Licensees 
  
  Subchapter B. Specific Licensees 
 
  Licensees for Horse Racing 
 
  16 TAC sec.311.153 
 
  The Texas Racing Commission adopts the repeal of sec.311.153, concerning 
workers' compensation, without changes to the proposed text as published in the 
October 15, 1993, issue of the  Texas Register (18 TexReg 7086). 
 The repeal is adopted to ensure the commission's rules are consistent with 
applicable state law. 
 The repeal eliminates the requirement that trainers provide workers' 
compensation insurance for their employees. 
 No comments were received regarding adoption of the repeal. 
 The repeal is adopted under Texas Civil Statutes, Article 179e, sec.3.02, which 
authorize the commission to adopt rules for conducting racing with wagering and 
for administering the Texas Racing 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 December 1, 1993. 
 TRD-9332861 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: January 1, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
             Chapter 313. Officials and Rules of Horse Racing 
  
  Subchapter D. Running of the Race 
 
  Jockeys 
 
  16 TAC sec.313.409 
 
  The Texas Racing Commission adopts an amendment to sec.313.409, concerning 
jockey mount fees, without changes to the proposed text as published in the 
October 15, 1993, issue of the  Texas Register (18 TexReg 7086). 
 The amendment is adopted to ensure that funds will be available to pay jockeys 
for their services. 
 The amendment requires the losing jockey mount fee to be on deposit with the 
horsemen's bookkeeper before a horse is eligible to start in a race. 
 No comments were received regarding adoption of the amendment. 
 The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 
02, which authorize the commission to adopt rules for conducting racing with 
wagering and for administering the Texas Racing Act; and sec.6.06, which 
authorizes the commission to adopt rules relating to the operation of 
racetracks. 
 
  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 December 1, 1993. 
 TRD-9332862 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: January 1, 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
           
  Subchapter E. Training Facilities 
 
  16 TAC sec.sec.313.501-313.507 
 
  The Texas Racing Commission adopts new sec.sec.313.501, 313.502, 313.504, 313. 
506, and 313.507, concerning training facilities, without changes to the 
proposed text as published in the October 15, 1993, issue of the Texas Register 
(18 TexReg 7086). The Commission also adopts sec.313.503 and  sec.313. 505 with 
changes. 
 The sections are adopted to ensure that wagerers have accurate workout 
information on horses on which they are wagering and that racehorses 
participating in pari-mutuel racing are fit and ready to compete. 
 The sections establish the licensing procedures and operational requirements 
for training facilities and their employees. The changes in sec.313.503 and 
sec.313.505 correct errors in designating subsections. 
 Comments in favor of the proposal were received from the Diamond D Ranch, Bill 
Leach Racing Stables, and an individual in Brady. Comments against the proposal 
were received from Crabtree Training Center, which disagreed with the amount of 
the license fee and the minimum specifications for the racetrack. The Commission 
disagrees with these comments on the grounds that the amount of the license 
directly reflects the actual costs anticipated to be incurred by the Commission 
in regulating training facilities, which is the appropriate criteria for setting 
the fee under Texas Civil Statutes, Article 179e, sec.3. 021(c). The Commission 
further disagrees with the comments on the grounds that minimum specifications 
for a racetrack at a training facility are necessary to ensure the safety of the 
racehorses obtaining an official workout and the safety of the jockeys riding 
the horses. Comments were received from several individuals in the form of a 
petition indicating their desire for the Commission to expand the number of 
facilities at which official workouts may be obtained. The Commission believes 
that by adopting the new rules as proposed, there will be an increase in the 
number of facilities available to provide official workouts. 
 The new sections are adopted under Texas Civil Statutes, Article 179e, sec.3. 
02, which authorize the commission to adopt rules for conducting racing with 
wagering and for administering the Texas Racing Act; sec.3.021, which authorizes 
the commission to adopt rules for the licensing and regulation of training 
facilities and to charge an annual fee for training facility licenses;  
sec.7.02, which authorizes the commission to adopt categories of occupational 
licenses; and sec.7.05, which authorizes the commission to set the amount of 
occupational license fees by rule. 
 
 
  sec.313.503. Physical Plant. 
 
  (a) To be eligible for a training facility license, the facility must provide 
the equipment and facilities prescribed by this section. 
   
  (b) The racetrack at a training facility must have a chute at least 250 yards 
long from the back of the chute to the finish line. The racetrack must be an 
oval that is at least: 
 
  (1) five-eighths mile in length; 
   
  (2) 45 feet wide on each straightaway; 
   
  (3) 45 feet wide on each turn. 
     
  (c) The dimensions of the racetrack at the training facility must be surveyed 
by a certified land surveyor, including the distances from each distance pole to 
the finish line. The results of the survey must be submitted in writing with the 
application for a training facility license. If neither the track dimensions nor 
the distance poles have been altered since the date an original training 
facility license was granted, the general manager or chief executive officer of 
the training facility may submit a sworn affidavit stating that fact in lieu of 
a new survey. If the track dimensions or distance poles have been altered since 
the date the original training facility license was granted, the racetrack must 
be surveyed by a certified land surveyor and the results submitted to the 
commission in writing with the application for license renewal. 
   
  (d) A training facility shall provide an inside contour rail and an outside 
rail, both of which must be approved by the commission or the commission staff. 
The turns on the racetrack must be banked to a degree approved by the commission 
or the commission staff. A training facility shall provide a padded starting 
gate approved by the commission or the commission staff. The training facility 
shall provide timing equipment that is capable of recording the time of a horse 
in at least hundredths of a second. The timing equipment is subject to testing 
and approval by the commission or the commission staff. 
   
  (e) The racetrack at a training facility must have distance poles indicating 
the distance from the pole to the finish line as follows: 
 
  (1) 1/16 poles with black and white stripes; 
   
  (2) 1/8 poles with green and white stripes; and 
   
  (3) 1/4 poles with red and white stripes. 
     
  (f) A training facility is not required to have: 
 
  (1)  facilities for the public to observe the workouts; or 
   
  (2) concessions. 
 
       
  sec.313.505. Workout Requirements. 
 
  (a) All official workouts must be supervised by the following officials, who 
must be licensed and approved by the commission: 
 
  (1) a timer/clocker; 
   
  (2) a horse identifier; and 
   
  (3) a starter. 
     
  (b) The person riding a horse in an official workout and the person bringing a 
horse to a licensed training facility for an official workout must hold a valid 
commission license in the appropriate category. 
   
  (c) The horse identifier shall identify each horse before each official 
workout. The original registration papers for each horse that is to work, or a 
copy that satisfies the horse identifier, must be submitted to the horse 
identifier before the horse's initial workout at the facility to permit the 
identifier to record the horse's color, gender, markings, and tattoo number, if 
applicable. The horse identifier shall inspect all documents of ownership, 
registration, or breeding necessary to ensure the proper identification of the 
horse. The identification procedures used at the training facility are subject 
to the approval of the executive secretary. The individual serving as the horse 
identifier may serve as timer or starter also, with the approval of the 
executive secretary. 
   
  (d) A training race may be used as an official workout. The distance of an 
official workout must be at least: 
 
  (1) 220 yards for a quarter horse; 
   
  (2) two furlongs, for a two-year old thoroughbred; and 
   
  (3) three furlongs, for a thoroughbred three years of age or older. 
     
  (e) A workout must be timed on a stopwatch that is accurate to within .01 of a 
second. Times for quarter horses shall be rounded to tenths of one second and 
times for thoroughbred horses shall be rounded to fifths of one second. 
   
  (f) An individual may not ride a horse in an official workout unless the 
individual is wearing a properly fastened helmet of a type approved by the 
commission. 
   
  (g) Each official workout must be recorded on a form prescribed by the 
commission. Not later than 24 hours after the day of an official workout, a 
training facility shall transmit the results of the workout to: 
 
  (1) the official past performance publisher; 
   
  (2) the commission; and 
   
  (3) each pari-mutuel horse racetrack in this state that is: 
 
  (A) conducting a live race meeting for the same breed of horse as the horse 
that was worked; or 
   
  (B) will, in 45 days or less after the date of the workout, commence a live 
race meeting for the same breed of horse as the horse that was worked. 
       
  (h) A horse may not have more than one official workout on a calendar day. 
 
  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 December 1, 1993. 
 TRD-9332863 
  Paula Cochran Carter 
 General Counsel 
 Texas Racing Commission 
    Effective date: January 1 1994 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 794-8461 
         
                   
  TITLE 22. EXAMINING BOARDS 
 Part XXIII. Texas Real Estate Commission 
  Chapter 535. Provisions of the Real Estate License Act 
  
  Mandatory Continuing Education 
 
  22 TAC sec.535.71, sec.535.72 
 
  The Texas Real Estate Commission adopts amendments to sec.535.71 and 
sec.535.72, concerning mandatory continuing education (MCE) for real estate 
licensees, without changes the proposed text as published in the October 19, 
1993, issue of the Texas Register (18 TexReg 7283). 
 The amendment to sec.535.71 eliminates a requirement that MCE providers pay 
filing fees by cashier's checks. The amendment also adds a new core real estate 
course on the law of agency to the list of courses which may be accepted for MCE 
credit. 
 The amendment to sec.535.72 simplifies the reporting process for MCE providers 
by eliminating a requirement that providers insert the course completion card 
number for each student on the course completion roster or alphabetized list of 
students filed with the commission. Providers who wish to insert student course 
completion numbers for additional verification may do so at their own 
discretion. 
 The amendments are necessary to conform the sections with current law and 
simply filing requirements. 
 No comments were received regarding adoption of the amendments. 
 The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.5(h), 
which provide the Texas Real Estate Commission with the authority to make and 
enforce all rules and regulations necessary for the performance of its duties. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 29, 1993. 
 TRD-9332867 
  Mark A. Moseley 
 General Counsel 
 Texas Real Estate Commission 
    Effective date: December 21, 1993 
 Proposal publication date: October 19, 1993 
 For further information, please call: (512) 465-3900 
         
         
  Licensed Real Estate Inspectors 
 
  22 TAC sec.sec.535.205, 535.208, 535.212, 535.214, 535.216, 535. 218, 535.221, 
535.224, 535.226 
 
  The Texas Real Estate Commission adopts amendments to sec. sec.535.205, 535. 
208, 535.212, 535.214, 535.216, 535.218, 535.221, 535.224, and 535.226, 
concerning licensed real estate inspectors, without changes the proposed text as 
published in the October 8, 1993, issue of the Texas Register  (18 TexReg 6898). 
 The amendments substitute the statutory terms "professional inspectors," "real 
estate inspector," and "licensed apprentice inspector" for the respective 
previous terms "real estate inspector," "inspector-in-training," and "registered 
apprentice inspector" and clarify the type of license involved in the sections. 
 The amendment to sec.535.224 conforms the section with a provision in recent 
legislation which permits the commission to authorize the Texas Real Estate 
Inspector Committee, an advisory committee of 12 inspectors appointed by the 
commission, to conduct administrative hearings or recommend the entry of final 
orders, or both, in contested cases involving inspectors. The amendment to 
sec.535.224 also substitutes new statutory terms for the inspector licenses 
issued by the commission. 
 The amendments are necessary to conform the sections with current law. 
 No comments were received regarding adoption of the amendments. 
 The amendments are adopted under Texas Civil Statutes, Article 6573a, sec.5(h), 
which provide the Texas Real Estate Commission with the authority to make and 
enforce all rules and regulations necessary for the performance of its duties. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 30, 1993. 
 TRD-9332866 
  Mark A. Moseley 
 General Counsel 
 Texas Real Estate Commission 
    Effective date: December 21, 1993 
 Proposal publication date: October 8, 1993 
 For further information, please call: (512) 465-3900 
         
               
  TITLE 28. INSURANCE 
 Part I. Texas Department of Insurance 
  Chapter 5. Property and Casualty 
  
  Subchapter E. Texas Catastrophe Property Insurance Association 
 
  28 TAC sec.5.4501 
 
  The State Board of Insurance of the Texas Department of Insurance adopts an 
amendment to sec.5.4501, concerning the adoption by reference of a new manual of 
rules governing the writing of windstorm and hail insurance through the Texas 
Catastrophe Property Insurance Association (TCPIA), with changes to the proposed 
manual and text as published in the October 8, 1993, issue of the  Texas 
Register (18 TexReg 6915). 
 The new TCPIA manual is necessary to incorporate new rules based on recent 
amendments to the Insurance Code, Article 21.49, enacted in House Bill 1461 by 
the 73rd Texas Legislature, that amended the rating for residential risks 
insured through the TCPIA and mandated that the association provide coverages 
for indirect losses caused by windstorm and hail. The new manual is also needed 
to incorporate all changes in the manual rules that have previously been 
approved by the State Board of Insurance and is reformatted and simplified for 
easier use. Implementation of the new manual rules will result in greater 
availability of residential insurance in the voluntary market for Texas coastal 
residents since most windstorm and hail coverage will be excluded from the 
residential policy written in the voluntary market, and coverages for both 
direct and indirect losses caused by windstorm and hail will be provided in the 
TCPIA policy. 
 Proposed sec.5.4501 as published, which provided for an effective date of 
December 1, 1993, for the new rules manual, is amended to provide for an 
effective date of January 1, 1994. This change is necessary to comply with the 
Administrative Procedure Act requirement that a rule takes effect 20 days after 
the date on which it is filed in the office of the secretary of state (the 
Government Code, sec.2001.036(a)) and to allow time for the printing and 
distribution of the new manual. 
 New Rules II.E.5 and II.E.6, which were not part of the proposed manual, are 
incorporated into the adopted manual to provide indirect loss coverage under a 
TCPIA policy for condominium owners (Forms HO-CON-B and HO-CON-C) with the 
remaining items under Rule II.E. renumbered as Rule II.E.7 through II.E.11. 
Rules III.E.1 and III.E.2 as proposed are amended in the adopted manual to 
provide proper rating for indirect loss coverages for condominium owners when 
TCPIA Forms 326 (HO-CONDO) and 328 (HO-CONDO) are attached to a TCPIA policy. 
Rule I.J.5 in the TCPIA manual as proposed is reworded in the adopted manual to 
more closely follow the statute (the Insurance Code, Article 21.49, sec.8D(e) , 
regulating liability limits of TCPIA policies), and the new wording is moved to 
be an exception under Rule I.J.2.a since the provisions of Rule I.J.5 apply only 
to those risks referenced under Rule I.J.2.a. This amendment as adopted does not 
change the intent or application of Rule I.J.5 as proposed but simply clarifies 
the application of the rule. Typographical errors in Rule III.F. are corrected 
in the adopted manual. 
 The new manual contains rules that are based on recent amendments to the 
Insurance Code, Article 21.49, enacted in House Bill 1461 by the 73rd Texas 
Legislature, that amended the rating for residential risks insured through the 
TCPIA and mandated that the association provide coverages for indirect losses 
caused by windstorm and hail. The proposed manual changes reflect the proper 
method of rating an association policy when insuring a dwelling risk using the 
board approved benchmark rates with an added factor not greater than +30%, but 
not less than +25%. The proposed manual changes also provide for the attachment 
of endorsements providing coverages for indirect losses caused by windstorm and 
hail and provide the appropriate rating for such coverages. In addition, the new 
manual incorporates all changes in the manual rules that have previously been 
approved by the State Board of Insurance and is presented in a new simplified 
format for easier use. 
 During the comment period, the Texas Department of Insurance received written 
comments on the proposal from the Texas Association of Insurance Agents and Zapp 
Insurance Agency. 
 Comment: One commenter stated that the exclusion of primary residential 
townhouses and condominium units from the indirect loss coverage provisions was 
not in keeping with the intent of the Insurance Code, Article 21.49, as amended 
by the 73rd Texas Legislature in House Bill 1461, which was to encourage 
insurance companies to increase their writings in coastal areas by eliminating 
coverage for certain wind-related exposures from residential property policies 
and providing coverage for these same exposures in the TCPIA policy. The 
commenter pointed out that because of this exclusion condominium unit owners 
will continue to experience a lack of availability in the voluntary market. The 
commenter proposed amending Rules II.E.2 and II.E.3 of the TCPIA manual to 
include HO-CON-B and HO-CON-C policies to provide for the use of indirect loss 
coverage endorsements for condominium owners and amending Rule III.E.1 in the 
last sentence for rating purposes. 
 Response: The Department agrees with the commenter's reasoning in the 
explanation of the legislative intent of the amendments to Article 21.49 as 
added in Section 8D. The Department disagrees that primary residential 
townhouses have been excluded from the proposal because any individually owned 
townhouse unit insured by the owner is defined as a dwelling in the TCPIA manual 
and is eligible to be covered under a TCPIA policy for indirect loss coverage 
based on the exclusion of such coverage from the companion homeowners or 
dwelling policy issued in the voluntary market to insure the individually owned 
townhouse unit. The Department agrees that condominium owners insured by the 
TCPIA should be provided with indirect loss coverages. The Department did not 
include such coverage in the proposal because while the newly enacted statute 
provides this coverage for condo renters, it does not address condo owners. 
However, it is the Department's position that the legislative intent is clear 
that certain indirect loss coverages for all residential risks were to be 
provided by the TCPIA policy when such coverages were excluded from a 
residential property policy written in the voluntary market. The State Board of 
Insurance pursuant to the authority granted in the Insurance Code, Article 
21.49, sec.sec.5A, 7, and 8 may provide for such coverages, and the rule as 
adopted provides for two additional endorsements to provide condo owners with 
certain indirect loss coverages. The Department, however, does not agree with 
the commenter that TCPIA Endorsement Forms 315 and 320 can be used for this 
purpose because these endorsements cannot be revised to properly correspond to 
the indirect loss coverages that must be provided for insuring condominium 
owners. As a result, the Board has adopted TCPIA Form 326 (HO-CONDO) to be 
attached to a TCPIA Windstorm and Hail policy if a HO-CON-B companion homeowners 
policy has been issued which excludes the coverages provided by the attached 
endorsement and TCPIA Form 328 (HO-CONDO) to be attached to a TCPIA Windstorm 
and Hail policy if a HO-CON-C companion homeowners policy has been issued which 
excludes the coverages provided by the attached endorsement. The Department has 
added new Rules II.E.5 and II.E.6, and amended Rules III.E.1 and III.E.2 
accordingly. 
 Comment: This same commenter suggested that Rule III.F. of the TCPIA manual 
should be amended to include the words "Association limit or the deductible 
amount" following the phrase "When the value exceeds the maximum". 
 Response: The Department responds that this was a typographical error, and it 
has been corrected in the adopted manual. 
 Comment: This same commenter suggested that while Rule I.K. of the manual lists 
mobile homes as excluded property, rules regarding the rating and writing of 
mobile homes should be included in the manual because the TCPIA provides 
coverage for mobile homes. 
 Response: The Department agrees and will prepare a mobile home rules and rates 
supplement to the manual for Board consideration and adoption in a separate 
rulemaking procedure. 
 Comment: Both commenters suggested that Rule I.J.5 of the manual does not 
accurately reflect the intent of the Insurance Code, Article 21.49, sec.8D(e) 
and that the rule should be changed to track the statutory language verbatim. 
 Response: The Department's wording of the rule is based on the statutory 
interpretation that the maximum limit of liability for a risk insured after 
September 1, 1991, may not be required to be reduced if the risk was insured by 
the TCPIA for a greater maximum limit of liability on September 1, 1991. The 
Department does not agree with the commenters' proposal in its entirety because 
the Department believes that there needs to be clarification that the pertinent 
statute applies only to risks insured by TCPIA and not to risks insured by the 
voluntary market. However, the Department agrees that Rule I.J. 5 in the TCPIA 
manual as proposed should be reworded to more closely follow the statute (the 
Insurance Code, Article 21.49, sec.8D(e) regulating liability limits of TCPIA 
policies) and yet still provide that it applies only to risks insured by TCPIA 
and not to risks insured by the voluntary market. Also, the Department believes 
that for clarification purposes the new wording should be moved from Rule I.J.5, 
as proposed, to be an exception under Rule I.J.2.a since the provisions of Rule 
I.J.5 apply only to those risks referenced under Rule I.J.2.a. These changes are 
incorporated into the adopted manual. This amendment as adopted does not change 
the intent or application of Rule I.J.5 as proposed but simply clarifies the 
application of the rule. If the commenters disagree with the Department's 
interpretation that the pertinent statute applies only to risks insured by TCPIA 
and not to risks insured by the voluntary market, this matter should be resolved 
in a separate rulemaking procedure because Rule I.J.5 was proposed for inclusion 
in the manual because it was previously adopted by the Board and was not 
proposed as new language under this rule. 
 Comment: Both commenters suggested that Rule III.F. of the TCPIA manual should 
be amended to include the words "coinsurance requirements and charge a" 
following the phrase "the association may waive the". 
 Response: The Department responds that this was a typographical error, and it 
has been corrected in the adopted manual. 
 Comment: One commenter disagreed with the proposed changes in the manual 
predicting that these changes will greatly complicate matters for agents, add a 
whole layer of underwriting review for the TCPIA staff, and result in a surge of 
applications returned for corrections or explanations. 
 Response: The Department responds that the new rules and procedures are the 
result of new legislation. The Department agrees that the newly enacted 
amendments to the Insurance Code, Article 21.49 create complications for 
administering the change; however, it is the Department's opinion that 
regardless of how those changes are implemented administering the changes will 
be complicated. 
 The amendment is adopted pursuant to the Insurance Code, Article 21.49, 
sec.1.23 of House Bill 1461 and the Government Code, sec.2001.004 et seq. 
Article 21.49, sec.5A authorizes the State Board of Insurance to issue any 
orders which it considers necessary to carry out the purposes of Article 21.49. 
Article 21.49, sec.7 requires the State Board of Insurance to prepare 
endorsements and forms applicable to the standard policies which it has 
promulgated providing for the deletion of coverages available through the Texas 
Catastrophe Property Insurance Association (TCPIA) and to promulgate the 
applicable reduction of premiums and rates for the use of such endorsements and 
forms. Article 21.49, sec.8 authorizes the State Board of Insurance to approve 
every manual of classifications, rules, rates, rating plans, and every 
modification of any of the foregoing for use by the TCPIA. Article 21.49, sec.8B 
requires the TCPIA to provide coverage for indirect losses caused by windstorm 
or hail when a companion policy issued in the voluntary market specifically 
excludes such coverage and authorizes the promulgation of rules. Section 1.23 of 
House Bill 1461 (Act of May 27, 1993, 73rd Legislature, Regular Session, Chapter 
685, 1993 Texas Session Law Service 2575 (Vernon)) provides that as of September 
1, 1993, that the State Board of Insurance relinquish authority over all areas 
of activity of the Texas Department of Insurance except the promulgation and 
approval of rates and policy forms and endorsements and rules related to these 
activities and that the Board may exercise such authority until no later than 
September 1, 1994. The Government Code, sec.2001.004 et seq authorize and 
require each state agency to adopt rules of practice setting forth the nature 
and requirement of available procedures and to prescribe the procedures for 
adoption of rules by a state administrative agency. 
 
 
  sec.5.4501. Rules and Regulations for Texas Catastrophe Property Insurance 
Association (association). The Texas Department of Insurance adopts by reference 
a rules manual for the association as amended effective January 1, 1994. Copies 
of the rules manual may be obtained by contacting the Property/Casualty 
Division, Mail Code 103-1A, Texas Department of Insurance, 333 Guadalupe Street, 
P.O. Box 149104, Austin, Texas 78714-9104. 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 24, 1993. 
 TRD-9332717 
  Linda von Quintus-Dorn 
 Chief Clerk 
 Texas Department of Insurance 
    Earliest possible date of adoption: January 7, 1994 
 For further information, please call: (512) 463-2765 
         
                 
  TITLE 30. ENVIRONMENTAL QUALITY 
 Part I. Texas Natural Resource Conservation Commission 
  Chapter 290. Water Hygiene 
  
  The Texas Natural Resource Conservation Commission (TNRCC) adopts the repeal 
of sec.290.51 and adopts new sec.290.51, concerning fees for services to 
drinking water systems. The repeal of sec.290.51 and new sec.290.51 are adopted 
without changes to the proposed text as published in the October 15, 1993, issue 
of the Texas Register (18 TexReg 7129). The fees will provide the Commission the 
additional revenue needed to satisfy the increased sampling, inspection and 
other requirements mandated by the Safe Drinking Water Act. 
 A public hearing was held on October 28, 1993, and two individuals presented 
testimony. One commenter expressed concern that the monies gained from the fee 
increase would be used to create an inefficient bureaucracy. The other commenter 
questioned the formula to determine the fee amount. 
 The Commission received several comment letters during the comment period in 
opposition to the proposed fee increase. Two commenters stated that the timing 
the agency chose to increase fees conflicted with the fiscal year of most 
municipalities, thereby causing financial hardships. They requested that in the 
future, the agency present their proposals for fee increases well before the end 
of the fiscal year (October 1-September 30) to allow municipalities to prepare 
their budgets. Several commenters stated that the formula favors larger systems. 
A commenter expressed concern that the increase would cause medium-sized water 
systems economic problems. This letter added that the State should be aware 
that, by increasing fees, monies that could be used to upgrade the water system 
are reduced. The letter suggested the agency improve procedures that would allow 
water systems to increase rates, so they can pass the increases on to their 
customers. Several commenters believed that the proposed increase in fees was 
excessive. Two commenters questioned whether it was fair that those systems that 
purchase treated water should pay twice because wholesalers would also increase 
their rates to cover the fee increase. Some commenters requested that fee bills 
be itemized and that the agency consider assessing a per connection based fee as 
opposed to a formula. Another commenter complained that utilities should only be 
charged for and when services are actually provided. 
 One comment was received in support of the new fee and urged the Commission to 
make every effort to maximize the benefits the fee is designed to provide. 
 Comments were received from the following: Texas Municipal League, West Wise 
Rural Water, Goodyear Tire & Rubber Company, City of McKinney, Guadalupe Blanco 
River Authority, City of Petersburg, Rusk Rural WSC, City of Nacogdoches, 
Sebestas Hitchin Post, City of Mason, The Ridge Subdivision, City of Crawford, 
El Dorado Mobile Home, City of Georgetown, Kerrville South Water Company, 
Ricardo WSC, Nueces WSC, Dallas County Water Control District 6, Rancho Oaks 
MHP, Frio Communities Improve, Twin Forks Estates, Lake LBJ MUD, Bayou Forest 
Village Utility, Lakeway MUD, Little G Court, City of Odessa, Kingsland WSC, and 
City of Dallas. 
   
  Rules and Regulations for Public Water System 
 
  30 TAC sec.290.51 
 
  The repeal is adopted under the Texas Water Code, sec.5.103, which authorizes 
the Texas Natural Resource Conservation Commission to adopt any rules necessary 
to carry out its powers, duties, and policies, and sec.341.041 of the Health and 
Safety 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 November 30, 1993. 
 TRD-9332847 
  Mary Ruth Holder 
 Director, Legal Division 
 Texas Natural Resource Conservation Commission 
    Effective date: December 21, 1993 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 463-8069 
         
     
  The new section is adopted under the Texas Water Code,  sec.5.103, which 
authorizes the Texas Natural Resource Conservation Commission to adopt any rules 
necessary to carry out its powers, duties, and policies, and sec.341.041 of the 
Health and Safety 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 November 30, 1993. 
 TRD-9332846 
  Mary Ruth Holder 
 Director, Legal Division 
 Texas Natural Resource Conservation Commission 
    Effective date: December 21, 1993 
 Proposal publication date: October 15, 1993 
 For further information, please call: (512) 463-8069 
         
               
  TITLE 31. NATURAL RESOURCES AND CONSERVATION 
 Part XVII. Texas State Soil and Water Conservation Board 
  Chapter 523. Agricultural and Silvicultural Water Quality Management 
  
  31 TAC sec.sec.523.1-523.4 
 
  The Texas State Soil and Water Conservation Board adopts new sec.sec.523. 1-
523.4. Sections 523.2-523.4 are adopted with changes to the proposed text as 
published in the September 28, 1993, issue of the Texas Register  (18 TexReg 
6625) and the Correction of Error in the October 1, 1993, issue of the Texas 
Register (18 TexReg 6767). Section 523.1 is adopted without changes and will not 
be republished. 
 The purpose of the new sections is to provide specific details and requirements 
for implementation of provisions in Senate Bill 503, Acts of the 73rd 
Legislature, regarding management of agricultural and silvicultural nonpoint 
source pollution, water quality management plan certification program, and 
complaints concerning agricultural and silvicultural nonpoint source pollution. 
The sections define a water quality management plan and establish the process 
for setting criteria and for landowners and operators to obtain water quality 
management plans. The sections establish procedures for investigation of 
complaints relative to agricultural and silvicultural nonpoint source pollution, 
development of corrective action plans when required, and referral to the Texas 
Natural Resource Conservation Commission if corrective actions fail to be 
implemented. The sections define what a person must do to obtain a water quality 
management plan, what the effect of having an activated water quality management 
plan will be, and how complaints relative to agricultural and silvicultural 
nonpoint source pollution will be processed. 
 Section 523.2(b)(4) has been changed to clarify that other existing programs 
and entities will be utilized to obtain data and information relative to the 
identification and delineation of problem areas. 
 Section 523.3(f) was redesignated as subsection (b) and all following 
subsections redesignated accordingly. Subsection (b)(1) has been expanded to 
reflect a concern that encouragement and assistance will be provided to 
landowners and operators that request the development of a water quality 
management plan. Redesignated subsection (c)(1) has been changed to clarify that 
the practices to be selected are those practices eligible for water quality 
management planning. Subsection (c)(3) was expanded to reference the Coastal 
Zone Act Reauthorization Amendments (CZARA). Redesignated subsection (d)(3) was 
expanded to include local underground water conservation districts and others as 
determined by the State Board as necessary to help develop practice standards. 
Redesignated subsection (e)(3) was revised to clarify the priority of practices 
within an implementation schedule. 
 Section 523.4(1)(C) was added to clarify that those operations that have 
applied for a water quality management plan would also be investigated if 
complaints made it necessary. Subsequent paragraphs were renumbered. Paragraph 
(2)(D) was reworded to clarify complainants will be informed of the outcome of a 
determination following an investigation but the report need not be a formal 
process. Paragraph (3)(B) has been expanded to clarify that corrective action 
plans are developed in the same manner as prescribed for a water quality 
management plan development. Paragraph (3)(C) was expanded to include local 
underground water conservation districts as a source of technical expertise that 
may be utilized to help develop corrective action plans. Paragraph (4) was 
reworded to clarify the use of the term warranted. 
 The public comment period closed on October 29, 1993. The Soil and Water 
Conservation Board received nine written comments on the proposed rules. 
Generally, the comments raised questions concerning the inclusion in the program 
of or coordination with various entities and suggested changes in the language 
to clarify various points. All written comments were submitted by groups, 
associations, or public entities. One soil and water conservation district 
requested changes by verbal communication. 
 Two commenters supported the rules as written. 
 One commenter pointed out the omission of a subparagraph (C) in sec.523.4. 
 Three commenters suggested adding local underground water conservation 
districts and the Texas Alliance of Groundwater Districts to those assisting 
with practice standards, corrective action plans, and providing data and 
information on identification of areas. 
 One commenter made six suggestions for revisions, deletions, and additions to 
sec.523.3, Water Quality Management Plans, including the deletion of the 
requirement for a report to complainants. 
 One commenter made the suggestion that State Water Quality Standards be subject 
to evaluation in terms of the actual benefits derived from meeting standards, 
and that acceptability of management plans should not be determined based on 
mathematical modeling of water quality. 
 One commenter suggested that the Board's authority need not be limited to 
private property as suggested in the preamble. 
 One commenter suggested that the rule does not reflect the intent of Senate 
Bill 503 in that the potential for agricultural and silvicultural nonpoint 
source pollution areas in the "Coastal Zone" is not specifically addressed. 
 One commenter suggested that the rule should specifically take into account the 
potential effect on the Board's water quality management plan certification 
program of the CMP goals and policies currently under development by the CCC and 
the guidelines adopted pursuant to sec.6217(g) of CZARA. 
 One commenter suggested that sec.523.2(a) specifically allow any person to 
petition for delineation, or at least, consider a petition from other state 
resource agencies including those represented on the CCC. 
 One commenter suggested that sec.523.2(b)(1) and (3) allow any person to submit 
data or information to the Board relating to potential nonpoint source pollution 
problem areas or at least other agencies, including studies conducted by the 
TNRCC, a National Estuary Program, or any other studies done by or for another 
state or federal resource agency. 
 One commenter suggested that sec.523.2(c)(1) specifically require the Board to 
consult with agencies represented on the CCC in identifying areas in the coastal 
zone which constitute a known problem. 
 One commenter suggested that sec.523.3(c)(3) reflect the need for coordination 
between the Board and CCC member agencies. 
 One commenter suggested that the rule specify that the Board can require a 
water quality management plan. 
 One commenter stated that it was not clear how the size or location 
consideration are relevant to CAFO's identification as point or nonpoint 
sources. 
 One commenter suggested the statement that all CAFO's "not required to obtain a 
permit from TNRCC will be nonpoint sources" appears to conflict with present 
TNRCC rules. 
 One commenter suggested that the rule clarify that aquaculture 
operations/activities that discharge to the waters of the State require a TNRCC 
permit. 
 One commenter suggested that in sec.523.2, Identification of Problem Areas, the 
rule more clearly emphasize the integration of problem delineations performed by 
the State Board and the State's water quality inventory. 
 One commenter suggested addition of the following references to sec.523.2(b) 
(4); sec.106 of the Clean Water Act; the Federal Safe Drinking Water Act; the 
Federal Insecticide, Fungicide, and Rodenticide Act; and data collected by state 
and federal groundwater protection entities." 
 One commenter suggested limiting allocation of resources under sec.523.2(c) to 
corrective action plans. 
 One commenter asked if the considerations for allocation of resources under 
sec.523.2(c)(1)-(3) represent a prioritized sequence of factors to be considered 
and suggested that the consideration of "benefit to water quality" under 
sec.523.2(c)(3) be given more consideration or the terms "First," Second, " and 
"Third," be deleted from subsection (c)(1)-(3). 
 One commenter suggested deleting the reference to corrective action plans in 
sec.523.2(c)(3). 
 One commenter noted that the term "no-discharge" is not used in sec.523.3, 
Water Quality Management Plans, and asks if plans are developed that allow for a 
discharge that does not comply with TNRCC and EPA regulations, will that 
facility be referred to TNRCC, and asks how the Board will address odor issues. 
 One commenter suggested that water quality management plan development and 
implementation in impaired or threatened water bodies be consistent with the 
State's water quality management plan. 
 One commenter TNRCC suggested deleting the term "Insofar as practicable" from 
sec.523.3(b)(3) and that practices should also be consistent with sec.6217 of 
the Coastal Zone Management Act and the Federal Insecticide, Fungicide, and 
Rodenticide Act. 
 One commenter suggested that management practices should be selected based upon 
an analysis of implications to both surface water and groundwater quality. 
 One commenter suggested the rule provide for an implementation schedule that 
incorporates development of total maximum daily loads in accordance with 40 CFR, 
sec.130. 
 One commenter asked if there was a provision in the rule to refer producers who 
fail to meet implementation schedules to TNRCC. 
 One commenter suggested deletion of the phrase "To the extent allowed by 
available technology" under sec.523.3(e), regarding applicability of water 
quality standards, and suggested that wording be added to incorporate the total 
maximum daily load process into the rules. 
 One commenter suggested replacing "landowners" with "facility owners and/or 
operators" in sec.523.3(b)(1)(as revised). 
 One commenter suggested deletion of "taking into account the state of the 
existing technology, economic feasibility, and water quality needs" in sec.523. 
3(b)(3) and asserts that the Texas Water Code does not allow for considerations 
of technological development or economic feasibility. 
 One commenter suggested replacing "operations" with "facilities" in sec.523. 
4(1)(B). 
 One commenter suggested adding "facilities that have applied for a Board Water 
Quality Management Plan" under sec.523.4(1)(B). 
 One commenter suggested deletion of "when warranted" under sec.523.4(4). 
 One commenter requested that soil and water conservation district rules in plan 
development and complaint investigation be clarified. 
 The groups and associations in support of the proposed rule as published were 
the Texas Citrus and Vegetable Association and the Texas Farm Bureau. No one 
opposed the rules as published but the following entities submitted written 
suggestions for changes: Texas Water Development Board, Texas Alliance of 
Groundwater Districts, Barton Springs/Edwards Aquifer Conservation Districts, 
Riverside and Landowners Protection Coalition, Inc., Foard County Soil and Water 
Conservation District (SWCD), General Land Office, and Texas Natural Resource 
Conservation Commission. The Hutchinson SWCD requested changes by verbal 
communication. 
 The Texas Water Development Board pointed out the omission of a subparagraph 
(C) in sec.523.4. The State Board corrected the omission. 
 Texas Alliance of Groundwater Districts suggested the following addition to 
sec.523.3(d)(3): "Practice standards will be developed in consultation with the 
local soil and water conservation district, the local underground water 
conservation district, with assistance and advice of the USDA, the Soil 
Conservation Service, Texas Agricultural Extension Service, Texas Forest 
Service, Texas Agricultural Experiment Station, the Texas Alliance of 
Groundwater Districts, and others as determined to be needed by the State 
Board." The Barton Springs/Edwards Aquifer Conservation District expressed the 
same comment as Texas Alliance of Groundwater Districts relative to adding 
groundwater districts to sec.523.3(d)(3). The State Soil and Water Conservation 
Board and soil and water conservation districts have a special relationship 
since the Board administers the law that districts operate under and is 
responsible for coordinating district programs. The assistance of underground 
water conservation districts will be greatly appreciated in implementation of 
this program. The rules were modified to reflect this. 
 The Barton Springs/Edwards Aquifer Conservation District requested that the 
following language be added to sec.523.2(b): "data, information collected, and 
studies performed by local groundwater districts." and suggested adding the 
local groundwater district to those entities providing assistance on corrective 
action plans under sec.523.4(3)(C). Language was added to accommodate this 
suggestion in sec.523.2(b)(4) and in sec.523.4(3)(C). 
 Riverside and Landowners Protection Coalition, Inc. (RLPC) suggested that 
sec.523.3(f)(4) be revised to reflect: "Landowners and operators will be 
assisted by their soil and water conservation district to find ways to 
incorporate Board requirements into their plans. Should Board requirements not 
be deemed feasible by the landowner, the landowners will be assisted in 
preparing an appeal of district decisions to the Board" and suggested moving 
sec.523.3(f) to sec.523.3(b) and redesignating the subsections that follow. The 
State Board feels that adequate provisions exist for any landowner to appeal 
district decisions. However, requiring districts to assist with appeals would 
quickly overwhelm existing resources. Considerable assistance will be available 
through the water quality management plan development process. sec.523.3(f) was 
moved and redesignated as 3(b) and those subsections that follow were 
redesignated accordingly. 
 RLPC suggested that wording be added in sec.523.3(b)(1) to reflect: 
"Landowners, following consultation with their soil and water conservation 
district, will be encouraged and aided in working with the district in the 
preparation of a plan based on Board standards to prevent or abate their 
nonpoint source pollution." The rule was modified accordingly. 
 RLPC recommended that all complaints, regardless of source, be reduced to 
writing and contain as many details as will support the complaint, that signed 
and dated complaints be delivered to the appropriate district, and that district 
personnel be encouraged to review the complaint and interview the complainant 
for details that may be lacking in the written complaint. They further recommend 
that district personnel confer with the owner of the land from which nonpoint 
source pollution is alleged to be occurring to confirm or negate the allegation, 
and to develop a plan if needed, and if the landowner does not agree with the 
district, then the file, along with district recommendations be sent to the 
Board for a determination relative to the need for action. They suggested that 
the requirement to report to complainants be taken out of the rules. 
 Senate Bill 503 directs the State Board, in cooperation with the local 
district, to investigate complaints, and upon completion of the investigation, 
in consultation with the district, to determine that further action is not 
warranted or to develop a corrective action plan. Soil and water conservation 
districts will be relying on assistance from the State Board to carry out the 
provisions of Senate Bill 503 and therefore most activities will be conducted 
jointly between the State Board and districts. It is felt that the rules, as 
written, will accommodate the intent of this comment since corrective action 
plans are to be developed in the same manner as water quality management plans. 
Section 523.4(3)(B) was reworded to clarify this point. It is felt that the 
requirement to report findings to the complainant is necessary to make the 
process credible in the eyes of the public. Section 523.4(2)(D) and (E) was 
reworded to clarify that the report need not be a formal process. 
 Foard County Soil and Water Conservation District suggested that State Water 
Quality Standards be subject to evaluation in terms of the actual benefits 
derived from meeting standards and suggested that acceptability of management 
plans should not be determined based on mathematical modeling of water quality. 
 Water Quality Standards are established by the Texas Natural Resource 
Conservation Commissions pursuant to federal law. The process contains 
provisions for economic evaluation through establishment of designated use and 
other means and also allows for public participation. It is outside the 
authority of the State Board to address this comment. Mathematical modeling is a 
tool that can be used to determine impacts on water quality caused by different 
types of activities. However, modeling will not play a major role in determining 
acceptability of water quality management plans since those standards and 
criteria will be set through the Field Office Technical Guides currently used to 
set practice standards. 
 The Texas General Land Office (GLO) suggested the Board's authority need not be 
limited to private property as suggested in the preamble. The rule does not 
limit the program to private property. The preamble has been reworded to remove 
the reference to private property. The State Board and districts do work on 
public property when called for and will continue to do so. 
 GLO commented the rule does not reflect the intent of Senate Bill 503 in that 
the potential for agricultural and silvicultural nonpoint source pollution areas 
in the "Coastal Zone" is not specifically addressed. GLO suggests the rule 
should specifically take into account the potential effect on the Board's water 
quality management plan certification program of the CMP goals and policies 
currently under development by the CCC and the guidelines adopted pursuant to 
sec.6217(g) of CZARA. Senate Bill 503 is being implemented on a statewide basis. 
Implementation within the coastal zone will be accomplished the same way as in 
other areas of the state. Coordination with the Coastal Coordination Council 
should be a part of this. Section 523.2(b)(4) has been revised to clarify 
coordination. As written, the rule requires that the water quality management 
plan certification program be consistent with the "Agricultural and 
Silvicultural Nonpoint Source Pollution Management Program" developed pursuant 
to sec.319 of the Federal Clean Water Act. This document, currently under 
revision, incorporates all guidelines published to date pursuant to sec.6217(g) 
of CZARA, provides for necessary coordination between the General Land Office, 
Coastal Coordination Council, and State Board to effectively administer a 
nonpoint source program in the coastal areas of Texas. At the appropriate time, 
the "Coastal Nonpoint Source Program" for Agricultural and Silviculture will be 
developed pursuant to sec.6217(g) of CZARA, consistent with and complementary to 
our existing programs. 
 GLO suggests that sec.523.2(a) specifically allow any person to petition for 
delineation, or at least, consider a petition from other state resource agencies 
including those represented on the CCC and suggests that sec.523.2(b) (1) and 
(3) allow any person to submit data or information to the Board relating to 
potential nonpoint source pollution problem areas or at least other agencies, 
including studies conducted by the TNRCC, a National Estuary Program, or any 
other studies done by or for another state or federal resource agency. 
 The need for delineation of an area can be made known to the Board through many 
processes. Specifically, sec.523.2(b)(4) allows the Board to consider such 
needs. Section 523.2(b)(1) provides for the special relationship between the 
State Board and soil and water conservation districts, which are an integral 
part of the program. Section 523.2(b)(2) provides for in-house activities of the 
Board, which include administration of the nonpoint source coordinating 
committee, made up of state and federal resource agencies including those on the 
CCC, and is in place for the purpose of coordinating programs. Section 523. 
2(b)(3) allows for the Board and districts to conduct studies to develop needed 
information not obtainable otherwise. Section 523.2(b)(4) as revised allows for 
submission of data and information through appropriate channels. 
 GLO suggests that sec.523.2(c)(1) specifically require the Board to consult 
with agencies represented on the CCC in identifying areas in the coastal zone 
which constitute a known problem and suggests that sec.523.3(c)(3) reflect the 
need for coordination between the Board and CCC member agencies. 
 The identification of problem areas is addressed through several processes 
included in sec.523.2(b)(4). Agencies on the CCC are already involved or could 
be involved in these processes. Section 523.2(c) allows the Board to allocate 
resources based upon program needs and priorities. The rule requires the program 
to be consistent with the State Agricultural and Silvicultural Nonpoint Source 
Management Program, which provides for needed coordination. The rule has been 
modified to clarify the Agricultural Nonpoint Source Management Program pursuant 
to the Federal Clean Water Act, sec.319, and the Coastal Zone Act 
Reauthorization Amendments, sec.6217. 
 GLO suggested that the rule specify that the Board can require a water quality 
management plan. Senate Bill 503 does not authorize the Board to require water 
quality management plans. 
 The Texas Natural Resource Conservation Commission (TNRCC) indicated it was not 
clear how the size or location considerations are relevant to CAFO's 
identification as point or nonpoint sources and suggested the statement that all 
CAFO's "not required to obtain a permit from TNRCC will be nonpoint 
sources"appears to conflict with present TNRCC rules. TNRCC stated their rules 
require a permit for facilities that hold more than a certain number of animals, 
or meet certain other conditions regarding discharges. A permit is not 
necessarily required for facilities that hold less than a specified number of 
animals, however these facilities are still regulated by rule. TNRCC asserts 
their rules parallel federal rules regarding definition of CAFO's. 
 Federal regulations (40 CFR, Part 122) defines the terms "Animal Feeding) 
Operation" and "Concentrated Animal Feeding Operation." Concentrated animal 
feeding operations are defined as point sources and subject to the NPDES 
Program, animal feeding operations are not. TNRCC rules do not distinguish 
between the two, but refer to both as concentrated animal feeding operations. 
Under federal regulations, the determining factors for establishing whether a 
feedlot is an animal feeding operation or a concentrated animal feeding 
operation involves size and location. Since TNRCC rules include all feedlots 
under the terms concentrated animal feeding operation, the State Board rule 
refers to all feedlots as concentrated animal feeding operations to avoid 
inconsistency with TNRCC rules, even though there is a distinction between point 
and nonpoint sources in regard to concentrated animal feeding operations. The 
problem being experienced is the result of inconsistencies between federal 
regulations and TNRCC rules. Under federal regulations, animal feeding 
operations, which do not require federal permits, are treated as nonpoint 
sources. The Soil and Water Conservation Board has been required by EPA to 
develop best management practices and strategies to deal with these since mid-
1970. This has been accomplished through the State's Water Quality Management 
Plan. A "Control Strategy for Agricultural Nonpoint Source Pollution" was 
developed, certified by the governor, and approved by EPA. The control strategy 
establishes how agricultural nonpoint sources are to be addressed, and is part 
of the State's Water Quality Management Plan. Senate Bill 503 parallels these 
procedures. The intent of Senate Bill 503 is clearly to address those animal 
feeding operations considered nonpoint sources. A Memorandum of Agreement 
between TNRCC and TSSWCB is nearing completion, which will clarify roles and 
responsibilities and provide for an effective, efficient program. 
 TNRCC suggested that the rule clarify that aquaculture operations/activities 
that discharge to the waters of the State require a TNRCC permit. The State 
Board contends aquaculture operations involving animals should be treated 
similar to CAFO's. 
 TNRCC suggested that in sec.523.2, Identification of Problem Areas, the rule 
more clearly emphasize the integration of problem delineations performed by the 
State Board and the State's water quality inventory and suggested addition of 
the following references to sec.523.2(b)(4); "sec.106 of the Clean Water Act; 
the Federal Safe Drinking Water Act; the Federal Insecticide, Fungicide, and 
Rodenticide Act; and data collected by state and federal groundwater protection 
entities." 
 Section 523.2 provides for the State Board to identify and delineate problem 
areas based on the most accurate and up-to-date information that is available. 
Currently, federal guidance calls for use of the assessment performed under 
sec.319 of the Clean Water Act for program direction. The State Board supports 
and encourages better integration of all assessment activities, and will be 
working toward accomplishing that. Section 523.2(b)(4) was revised to include 
the references suggested. 
 TNRCC suggested limiting allocation of resources under  sec.523.2(c) to 
corrective action plans and asks if the considerations for allocation of 
resources under sec.523.2(c)(1)-(3) represent a prioritized sequence of factors 
to be considered. 
 The allocation of resources is much broader than corrective action plans. 
Section 523.2(c)(1)-(3) correspond to categories of nonpoint source problem 
identification under sec.319 of the Federal Clean Water Act and will serve as a 
prioritized sequence of factors to be considered. 
 TNRCC suggested that the consideration of "benefit to water quality" under 
sec.523.2(c)(3) be given more consideration, or that the terms "First," Second, 
" and "Third," be deleted from (c)(1)-(3), and suggested deleting the reference 
to corrective action plans in sec.523.2(c)(3). 
 The terms "known' and "potential" are terms used and agreed upon in the State 
Nonpoint Source Management Program developed pursuant to sec.319 of the Federal 
Clean Water Act and are in themselves respective of water quality benefits. The 
phrase "benefits to water quality" in (c)(3) refers only to corrective action 
plan consideration. 
 TNRCC noted that the term "no-discharge" is not used in  sec.523.3, Water 
Quality Management Plans, and asks, if plans are developed that allow for a 
discharge that does not comply with TNRCC and EPA regulations, will that 
facility be referred to TNRCC, and asks how the Board will address odor issues. 
 Water Quality Management Plans called for in Senate Bill 503 are to address 
agricultural and silvicultural nonpoint source in general and are not limited to 
CAFO's for which the no discharge provision is written. The Board will be 
working diligently with TNRCC and EPA to assure that water quality standards are 
met. Odor control will be an integral part of the program in so far as practice 
standards are concerned, keeping in mind this is a water quality program. 
 TNRCC suggested that water quality management plan development and 
implementation in impaired or threatened water bodies be consistent with the 
State's water quality management plan. The strategy for control of agricultural 
and silvicultural nonpoint sources was developed by the State Board and 
incorporated into the State water quality management plan many years ago. The 
nonpoint source management program for agriculture and silviculture developed by 
the State Board pursuant to sec.319 of the Clean Water Act is consistent with 
the strategy. Both have been certified and approved by EPA. Senate Bill 503 
implements a program consistent with both. 
 TNRCC suggested deleting the term "Insofar as practicable" from 523.3(b)(3) and 
that practices should also be consistent with sec.6217 of the Coastal Zone 
Management Act and the Federal Insecticide, Fungicide, and Rodenticide Act. The 
term "insofar as practicable" is used because nonpoint source technology is not 
yet perfected. There may be areas where in the best interest of water quality, 
slight deviations may need to be made. The rule has been modified to include the 
references to sec.6217, CZARA. These provisions are clarified in the nonpoint 
source management program under sec.319, CWA. The Federal, Insecticide, 
Fungicide, and Rodenticide Act is consulted in development of the management 
program. 
 TNRCC suggested that management practices should be selected based upon an 
analysis of implications to both surface water and ground water quality and 
suggested the rule provide for an implementation schedule that incorporates 
development of total maximum daily loads in accordance with 40 CFR, sec.130. 
 The agricultural and silvicultural nonpoint source management program, through 
which practices are developed, addresses both surface and groundwater. A 
priority with the Board will be to incorporate the development of total maximum 
daily loads where appropriate into this program. Considerable work remains to be 
done before we could begin to work on load allocations. The State Board will be 
working toward this goal and will consider a rule at such time as technology is 
in place for its implementation. 
 TNRCC asked if there was a provision in the rule to refer producers who fail to 
meet implementation schedules to TNRCC. The development and implementation of 
water quality management plans is voluntary on behalf of the producer. In order 
to obtain the benefits from a plan, however, the producer would have to meet the 
implementation schedule. Provisions for referral to TNRCC are associated with 
complaint resolution under sec.523.4. 
 TNRCC suggested deletion of the phrase "To the extent allowed by available 
technology" under sec.523.3(e) regarding applicability of water quality 
standards, and suggested that wording be added to incorporate the total maximum 
daily load process into the rules. 
 The State Board notes that sec.26.121 of the Texas Water Code provides, in 
enforcement of the prohibition against discharges as it relates to nonpoint 
sources, that"consideration shall be given to the state of existing technology, 
economic feasibility, and the water quality needs of the water that might be 
affected." This rule must recognize that the state of existing technology in 
many cases is currently inadequate to address nonpoint source impacts. It is 
very critical that the State Board and TNRCC work together as technology 
develops to assure that water quality standards reflect nonpoint source impacts 
and that the total maximum daily load concept is employed as appropriate. The 
program authorized by Senate Bill 503 will provide the avenue to address load 
allocations for agricultural and silvicultural nonpoint sources, when nonpoint 
source loads can be quantitatively associated with water quality impacts and 
water quality standards. The rule will be amended as these processes develop. 
 TNRCC suggested replacing "landowners" with "facility owners and/or 
operators"in sec.523.3(b)(1). 
 The program deals with agricultural and silvicultural nonpoint sources 
(farmers, ranchers, and timber growers, which includes dairy operators, etc.) 
"Facility owners" is not consistent with terminology in common usage in the 
agricultural sector but would be included in the term "landowner and/or 
operators" which the rule has been revised to specify. 
 TNRCC suggested deletion of "taking into account the state of the existing 
technology, economic feasibility, and water quality needs" in sec.523.3(b)(3) 
and asserts that the water code does not allow for considerations of 
technological development or economic feasibility. 
 The State Board notes that sec.26.121, of the Texas Water Code specifically 
calls for these types of considerations; therefore, the language is consistent 
with the Texas Water Code. 
 TNRCC suggested replacing "operations" with "facilities" in sec.523.4(1)(B) and 
suggested adding "facilities that have applied for a Board Water Quality 
Management Plan" under sec.523.4(1)(B). 
 The term "facilities" is not consistent with terminology in common usage in the 
agricultural sector. The term "operation" is inclusive of the meaning of the 
term "facility." The rule has been amended by adding sec.523.4(1)(C) to 
incorporate the suggestion. 
 TNRCC suggested deletion of "when warranted" under sec.523.4(4). 
 Use of the term "when warranted" implies that a corrective action is warranted. 
The rule has been revised to clarify meaning. 
 The new sections are adopted pursuant to the Texas Agriculture Code, Title 7, 
Chapter 201, sec.201.020, which authorizes the Soil and Water Conservation Board 
to promulgate rules necessary to carry out the powers and duties under provision 
of the Texas Agriculture Code, and sec.201.026, which further authorizes the 
Soil and Water Conservation Board to establish nonpoint source pollution 
abatement programs. 
 
 
  sec.523.2. Identification of Problem Areas. 
 
  (a) On its own petition or on the petition of a soil and water conservation 
district, the State Board may delineate an area having the potential to develop 
agricultural or silvicultural nonpoint source water pollution problems. 
   
  (b) Problem areas may be delineated based on the following criteria: 
 
  (1) data and information submitted by soil and water conservation districts; 
   
  (2) data and information obtained by the State Board; 
   
  (3) studies conducted by the State Board or soil and water conservation 
districts; 
   
  (4) assessments, special studies and programs, and research conducted relative 
to surface and underground water quality pursuant to the Federal Clean Water 
Act, sec.sec.106, 305b, 314, and 319; the Coastal Zone Act Reauthorization 
Amendments (CZARA), sec.6217; the National Estuary Program; the Federal 
Insecticide, Fungicide, and Rodenticide Act; the Texas Water Code, sec.26.0135; 
the Texas Clean Rivers Program, and data and information collected or obtained 
by other local, state, or federal governmental entities; 
   
  (5)  guidelines developed and promulgated by the State Board. 
     
  (c)  Allocation of resources will be based on priority considerations. In 
allocating program resources, the State Board will consider the following: 
 
  (1) first, known problems, where the State Board has determined that adequate 
data show the existence of a water quality problem caused by agricultural or 
silvicultural nonpoint sources; 
   
  (2) second, potential problems, where the State Board has determined that the 
intensity and location of certain agricultural and silvicultural activities 
requires program implementation to prevent pollution problems caused by 
agricultural and silvicultural nonpoint source activities; 
   
  (3) third, corrective action plans needing to be implemented, the economic 
impact on producers and benefits to water quality. 
 
       
  sec.523.3. Water Quality Management Plans. 
 
  (a) A water quality management plan is a site-specific plan for agricultural 
or silvicultural lands which includes appropriate land treatment practices, 
production practices, management measures, technologies, or combinations thereof 
which achieve a level of pollution prevention or abatement determined by the 
State Board in consultation with the local soil and water conservation district 
and Texas Natural Resource Conservation Commission to be consistent with state 
water quality standards. 
   
  (b) Process for obtaining a Water Quality Management Plan. 
 
  (1) Landowners and operators may request the development of a plan by the 
local soil and water conservation district. Landowners and operators, following 
consultation with their soil and water conservation district, will be encouraged 
and aided in working with the district in the preparation of a plan based on 
standards adopted by the State Board to prevent or abate their nonpoint source 
pollution. 
   
  (2) The soil and water conservation district will determine the priority of 
plan development and subsequently cause the development and approval of the 
plan. 
   
  (3) Landowners and operators may appeal district decisions relative to 
practices and practice standards to the State Board in the manner prescribed by 
the Board. 
   
  (4) When determined to be consistent with state water quality standards, 
taking into account the state of existing technology, economic feasibility and 
water quality needs, the State Board will certify the plan. 
     
  (c) Practice selection. 
 
  (1) Practices eligible for water quality management planning will be selected 
by the State Board in consultation with the soil and water conservation 
district. 
   
  (2) Practices will address activities determined by the State Board in 
consultation with the soil and water conservation district to be in need of 
pollution prevention or abatement. 
   
  (3) Insofar as practicable, those practices shall be consistent with the 
Agricultural and Silvicultural Nonpoint Source Management Program developed by 
the State Board pursuant to the Federal Clean Water Act, sec.319 and CZARA, 
sec.6217. 
     
  (d) Practice standards. 
 
  (1) Practice standards will be based on specific local conditions. 
   
  (2) Practice standards will be based on criteria in the Soil Conservation 
Service, Field Office Technical Guide; however, modification of those practice 
standards to ensure consistency with state water quality standards and the state 
agricultural and silvicultural nonpoint source management program will be made 
as necessary. 
   
  (3) Practice standards will be developed in consultation with the local soil 
and water conservation district, with assistance and advice of the USDA, the 
Soil Conservation Service, Texas Agricultural Extension Service, Texas Forest 
Service, Texas Agricultural Experiment Station, Texas Natural Resource 
Conservation Commission, the local underground water conservation district, and 
others as determined to be needed by the State Board. 
     
  (e) Implementation schedule. 
 
  (1) A Water Quality Management Plan must contain an implementation schedule. 
   
  (2) The implementation schedule will, as far as is practicable, balance the 
state's need for protecting water quality with need of agricultural and 
silvicultural producers to have sufficient time to implement practices in an 
economically feasible manner. 
   
  (3) Highest priority will be given to the implementation of the most cost 
effective and most needed pollution abatement practices. 
   
  (4) The State Board in consultation with affected soil and water conservation 
districts will conduct an annual status review of plan implementation. 
     
  (f) Applicability of state water quality standards. To the extent allowed by 
available technology, water quality management plan development, approval, and 
certification will be based on state water quality standards as established by 
the Texas Natural Resources Conservation Commission. 
 
     
  sec.523.4. Resolution of Complaints. Complaints concerning the violation of a 
Water Quality Management Plan or a violation of a law source pollution will be 
addressed as follows: 
 
  (1) The State Board will investigate complaints regarding: 
 
  (A) agricultural and silvicultural nonpoint sources; 
   
  (B) operations with a certified Water Quality Management Plan; 
   
  (C) operations that have applied for a Water Quality Management Plan; 
   
  (D) nonpoint source problems related to operations needing a Water Quality 
Management Plan; and 
   
  (E) general complaints regarding agricultural and silvicultural nonpoint 
source related pollution. 
     
  (2) Determination of the need for action. 
 
  (A) The State Board, in consultation with the soil and water conservation 
district, will make a determination relative to the need for action. 
   
  (B) To the extent practicable, the complainant will be interviewed by the 
State Board and the soil and water conservation district prior to an 
investigation. 
   
  (C) The State Board in consultation with the local soil and water conservation 
district will, based on complainant interviews and investigations, including are 
view of Water Quality Management Plans on file with the State Board and/or the 
soil and water conservation district, determine whether or not the need for 
corrective action exists. 
   
  (D) The State Board will inform the complainant of the outcome of a 
determination upon completion of the investigation and it is determined whether 
the need for corrective action exists. 
   
  (E) Upon completion of an investigation by the State Board and all pertinent 
soil and water conservation districts, and provision of the final investigative 
determination to all complainants and operators interviewed and investigated, 
any complainant or operator interviewed or investigated shall be provided an 
opportunity for a hearing before members of the soil and water conservation 
district or districts involved in the investigation. 
   
  (F) Subsequent to a hearing before members of the local soil and water 
conservation district or districts involved in the investigation, any 
complainant or operator interviewed or investigated may request a hearing before 
the State Board. The State Board may provide for the requested hearing at its 
discretion. 
     
  (3) Corrective action plan. Once the determination of the need for action is 
made, a corrective action plan will be developed. 
 
  (A) The corrective action plan must meet all requirements of a certified Water 
Quality Management Plan. 
   
  (B) The corrective action plan will be developed in consultation with the soil 
and water conservation district in the same manner as a water quality management 
plan is developed. 
   
  (C) The corrective action plan will be developed with the technical assistance 
from the Soil Conservation Service, Texas Agricultural Extension Service, Texas 
Forest Service, the local underground water conservation district, and/or State 
Board as appropriate. 
     
  (4) If the person upon whom the complaint was filed fails or refuses to take 
warranted corrective action, the State Board shall refer the complaint to the 
Texas Natural Resources Conservation 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 Temple, Texas, on November 29, 1993. 
 TRD-9332853 
  Robert G. Buckley 
 Executive Director 
 Texas State Soil and Water Conservation Board 
    Effective date: December 22, 1993 
 Proposal publication date: September 28, 1993 
 For further information, please call: (817) 773-2250 
         
                 
  TITLE 40. SOCIAL SERVICES AND ASSISTANCE 
 Part I. Texas Department of Human Services 
  Chapter 79. Legal Services 
  
  The Texas Department of Human Services (DHS) adopts amendments to sec.sec.79. 
401-79.404 and the repeal of sec.79.405, without changes to the proposed text as 
published in the October 29, 1993, issue of the Texas Register  (18 TexReg 
7529). 
 The justification for the amendments and repeal is to formalize operational 
procedures for advisory committees, reduce the number of advisory committee 
members, specify abolishment dates for each committee, and require reporting 
with the biennial legislative appropriations request. 
 The amendments and repeal will function by maintaining the public's ability to 
participate in DHS's rulemaking process. 
 No comments were received regarding adoption of the amendments and repeal. 
   
  Subchapter E. Advisory Committees 
 
  40 TAC sec.sec.79.401-79.404 
 
  The amendments are adopted under the Human Resources Code, Title 2, Chapter 
22, which provides the department with the authority to administer public 
assistance programs. The amendments implement the Human Resources Code, 
sec.22.009 and Texas Revised Civil Statutes, Article 6252-33. the department to 
serve as a non-voting member. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 30, 1993. 
 TRD-9332830 
  Nancy Murphy 
 Section Manager, Policy and Document Support 
 Texas Department of Human Services 
    Effective date: January 1, 1994 
 Proposal publication date: October 29, 1993 
 For further information, please call: (512) 450-3765 
         
       
  40 TAC sec.79.405 
 
  The repeal is adopted under the Human Resources Code, Title 2, Chapter 22, 
which provides the department with the authority to administer public assistance 
programs. The repeal implements the Human Resources Code, sec.22.009. 
 
  This agency hereby certifies that the rule as adopted has been reviewed by 
legal counsel and found to be a valid exercise of the agency's legal authority. 
 Issued in Austin, Texas, on November 30, 1993. 
 TRD-9332831 
  Nancy Murphy 
 Section Manager, Policy and Document Support 
 Texas Department of Human Services 
    Effective date: January 1, 1994 
 Proposal publication date: October 29, 1993 
 For further information, please call: (512) 450-3765