PROPOSED RULES 
 
 Before an agency may permanently adopt a new or amended section or repeal an 
existing section, a proposal detailing the action must be published in the  
Texas Register at least 30 days before action is taken. The 30-day time period 
gives interested persons an opportunity to review and make oral or written 
comments on the section. Also, in the case of substantive action, a public 
hearing must be granted if requested by at least 25 persons, a governmental 
subdivision or agency, or an association having at least 25 members. 
  Symbology in proposed amendments. New language added to an existing section is 
indicated by the use of  bold text. [Brackets] indicate deletion of existing 
material within a section. 
 
   
  TITLE 4. AGRICULTURE 
 Part III. Texas Feed and Fertilizer Control Service 
  Chapter 61. Feed 
  
  Labeling 
 
  4 TAC sec.61.21, sec.61.22 
 
  The Feed and Fertilizer Control Service/Office of the Texas State Chemist 
proposes amendments to sec.61.21 and sec.61.22, concerning Labeling of 
Commercial Feed. The amendment is being proposed to update feed labels to be 
consistent with those approved by the Association of American Feed Control 
Officials. 
 Dr. George W. Latimer, Jr., state chemist, Office of the Texas State Chemist, 
has determined that there will be no fiscal implications on state and local 
governments for the first five year period. 
 There will be an effect on small businesses. The cost of compliance with the 
rule will be from preparing new label designs and plates. 
 There will be no difference in the cost of compliance for small businesses 
versus large business. 
 Dr. Latimer has determined that for each year of the first five years the rule 
as proposed is in effect the public benefits anticipated as a result of 
enforcing the rule as proposed will be a clearer, more descriptive label which 
will allow the purchaser to make more informed decisions; to comply with 
standard label formats being adopted by other states so that Texas manufacturers 
can sell in non-Texas markets; a need to comply with new net weight 
requirements. 
 The possible economic cost to persons who are required to comply with the rule 
as proposed will be preparation of new plates; removal of product with obsolete 
labels still in field. These costs differ for each registrant so that neither 
individual nor aggregate costs can be estimated; however, changes required to 
meet this new standard should be a one-time cost. To minimize transition costs, 
the Feed and Fertilizer Control Service has conducted numerous seminars and has 
and will supply advice to all firms marketing products in Texas. Additionally, 
the Service proposes a two-step phase by requiring labels for new products 
submitted for approval to conform to the new standard beginning on January 1, 
1995; requiring all products with old style labels to be removed from the 
marketplace by December 31, 1995. 
 Comments on the proposal may be submitted to Dr. George W. Latimer, Jr., State 
Chemist, Office of the Texas State Chemist, P.O. Box 3160, College Station, 
Texas 77841-3160. 
 The amendment is proposed under Texas Agriculture Code, Chapter 141, sec.141. 
004 which provides the Feed and Fertilizer Control Service with the authority to 
adopt rules relating to the distribution of commercial feeds. 
 The Texas Agriculture Code, Chapter 141, Subchapter C (Texas Commercial Feed 
Control Act) is affected by these amendments. 
 
 
  sec.61.21. General Label Restrictions. 
 
  (a)-(b) (No change.) 
   
  (c) A trademark or trade name may form part of the labeling of a commercial 
feed provided that: 
 
  (1) (No change.) 
   
  (2) the display of the trademark or trade name is  <nl>no more<ol> [not 
unduly] conspicuous <nl>than<ol> [in relation to] the display of the name of the 
registrant or guarantor of the product or other required information<nl>, i.e., 
its style, size and color of print makes it no more likely to be read than the 
accompanying/surrounding word(s), statement(s) or other required information. 
     
  (d)-(e) (No change.) 
 
     
  sec.61.22. Labeling of Commercial Feed. Commercial feed shall be labeled with 
the information prescribed in the Texas Commercial Feed Control Act (Act) and 
this <nl>chapter<ol> [part] on the principal display panel of the product with 
the following general format, unless otherwise specifically provided. 
 
  <nl>(1) Purpose Statement. 
 
  <nl>(A) A statement of purpose (unless exempted in accordance with paragraph 
(4)(E) of this section shall contain the specific species and animal class(es) 
for which the feed is intended. 
   
  <nl>(B) The manufacturer shall have flexibility in describing in more specific 
and common language the defined animal class, specie and purpose while being 
consistent with the category of animal class defined in the AAFCO Model Feed 
Bill, Regulation 3(a)(4), which may include, but is not limited to, including 
the weight range(s), sex or ages of the animal(s) for which the feed is 
manufactured. 
     
  [(1) Net Weight 
 
  [(A) Packages, dry, and liquid bulk shall be determined directly from scales 
or for bulk liquids only as calculated from volume and specific gravity/density. 
   
  [(B) Conformance to weight guarantee shall be judged solely by use of 
certified scale defined in accordance with Texas Department of Agriculture 
standards. 
   
  [(C) Dip-sticks, uncertified/uncalibrated meters, or sight gauges shall not be 
used to estimate volume. Scales not certified in accordance with the Texas 
Department to Agriculture standards shall not be used for net weights.] 
     
  (2)-(3) (No change.) 
   
  (4) Guaranteed analysis of the feed: 
 
  (A) The guaranteed analysis of the feed shall include the following items in 
the following order <nl>crude protein, non-protein nitrogen, amino acids, crude 
fat, crude fiber, acid detergent fiber, calcium, phosphorus, salt and sodium<ol> 
[,] unless exempted in accordance with subparagraph (E) of this paragraph. 
 
  (i)-(iv) (No change.) 
   
  (v) The guarantees for minerals shall be expressed as follows. 
 
  (I) Commercial feeds containing [a total of 6.5% or more] calcium, phosphorus 
and/or salt shall include a guaranteed analysis of the following minerals in the 
following order: 
 
  (-a-)-(-b-) (No change.) 
   
  (-c-) minimum and maximum percentages of salt (NaCl), <nl>when required<ol> 
[if added]; and 
   
  (-d-) (No change.) 
     
  (II)-(IV) (No change.) 
     
  (vi) The guarantees for vitamins shall be expressed as follows. 
 
  (I) If made, guarantees for minimum vitamin content of commercial feeds and 
feed supplements shall be stated on the label in milligrams per pound of feed, 
except that: 
 
  (-a-) vitamin A, other than precursors of vitamin A, shall be stated in 
international [or USP] units per pound; 
   
  (-b-) (No change.) 
   
  (-c-) vitamin D, for other uses, shall be stated in terms of international [or 
USP] units per pound; 
   
  (-d-) vitamin E shall be stated in international [or USP] units per pound; 
   
  (-e-)-(-f-) (No change.) 
     
  (II) (No change.) 
     
  (vii) The analysis shall include the <nl>minimum percentage<ol> total sugars 
as invert on products being sold for their molasses content or products 
containing more than 16% sugars. 
   
  (viii) (No change.) 
   
  (ix) Microorganisms need not be guaranteed when the commercial feed is 
intended for a purpose other than to furnish these substances and no other 
specific label claims are made. When guaranteed, the units shall be colony 
forming units (CFU) per gram if directions for use are in grams or in CFU per 
pound when directions for use are in pounds. <nl>A parenthetical statement 
following guarantee shall list each species in order of predominance. 
   
  <nl>(x)<nl> Other required and voluntary guarantees should follow in a general 
format such that the units of measure used to express guarantees (percentage, 
parts per million, international units, etc.) are listed in a sequence which 
provides a consistent grouping of the units of measure. 
     
  (B)-(D) (No change.) 
   
  (E) Exemptions are as follows. 
 
  (i)-(iv) (No change.) 
   
  <nl>(v)<nl> The purpose statement may be excluded from the label if the 
product name includes a description of the species and animal class(es) for 
which the product is intended. 
   
  <nl>(vi)<nl> A mineral guarantee is not required when the feed is intended or 
represented for zoo and/or laboratory animals and contains less than 6.5% 
minerals. 
       
  (5) (No change.) 
   
  (6) Directions for use and cautionary statements. 
 
  (A)-(B) (No change.) 
   
  (C) Feeds containing urea or other non-protein nitrogen products. 
 
  (i) All mixed feeds containing urea or other non-protein nitrogen products  
<nl>except those which comply with clause (iv) of this subparagraph<ol> shall 
have included on their label: 
 
  (I)-(III) (No change.) 
     
  (ii)-(iv) (No change.) 
     
  (D) (No change.) 
     
  (7) (No change.) 
   
  <nl>(8) Net Weight. 
 
  <nl>(A) Net weight must be expressed both in English and in SI units 
 
  <nl>(i)<nl> when the net weight is expressed in pounds, the corresponding SI 
units shall be in kilograms and vice-versa; 
   
  <nl>(ii)<nl> when the net weight is expressed in ounces, the corresponding SI 
units shall be in grams; 
   
  <nl>(iii)<nl> any fractional number which arises expressing the net weight in 
both systems shall be limited to two decimal places and the number rounded down. 
     
  <nl>(B) Measurement 
 
  <nl>(i)<nl> Packages, dry and liquid bulk shall be determined directly from 
scales or for bulk liquids only as calculated from volume and specific 
gravity/density. 
   
  <nl>(ii)<nl> Conformance to weight guarantee shall be judged solely by use of 
certified scale defined in accordance with Texas Department of Agriculture 
standards. 
   
  <nl>(iii)<nl> Dip-sticks, uncertified/uncalibrated meters or sight gauges 
shall not be used to estimate volume. Scales not certified in accordance with 
the Texas Department of Agriculture standards shall not be used for net weights. 
   
  <nl>(iv)<nl> Net weights shall meet both the English and SI statements on the 
label. 
 
  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 College Station, Texas, on November 1, 1994. 
 TRD-9450329 
  George W. Latimer, Jr. 
 Texas State Chemist 
 Texas Feed and Fertilizer Control Service 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (409) 845-1121 
         
                   Chapter 63. Pet Food 
  
  4 TAC sec.sec.63.1-63.9, 63.20 
 
  The Office of the Texas State Chemist/Texas Feed and Fertilizer Control 
Service proposes amendments to sec.sec.63.1-63.5 and sec.63.7 and new sec.63.6, 
sec.63.8-63.9 and sec.63.20, concerning Pet Food Rules. Section 141.004 TAC 
requires that "to the extent practicable, rules that define and establish 
minimum standards for commercial feed must be in harmony with the Official 
Standards of the Association of American Feed Control Officials." After 
discussion with the pet food industry, the Association has substantially changed 
its standards as expressed in its model bill. These amendments reflect those 
changes differing only where Texas precedent and long-standing practice would 
not make change practical. 
 Dr. George W. Latimer, Jr., state chemist, has determined that for the first 
five year period the rules are in effect, there will not be fiscal implications 
for state or local government as a result of enforcing or administering the 
section. 
 Dr. Latimer also has determined that for the first five years the rules are in 
effect, the public benefit anticipated as a result of enforcing the section as 
proposed will be to enable Texas manufacturers to compete with other 
manufacturers from other states in the marketplace. There is no anticipated 
economic cost to persons who are required to comply with the section as proposed 
because most pet food manufacturers are already complying. 
 Comments on the proposal may be submitted to Dr. George W. Latimer, Jr., Office 
of the Texas State Chemist, P.O. Box 3160, College Station, Texas 77841-3160. 
 The amendments and new sections are proposed under Texas Agriculture Code 141, 
sec.141.004 which provides Texas Feed and Fertilizer Control Service with the 
authority to adopt rules relating to the distribution of commercial feeds. 
 The Texas Agriculture Code, Chapter 141, Subchapter C (Texas Commercial Feed 
Control Act) is affected by these amendments. 
 
 
  sec.63.1. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
  <nl>   AAFCO Nutritional Task Force-The Nutritional Task Force appointed by 
the Association of American Feed Control Officials (AAFCO). 
   
  <nl>   AAFCO Dog and Cat Food Nutritional Profiles -Practical standard 
nutrient profiles for dog and cat foods based on commonly used ingredients. 
   
  <nl>   Immediate container -means the unit, can, box, tin, bag or other 
receptacle or covering in which a pet food is displayed for sale to retail 
purchasers, but does not include containers used as shipping containers. 
   
   Information panel -Information panel as defined by 21 Code of Federal 
Regulation <nl>sec.501.2<ol> [sec.501.1]. 
   
  <nl>   Ingredient Statements -means a collective and contiguous listing on the 
label of the ingredients of which the pet food is composed. 
   
  <nl>   National Research Council-The National Research Council of the National 
Academy of Sciences. 
   
   Principal display panel-Principal display panel as defined by 21 Code of 
Federal Regulation  <nl>sec.501.1<ol> [sec.501.2]. 
   
  <nl>   Quantity Statement -means the net weight (mass), net volume (liquid or 
dry) or count. 
 
   
  sec.63.2. Label Format and Labeling. 
 
  (a) The <nl>quantity<ol> statement [of net content] and product name must be 
shown on the principal display panel. All other required information may be 
placed elsewhere on the label but shall be sufficiently conspicuous as to render 
it easily read by the average purchaser under ordinary conditions of purchase 
and sale. 
   
  (b) The <nl>quantity statement <ol> [declaration of the net content] shall be 
made in conformity with the United States Fair Packaging and Labeling Act, 15 
United States Code sec.1451, et seq, and the regulations promulgated thereunder 
<nl>and if not in units of net weight, the manufacturer shall have: 
 
  (1)-(2) (No change.) 
     
  (c) The information which is required to appear in the "Guaranteed Analysis" 
shall be listed in the following order: 
 
  (1) crude protein (minimum <nl>percentage <ol> [amount]); 
   
  (2) crude fat (minimum <nl>percentage<ol> [amount]); 
   
  (3) crude fiber (maximum <nl>percentage <ol> [amount]); 
   
  (4) moisture (maximum <nl>percentage<ol> [amount]); 
   
  (5) (No change.) 
     
  (d)-(k) (No change.) 
   
  (l) The label of a pet food shall not contain an unqualified representation or 
claim, directly or indirectly, that the pet food therein contained or a 
recommended feeding thereof, is or meets the requisites of a complete, perfect, 
scientific, or balanced ration for dogs or cats unless such product or feeding: 
 
  (1) contains ingredients in quantities sufficient to <nl>meet<ol> [provide] 
the [estimated] nutrient requirements for all <nl>life<ol> stages [of the life 
of a dog or cat]  <nl>established by the AAFCO Dog or Cat Food Nutrient 
Profiles<ol>, as the case may be, <nl>or some other FFCS-recognized authority on 
animal nutrition<ol> [which have been established by a recognized authority on 
animal nutrition,] such as the Committee on Animal Nutrition of the National 
Research Council [provided however, that] to the extent that the product's 
ingredients provide nutrients in amounts which substantially deviate from those 
nutrient requirements estimated by such a recognized authority on animal 
nutrition, or in the event that no estimation has been made by a recognized 
authority on animal nutrition of the requirements of animals for one or more 
stages of said animals' lives, the product's represented capabilities in this 
regard must have been demonstrated by adequate testing; or 
   
  (2) contains a combination of ingredients which when fed to a normal animal as 
the only source of nourishment  <nl>in accordance with the testing procedures 
established by AAFCO, meets the criteria of such testing procedures for all life 
stages<ol> [will provide satisfactorily for fertility of females, gestation and 
lactation, normal growth from weaning to maturity without supplementary feeding, 
and will maintain the normal weight of an adult animal whether working or at 
rest and has its capabilities in this regard demonstrated by adequate testing]. 
     
  (m) Labels for products which are compounded for or which are suitable for 
only a limited purpose (i.e., a product designed for the feeding of puppies) may 
contain representations that said pet food product or recommended feeding 
thereof, is or meets the requisites of a complete, perfect, scientific, or 
balanced ration for dogs or cats only: 
 
  (1) (No change.) 
   
  (2) such qualified representations may appear on pet food labels only if: 
 
  (A) the pet food contains ingredients in quantities sufficient to <nl>meet<ol> 
[satisfy] the [estimated] nutrient requirements established by <nl>the AAFCO Dog 
or Cat Food Nutrient Profiles, as the case may be, or some other FFCS-recognized 
authority on animal nutrition,<ol> [a recognized authority on animal nutrition,] 
such as the Committee on Animal Nutrition of the National Research Council for 
such limited or qualified purpose; or 
   
  (B) (No change.) 
       
  (n) Except as specified by sec.63.3(a), of this title (relating to Brand and 
Product Names), the name of any ingredient which appears on the label other than 
in the product name shall not be given undue emphasis so as to create the 
impression that such an ingredient is present in the product in a larger amount 
than is the fact, <nl>the aforementioned ingredient shall constitute at least 
3.0% of the total ingredients (exclusive of water for processing) when preceded 
by the designation "with" or like term, the name shall be in the same size, 
style and color print,<ol> and if the names of more than one such ingredient are 
shown, they shall appear in the order of their respective predominance by weight 
in the product. 
   
  (o) The label of a dog or cat food, other than one prominently identified as a 
snack or treat as part of the designation required upon the principal display 
panel under subsection (k) of this section, shall bear, on either the principal 
display panel or the information panel, in type of a size reasonably related to 
the largest type on the panel, a statement of the nutritional adequacy or 
purpose of the product. Such statement shall consist of one of the following: 
 
  (1) a claim that the pet food meets or exceeds the requirements of one or more 
of the recognized categories of nutritional adequacy: gestation, lactation, 
growth, maintenance, and complete for all life stages as those categories are 
set forth in subsections (l) and (m) of this section[;]<nl>. The claim shall be 
stated as one of the following: 
 
  <nl>(A) (Name of Product) is formulated to meet the nutritional levels 
established by the AAFCO Dog (or Cat) Food Nutrient Profiles for. (Blank is to 
be completed by using the stage or stages of the pet's life, such as gestation, 
lactation, growth, maintenance, or the words "All Life Stages.") 
   
  <nl>(B) Animal Feeding tests using AAFCO procedures substantiates that (name 
of product) provides complete and balanced nutrition for. (Blank is to be 
completed by using the stage or stages of the pet's life tested, such as 
gestation, lactation, growth, maintenance or the words "All Life Stages.") 
     
  (2) (No change.) 
   
  (3) the statement: "Use only as directed by your veterinarian," if it is a 
<nl>pet<ol> [dietary animal] food product intended for use by, or under the 
supervision or direction of, a veterinarian <nl>and shall make a statement in 
accordance with paragraph (1) or (4) of this subsection. 
   
  (4) (No change.) 
     
  <nl>(p) The use of claims on pet food labels stating improvement or newness 
shall be sufficiently substantiated by the manufacturer and limited to six 
months production. The use of claims stating preference or comparative attribute 
claims shall be sufficiently substantiated by the manufacturer and limited to 
one year production after which the claim must be removed or resubstantiated. 
   
  <nl>(q) Dog and cat foods labeled as complete and balanced for any or all 
life's stages as provided in subsection (o)(1) of this section except those pet 
foods labeled in accordance with subsection (o)(3) of this section shall list 
feeding directions on the product label. These directions shall be expressed in 
common terms and shall appear prominently on the label. Feeding directions 
shall, at a minimum state "Feed (weight/unit of product) per (weight unit) of 
dog (or cat)." 
 
     
  sec.63.3. Brand and Product Names. 
 
  (a)-(e) (No change.) 
   
  (f) When an ingredient or combination of ingredients [derived from animals, 
poultry, or fish] constitutes at least 25% but less than 95% of the total weight 
of all ingredients of a <nl>dog or cat<ol> [pet] food mixture, the name or names 
of such ingredient(s) may form a part of the product name of the pet food  
<nl>if each of the ingredients constitute at least 3.0% of the product weight 
excluding water used for processing and<ol> only if the product name also 
includes a primary descriptive term such as <nl>"dinner," "platter, " or similar 
designation<ol> ["meatballs" or "fishcakes"] so that the product name describes 
the contents of the product in accordance with an established law, custom, or 
usage or so that the product name is not misleading. <nl>If the names of more 
than one such ingredient are shown, they shall appear in the order of their 
respective predominance by weight in the product. <ol> All such ingredient names 
and primary descriptive terms shall be in the same size, style, and color print. 
For the purpose of this provision, water sufficient for processing shall be 
excluded when calculating the percentage of the named ingredient(s). However, 
such named ingredient(s) shall constitute at least 10% of the total product. 
   
  (g) (No change.) 
 
     
  sec.63.4. Expression of Guarantees. 
 
  (a) (No change.) 
   
  (b) <nl>Pursuant to Texas Commercial Feed Control Act, sec.141.002(d), the<ol> 
[The] label of a pet food which is formulated as and represented to be a mineral 
[additive] supplement shall include in the guaranteed analysis the minimum and 
maximum percentages of calcium, the minimum percentage of phosphorus, and the 
minimum and maximum percentages of salt. The minimum content of all other 
essential nutrient elements recognized by the <nl>AAFCO Dog or Cat Food Nutrient 
Profile or FFCS-recognized nutrient profile<ol> [National Research Council] from 
sources declared in the ingredients statement shall be expressed as the element 
in units <nl>specified in the recognized nutrient profile<ol> [of measurement 
established by a recognized authority on animal nutrition such as the National 
Research Council].  <nl>Products labeled as per sec.63.2(b) of this title 
(relating to Label Format and Labeling) may express the mineral guarantees in 
milligrams (mg) per unit (e.g., tablets, capsules, granules or liquids) 
consistent with those employed in the quantity statement and directions for use. 
Liquids expressed as volume must also list a weight equivalent (e.g., 1 fluid 
ounce = 28 grams). 
   
  (c) The label of pet food which is formulated as and represented to be a 
vitamin supplement, shall include a guarantee of the minimum content of each 
vitamin declared in the ingredients statement. <nl>Vitamin guarantees shall be 
expressed as per subsection (d) of this section. Products labeled as per 
sec.63.2(b) of this title (relating to Label Format and Labeling) may express 
the vitamin guarantees in approved units per unit (e.g., tablets, capsules, 
granules or liquid) consistent with those employed in the quantity statement and 
directions for use. Liquids expressed as volume must also list a weight 
equivalent (e.g., 1 fluid ounce = 28 grams).<ol> [Such guarantees shall be 
stated in units of measurements established by a recognized authority on animal 
nutrition such as the National Research Council.] 
   
  (d) <nl>Vitamins guaranteed on pet food labels shall be stated in 
international units per kilogram (IU/kg) for vitamins A, D, and E. All other 
vitamins shall be guaranteed in milligrams per kilogram (mg/kg) except vitamins 
which may be guaranteed in micrograms per kilogram (mcg/kg)<ol> [The vitamin 
potency of pet food products distributed in containers smaller than one pound 
may be guaranteed in approved units per ounce]. 
   
  (e) If the label of a pet food does not represent the pet food to be either a 
vitamin or a mineral supplement, but does include a table of comparison of a 
typical analysis of the vitamin, mineral, or nutrient content of the pet food 
with levels recommended by <nl>an AAFCO-recognized <ol> [a recognized] animal 
nutrition authority, such comparison may be stated in the units of measurement 
used <nl>in the AAFCO Dog or Cat Food Nutrient Profiles<ol> [by the recognized 
authority on animal nutrition such as the National Research Council]. The 
statement in a table of comparison of the vitamin, mineral or nutrient content 
shall constitute a guarantee, but need not be repeated in the guaranteed 
analysis. Such table of comparison may appear on the label separate and apart 
from the guaranteed analysis. 
   
  <nl>(f) The use of percentages or words of similar import when referring to 
nutrient levels established by the AAFCO Dog or Cat Food Nutrient Profile or 
other recognized nutrient profile shall not be permitted on pet food labels 
except that such direct comparisons in whole or part of the individual nutrient 
contents of a pet food with those recommended by the recognized nutrient profile 
may be made where the comparisons are expressed in the same quantitative units 
as those used by the cited nutrient profile and 
 
  <ol>(1) the product in question meets the nutrient profile recommended by the 
authority; and 
   
  <nl>(2) the comparison is prescribed by a statement to that effect. 
 
       
  sec.63.6. Directions for Use. The label of a pet food product which is 
suitable only for intermittent or supplemental feeding or for some other limited 
purpose shall: 
 
  (1) (No change.) 
   
  (2) contain specific feeding directions which clearly state that the product 
should be used only in conjunction with other foods. 
 
     
  sec.63.7. Drugs and Pet Food Additives. 
 
  (a) (No change.) 
   
  (b) Prior to approval of a registration application and approval of a label 
for pet food which contains additives (including drugs, other special purpose 
additives, or nonnutritive additives), the distributor may be required to submit 
evidence to prove the safety and efficacy of the pet food, when used according 
to directions furnished on the label. Satisfactory evidence of the safety and 
efficacy of a pet food may be: 
 
  (1) when the pet food contains such additives, the use of which conforms to 
the requirements of the applicable regulation in the C.F.R., Title 21, or which 
are "prior sanctioned" or "generally recognized as safe" for such use; or 
   
  (2) when the pet food itself is a drug and is generally recognized as safe and 
effective for label use or is marketed subject to an application approved by the 
Food and Drug Administration under <nl>Title<ol> 21 United States Code 
<nl>sec.360(b) <ol> [sec.355 or sec.357]. 
     
  (c) (No change.) 
 
     
  sec.63.8. Application for Registration. 
 
  (a) Each brand and product name of a pet food must be registered before it may 
be distributed. 
   
  (b) All labeling information shall be submitted with the application for 
registration. 
   
  (c) The Service may require the applicant to present evidence of authorization 
to use a registered trademark or other labeling reference as a condition for 
registration and that the ownership of such trademark, if referenced, appear 
inconspicuously both as to size or type and location on the label (or labeling) 
and that components of such trademark product be determinable by laboratory 
methods. 
   
  (d) The net weight shall be provided as a condition for registration of 
specialty products packaged and marketed in containers weighing one pound or 
less whose quantity statement is declared in conformance with sec.63.2(b) of 
this title (relating to Label Format and Labeling). 
 
     
  sec.63.9. Statement of Caloric Content. The label of a dog or cat food may 
bear a statement of caloric content, provided: 
 
  (1) The statement shall be separate and distinct from the "Guaranteed 
Analysis" and shall appear under the heading "Caloric Content"; and 
   
  (2) The statement shall be measured in terms of metabolizable energy (ME) on 
as fed basis and must be expressed as "kilocalories per kilogram" ("kcal/kg") of 
product, and may also be expressed as kilocalories per familiar household 
measure (e.g., cans, cups, pounds): and 
   
  (3) An affidavit shall accompany the request for label review or registration, 
substantiating that the caloric content was determined: 
 
  (A) by calculation using the following "Modified Atwater" formula: ME 
(kcal/kg) = 10 (3.5 x CP) + (8.5 x CF) + (3.5 x NFE) where CP = % crude protein 
as fed CF = % crude fat as fed NFE = % nitrogen-free extract (carbohydrate) as 
fed and the percentages of CP and CF are the arithmetic averages from proximate 
and the percentages of CP and CF are the arithmetic averages from proximate 
analyses of at least four production batches of the product, and the NFE is 
calculated as the difference between 100 and the sum of CP, CF, and the 
percentages of crude fiber, moisture and ash (determined in the same manner as 
CP and CF). The results of all the analyses used in the calculation must 
accompany the affidavit, and the claim on the label or other labeling must be 
followed parenthetically by the word "calculated"; 
   
  (B) in accordance with a testing procedure established by the Association of 
American Feed Control Officials. The summary data used in the determination of 
calorie content must accompany the affidavit. The value stated on the label 
shall not exceed or understate the value determined in accordance with paragraph 
(3)(A) of this section by more than 15%; and 
     
  (4) Comparative claims shall not be false, misleading or given undue emphasis 
and must be based on the same methodology for both products. 
 
     
  sec.63.20. Compliance with Texas Commercial Feed Rules. <ol> The Pet Food 
Rules are a subset of the Feed Rules issued under the authority of Texas 
Commercial Feed Act, sec.141.004; they do not replace them. Registrants are 
expected to comply with the applicable sections of those rules where the Pet 
Food Rules are silent. 
 
  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 College Station, Texas, on November 1, 1994. 
 TRD-9450338 
  George W. Latimer, Jr. 
 Texas State Chemist 
 Texas Feed and Fertilizer Control Service 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (409) 845-1121 
         
               
  TITLE 16. ECONOMIC REGULATION 
 Part VI. Texas Motor Vehicle Commission 
  Chapter 105. Advertising 
  
  16 TAC sec.105.12, sec.105.26 
 
  The Texas Motor Vehicle Board proposes amendments to sec.105.12, concerning 
Advertising at Cost or Invoice, and sec.105.26 to track the amendments to the 
Consumer Leasing Act. 
 The proposed amendment to sec.105.12(b), prohibits the use of the terms 
"invoice" and "invoice price" in new motor vehicle dealer advertisements. 
 Section 105.26 is amended by adding subsection (b) which authorizes dealers, 
who advertise payment amount, number of payments or refer to down payments in a 
consumer lease, to disclose required information by means of a toll-free 
telephone number or reference to a written advertisement that is in general 
circulation in the community served by the radio station. The required 
information includes a declaration that the transaction is a lease, the total 
initial payment, if any, payment amounts and schedule along with a total of all 
payments, a declaration of whether the lease includes an option to purchase, and 
whether the consumer has any liability at the end of the lease and the amount, 
or the formula for determining the amount, of such liability. 
 Brett Bray, director, Motor Vehicle Division, has determined that for the first 
five-year period the sections are in effect there will be no fiscal implications 
for the state or local government as a result of enforcing or administering the 
sections. 
 Mr. Bray also has certified that there will be no significant impact on local 
economies or overall employment as a result of enforcing or administering the 
sections. 
 The suggested public benefit anticipated as a result of amending these 
provisions will be uniformity of Texas Motor Vehicle Board rules with Federal 
Judicial decrees that invoice advertising is inherently deceptive, and 
conformity with the Federal Community Development and Regulatory Improvement Act 
of 1994, which already authorizes the alternate methods of lease term disclosure 
that is contemplated by the proposed amendment. There will be no effect on small 
businesses and no anticipated economic cost to persons who are required to 
comply with the sections as proposed. 
 Comments on the proposal may be submitted to Brett Bray, Division Director, 
Motor Vehicle Division, Texas Department of Transportation, P.O. Box 2293, 
Austin, Texas 78768, (512) 476-3587. The deadline for comments is January 6, 
1995. 
 The amendments are proposed under the Texas Motor Vehicle Commission Code, 
sec.3.06, which provides the Board with authority to adopt rules necessary and 
convenient to effectuate the provisions of the Act and to govern practice and 
procedure before the agency. 
 Motor Vehicle Commission Code, sec.5.01(2) and sec.5.01(5), is affected by the 
proposed amendments. 
 
 
  sec.105.12. Advertising at Cost or Invoice. 
 
  (a) (No change.) 
   
  (b) The use of the term "invoice" or "invoice price" in advertising <nl>shall 
not be used.<ol> [must be in reference to the manufacturer's or distributor's 
total invoice price on a vehicle without dealer added accessories and services 
and such advertisement shall clearly and conspicuously include one of the 
following disclosures: 
 
  [(1) "The invoice may not represent actual dealer cost;" or 
   
  [(2) "Actual dealer cost may vary from invoice."] 
 
       
  sec.105.26. Payment Disclosures -Lease. 
 
  <nl>(a) An advertisement that promotes a consumer lease and contains any one 
of the following messages, statements or terms: 
 
  (1) the amount of any payment; 
   
  (2) the number of required payments; or 
   
  (3) a statement that any down payments or no down payment, or other payment, 
is required at the beginning of the lease must include the following: 
 
  (A)  a statement that the transaction advertised is a lease; 
   
  (B) the total amount of any payment (such as security deposit or capitalized 
cost reduction) required at the beginning of the lease, or a statement that no 
such payment is required; 
   
  (C) the number, amounts, due dates or periods of scheduled payments, and the 
total of these payments under the lease; 
   
  (D)  a statement explaining whether the customer has the option to purchase 
the leased property and, if so, at what time and price. The method of 
determining the price may be substituted for disclosure of the price; and 
   
  (E) a statement of the amount (or method of determining the amount) of any 
liabilities the lease imposes upon the customer at the end of the term. If the 
customer has this liability, the ad also must include a statement that the 
customer is responsible for any difference between the estimated value of the 
leased property and its realized value at the end of the lease term. 
       
  <nl>(b) An advertisement that promotes a consumer lease by a radio broadcast 
and includes any of the information in subsection (a)(1)-(3) of this section may 
disclose the information required in subsection (a)(3)(A)-(E) of this section by 
means of a referral to: 
 
  <nl>(1) a toll-free telephone number. The toll-free telephone number may be 
used by a consumer to obtain the information required in subsection (a)(A)-(E) 
of this section and the lessor who offers the consumer lease shall establish the 
toll-free telephone number not later than the date of the radio broadcast and 
the lessor must maintain the toll-free telephone number for not less than ten 
days, beginning on the date of the radio broadcast. The information shall be 
provided orally or, if requested by the consumer, in written form; or 
   
  <nl>(2) a written advertisement. The written advertisement must appear in a 
publication in general circulation in the community served by the radio station 
in which the advertisement is broadcast during the period beginning three days 
before the broadcast and ending ten days after the broadcast. The name and dates 
of the publication must be disclosed within the radio broadcast. 
 
  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 8, 1994. 
 TRD-9450671 
  Diane L. Northam 
 Legal Executive Assistant 
 Texas Motor Vehicle Commission 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-8630 
         
                   
  TITLE 19. EDUCATION 
 Part I. Texas Higher Education Coordinating Board 
  Chapter 1. Agency Administration 
  
  Subchapter B. Hearings and Appeals 
 
  19 TAC sec.1.22 
 
  The Texas Higher Education Coordinating Board proposes an amendment to 
sec.1.22, concerning Agency Administration (Hearings and Appeals). The 
amendments to the rules are necessary to implement the State Postsecondary 
Review Program (a federal program) and establish the guidelines under which the 
State Postsecondary Review Entity will review institutions of higher education 
in the state. The rules will guide the activities of the State Postsecondary 
Review Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rule is in effect that there will be fiscal 
implications as a result of enforcing the rule as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rule will be in 
effect. The effect on small business is that this rule is promulgated under the 
authority of the Texas Tax Code, Title 2; therefore no analysis of the effect on 
small business is required. The cost compliance with the rule for small business 
will be contingent on the nature of non-compliance with the standards. For those 
institutions fully complying with federal regulations relating to Title IV, 
Higher Education Act (HEA) programs, additional cost of compliance with the new 
rules will be limited to the cost of assembling and copying documents requested 
for the reviews. Other institutions may be required to update their catalogs, 
improve building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rule as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The amendment is proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning Agency 
Administration (Hearings and Appeals). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.1.22. Scope and Purpose. 
 
  (a) This subchapter shall govern the proceedings in all contested cases before 
the board <nl>except contested cases arising under the SPRP program. Rules 
governing SPRP program are at Chapter 7 of this Title. 
   
  (b) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 8, 1994. 
 TRD-9450690 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
               Chapter 7. State Postsecondary Review Program 
  
  Subchapter A. General Provisions 
 
  19 TAC sec.sec.7.1-7.5 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.1-7.5, 
concerning State Postsecondary Review Program (SPRE) (General Provisions). The 
new rules are necessary to implement the State Postsecondary Review Program (a 
federal program) and establish the guidelines under which the State 
Postsecondary Review Entity will review institutions of higher education in the 
state. The rules will guide the activities of the State Postsecondary Review 
Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that these rules is promulgated under 
the authority of the Texas Tax Code, Title 2; therefore no analysis of the 
effect on small business is required. The cost compliance with the rules for 
small business will be contingent on the nature of non-compliance with the 
standards. For those institutions fully complying with federal regulations 
relating to Title IV, Higher Education Act (HEA) programs, additional cost of 
compliance with the new rules will be limited to the cost of assembling and 
copying documents requested for the reviews. Other institutions may be required 
to update their catalogs, improve building maintenance, increase financial 
strength or hire qualified administrative and instructional staff. The cost of 
compliance per hour of labor will vary by type of program the institution 
offers. Highly technical and mechanical programs may be more equipment intensive 
than other programs. Generally the cost of compliance for small business is 
expected to be approximately equal to the cost for large business, given the 
similar nature of programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (General Provisions). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.1. Definitions.  The following words and terms, when used in this 
subchapter, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   ALJ-Administrative Law Judge employed by the State Office of Administrative 
Hearings. 
   
   Academic year- 
 
  (A) A period that begins on the first day of classes and ends on the last day 
of classes or examinations and that is a minimum of 30 weeks (except as provided 
in 34 Code of Federal Regulations, sec.668.3) of instructional time during which 
for an undergraduate education program, a full-time student is expected to 
complete at least: 
 
  (i) twenty-four semester or trimester hours or 36 quarter hours in an 
educational program whose length is measured in credit hours; or 
   
  (ii)  nine hundred clock hours in an educational program whose length is 
measured in clock hours. 
     
  (B) For purposes of this definition a week is a consecutive seven-day period. 
For an educational program using a semester, trimester, or quarter system or an 
educational program using clock hours, the Secretary considers a week of 
instructional time to be any work in which at least one day of regularly 
scheduled instruction, examination, or preparation for examinations occurs. For 
an educational program using credit hours but not using a semester, trimester, 
or quarter system, the Secretary considers a week of instructional time to be 
any week in which at least five days of regularly scheduled instruction, 
examinations, or preparation for examination occurs. Instructional time does not 
include periods of orientation, counseling, vacation, or other activity not 
related to class preparation or examinations. 
     
   Accredited-The status of public recognition which a nationally-recognized 
accrediting agency or association grants to an institution, school, or 
educational program which meets certain established qualifications and 
educational standards. 
   
   Act-The Higher Education Act of 1965, as amended. 
   
   Board-The Texas Higher Education Coordinating Board. 
   
   Board staff-Board-employed staff members or others who function as a part of 
the standards review team, peer review team, or other staff who have the 
responsibility of carrying out the functions of the State Postsecondary Review 
Program for the State of Texas. 
   
   Branch campus-A location of an institution that is geographically apart and 
independent of the main campus of the institution. The Secretary considers a 
location of an institution independent of the main campus if the location: 
 
  (A) is permanent in nature; 
   
  (B)  offers courses in educational programs leading to a degree, certificate, 
or other recognized educational credential; 
   
  (C) has its own faculty and administrative or supervisory organization; and 
   
  (D) has its own budgetary and hiring authority. 
     
   Campus-based programs -Includes: 
 
  (A) the Federal Perkins Loan program (34 Code of Federal Regulations, Part 
674); 
   
  (B)  the Federal Work-Study (FWS) program (34 Code of Federal Regulations, 
Part 675); and 
   
  (C) the Federal Supplemental Educational Opportunity Grant (FSEOG) program (34 
Code of Federal Regulations, Part 676). 
     
   Certify or certification -To attest to the truth in a signed document. 
   
   CIP-Classification of Instructional Programs-A manual published by the U.S. 
Department of Education, National Center for Education Statistics, that lists 
the codes, titles, and descriptions of educational programs used by institutions 
and States for reporting and analyzing education data at the national level. 
This manual can be obtained at the United States Department of Education, 
Outreach Division, OERI, 55 New Jersey Avenue, Northwest, Room 300, Washington, 
D.C. 20208. 
   
   Clock hour-A period of time consisting of: 
 
  (A) a 50-minute to 60-minute class, lecture, or recitation in a 60-minute 
period; 
   
  (B) a 50-minute to 60-minute faculty-supervised laboratory, shop training, or 
internship in a 60-minute period; or 
   
  (C) sixty minutes of preparation in a program of study by correspondence. 
     
   Cohort default rate-A percentage obtained by the formula defined in 34 Code 
of Federal Regulations, sec.668.17(e) and amended by the Student Right-to-Know 
Act of 1990, as amended. 
   
   Commissioner-The Commissioner of Higher Education, The Texas Higher Education 
Coordinating Board. 
   
   Completion rate -A percentage obtained by the formula defined in 34 Code of 
Federal Regulations, sec.668.8(f) and amended by the Student Right-to-Know Act 
of 1990, as amended. 
   
   Compliance guideline -The state-defined criteria for finding an institution 
to be conforming to the rules and regulations of the federal and state SPRE 
standards. 
   
   Conference-Proceeding to determine whether there was sufficient evidence to 
support a final report that finds an institution out of compliance with the 
Review Standards and which directs an institution to come into compliance with 
the Review Standards. 
   
   Conference officer -The individual appointed by the Board to preside over 
conferences. 
   
   Contested case -A proceeding in which the legal rights, duties, or privileges 
of a party are to be determined by the Board after an opportunity for 
adjudicative hearing. Control, controlling, controlled by, and under common 
control with-The possession, direct or indirect, of the power to direct or cause 
the direction of the management and policies of a person, whether through the 
ownership of voting securities, by contract or otherwise. 
   
   Cost of attendance -An estimate of the student's educational expenses for a 
specific period of enrollment as prescribed in Part F, sec.472 of the HEA. It is 
generally the sum of tuition and fees, room and board, books and supplies, 
transportation, personal expenses, and if applicable, allowances for dependents 
and those expenses related to a specific disability. 
   
   Dependent student -Any student who does not qualify as an independent student 
(see Independent student). 
   
   Designated department official-An official of the U.S. Department of 
Education to whom the Secretary has delegated responsibilities indicated in this 
part. 
   
   Direct loan-A loan made under Title IV-E of the HEA after June 30, 1972, that 
does not satisfy the definition of Federal Perkins Loan. 
   
   Educational program -A legally authorized postsecondary program of organized 
instruction or study which leads to an academic or professional degree, 
vocational certificate, or other recognized educational credential. 
   
   Eligible institution -Includes: 
 
  (A) an institution of higher education, as defined in 34 Code of Federal 
Regulations, sec.600.4; 
   
  (B) a proprietary institution of higher education, as defined in 34 Code of 
Federal Regulations, sec.600.5; and 
   
  (C) a postsecondary vocational institution, as defined in 34 Code of Federal 
Regulations, sec.600.6. 
     
   Eligible program -An educational program provided by a participating 
institution in Title IV, HEA funds and satisfies other requirements contained in 
34 Code of Federal Regulations,  s668.8. 
   
   Enrolled-The status of a student who: 
 
  (A) has completed the registration requirements (except for the payment of 
tuition and fees) at the institution that he or she is attending; or 
   
  (B) has been admitted into an educational program offered predominantly by 
correspondence and has submitted one lesson, completed by him or her after 
acceptance for enrollment and without the help of a representative of the 
institution. 
     
   Factors of financial responsibility-Requirements prescribed in 34 Code of 
Federal Regulations, sec.668.15(b)(1)-(f)(3). 
   
   Fair and equitable refund policy-A refund policy of an institution or branch 
campus congruous with the requirements prescribed in 34 Code of Federal 
Regulations, sec.668.22(b). 
   
   Federal Consolidation Loan program-The loan program authorized by Title IV-B, 
sec.428C, of the HEA that encourages the making of loans to borrowers for the 
purpose of consolidating their repayment obligations, with respect to loans 
received by those borrowers while they were students, under the Federal Insured 
Student Loan (FISL) program as defined in 34 Code of Federal Regulations, Part 
682, the Federal Stafford Loan, Federal PLUS (as in effect before October 17, 
1986), Federal SLS, ALAS (as in effect before October 17, 1986), Federal Direct 
Student Loan, and Federal Perkins Loan programs, and under the Health 
Professions Student Loan (HPSL) program authorized by Subpart II of Part C of 
Title VII of the Public Health Service Act, for parent Federal PLUS borrowers 
whose loans were made after October 17, 1986, and for Higher Education 
Assistance Loans (HEAL) authorized by Subpart I of Part A of Title VII of the 
Public Health Services Act. 
   
   Federal Direct Student Loan (FDSL) program -The student loan program 
authorized on July 23, 1992, by Title IV-D of the HEA. Federal Direct PLUS loans 
and Federal Direct Stafford loans are made under this program. 
   
   Federal Family Educational Loan (FFEL) programs -The loan programs (formerly 
called the Guaranteed Student Loan Programs) authorized by Title IV-B of the 
HEA, including the Federal Stafford Loan, Federal PLUS, Federal SLS, and Federal 
Consolidation Loan programs, in which lenders use their own funds to make loans 
to enable students or their parents to pay the costs of the students' attendance 
at eligible institutions. Federal Stafford loans, Federal PLUS loans, Federal 
SLS loans, and Federal Consolidation loans are made under this program. 
   
   Federal Parent Loans for Undergraduate Students (PLUS) Loan program-The loan 
program authorized by Title IV-B, sec.428B of the HEA, that encourages the 
making of loans to parents of dependent undergraduate students. Before October 
17, 1986, the Federal PLUS program also provided for making loans to graduate, 
professional, and independent undergraduate students. Before July 1, 1993, the 
Federal PLUS program also provided for making loans to parents of dependent 
graduate students. Federal PLUS loans are made under this program. 
   
   Federal Pell Grant program-The grant program authorized by Title IV-A-1 of 
the HEA. 
   
   Federal Perkins Loan program-The student loan program authorized by Title IV-
E of the HEA after October 16, 1986. Loans made under this program are made to 
cover the cost of attendance for a period of enrollment beginning on or after 
July 1, 1987, to individuals who on July 1, 1987, had no outstanding balance of 
principal or interest owing on any loan previously made under Title IV-E of the 
HEA. 
   
   Federal Stafford Loan program-The loan program authorized by Title IV-B 
(exclusive of sec.sec.428A, 428B, and 428C) that encourages the making of 
subsidized Federal Stafford and unsubsidized Federal Stafford loans as defined 
in 34 Code of Federal Regulations, Part 682 to undergraduate, graduate, and 
professional students. Federal Stafford loans (subsidized and/or unsubsidized) 
are made under this program. 
   
   Federal Supplemental Educational Opportunity Grant (FSEOG) program-The grant 
program authorized by Title IV-A-2 of the HEA. 
   
   Federal Supplemental Loans for Students (SLS) program-The loan program 
(formerly called the ALAS program) authorized by Title IV-B, sec.428A, of the 
HEA that encourages the making of loans to graduate, professional, independent 
undergraduate, and certain dependent undergraduate students. Federal SLS loans 
are made under this program, but are no longer available as of July 1, 1993. 
   
   Federal Work-Study (FWS) program-The part-time employment program for 
students authorized by Title IV-C of the HEA. 
   
   Final determination -A written document sent to the institution and to the 
Secretary containing the Board's conclusion after affording notice and an 
opportunity for hearing relative to the institution's continued participation in 
Title IV, HEA programs. 
   
   Final report-The report of the Board's findings after reconsideration of the 
initial report based on evidence provided by an institution; or, if an 
institution fails to respond to the initial report within the time required by 
Board, the initial report becomes the final report the day after the expiration 
of the last day to file a response. 
   
   Full-time student -An enrolled student who is carrying a full-time academic 
workload (other than by correspondence) as determined by the institution under a 
standard applicable to all students enrolled in a particular educational 
program. The student's workload may include any combination of courses, work, 
research, or special studies that the institution considers sufficient to 
classify the student as a full-time student. However, for an undergraduate 
student, an institution's minimum standard must equal or exceed one of the 
following minimum requirements: 
 
  (A) 12 semester hours or 12 quarter hours per academic term in an educational 
program using a semester, trimester, or quarter system; 
   
  (B)  24 semester hours or 36 quarter hours per academic yearfor an educational 
program using credit hours but not using a semester, trimester, or quarter 
system, or the prorated equivalent for a program of less than one academic year; 
   
  (C) 24 clock hours per week for an educational program using clock hours; 
   
  (D) in an educational program using both credit and clock hours, any 
combination of credit and clock hours where the sum of the following functions 
is equal to or greater than one: 
 
  (i) for a program using a semester, trimester, or quarter system, number of 
credit hours per term/12 + number of clock hours per week/24; 
   
  (ii) for a program not using a semester, trimester, or quarter system, number 
of semester or trimester hours per academic year/24 + number of quarter hours 
per academic year/36 + number of clock hours per week/24; 
     
  (E) a series of courses or seminars that equal 12 semester hours or 12 quarter 
hours in a maximum of 18 weeks; or 
   
  (F) the work portion of a cooperative education program in which the amount of 
work performed is equivalent to the academic workload of a full-time student. 
     
   Graduation rate -For purposes of SPRP, graduation rate is the same as 
completion rate. 
   
   HEA-The Higher Education Act of 1965, as amended. 
   
   Hearing-A contested case proceeding at which all parties are given the 
opportunity to produce evidence, examine witnesses, and make argument. 
   
   Income Contingent Loan (ICL) program-The student loan program authorized by 
Title IV-D of the HEA prior to July 23, 1992. 
   
   Independent student -A student who qualifies as an independent student under 
sec.480(d) of the HEA. 
   
   Initial report -The first report of the findings of the Board staff after 
review of a referred institution. 
   
   Initiating official -The designated department official authorized to begin 
an emergency action under 34 Code of Federal Regulations, sec.668.83. 
   
   Institution- 
 
  (A) An institution of higher education as defined in 34 Code of Federal 
Regulations, sec.600.4; 
   
  (B)  a proprietary institution of higher education as defined in 34 Code of 
Federal Regulations, sec.600.5; and 
   
  (C) a postsecondary vocational institution as defined in 34 Code of Federal 
Regulations, sec.600.6. The term also includes the governing board of any such 
entity. 
     
   Investigation-A close examination and systematic inquiry undertaken to 
discover facts and information regarding circumstances relevant to a student 
complaint. 
   
   Legally authorized -The legal status granted to an institution through a 
charter, license, or other written document issued by the appropriate agency or 
official of the State in which the institution is physically located. 
   
   Licensure examination pass rate-A percentage obtained by dividing the total 
number of students in a specific institution or branch campus who passed a 
licensing examination during the reporting year of January 1 through December 31 
by the total number of students taking the licensing examination from that 
institution during that same period. 
   
   Limitation-A restriction of participation in the Title IV, HEA program for 
violations of provisions and regulations of the program. Limitation may include: 
 
  (A) a limit on the number or percentage of students enrolled in an institution 
who may receive Title IV, HEA program funds; 
   
  (B) a limit, for a stated period of time, on the percentage of an 
institution's total receipts from tuition and fees derived from Title IV, HEA 
program funds; or 
   
  (C) other conditions described in 34 Code of Federal Regulations, sec.668.93 
or by the Secretary of the U.S. Department of Education. Removal of a limitation 
cannot occur for at least 12 months from the effective date of the limitation. 
     
   NOICC-National Occupational Information Coordinating Committee. An agency 
jointly sponsored by the U.S. Departments of Education and Labor to facilitate 
comparisons between educational programs and related occupations and to provide 
information to State employment counseling services. 
   
   NOICC Master Crosswalk-A computerized database that shows the relationships 
among major occupational and educational systems used by the Federal government. 
This database can be obtained from the National Crosswalk Service Center, Iowa 
SOICC, 200 East Grand Avenue, Des Moines, Iowa 50309, (515) 242-4881. 
   
   National Defense Student Loan program-The student loan program authorized by 
Title II of the National Defense Education Act of 1958. 
   
   National Direct Student Loan (NDSL) program -The student loan program 
authorized by Title IV-E of the HEA between July 1, 1972, and October 16, 1986. 
   
   National Early Intervention Scholarship and Partnership (NEISP) program-The 
scholarship program authorized by Chapter 2 of Subpart 1 of Title IV-A of the 
HEA. 
   
   Nationally recognized accrediting agency or association -An agency or 
association that the Secretary has recognized to accredit or preaccredit a 
particular category or institution, school, or educational program in accordance 
with the provisions contained in 34 Code of Federal Regulations, Part 603. The 
Secretary periodically publishes a list of those nationally recognized 
accrediting agencies and associations in the Federal Register. 
   
   Nonprofit institution -An institution that: 
 
  (A)  is owned and operated by one or more nonprofit corporations or 
associations, no part of the net earnings of which benefits any private 
shareholder or individual; 
   
  (B) is legally authorized to operate as a nonprofit organization by each State 
in which it is physically located; and 
   
  (C) is determined by the U.S. Internal Revenue Service to be an organization 
to which contributions are tax deductible in accordance with sec.501(c)(3) of 
the Internal Revenue Code. 
     
   One-third of an academic year-A period that is at least one-third of an 
academic year as determined by an institution. At a minimum, one-third of an 
academic year must be a period that begins on the first day of classes and ends 
on the last day of classes or examinations and is a minimum of ten weeks of 
instructional time during which, for an undergraduate educational program, a 
full-time student is expected to complete at least eight semester or trimester 
hours or 12 quarter hours in an educational program whose length is measured in 
credit hours or 300 clock hours in an educational program whose length is 
measured in clock hours. For an institution whose academic year has been reduced 
under 34 Code of Federal Regulations,  s668.3, one-third of an academic year is 
the prorated equivalent, as measured in weeks and credit or clock hours, of at 
least one-third of the institution's academic year. 
   
   One-year training program-An education program that is at least: 
 
  (A) 24 semester or trimester hours or units, or 36 quarter hours or units, at 
an institution using credit hours or units to measure academic progress; 
   
  (B) nine hundred clock hours of supervised training at an institution using 
clock hours to measure academic progress; or 
   
  (C) nine hundred clock hours in a program of study by correspondence. 
     
   Ownership or ownership interest-A legal or beneficial interest in an entity, 
or a right to share in the profits derived from the operation of an entity. This 
does not include the interests of a mutual fund that is regularly and publicly 
traded, of an institutional investor, or of a profit-sharing plan in which all 
employees of an entity may participate. 
   
   Participating institution -An eligible institution that meets the standards 
for participation in Title IV, HEA programs in Subpart B, and has a current 
program participation agreement with the Secretary. 
   
   Party-Each person or agency named or admitted as a party to a hearing. 
   
   Peer review-Review conducted by the peer review team of the content and 
quality of the educational programs offered by a referred institution. 
   
   Peer review team-The group of individuals with which the Board contracts to 
perform a peer review of a referred institution. 
   
   Placement rate -A percentage obtained by the formula defined in 34 Code of 
Federal Regulations, sec.668.8(g), as amended by the Student Right-to-Know Act 
of 1990, as amended. Generally, it is determined by dividing the total number of 
students who obtained gainful employment in the recognized occupation for which 
they were trained by the total number of students who completed the training. 
   
   Preaccredited-A status that: 
 
  (A) a nationally recognized accrediting agency or association, recognized by 
the Secretary to grant that status, has accorded an unaccredited public or 
private nonprofit institution that is progressing toward accreditation within a 
reasonable period of time; and 
   
  (B) the Secretary determines is the exclusive indication under 
sec.435(b)(5)(A) and 1201(a)(5)(A) of the HEA that an institution will meet the 
accreditation standards of a nationally recognized accrediting agency or 
association within a reasonable time. 
     
   Presidential Access Scholarship (PAS) program-The scholarship program 
authorized by Chapter 3 of Subpart 1 of Title IV-A of the HEA. 
   
   Professional program -An undergraduate or graduate educational program that: 
 
  (A) is listed in the CIP; and 
   
  (B)  prepares individuals for an occupation, if that occupation: 
 
  (i)  requires at least a bachelor's degree to qualify for entry; 
   
  (ii)  involves the independent practice or application of a defined or 
organized body of competencies that is unique to the occupation; and 
   
  (iii) is formally recognized and regulated under a national or State 
licensure, accreditation, or permit system. 
       
   Program of study by correspondence-An educational program offered principally 
by mail by an institution. Under this type of program, the institution prepares 
lesson materials and mails them to the student in a sequential and logical 
order. The student completes the lessons and mails them back to the institution 
within a specified period of time. The program may include a required period of 
residential training. 
   
   Recognized equivalent of a high school diploma - 
 
  (A)  A General Education Development (GED) Certificate; or 
   
  (B) a State certificate received by a student after the student has passed a 
State authorized examination which the State recognizes as the equivalent of a 
high school diploma. 
     
   Recognized occupation -An occupation that is: 
 
  (A)  listed in an occupational division of the latest edition of the 
Dictionary of Occupational Titles, published by the U.S. Department of Labor; or 
   
  (B)  determined by the Secretary in consultation with the Secretary of Labor 
to be a recognized occupation. 
     
   Records-A collection of items of information treated as a unit. 
   
   Referral-A recommendation by the Secretary or by the Board that an 
institution be reviewed to determine compliance with review standards. 
   
   Referred institution -An institution that: 
 
  (A)  the Secretary has referred to the Board for review; or 
   
  (B) the Board has selected for review. 
     
   Regular student -A person who is enrolled or accepted for enrollment at an 
institution for the purpose of obtaining a degree, certificate, or other 
recognized educational credential offered by that institution. 
   
   Resolution-A recommended course of action or response made subsequent to an 
investigation of a student complaint. 
   
   Review-An evaluation of a referred institution conducted by the standards 
review or peer review team using the review standards contained in this Chapter. 
   
   Review standards -The performance measures upon which referred institutions 
shall be evaluated by the standards review team. 
   
   SOAH-The Texas State Office of Administrative Hearings. 
   
   SPRE-The Texas Higher Education Coordinating Board in its capacity as the 
State Postsecondary Review Entity. 
   
   SPRP-The State Postsecondary Review Program, as regulated by the federal 
government in 34 Code of Federal Regulations, Part 667, which implements the 
program that is the subject of this Chapter. 
   
   SPRP coordinator -The individual designated by the institution to serve as 
the SPRP agent and contact for the institution. 
   
   Secretary-The U.S. Secretary of Education. 
   
   Six-hundred hour course or Six-month training program-See Two-thirds of an 
academic year. 
   
   SOICC (also referred to as the state-verified NOICC) -Texas State 
Occupational Information Coordinating Committee. 
   
   Standards of administrative capability-Requirements prescribed in 34 Code of 
Federal Regulations,  s668.16(a)-(n), as amended by the Student Right-to-Know 
Act of 1990, as amended. 
   
   Standards review team-Those individuals appointed to conduct reviews of 
referred institutions based on the standards set forth at Subchapter C. 
   
   State-A State of the Union, American Samoa, the Commonwealth of Puerto Rico, 
the District of Columbia, Guam, the Trust Territories of the Pacific Islands, 
the Virgin Islands, and the Commonwealth of the Northern Mariana Islands. 
   
   State Student Incentive Grant (SSIG) program -The grant program authorized by 
Title IV-A-3 of the HEA. 
   
   Student Right-to-Know Act of 1990-Student Right-to-Know and Campus Security 
Act of 1990 (Public Law 101-542, amended by Public Law 102-26) and appropriate 
federal regulations. 
   
   Suspension-Suspension removes an institution's participation in Title IV, HEA 
programs for a period not to exceed 60 days, unless a limitation or termination 
proceeding has begun. Suspension actions are used when a school can be expected 
to correct a program violation in a short time. 
   
   Termination-A termination ends an institution's participation in the Title 
IV, HEA programs. Additional prohibitions include making new commitments for 
funds, providing guarantee commitments, or disbursing funds. Reinstatement 
cannot occur for at least 18 months, even if the school changes ownership. 
   
   Title IV, HEA program-Any student financial assistance program authorized by 
Title IV of the Higher Education Act of 1965, as amended. Title IV, HEA programs 
include: 
 
  (A) the Federal Pell Grant program; 
   
  (B) the National Early Intervention Scholarship and Partnership program 
(NEISP); 
   
  (C) the Presidential Access Scholarship program (PAS); 
   
  (D) the Federal Supplemental Educational Opportunity Grant (FSEOG) program; 
   
  (E) the State Student Incentive Grant (SSIG) program; 
   
  (F)  the Federal Stafford Loan program; 
   
  (G) the Federal Supplemental Loans for Students (SLS) program; 
   
  (H) the Federal Parent Loans to Undergraduate Students (PLUS) program; 
   
  (I) the Federal Consolidation Loan program; 
   
  (J) the Federal Work-Study (FWS) program; 
   
  (K)  the Federal Direct Student Loan (FDSL) program; and 
   
  (L) the Federal Perkins Loan program. 
     
   Two-thirds of an academic year-A period that is at least two-thirds of an 
academic year as determined by an institution. At a minimum, two-thirds of an 
academic year must be a period that begins on the first day of classes and ends 
on the last day of classes or examinations and is a minimum of 20 weeks of 
instructional time during which, for an undergraduate educational program, a 
full-time student is expected to complete at least 16 semester or trimester 
hours or 24 quarter hours in an educational program whose length is measured in 
credit hours or 600 clock hours in an educational program whose length is 
measured in clock hours. For an institution whose academic year has been reduced 
under sec.668.3, two-thirds of an academic year is the prorated equivalent, as 
measured in weeks and credit or clock hours, of at least two-thirds of the 
institution's academic year. 
   
   Undergraduate-A regular student who is enrolled in an undergraduate course of 
study and who has not earned a baccalaureate or first professional degree 
(degrees offered by professional programs). 
   
   Vocational program -An educational program, below the bachelor's level, 
designed to prepare individuals with the skills and training required for 
employment in a specific trade, occupation, or profession related to the 
educational program. 
   
   Withdrawal rate -A percentage obtained by the formula found in 34 Code of 
Federal Regulations, sec.668.16(l), as amended by the Student Right-to-Know Act 
of 1990, as amended. Generally, it is determined by dividing the number of 
undergraduate regular students who officially withdrew (excluding those who were 
entitled to a refund of 100% of tuition and fees, and other specific kinds of 
students) by the number of undergraduate regular students who were enrolled 
during an academic year or appropriate eight-month period. 
 
   
  sec.7.2. Scope and Purpose. The rules in this Chapter implement the State 
Postsecondary Review Program (SPRP) authorized under Title IV of the Act, (Part 
H, Subpart 1 of the Higher Education Act of 1965, as amended). This Chapter 
applies to all institutions participating in Title IV, HEA programs. The rules 
in this Chapter implement standards and procedures required by the U. S. 
Department of Education by federal regulation. Fifty-nine Federal Register<ol> 
22286-22311 (1994) to be codified at 34 Code of Federal Regulations, sec.667.1 
et. seq. Where indicated in these rules, federally required criteria and 
provisions are incorporated by reference. 
 
   
  sec.7.3. Institutions Subject to SPRP. All institutions which participate in 
Title IV, HEA programs are subject to the provisions of this Chapter. 
 
   
  sec.7.4. Complaint Procedures. 
 
  (a) Complaints regarding institutions shall be made in writing. At its 
discretion, the Board may accept an oral complaint. If made orally, Board staff 
will reduce the complaint to writing, including the complainant's name, unless 
the Board staff member determines that the nature of the complaint warrants 
anonymity. The Board staff will track complaints by institution name. 
   
  (b) If the complaint relates to an institution's management of Title IV, HEA 
programs, or to advertising or promotion of educational programs, the Board 
staff shall: 
 
  (1) invite the institution to respond to the complaint; 
   
  (2)  if appropriate, recommend options for resolution of the complaint; and 
   
  (3) notify the Secretary of complaints. 
     
  (c) The Board staff will refer all other complaints to an appropriate 
institution or authority. 
 
     
  sec.7.5. Institution Obligations. 
 
  (a) Each institution subject to this Chapter shall designate a SPRP 
coordinator and furnish in writing to the Board staff the name and telephone 
number of that person. The Board staff: 
 
  (1) may refer complaints to the coordinator if the referral might resolve the 
complaint without jeopardizing the complainant's relationship with the 
institution; and 
   
  (2) shall utilize the coordinator as the institutional contact for the review 
teams or Board staff. 
     
  (b) Each institution shall notify students of their rights to complain to the 
Board staff regarding the institution's management of Title IV, HEA programs or 
its advertising or promotion of its educational programs. The notification must 
be published in the institution's catalog or posted in a prominent campus 
location frequented by a significant student population. 
 
  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 8, 1994. 
 TRD-9450684 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
             
  Subchapter B. Institutional Reviews 
 
  19 TAC sec.sec.7.21-7.25 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.21-7.25, 
concerning State Postsecondary Review Program (Institutional Reviews). The new 
rules are necessary to implement the State Postsecondary Review Program (a 
federal program) and establish the guidelines under which the State 
Postsecondary Review Entity will review institutions of higher education in the 
state. The rules will guide the activities of the State Postsecondary Review 
Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that this rules is promulgated under the 
authority of the Texas Tax Code, Title 2; therefore no analysis of the effect on 
small business is required. The cost compliance with the rules for small 
business will be: contingent on the nature of non-compliance with the standards. 
For those institutions fully complying with federal regulations relating to 
Title IV, HEA programs, additional cost of compliance with the new rules will be 
limited to the cost of assembling and copying documents requested for the 
reviews. Other institutions may be required to update their catalogs, improve 
building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (Institutional Reviews). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.21. Reviews Based on Secretary Referral. 
 
  (a) The criteria upon which the Secretary will refer an institution to the 
Board or upon which the Board staff will request approval from the Secretary for 
review have been mandated by the U.S. Department of Education, 59 Federal 
Register<ol> 22291 (1994) to be codified at 34 Code of Federal Regulations, 
sec.667.5. The criteria are listed in paragraphs (1)-(11) of this subsection . 
 
  (1) The institution has a cohort default rate equal to or greater than 25%. 
   
  (2) The institution: 
 
  (A) has a cohort default rate equal to or greater than 20%; and 
   
  (B) during the latest completed award year for which data are available: 
 
  (i) more than two-thirds of the institution's undergraduate students who were 
enrolled as at least half-time students received assistance under any Title IV, 
HEA program, excluding assistance received from the SSIG, NEISP, and Federal 
PLUS programs; or 
   
  (ii) the amount that the institution's students received under the Title IV, 
HEA programs, excluding funds from the SSIG, NEIDP and Federal PLUS programs, is 
equal to or greater than two-thirds of the institution's education and general 
expenditures. 
       
  (3) The amount that the institution's students received under the Federal Pell 
Grant program is equal to or greater than two-thirds of the institution's 
education and general expenditures. 
   
  (4) The Secretary initiated a limitation, suspension, or termination action 
against the institution under 34 Code of Federal Regulations, Part 668, Subpart 
G, within the preceding five years. 
   
  (5)  An audit finding in the institution's two most recent audits under 34 
Code of Federal Regulations, sec.668.23 resulted in a required repayment by the 
institution of an amount greater than 5.0% of the funds the institution received 
under the Title IV, HEA programs for any one award year covered by those audits. 
   
  (6) The Secretary cited the institution for its failure to submit an 
acceptable audit report by the deadlines established under 34 Code of Federal 
Regulations, sec.668.23. 
   
  (7) The amount that the institution's students received: 
 
  (A) under the Federal Pell Grant program during any award year differed by 
more than 25% from the amount that the institution's students received under 
that program in the preceding award year, unless the differences can be 
accounted for by changes in that program; 
   
  (B) under the Federal Stafford Loan program during any award year differs by 
more than 25% from the amount that the institution's students received under 
that program in the preceding year, unless the differences can be accounted for 
by changes in that program; or 
   
  (C) under the Federal SLS program during any award year differs by more than 
25% from the amount that the institution's students received under that program 
in the preceding award year, unless the differences can be accounted for by 
changes in that program. 
     
  (8) The institution failed to meet the factors of financial responsibility in 
34 Code of Federal Regulations, Part 668, Subpart B. 
   
  (9) The institution underwent a change in ownership that resulted in a change 
of control as defined in 34 Code of Federal Regulations, sec.600.31. 
   
  (10) Except with regard to any public institution affiliated with a State 
system of higher education, the institution has participated for less than five 
years in: 
 
  (A) the Federal Pell Grant program; 
   
  (B)  the FFEL program; 
   
  (C) the FSEOG program; 
   
  (D) the FWS program; or 
   
  (E) the Federal Perkins Loan program. 
     
  (11) The institution has been subject to: 
 
  (A) a pattern of complaints from students related to its management or conduct 
of the Title IV, HEA programs; or 
   
  (B) misleading or inappropriate advertising and promotion of the institution's 
educational programs that, in the Secretary's judgement, based on information 
available to the Secretary, including information provided to the Secretary by 
the SPRE, is sufficient to warrant review. 
       
  (b) If an institution in this State is a branch campus or additional location 
of a Secretary-referred institution that has its main campus located in another 
State, that branch or additional location, if referred by the Secretary, shall 
be subject to review by the Board, in accordance with the standards of review 
established under Subchapters C and D of this chapter (relating to State Review 
Standards and Peer Review Standards). The Board may: 
 
  (1) review that branch campus or additional location before a SPRE review is 
conducted of the main campus of that institution; 
   
  (2) delay its review of that branch campus or additional location until a SPRE 
review is conducted of the main campus of that institution; or 
   
  (3) choose not to review that branch campus or additional location if: 
 
  (A) the SPRE of the State in which the main campus is located reviews that 
institution and makes no significant findings; and 
   
  (B) the allotment of this State is insufficient to allow the Board to review 
all referred institutions. 
       
  (c)  The Commissioner is entitled to enter into an agreement with the SPREs of 
other States which may alter the review responsibilities of the various SPREs 
with respect to the review of institutions with locations in more than one 
State. 
 
     
  sec.7.22. Reviews Initiated by the Board. 
 
  (a) The Board may review an institution under this part that was not referred 
by the Secretary if: 
 
  (1) the Board: 
 
  (A) either: 
 
  (i) determines that the institution meets a referral criterion in sec.7.21 of 
this title (relating to reviews based on Secretary referral), based on more 
recent data available to the Board; or 
   
  (ii) has reason to believe the institution is engaged in fraudulent practices; 
and 
     
  (B) requests the Secretary to approve its review of that institution; and 
     
  (2) the Secretary: 
 
  (A) approves that request; or 
   
  (B) does not respond to the Board's request within 21 calendar days after the 
date the Secretary receives that request. 
       
  (b) If, under subsection (a)(1)(A) of this section, the Board selects an 
institution for review, before the Secretary is requested to approve that 
review, the Board shall: 
 
  (1)  notify the institution of the selection and provide the institution with 
the reasons for its selection; and 
   
  (2) delay its review request to the Secretary if the Board receives a notice 
from the institution, no later than seven calendar days after the institution 
receives the notice from the Board, challenging the accuracy of the information 
on which the selection was based. 
 
       
  sec.7.23. Challenge to Selection for Review by the Board. 
 
  (a)  If an institution wishes to challenge the accuracy of the information on 
which its referral was based, it shall submit a notice of challenge no later 
than seven calendar days from the day the institution receives notice from the 
Board of the selection. The Board shall delay its review request to the 
Secretary upon receipt of a timely notice of challenge. 
   
  (b) The institution has the burden of proving that the information was 
inaccurate. 
   
  (c) If an institution challenges the accuracy of its cohort default rate for a 
particular year under 34 Code of Federal Regulations, sec.668.17(d) (1)(i)(A) 
and (B), it must file a timely appeal of that rate under those provisions. 
   
  (d) For purposes of subsection (b) of this section, the Board shall presume 
that records maintained in the normal course of business by the U.S. Department 
of Education, a guaranty agency under the FFEL programs, a SPRE, a State-
licensing agency, or another State agency are accurate. 
   
  (e) To challenge the accuracy of the information on which its referral was 
based, the Board must receive no later than 30 calendar days after the 
institution receives the notice described in subsection (a) of this section the 
institution's submission, along with any supporting document or record. 
   
  (f) If the institution timely challenges its referral under subsection (e) of 
this section, the Board requests a review of the institution from the Secretary 
unless the institution convinces the Board that its selection was based upon 
inaccurate information. 
   
  (g) Documents referenced in this section may be hand-delivered or mailed. 
 
  (1) If documents are mailed, they must be mailed certified mail, return 
receipt requested, or by next-day mail or delivery service. 
   
  (2) If documents are mailed, proof of receipt shall be evidenced by the 
delivery date indicated on the U.S. Postal Service return receipt card, or the 
pick-up date indicated on the next-day mail or delivery service's bill. 
   
  (3) For purposes of paragraph (2) of this subsection, if any submission is 
sent by next-day mail service, the Board shall presume that the document was 
submitted on the date which appears on the U.S. Postal Service postmark or, if 
delivered by private courier, the pick-up date which appears on the delivery 
receipt. 
 
       
  sec.7.24. Priorities for Reviews. 
 
  (a) The Board may determine that an institution shall be reviewed before or 
instead of another institution that has also met one or more of the criteria for 
review under sec.7.21 of this title (relating to reviews based on Secretary 
referral) or sec.7.22 of this title (relating to reviews initiated by the 
Board). The determination shall be based on the criteria prioritized according 
to the following list. 
 
  (1)  Referred institutions that the Secretary has scheduled for 
recertification under 34 Code of Federal Regulations, Part 668, Subpart B will 
be reviewed first. 
   
  (2) There is a pattern of student complaints related to management or conduct 
of Title IV funds or misleading or inappropriate advertising and promotion 
practices. 
   
  (3) A limitation, suspension, or termination action has been initiated. 
   
  (4) There is a default rate equal to or greater than 25%. 
   
  (5)  There is a failure to meet factors of financial responsibility. 
   
  (6)  One or both of the two most recent audits results in a required repayment 
of an amount greater than 5.0% of the Title IV funds received for any award 
year. 
   
  (7) There is a default rate of 20% or more with two-thirds of the students on 
Title IV funds, or the amount of Title IV funds (excluding SSIG, NEISP and 
Federal Plus programs) is equal to or greater than two-thirds of the 
institution's education and general expenditures. 
   
  (8) There has been a change in ownership of the institution. 
   
  (9) The institution has participated in Title IV programs for less than five 
years. 
   
  (10) The amount of Pell Grant funds is equal to or greater than the 
institution's education and general expenditures. 
   
  (11) There has been a citation for failure to submit audits. 
   
  (12) There has been a fluctuation of more than 25% of Title IV funds in the 
preceding award year for Federal Pell Grants, Federal Stafford loans, or under 
the Federal SLS program. 
   
  (13) There has been a change of ownership or a citation for failure to submit 
audits, and the Board has previously reviewed the institution for the same 
reason and found no significant violations of standards. 
     
  (b)  Review priorities also may be affected by the following factors: 
 
  (1)  multiple triggers; 
   
  (2) volume of students and dollars affected; or 
   
  (3) geographic proximity of referred institutions. 
 
       
  sec.7.25. Notice to Accrediting Agency. 
 
  (a) If an institution is referred for review under  s7.22(a)(1)(A)(i), of this 
title (relating to Reviews), the Board staff shall notify a nationally-
recognized accrediting agency when it plans to conduct a review of an 
institution accredited or preaccredited by that agency; and 
   
  (b) after conducting a review of the institution, the Board staff shall notify 
the accrediting agency of its findings and the actions the Board takes, or plans 
to take, as a result of those findings. 
 
  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 8, 1994. 
 TRD-9450685 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
             
  Subchapter C. State Review Standards and Procedures 
 
  19 TAC sec.sec.7.41-7.43 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.41-7.43, 
concerning State Postsecondary Review Program (State Review Standards and 
Procedures). The new rules are necessary to implement the State Postsecondary 
Review Program (a federal program) and establish the guidelines under which the 
State Postsecondary Review Entity will review institutions of higher education 
in the state. The rules will guide the activities of the State Postsecondary 
Review Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that these rules is promulgated under 
the authority of the Texas Tax Code, Title 2; therefore no analysis of the 
effect on small business is required. The cost compliance with the rules for 
small business will be: contingent on the nature of non-compliance with the 
standards. For those institutions fully complying with federal regulations 
relating to Title IV, HEA programs, additional cost of compliance with the new 
rules will be limited to the cost of assembling and copying documents requested 
for the reviews. Other institutions may be required to update their catalogs, 
improve building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (State Review Standards and Procedures). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.41. Review Personnel. <ol> Board staff shall: 
 
  (1)  conduct institutional reviews to determine whether such institutions are 
in compliance with the standards set forth in sec.7.42 of this title (relating 
to state review standards); and 
   
  (2) prepare initial and final reports. 
 
     
  sec.7.42. State Review Standards. 
 
  (a) Availability of information. 
 
  (1) Review Standard Number 1. An institution shall publish and make available 
to prospective and enrolled students catalogs and other appropriate documents 
which provide accurate and current information regarding, but not necessarily 
limited to, clearly stated admissions requirements; academic calendar; program 
and course descriptions; schedules of tuition and fees; course cancellation 
policies; financial aid; refunds; withdrawals; policies for academic progress 
and dismissal; standards of student conduct including student rights and 
responsibilities; disciplinary procedures; rules and regulations of the 
institution that relate to students; enrollment agreements as applicable; and 
institutional and State complaint procedures. 
   
  (2) Compliance Guideline Number 1. An institution shall be considered in 
compliance if the information required by Review Standard Number 1 is documented 
in the catalog or other form, and it is available for distribution to 
prospective and enrolled students. 
   
  (3) References. See subsection (b)(1) of this section (Review Standard Number 
2). 
     
  (b)  Accuracy of information. 
 
  (1) Review Standard Number 2. An institution's course and program descriptions 
shall represent actual course and program content. 
   
  (2) Compliance Guideline Number 2. An institution's description of its courses 
and educational programs will be considered accurate unless there is evidence to 
the contrary. 
   
  (3)  References. 59 Federal Register <ol> 22426 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.14(b)(9)(10)(i); 34 Code of Federal 
Regulations, Subpart D sec.sec.668.41-668.44 (1993); 34 Code of Federal 
Regulations, Subpart F,  ssec.668.71-668.74 (1993); and HEA, Part G, sec.485(a) 
codified at 20 United States Code, sec.1092(a) (1994). 
     
  (c) Standards for admission. 
 
  (1) Review Standard Number 3. An institution shall publish and consistently 
apply standards for admission to the institution and to specific programs where 
standards differ from general admissions requirements. The standards shall be 
based on a student's ability to complete successfully the course of study for 
which he or she has applied as demonstrated by possessing one or more of the 
following: 
 
  (A) a high school transcript, diploma, or high school equivalency diploma; 
   
  (B)  an official academic transcript from an accredited institution of higher 
education; 
   
  (C) passing scores on independently administered tests approved by the 
Secretary of Education; or 
   
  (D) by satisfying other appropriate admissions requirements and/or placement 
standards. 
     
  (2)  Compliance Guideline Number 3. An institution shall be considered in 
compliance if the school's records show its admissions decisions are based on 
its published admissions policy which must include one or more of paragraph (1) 
(A)-(D) of this subsection. 
   
  (3) References. 34 Code of Federal Regulations, sec.668.7(b) (1993); 59 
Federal Register<ol> 22337 (1994) to be codified at 34 Code of Federal 
Regulations, sec.600.5; and 59 Federal Register<ol> 22339 (1994) to be codified 
at 34 Code of Federal Regulations, sec.600.7. 
     
  (d) Standards of academic progress. 
 
  (1) Review Standard Number 4. The institution shall have a written policy that 
defines acceptable academic progress and at least once in an academic year shall 
review the progress of all regular students to determine whether standards of 
academic progress are being achieved. The policy shall specify the range of 
actions the institution may take if satisfactory academic progress is not 
achieved. 
   
  (2) Compliance Guideline Number 4. An institution shall be considered in 
compliance if it has a written policy defining acceptable academic progress and 
all regular students are reviewed in accordance with this policy at least once 
in an academic year. 
   
  (3) References. 59 Federal Register <ol> 22295 (1994) to be codified at 34 
Code of Federal Regulations, sec.667.21(b)(3); 34 Code of Federal Regulations, 
sec.668.7(c) (1993); and 59 Federal Register<ol> 22431 (1994) to be codified at 
34 Code of Federal Regulations, sec.668.16(e). 
     
  (e) Record maintenance. 
 
  (1) Review Standard Number 5. The institution shall maintain records for each 
student that document admission status, course work completed, and formal 
educational attainments to include: transcripts that contain a student's name, 
address, and social security number; dates of attendance and completion or 
termination; a copy of the enrollment agreement (if any); a record of all 
courses (including remedial courses) taken at the institution; a record of any 
credit granted; the total number of credit or clock hours of instruction 
received; grades and dates of enrollment for each course or unit of instruction; 
cumulative grade for completed work; an explanation of the grading system; 
financial aid records; and other such student records as prescribed by federal 
laws and regulations. 
   
  (2) Compliance Guideline Number 5. An institution shall be considered in 
compliance if it has records for each student that contain the information 
required in Review Standard Number 5. 
   
  (3) References. 59 Federal Register <ol> 22295 (1994) to be codified at 34 
Code of Federal Regulations, sec.667.21(b)(3); 59 Federal Register <ol> 22440-
22441 (1994) to be codified at 34 Code of Federal Regulations,  s668.23(h)(1) to 
sec.668.24; and 34 Code of Federal Regulations, sec.668.36 (1993). 
     
  (f) Health and safety standards. 
 
  (1) Review Standard Number 6. An institution shall certify and maintain its 
compliance with applicable safety, health, fire, building, and sanitation 
regulations. 
   
  (2) Compliance Guideline Number 6. An institution shall be considered in 
compliance if it provides current certification that there are no citations, or 
if cited, there is a plan for coming into compliance that has been accepted by 
the citing authority. 
   
  (3) References. None are cited. 
     
  (g) Financial and administrative capacity. 
 
  (1) Review Standard Number 7. An institution shall maintain evidence of 
current financial, administrative, and other resources which are adequate to 
ensure satisfactory conduct of its programs and the achievement of its stated 
educational goals in accordance with the requirements of the U.S. Department of 
Education. 
   
  (2) Compliance Guideline Number 7. An institution's financial and 
administrative capacity and resources to conduct its programs shall be 
considered in compliance if they meet or exceed the requirements of the U.S. 
Department of Education. 
   
  (3)  References. 59 Federal Register <ol> 22428-22431 (1994) to be codified at 
34 Code of Federal Regulations,  s668.15; 59 Federal Register <ol> 22431-22433 
(1994) to be codified at 34 Code of Federal Regulations,  s668.16; 59 Federal 
Register <ol> 22439 (1994) to be codified at 34 Code of Federal Regulations, 
sec.668.23; and 59 Federal Register <ol> 22444 (1994) to be codified at 34 Code 
of Federal Regulations, sec.668.82. 
     
  (h)  Contingency for at risk institutions. 
 
  (1) Review Standard Number 8. If, in accordance with Review Standard Number 7, 
the institution is determined to be financially at risk, it shall present a 
written plan which provides for the retention of and accessibility to its 
academic and financial aid records in the event of institutional closure. 
Similarly, the institution shall make reasonable efforts to identify 
opportunities for students to transfer to alternative programs of instruction 
and present a written plan for informing students of their options. 
   
  (2) Compliance Guideline Number 8. An institution shall be considered in 
compliance if it has a written plan which provides for retention of and 
accessibility to its academic and financial aid records in event of 
institutional closure, and it has a written plan that identifies reasonable 
opportunities for students to transfer to alternative programs. For colleges and 
universities whose accreditation is recognized by the Board, credits will be 
assumed to be transferable. For all other institutions, the plan must contain 
evidence of assurance of financial and educational protection of the students. 
   
  (3) References. 59 Federal Register <ol> 22428 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.15(d)-(e). 
     
  (i) Vocational program cost and length. 
 
  (1) Review Standard Number 9. This standard applies to vocational programs 
below the bachelor's degree which have as their objective preparing students for 
gainful employment in specific recognized occupations. For each of these 
programs, the institution shall obtain and make available to students 
information regarding the total costs of tuition and fees for completing the 
program and the average remuneration an employee earns in the occupation for 
which the program is designed to prepare the student. 
 
  (A) The tuition and fees charged a student shall not be excessive. 
   
  (B) See Review Standard Number 11 for length of course; see Review Standard 
Number 17 for placement rates; and for quality of training see sec.7.62 of this 
title (relating to Peer Review Standards). 
     
  (2) Compliance Guideline Number 9. An institution shall be considered in 
compliance if the sum of tuition and fees charged to complete the program does 
not exceed by more than 10% the median charges of other like institutions for 
similar programs on a state or regional basis; and is not greater than a 1:1.5 
ratio with the average earnings for the occupation based on state or regional 
data. For programs one year or less, the earnings period shall be one year. For 
programs longer than one year, the earnings period shall be the same length as 
the vocational program. An institution's tuition and fees shall not be 
considered excessive if the program completers may expect higher long-term 
earnings. 
   
  (3)  References. 59 Federal Register <ol> 22336 (1994) to be codified as 34 
Code of Federal Regulations, sec.600.2; 59 Federal Register <ol> 22337-22341 
(1994) to be codified as 34 Code of Federal Regulations,  ssec.600. 4-600.6; and 
59 Federal Register<ol> 22427 (1994) to be codified as 34 Code of Federal 
Regulations, sec.668.14(b)(26). 
     
  (j) Availability of job market and licensing information. 
 
  (1) Review Standard Number 10. Each institution shall publish and make 
available to prospective and enrolled students in occupational, professional, 
and vocational programs information pertaining to the availability of employment 
opportunities in recognized occupations for which those programs were designed. 
Each institution shall publish and make available to prospective and enrolled 
students information that identifies courses designed to meet the requirements 
for state licensure in its specific occupational, professional, and vocational 
programs. This information shall also specify the relationship of the 
institution's programs and courses to specific Texas licensure requirements. 
   
  (2) Compliance Guideline Number 10. An institution shall be considered in 
compliance if: 
 
  (A) it publishes and makes available to prospective and enrolled students in 
occupational, professional, and vocational programs information pertaining to 
availability of employment opportunities in recognized occupations for which 
those programs were designed; 
   
  (B) it publishes and makes available to prospective and enrolled students 
information that identifies courses designed to meet the requirements for state 
licensure in its specific occupational, professional, and vocational programs; 
and 
   
  (C)  the information specifies the relationship of the institution's programs 
and courses to specific Texas licensure requirements. 
     
  (3) References. 59 Federal Register <ol> 22426 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.14(b)(10)(i)-(ii). 
     
  (k) Appropriateness of required hours. 
 
  (1) Review Standard Number 11. An institution shall maintain and publish 
information specifying the length of its programs. The number of credit or clock 
hours required for the completion of any program shall be consistent with: 
 
  (A) common practice in similar postsecondary education programs; 
   
  (B) state licensing or certification standards; and/or 
   
  (C) accrediting agency requirements. 
     
  (2) Compliance Guideline Number 11. An institution shall be considered in 
compliance if: 
 
  (A) it maintains and publishes information specifying the length of its 
programs; and 
   
  (B) the number of credit or clock hours required for the completion of any 
program is consistent with: 
 
  (i) common practice in similar postsecondary education programs in that the 
length is not more than 10% above the median of similar programs in the state or 
region preparing students for the same occupation; 
   
  (ii) state licensing or certification standards; and/or 
   
  (iii) accrediting agency requirements. 
       
  (3) References. 59 Federal Register <ol> 22421 (1994) to be codified as 34 
Code of Federal Regulations, sec.668.8(a)-(e)(iv) and sec.668.8(k)-(1). 
     
  (l) 600-clock hour program. 
 
  (1) Review Standard Number 12. The 600-clock hour courses shall be of 
appropriate length that is consistent with: 
 
  (A) applicable accrediting or credentialing requirements; 
   
  (B) available industry standards; or 
   
  (C) the length of similar programs in the state or region (by CIP code). 
     
  (2)  Compliance Guideline Number 12. An institution shall be considered in 
compliance if the length of each 600-clock hour program is consistent with 
applicable accrediting or credentialing requirements and/or available industry 
standards. In the absence of such standards then the length shall be comparable 
to the length of similar programs in the state or region (by CIP code). 
   
  (3) References. 59 Federal Register <ol> 22421 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.8(d)-(e)(iv). 
     
  (m)  Management integrity. 
 
  (1) Review Standard Number 13. An institution shall not have an owner, chief 
executive officer, member of a governing board, or shareholder (if applicable) 
who has been either: 
 
  (A)  convicted of, or pled nolo contendere or guilty to, a crime involving the 
acquisition, use, or expenditure of funds; or 
   
  (B) judicially determined to have committed fraud involving funds. 
     
  (2) Compliance Guideline Number 13. An institution shall be considered in 
compliance if it provides current certification that no owner, chief executive 
officer, shareholder or board member has been either convicted of, or pled nolo 
contendere to, a crime involving the acquisition, use, or expenditure of funds 
or judicially determined to have committed fraud involving funds. 
   
  (3)  References. 59 Federal Register <ol> 22339 (1994) to be codified at 34 
Code of Federal Regulations, sec.600.7(a)(3); 59 Federal Register <ol> 22343 
(1994) to be codified at 34 Code of Federal Regulations, sec.600.30(a)(7)) ; 59 
Federal Register <ol> 22426 (1994) to be codified at 34 Code of Federal 
Regulations, sec.668.14(b)(18); 59 Federal Register <ol> 22428 (1994) to be 
codified at 34 Code of Federal Regulations, sec.668.15(c)-(d); and 59 Federal 
Register <ol> 22450 (1994) to be codified at 34 Code of Federal Regulations, 
sec.668.82(a)-(c). 
     
  (n) Complaint procedures. 
 
  (1)  Review Standard Number 14. An institution shall publish and consistently 
administer internal procedures which receive, investigate, and formally respond 
to student complaints. At a minimum, the complaints procedure should process 
complaints concerning the management or conduct of its programs or concerning 
misleading advertisement or promotion of those programs. 
   
  (2)  Compliance Guideline Number 14. An institution shall be considered in 
compliance if it has a procedure for receiving, investigating, and resolving 
student complaints which at a minimum, processes complaints concerning the 
management or conduct of its programs or concerning misleading advertisement or 
promotion of those programs. 
   
  (3) References. 59 Federal Register <ol> 22295 (1994) to be codified 34 Code 
of Federal Regulations, sec.667.21(b)(3). 
     
  (o) Advertising and recruiting practices. 
 
  (1)  Review Standard Number 15. Advertising, promotion, or student recruitment 
practices conducted by or on behalf of an institution shall not be false or 
misleading. 
   
  (2) Compliance Guideline Number 15. An institution shall be considered in 
compliance if information provided to prospective and enrolled students is 
accurate with respect to the costs of attendance, conditions, and benefits of 
the institution and its programs. 
   
  (3)  References. 34 Code of Federal Regulations, sec. s668.71-668.74 (1993); 
59 Federal Register <ol> 22426 (1994) to be codified at 34 Code of Federal 
Regulations, sec.668.14(b)(10); and 59 Federal Register <ol> 22427 (1994) to be 
codified at 34 Code of Federal Regulations, sec.668.14(b)(22). 
     
  (p)  Refund policy. 
 
  (1) Review Standard Number 16. An institution shall publish and consistently 
administer fair and equitable refund policies that include procedures for 
official withdrawal. 
   
  (2) Compliance Guideline Number 16. An institution shall be considered in 
compliance if its refund policy complies with sec.484B of the HEA and the 
relevant implementing regulations with regard to students who receive Title IV 
financial aid. For non-Title IV students, an institution shall be in compliance 
if the refund policy complies with appropriate accrediting agency guidelines or 
other state and federal regulations. 
   
  (3) References. 59 Federal Register <ol> 22436 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.22; and 59 Federal Register <ol> 22453 
(1994) to be codified at 34 Code of Federal Regulations, Appendix A to Part 668. 
     
  (q) Performance outcome measures. 
 
  (1) Review Standard Number 17. An institution's educational programs shall be 
successful as measured by its completion/graduation, withdrawal, placement, and 
licensure examination passage rates. 
   
  (2) Compliance Guideline Number 17. An institution shall be considered in 
compliance if its completion/graduation, withdrawal, placement, and licensure 
examination passage rates are comparable to the same rates at like institutions 
with similar missions, taking into account the selectivity of its admissions 
policies. The Board shall establish and periodically review standards for 
institutions for which there are no comparable data available. 
   
  (3)  References. 59 Federal Register <ol> 22421 (1994) to be codified at 34 
Code of Federal Regulations, sec.668.8(e)-(h); 59 Federal Register <ol> 22431 
(1994) to be codified at 34 Code of Federal Regulations, sec.668.16(l); and HEA, 
Part G,  s485(a) to be codified at 20 United States Code, sec.1092(a) (1994). 
Student Right-to-Know Act of 1990, as amended. 
 
       
  sec.7.43. Procedures for State Reviews. 
 
  (a) Reviews may consist of inspection of documents and records, interviews 
with individuals, and announced and/or unannounced site visits. 
   
  (b) An institution under review shall: 
 
  (1) submit requested records immediately. For records not previously made, the 
institution shall submit records within the time allotted by the coordinator of 
the review; and 
   
  (2) when cited for non-compliance with a review standard and when a course of 
action has been prescribed, the institution shall comply with the performance 
and schedule requirements provided by the Board. 
 
  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 8, 1994. 
 TRD-9450686 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
               
  Subchapter D. Peer Review Standards and Procedures 
 
  19 TAC sec.sec.7.61-7.63 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.61-7.63, 
concerning State Postsecondary Review Program (Peer Review Standards and 
Procedures). The new rules are necessary to implement the State Postsecondary 
Review Program (a federal program) and establish the guidelines under which the 
State Postsecondary Review Entity will review institutions of higher education 
in the state. The rules will guide the activities of the State Postsecondary 
Review Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that these rules is promulgated under 
the authority of the Texas Tax Code, Title 2; therefore no analysis of the 
effect on small business is required. The cost compliance with the rule for 
small business will be: contingent on the nature of non-compliance with the 
standards. For those institutions fully complying with federal regulations 
relating to Title IV, HEA programs, additional cost of compliance with the new 
rules will be limited to the cost of assembling and copying documents requested 
for the reviews. Other institutions may be required to update their catalogs, 
improve building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (Peer Review Standards and Procedures). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.61. Review Personnel. 
 
  (a) The Board shall contract with a group of peer reviewers (peer review team) 
consisting of individuals who have demonstrated to the Board their competence in 
assessing educational programs. 
   
  (b) Under the contract with the Board, the peer review team shall carry out a 
review or provide information from a previous review to the Board regarding the 
assessment of the quality and content of the institution's educational programs 
in relation to achieving the stated objectives for which the programs were 
offered. 
   
  (c) For each educational program, the assessment shall take into account the 
adequacy of the space, equipment, instructional materials, staff, and student 
support services, including student orientation and counseling provided for each 
program, and any other areas specified by the Board. 
 
     
  sec.7.62. Peer Review Standards. 
 
  (a) In the scope of the peer review, the peer review team shall consider the 
standards in this section. 
 
  (1) Faculty qualifications. The character, education, and experience in higher 
education of the faculty shall be such as may reasonably ensure that the 
students will receive an education consistent with the objectives of the course 
or program of study. 
 
  (A) Each faculty member teaching in an associate or baccalaureate level degree 
program shall have at least a master's degree from an institution accredited by 
a recognized agency or a regional accrediting agency with at least 18 graduate 
semester credit hours in the discipline being taught. Furthermore, at least 25% 
of course work in a baccalaureate level major shall be taught by faculty members 
holding doctorates, or other terminal degrees, in the discipline being taught 
from institutions accredited by a recognized agency or a regional accrediting 
agency. Graduate level degree programs shall be taught by faculty holding 
doctorates, or other terminal degrees, in the discipline being taught from 
institutions accredited by a recognized agency or a regional accrediting agency. 
   
  (B) Each faculty member teaching in a proprietary institution of higher 
education in less than associate or baccalaureate level programs shall be 
approved under a variety of specific qualifications. 
 
  (i)  For those institutions under the legislative oversight of the Texas 
Education Agency, faculty shall be approved under those qualifications contained 
in Title 19, Texas Administrative Code, Chapter 175, Subchapter A, 
sec.175.127(b)(1)(B)(ii) and sec.175.130(c)(1) and (d)(1) (West 1994). 
   
  (ii)  For all other institutions, faculty shall comply with applicable minimum 
requirements as adopted by the appropriate regulatory entities. 
       
  (2) Faculty size. There shall be a sufficient number of full-time teaching 
faculty resident and accessible to ensure continuity and stability of the 
education program, adequate educational association between students and faculty 
and among the faculty members, and adequate opportunity for proper preparation 
for instruction and professional growth by faculty members. At the associate and 
baccalaureate levels, there shall be at least one full-time faculty member in 
each program. At the graduate level, there shall be at least four full-time 
faculty members in each program. In proprietary institutions, the school shall 
maintain sufficient and qualified faculty to complete the program during the 
length of time stipulated in the school catalog regardless of class size. As 
determined by the school director, an appropriate number of faculty shall have 
the relevant license or certificate required for the job objective. 
   
  (3) Curriculum. The quality, content, and sequence of each course, curriculum, 
or program of instruction, training, or study shall be appropriate to the 
purpose of the institution and shall be such that the institution may reasonably 
and adequately achieve the stated objectives of the course or program. 
Substantially all of the courses in the areas of specialization required for 
each degree program shall be offered in organized classes by the institution, 
provided such courses are appropriate to the level of the institutions. 
   
  (4) General education. Each associate or baccalaureate degree program shall 
contain a general education component consisting of at least 25% of the total 
hours offered for the program. This component shall be drawn from each of the 
following areas: Humanities and Fine Arts, Social and Behavioral Sciences, and 
Natural Sciences and Mathematics. It shall include courses to develop skills in 
written and oral communication and in basic computer instruction. Courses 
designed to correct deficiencies, remedial courses for associate and 
baccalaureate programs, and leveling courses for graduate programs may not count 
toward course requirements for the degree. The applicant institution may arrange 
for all or part of the general education component to be taught by another 
institution with the following provisions: the applicant institution's faculty 
shall design the general education requirement, there shall be a written 
agreement between the institutions to provide the general education component, 
at least one-half of the courses shall be offered in organized classes, and the 
providing institution shall be accredited by a recognized accrediting agency. 
   
  (5)  Facilities. The institution shall have adequate space, equipment, and 
instructional materials to provide education of good quality. 
   
  (6)  Library. The institution shall have in its possession or direct control 
and readily available to its students and faculty a sufficient quality and 
variety of library holdings to support adequately its own curriculum. The 
holdings shall be catalogued and be readily accessible to students and faculty. 
The institution shall have adequate library facilities for the library holdings, 
space for study, and work space for the librarian and library staff. 
 
  (A) For associate or baccalaureate level programs, the librarian shall hold a 
graduate degree in library science from an institution accredited by a 
recognized accrediting agency or a regional accrediting agency. Arrangements for 
the use of library materials made with other libraries shall be formalized in 
writing, the collection shall be validated by the institution to be appropriate 
for the programs being offered, records of usage by the students shall be kept, 
and the library shall be reasonably accessible to the students and faculty. 
   
  (B) For programs less than associate or baccalaureate degrees in proprietary 
institutions, these institutions shall maintain and have available and easily 
accessible to faculty and students recent editions of handbooks appropriate to 
the curriculum, current periodicals, and other references relative to the 
subject matter taught. Business schools, in addition, shall have such standard 
reference works as current unabridged dictionaries, almanacs, and thesauruses. 
Major consideration shall be given to the variety of volumes, periodicals, and 
information technology available to students, recency of publications, 
appropriateness, and relevance to the program. In occupational degree programs, 
the library must be accessible to students beyond classroom hours and holdings 
must be relevant to degree programs offered and comprised of texts, reference 
books, and audio-visual materials sufficient in breadth and scope to meet the 
needs of the student body. 
     
  (7) Staff qualifications. Staff shall be adequately qualified to assist 
faculty and administrators in meeting the stated objectives of the institution's 
educational and training programs. 
   
  (8) Academic advising and counseling. The institution shall provide an 
effective program of academic advising for all students enrolled. The program 
shall include orientation to the academic program, academic and personal 
counseling, career information and planning, placement assistance, and testing 
services. 
   
  (9) Other standards. The Board may ask the peer reviewers to review additional 
elements relating to quality and course or program content. 
     
  (b) If the peer review team deems it appropriate, it may substitute a prior 
review report or the findings of an accreditation report for some or all of the 
findings it provides to the standards review team in its review report, provided 
that the report accurately reflects the current conditions of the referred 
institution and meets the requirements set forth in the agreement between the 
Board and the peer review team. 
   
  (c) The Board staff shall consider the information provided by the peer review 
team to prepare an initial report of a referred institution that has been 
reviewed. 
 
     
  sec.7.63. Procedures for Peer Review. 
 
  (a) Reviews may consist of inspection of documents and records, interviews 
with individuals, some or all of the findings located in a recent accreditation 
or other review report, and announced and/or unannounced site visits. 
   
  (b) An institution under review shall: 
 
  (1) submit requested records immediately. (For records not available at that 
time, the institution shall submit records within the time allotted by the 
coordinator of the review); and 
   
  (2)  comply with the performance and schedule requirements when cited for non-
compliance with a review standard and when a course of action has been 
prescribed. 
 
  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 8, 1994. 
 TRD-9450687 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
               
  Subchapter E. Initial and Final Reports 
 
  19 TAC sec.sec.7.81-7.83 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.81-7.83, 
concerning State Postsecondary Review Program (Initial and Final Reports). The 
new rules are necessary to implement the State Postsecondary Review Program (a 
federal program) and establish the guidelines under which the State 
Postsecondary Review Entity will review institutions of higher education in the 
state. The rules will guide the activities of the State Postsecondary Review 
Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that these rules is promulgated under 
the authority of the Texas Tax Code, Title 2; therefore no analysis of the 
effect on small business is required. The cost compliance with the rules for 
small business will be: contingent on the nature of non-compliance with the 
standards. For those institutions fully complying with federal regulations 
relating to Title IV, HEA programs, additional cost of compliance with the new 
rules will be limited to the cost of assembling and copying documents requested 
for the reviews. Other institutions may be required to update their catalogs, 
improve building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code, s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (Initial and Final Reports). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.81. Initial Report. 
 
  (a) The Board staff shall issue an initial report to the reviewed institution 
within 45 calendar days after the review is complete. 
   
  (b) The initial report shall serve to summarize the findings of both review 
teams and to notify the institution of findings and/or recommendation to be made 
to the Secretary. The report shall address the findings made at the time of the 
reviews. 
   
  (c) The initial report may contain statements related to the conditions in 
paragraphs (1)-(3) of this subsection. 
 
  (1) The institution was not in violation of one or more of the review 
standards. 
   
  (2) The institution was in violation of one or more of the review standards. 
If so, the report shall: 
 
  (A) cite the standard violated and the nature of the violation; and 
   
  (B) specify a course of action the institution must follow and a time period 
to correct the violation; or 
   
  (C) indicate that no further action by the institution is required as 
determined by the Board staff and the reasons for that determination; or 
   
  (D) notify the institution that the Commissioner shall initiate a proceeding 
to terminate the institution's participation in the Title IV, HEA programs. 
     
  (3) A recommendation that the Commissioner initiate termination proceedings 
for the participation of the institution in Title IV, HEA programs. 
     
  (d) The report shall inform the institution of its rights of appeal. 
   
  (e) The Board may also determine that the institution should no longer 
participate in one or more Title IV, HEA programs and initiate termination 
proceedings if that institution does not: 
 
  (1) respond to the findings or comply with the Board's required actions within 
the time permitted; 
   
  (2) allow a review team at the institution; or 
   
  (3) provide a review team with prompt access to its documents and records. 
     
  (f) The initial report shall be sent to the Secretary within 30 calendar days 
after it is issued to the institution, unless the Board receives a timely and 
proper challenge from the institution. If an institution fails to challenge the 
initial report within the number of days prescribed by the Board, the initial 
report becomes a final report on the day after the date provided to the 
institution for responding to the initial report. 59 Federal Register 22296 
(1994) to be codified at 34 Code of Federal Regulations, sec.667.23(f)(1)(ii). 
 
     
  sec.7.82. Challenges to an Initial Report. 
 
  (a) An institution challenging the initial report shall notify the Board of 
its intent within seven working days after the institution's receipt of the 
initial report. 
   
  (b) Documents referenced in this section may be hand-delivered or mailed. 
 
  (1) If documents are mailed, they must be mailed certified mail, return 
receipt requested, or by next-day mail or delivery service. 
   
  (2) If documents are mailed, proof of receipt shall be evidenced by the 
delivery date indicated on the U. S. Postal Service return receipt card, or the 
pick up date indicated on the next day mail or delivery service's bill. 
   
  (3) For purposes of paragraph (2)(b) of this section, the board shall presume 
that the document was submitted on the date which appears on the U.S. Postal 
Service postmark or, if delivered by private courier, the pick-up date which 
appears on the delivery receipt. 
     
  (c) Institutional responses must be in writing, but also may be accompanied by 
verbal discussions with the board staff. Written responses must be received 
within 30 calendar days after the institution receives the initial report and 
may: 
 
  (1) provide basis for the differences of facts and initial findings of the 
Board staff; 
   
  (2)  respond to each individual finding in the order each finding appears in 
the initial report; and 
   
  (3) respond to each individual prescribed course of action in the order each 
course of action is prescribed in the initial report. 
     
  (d) An institution's written response must include attached documentation to 
support its position, with all documents referred to in the individual finding. 
   
  (e) The reviewed institution has the burden to prove by compelling documentary 
evidence that the institution's failure to comply with a review standard does 
not warrant further action. 
 
     
  sec.7.83. Final Report. 
 
  (a) If an initial report is not challenged timely and properly, it will become 
the final report. 
   
  (b)  If the initial report is timely and properly challenged, under sec.7.82 
the Board staff shall notify the institution in writing of the result of the 
institution's challenge and the basis of that result. The Board staff, through 
its response, may either cite institutional violations and how, when, and 
whether they must be corrected or may notify the institution that termination 
proceedings are initiated. 
   
  (c) The Board staff may determine, based on compelling evidence provided by 
the institution, that the institution's failure to satisfy a review standard 
does not warrant further action by the Board. If no course of action will be 
required, the Board shall indicate in its final report why courses of action 
were not prescribed. Fifty-nine Federal Register <ol> 22296 (1994) to be 
codified at 34 Code of Federal Regulations, sec.667.23(f)(2). 
   
  (d) The final report shall be reviewed by the Commissioner who will send it to 
the Secretary no later than 30 calendar days after it is issued and shall 
include any other information the Secretary requires. This report shall NOT 
recommend termination to the Secretary, but may indicate that termination 
proceedings have been or shall be initiated. However, the final report may be 
accompanied by a recommendation for termination if the institution failed to 
appeal the initial report properly and timely. 
   
  (e) In the final report, the Board may initiate termination of participation 
by the institution in Title IV, HEA programs for the reasons set forth at 
sec.7.81(c) and (e). 
   
  (f) The final report shall inform the reviewed institution of its rights to 
appeal, if any. 
 
  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 8, 1994. 
 TRD-9450688 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
             
  Subchapter F. Administrative Review 
 
  19 TAC sec.sec.7.101-7.127 
 
  The Texas Higher Education Coordinating Board proposes new sec.sec.7.101-7. 
127, concerning State Postsecondary Review Program (Administrative Review). The 
new rules are necessary to implement the State Postsecondary Review Program (a 
federal program) and establish the guidelines under which the State 
Postsecondary Review Entity will review institutions of higher education in the 
state. The rules will guide the activities of the State Postsecondary Review 
Entity in its review of institutions of higher education. They will also 
establish the standards developed in consultation with affected schools. 
 Dr. Bill Sanford, Assistant Commissioner for Universities, has determined that 
for the first five-year period the rules are in effect that there will be fiscal 
implications as a result of enforcing the rules as proposed. At present the cost 
of operation of the SPRE is born by the federal government. The fiscal 
implications will be the cost on a public institution in preparing for a review. 
The following estimates are based on ten reviews of public institutions 
estimated at $600 each. Estimated additional cost for 1995 is $6, 000; for 1996-
$6,000; for 1997-$6,000; for 1998 -$6,000; and for 1999-$6,000. There will be no 
effect on local government for the first five-year period the rules will be in 
effect. The effect on small business is that these rules is promulgated under 
the authority of the Texas Tax Code, Title 2; therefore no analysis of the 
effect on small business is required. The cost compliance with the rules for 
small business will be: contingent on the nature of non-compliance with the 
standards. For those institutions fully complying with federal regulations 
relating to Title IV, HEA programs, additional cost of compliance with the new 
rules will be limited to the cost of assembling and copying documents requested 
for the reviews. Other institutions may be required to update their catalogs, 
improve building maintenance, increase financial strength or hire qualified 
administrative and instructional staff. The cost of compliance per hour of labor 
will vary by type of program the institution offers. Highly technical and 
mechanical programs may be more equipment intensive than other programs. 
Generally the cost of compliance for small business is expected to be 
approximately equal to the cost for large business, given the similar nature of 
programs. 
 Dr. Sanford also has determined that for each year of the first five years the 
rules are in effect the public benefit anticipated as a result of enforcing the 
rules will be that the rules will eliminate fraud and abuse in Title IV, HEA 
programs, reduce loss resulting from high defaults in student loan program, and 
increase overall quality of education in the state. The possible economic cost 
to persons who are required to comply with the rules as proposed will be 
contingent on the degree of non-compliance with the standards. Refusal to bring 
an institution into compliance could result in the recommendation to terminate 
the institutions participation in Title IV, HEA programs. 
 Comments on the proposal may be submitted to Dr. Kenneth H. Ashworth, 
Commissioner of Higher Education, Texas Higher Education Coordinating Board, P. 
O. Box 12788, Austin, Texas 78711. 
 The new rules are proposed under 42 United States Code,  s1099 a-1 and Texas 
Education Code, Chapter 61, sec.61.927, which provides the Texas Higher 
Education Coordinating Board with the authority to adopt rules concerning State 
Postsecondary Review Program (Administrative Review). 
 42 United States Code, sec.1099 a-1 and Education Code, Chapter 61, sec.61. 927 
are also affected by these rules. There is also authority from federal 
regulations at 34 Code of Federal Regulations, Part 667. 
 
 
  sec.7.101. Conferences.  An institution that wishes to contest a final report 
that cites institutional violations and prescribes to the institution a course 
of action, shall submit to the Commissioner a written request for a conference. 
The request must: 
 
  (1) indicate all legal bases for the challenge and state the relief the 
institution requests; and 
   
  (2) be sent to the Commissioner no more than ten working days after the final 
report is received by the institution. 
 
     
  sec.7.102. Challenges to Findings of Violations and Prescribed Course of 
Action. <ol> Upon receipt of a challenge to the final report and a request for 
conference, as described in sec.7.101, the Board staff shall schedule a 
conference to take place not less than 30 days from receipt of the challenge. 
The staff will notify the institution of the time, place and nature of the 
conference at least seven working days before the conference is to be held. The 
notice shall include: 
 
  (1) a statement of the time, place, and nature of the conference; 
   
  (2) a statement of the legal authority and jurisdiction under which the 
conference is to be held; 
   
  (3) a reference to the particular sections of the statutes and rules involved; 
and 
   
  (4) a short and plain statement of the matters asserted. 
 
     
  sec.7.103. Conference Procedures. 
 
  (a) A conference officer appointed by the Commissioner shall consider relevant 
documentation from the challenging institution as well as any other evidence the 
conference officer determines is relevant to the case. The parties shall not be 
entitled to present live witnesses. The Texas Rules of Civil Evidence and Civil 
Procedure shall not apply to the conference, but the conference officer shall 
allow the institution to present documentary evidence, and a brief oral 
statement which shall detail the institution's grievance with the final decision 
and present evidence to support the institution's position. The conference 
officer shall allow the standards review team to present documentary evidence 
and a brief oral statement to support its position. 
   
  (b) The conference officer shall consider the documentary evidence and the 
oral statements before making a decision. The decision shall be released in the 
form of findings of fact and conclusions of law within seven working days after 
the conference closes. The standard of review will be to determine the 
sufficiency of evidence to support the final report. 
   
  (c) Upon release of the decision, the institution shall be required to comply 
with the final report, if the decision determines the evidence supports the 
final report. 
   
  (d) Failure to comply with the final report within the time prescribed 
subjects the institution to the initiation by the Board of termination 
proceedings. 
 
     
  sec.7.104. Appeal of Conference Decision. 
 
  (a) Upon receipt of the conference officer's decision, an institution may 
appeal to the Board. 
   
  (b) Appeals from a conference decision shall proceed and be subject to the 
provisions of sec.7.122 of this title (relating to committee to consider ALJ 
report or conference officer decision) and sections subsequent thereto. 
   
  (c) An appeal to the Board shall: 
 
  (1) be considered by a committee designated by the Board; 
   
  (2) be held in a public hearing that takes place within 30 calendar days of 
notice of intent; and 
   
  (3)  consists of a written appeal which must include new or compelling 
evidence why the Board should reconsider the decision of the conference officer. 
     
  (d) The Board shall consider the recommendation of its committee at the next 
appropriate meeting of the Board. 
   
  (e) The decision by the Board shall be mailed to the institution within seven 
working days following the Board's meeting. 
 
     
  sec.7.105. State Office of Administrative Hearings (SOAH) Hearings.  An 
institution that has been notified by the Board that termination proceedings are 
appropriate in a final report is entitled to request a hearing before the State 
Office of Administrative Hearings (SOAH). Provided it receives a timely request 
from the institution, the Board shall schedule a hearing for any reviewed 
institution. 
 
   
  sec.7.106. Challenge to Initiation of Termination Proceedings. 
 
  (a) An institution's request for a hearing must be sent to the Commissioner no 
later than seven working days after the institution receives the final report. 
Failure of an institution to timely and properly request a hearing shall result 
in immediate recommendation to the Secretary that the institution be terminated. 
   
  (b) The rules regarding hearings are applicable to all challenges to a final 
report that finds termination of participation in Title IV, HEA programs of the 
reviewed institution is appropriate for any of the reasons provided by these 
rules. 
 
     
  sec.7.107. Notice.  The Board staff shall inform the institution made the 
subject of termination proceedings of a hearing date which shall be determined 
by the SOAH. The notice shall include: 
 
  (1) a statement of the time, place, and nature of the hearing; 
   
  (2) a statement of the legal authority and jurisdiction under which the 
hearing is to be held; 
   
  (3) a reference to the particular sections of the statutes and rules involved; 
   
  (4) a short and plain statement of the matters asserted; and 
   
  (5) a statement of any and all standards of which the institution has been 
found to be in violation and/or other basis for initiation of termination 
proceedings. 
 
     
  sec.7.108. Scope and Purpose of SOAH Hearings. 
 
  (a) The Sections of Subchapter F, dealing with SOAH hearings, shall govern the 
proceedings in all contested cases under this Chapter 7. 
   
  (b) The purpose of this Section is to incorporate by reference, to the extent 
they are not in conflict with these rules, for all purposes the provisions of 
the Administrative Procedure Act, Texas Government Code, sec.2001 (Vernon 1994 
pamphlet), and to set forth the procedure for the administration of all appeals 
before SOAH. 
 
     
  sec.7.109. Administrative Law Judge (ALJ). 
 
  (a) The SOAH may designate an Administrative Law Judge (ALJ) to act on behalf 
of the SOAH in conducting any hearing or proceeding held pursuant to this 
Subchapter and to prepare a written report on such hearing. 
   
  (b) The ALJ has the authority to administer oaths; call and examine witnesses; 
issue subpoenas; make rulings on motions, admissibility of evidence, and 
amendments to pleadings; maintain decorum; schedule and recess the proceedings 
from day to day; and to make any other orders as justice requires. 
   
  (c) If the ALJ is removed, dies, becomes disabled, or withdraws from an appeal 
prior to the completion of duties, the SOAH may designate a substitute ALJ to 
complete the performance of duties without the necessity of repeating any 
previous proceedings. 
 
     
  sec.7.110. Appearance.  Any party allowed to appear may be represented by an 
attorney-at-law. 
 
   
  sec.7.111. Answers to Notice of Hearing and Initiation of Termination 
Proceedings. 
 
  (a) An institution shall file an answer to the notice of hearing within 30 
calendar days of receipt of notification by the Board that a hearing has been 
docketed. 
   
  (b) The answer shall specifically admit or deny each allegation in the notice 
of hearing and shall set forth all affirmative defenses. Any allegation not 
specifically denied will be deemed admitted. The ALJ may deny the institution 
the opportunity to present evidence concerning any fact in the Board's notice 
which is not specifically denied or any affirmative defense which is not raised 
by the answer. 
 
     
  sec.7.112. Classification of Pleadings. Pleadings filed with the SOAH shall 
include, but not be limited to, petitions, answers, replies, exceptions, and 
motions. Regardless of any error in its designation, the pleading shall be 
accorded its true status in the appeal in which it is filed. 
 
   
  sec.7.113. Form and Content of Documents.  All pleadings, briefs, and exhibits 
shall be legibly handwritten, typewritten, or printed on paper 8-1/2 inches wide 
by 11 inches long. Electronic transmission of pleadings in proper form 
containing a facsimile of the signature of the attorney or party filing the 
pleading is permissible. 
 
   
  sec.7.114. Filing of Documents. 
 
  (a) Any document shall be deemed filed only when actually received by the 
SOAH. 
   
  (b) Documents may be hand-delivered or filed by mail if sent by certified U.S. 
mail, return receipt requested. A document will be deemed timely filed if it was 
mailed one day prior to the filing deadline. 
 
     
  sec.7.115. Service of Pleadings. Copies of all pleadings must be sent to all 
parties of record in an appeal in compliance with the requirements of SOAH 
rules. 1 Texas Administrative Code, sec.155.22. 
 
   
  sec.7.116. Prehearing Conference. 
 
  (a) In any appeal, the ALJ or a party may move for the setting of a prehearing 
conference. The ALJ may direct that the parties appear at a specific time for a 
conference prior to a hearing for the purposes of considering any of the 
following: 
 
  (1) the formulation or simplification of issues; 
   
  (2) admission of certain assertions of fact or stipulations; 
   
  (3) the procedure at the hearing; 
   
  (4) any limitation, where possible, of the number of witnesses; and/or 
   
  (5) such other matters as may aid in the simplification of the proceeding or 
the disposition of matters in controversy, including the settlement of matters 
in dispute. 
     
  (b) Action taken at the conference shall be reduced to writing and delivered 
to all parties. 
 
     
  sec.7.117. Dismissal or Withdrawal of an Appeal. 
 
  (a) The ALJ may, on the motion of a party, dismiss an appeal without a hearing 
for the following reasons: compromise; unnecessary duplication of proceedings; 
res judicata (a matter already decided by a court); withdrawal; mootness; 
untimely filing; lack of jurisdiction; or failure to prosecute. 
   
  (b)  Institution may request that the hearing be terminated and that the 
institution's challenge be withdrawn at any time prior to the Board's decision. 
 
     
  sec.7.118. Rules of Evidence. 
 
  (a) The ALJ shall admit in evidence and shall consider all documentary 
evidence considered by the review team in making its final report. Otherwise, 
the rules of evidence as applied in a nonjury civil case in a district court of 
this state shall apply to a contested case except that evidence inadmissible 
under those rules may be admitted if the evidence is: 
 
  (1) necessary to ascertain facts not reasonably susceptible of proof under 
those rules; 
   
  (2) not precluded by statute; and 
   
  (3) of a type of which a reasonably prudent person commonly relies in the 
conduct of the person's affairs. 
     
  (b) Exclusion of Evidence. Evidence that is irrelevant, immaterial, or unduly 
repetitious shall be excluded. 
   
  (c) Privilege. The ALJ shall give effect to the rules of privilege recognized 
by law. 
 
     
  sec.7.119. Procedure at a Hearing. 
 
  (a) The Board shall state briefly the nature of the claim, what the Board 
expects to prove, and the action it seeks to effect. Immediately thereafter, the 
institution may make a similar statement, and intervenors and other parties will 
be afforded similar rights as determined by the ALJ. 
   
  (b) Evidence shall then be introduced by the Board. 
   
  (c) Unless such statement has already been made, institution shall briefly 
state the nature of the claim or defense, what institution expects to prove, and 
the relief sought. 
   
  (d) Evidence shall be introduced by institution. 
   
  (e) The intervenor and other parties shall make their statement, unless they 
have already done so, and shall introduce their evidence. 
   
  (f) The parties may be allowed closing arguments at the discretion of the ALJ. 
   
  (g) Unless the ALJ, for good cause stated in the record, otherwise directs, 
the order of procedure shall be the order designated in subsections (a)-(i) of 
this section. 
   
  (h)  Parties shall provide four copies of each exhibit offered. 
   
  (i) In any appeal where a party is represented by more than one attorney, the 
ALJ shall require the designation of a lead attorney. 
   
  (j) A reasonable time limit may be set by the ALJ for any oral argument 
offered by a party. 
   
  (k) Testimony presented at a hearing shall be confined to the subject matter 
designated in the hearing notice. Any testimony not relevant or material to the 
subject matter may be excluded by the ALJ. 
   
  (l) The ALJ shall have the right to limit the number of witnesses whose 
testimony is merely cumulative. 
 
     
  sec.7.120. ALJ's Report. <ol> The ALJ shall recommend a decision and a 
statement of the reasons for the recommendation and of each finding of fact and 
conclusion of law supporting the recommended decision. A copy of the report 
shall be furnished to each party. 
 
   
  sec.7.121. Exceptions and Replies. Exceptions to the ALJ's report may be made 
by filing the exceptions, with the ALJ within 30 calendar days of the issuance 
of the report. Replies to the exceptions, if made, must be filed with the ALJ 
within 30 calendar days of the issuance of the report. 
 
   
  sec.7.122. Committee to Consider ALJ Report or Conference Officer Decision. 
 
  (a) If the institution wishes to appeal a conference officer's decision, it 
shall notify the Board within seven working days after receiving notice of the 
conference decision of its intention to appeal. 
   
  (b) An appeal to the Board from the ALJ hearing of the conference officer's 
decision shall be: 
 
  (1) considered by a committee designated by the Board; 
   
  (2) considered in an open meeting of the Board committee within 30 calendar 
days of notice of intent; and 
   
  (3)  limited to a written appeal which shall include new or compelling 
evidence why the Board should reconsider the decision of the conference officer. 
     
  (c) A committee of the Board in an open meeting will consider the ALJ's 
recommendation or conference officer's decision, findings of fact, conclusions 
of law, and final report and render its own recommendation to the Board. This 
committee is not required to consist of a quorum of the Board. The committee 
shall: 
 
  (1) consider written material received from the ALJ or the conference officer 
or the institution; and 
   
  (2) at its discretion, listen to oral presentations, the length of which may 
be determined by the committee. 
 
       
  sec.7.123. Procedure before the Board. 
 
  (a) The Board shall consider the report of the ALJ, the conference officer's 
decision, and the committee's recommendation at the next appropriate Board 
meeting after the SOAH hearing or the conference is finally closed. The Board 
shall at that meeting issue a final decision or order. 
   
  (b) At least seven working days notice shall be given by the Commissioner to 
all parties to a hearing of the time and place of the Board meeting at which the 
report of the ALJ or appeal of the conference decision will be considered by the 
Board. 
   
  (c)  No party shall be allowed to introduce evidence before the Board at the 
meeting at which the report of the ALJ or appeal of the conference decision is 
considered unless leave to present such newly discovered evidence has been heard 
by an ALJ or conference officer and the ALJ or conference officer has determined 
that such newly discovered evidence was unavailable at the time of the hearing 
and is material to the matter presented for Board determination. 
   
  (d) The committee members shall not vote when the Board votes on the matter of 
the ALJ report or of a conference officer's report. 
   
  (e) The decision by the Board shall be mailed to the institution within seven 
working days following the Board's meeting. 
 
     
  sec.7.124. Motion for Rehearing. 
 
  (a) A motion for rehearing in a contested case must be filed by a party not 
later than the 20th day after the date on which the party or the party's 
attorney of record is notified as required by the Government Code, sec.2001.142 
of a decision or order that may become final under sec.2001.144. 
   
  (b) A reply to a motion for rehearing must be filed with the Board not later 
than the 30th day after the date on which the party or the party's attorney of 
record is notified as required by sec.2001.142 of the decision or order that may 
become final under sec.2001.144. 
   
  (c) A Board shall act on a motion for rehearing not later than the 45th day 
after the date on which the party or the party's attorney of record is notified 
as required by sec.2001.142 of the decision or order that may become final under 
sec.2001.144 or the motion for rehearing is overruled by operation of law. 
   
  (d) The Board may rule on a motion for rehearing at a meeting or by mail, 
telephone, telegraph, or another suitable means of communication if any Board 
member does not receive a salary for work as a Board member and resides outside 
of Travis County. 
   
  (e) The Board may by written order extend the motion or reply or take agency 
action under this section, except that an extension may not extend the period 
for Board action beyond the 90th day after the date on which the party or the 
party's attorney of record is notified as required by sec.2001.142 of the 
decision or order that may become final under sec.2001.144. 
   
  (f) In the event of an extension, a motion for rehearing is overruled by 
operation of law on the date fixed by the order or, in the absence of a fixed 
date, 90 days after the date on which the party or the party's attorney of 
record is notified as required by sec.2001. 142 of the decision or order that 
may become final under sec.2001.144. 
   
  (g)  Rehearings may be conducted by the SOAH or the Board, as the Board may 
determine is appropriate, considering the nature of the motion for rehearing. 
 
     
  sec.7.125. Procedure after a Decision Becomes Final. <ol> If an institution 
does not file an appeal to district court within 30 calendar days after the 
Board's decision is final, the Board shall submit to the Secretary its final 
determination, which may include a recommendation for termination. If the 
institution has timely appealed the final decision, the Board shall notify the 
Secretary of the Board's final decision and the status of the appeal but shall 
not recommend termination until all appeals have been exhausted. 
 
   
  sec.7.126. Judicial Review. <ol> In the event that an institution timely files 
an appeal of the Board's final decision to district court, the provisions of the 
Administrative Procedure Act relevant to judicial review of contested cases 
shall apply. 
 
   
  sec.7.127. Final Determination Sent to U.S. Department of Education.  The 
Board shall deliver the final determination to the institution and to the 
Secretary after the institution's right to appeal is exhausted. The final 
decision at the court of last appeal and any other information required by the 
Secretary shall be noted in the final determination. 
 
  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 8, 1994. 
 TRD-9450689 
  James McWhorter 
 Assistant Commissioner for Administration 
 Texas Higher Education Coordinating Board 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 483-6160 
         
                 
  TITLE 22. EXAMINING BOARDS 
 Part III. Texas Board of Chiropractic Examiners 
  Chapter 71. Application and Applicants 
  
  22 TAC sec.sec.71.1, 71.3, 71.12 
 
  The Texas Board of Chiropractic Examiners proposes new  ssec.71.1, concerning 
Definitions, 71.3, concerning Qualifications of Applicants, and 71. 12, 
concerning National Board Examination. 
 New sec.71.1 defines terms used in the practice of chiropractic, used in The 
Chiropractic Act, Texas Civil Statutes, Article 4512b (the Act), or used 
elsewhere in these rules. 
 New sec.71.3 provides applicants with the information required to establish 
their qualifications to sit for the Texas licensure examination. 
 New sec.71.12 implements the requirement found in the Act, sec.10 that 
candidates for licensure must have successfully passed all required and optional 
parts of the National Board Examination. 
 Patte B. Kent, Executive Director, has determined that for the first five-year 
period the new sections are in effect, there will be no fiscal implications for 
state or local governments as a result of enforcing or administering the 
sections. 
 Ms. Kent also has determined that for each year of the first five years the new 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be that application qualification requirements will be 
standardized. There will be no effect to small or large businesses. There is no 
anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
 Comments on the proposal may be submitted to Patte B. Kent, 333 Guadalupe, 
Tower III, Suite 825, Austin, TX 78701 and must be received no later than 30 
days from the date of publication of the proposal in the Texas Register. 
 New sec.71.1 is proposed under the authority of the Texas Chiropractic Act, 
sec.sec.4a and 1, and under the Government Code, Chapter 2001, sec.2001.004. The 
Act, sec.4a authorizes the Board to make rules as may be necessary for the 
performance of its duties, the regulation of the practice of chiropractic, and 
the enforcement of the Act. The Act, sec.1 establishes the scope of practice of 
chiropractic. The Government Code, Chapter 2001, sec.2001.004 requires agencies 
to adopt rules of practice setting forth all available procedures, formal and 
informal. 
 New sec.71.3 is proposed under the authority of the Texas Chiropractic Act, 
sec.sec.4(a), 4a and 10. The Act, sec.4a authorizes the Board to make rules as 
may be necessary for the performance of its duties, the regulation of the 
practice of chiropractic, and the enforcement of the Act. The Act, sec.4(a) 
authorizes the Board to prescribe rules for the examination of applicants for 
licensure to practice chiropractic. The Act,  s10 establishes the statutory 
requirement that applicants for licensure must have passed all required and 
optional parts of the National Board Examination. 
 New sec.71.12 is proposed under the authority of the Texas Chiropractic Act, 
sec.sec.4a and 10. The Act, sec.4a authorizes the Board to make rules as may be 
necessary for the performance of its duties, the regulation of the practice of 
chiropractic, and the enforcement of the Act. The Act, sec.10 establishes the 
statutory requirement that applicants for licensure must have passed all 
required and optional parts of the National Board Examination. 
 The Act, sec.sec. 1, 4a, 4(a) and 10 and the Government Code, Chapter 2001, 
sec.2001.004 are affected by the proposed new rules. 
 
 
  sec.71.1. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
   Applicant-An individual who applies to take the examination for licensure 
given by the board. 
   
   Biomechanical condition of the musculoskeletal system -The structural and 
functional state of support and motor components of the musculoskeletal system 
under biostatic and biodynamic conditions. 
   
   Board-The Texas Board of Chiropractic Examiners 
   
   Board member-One of the appointed members of the decision-making body defined 
in this section as the board. 
   
   Examinee-An individual who has been approved and admitted to take the 
examination given by the board. 
   
   Executive director -The executive director of the board. 
   
   Licensee-An individual who has been granted a license to practice 
chiropractic by the Texas Board of Chiropractic Examiners and whose license is 
active and not under suspension. 
   
   Practitioner-A doctor of chiropractic, a doctor of medicine, a doctor of 
osteopathy, a doctor of podiatry, or a doctor of dentistry who is licensed and 
authorized to practice under the laws of this state. 
   
   Subluxation-Subluxation is an aberrant relationship between two adjacent 
articular structures that may have functional or pathological sequelae, causing 
an alteration in the biomechanical and/or neuro-physiological reflections of 
these articular structures, their proximal structures, and/or other body systems 
that may be directly or indirectly affected by them. 
 
   
  sec.71.3. Qualifications of Applicants 
 
  (a) All applicants shall have completed the number of college courses and 
credits required by Texas Civil Statutes, Article 4512b, sec.10. 
   
  (b) All applicants shall submit evidence to the executive director to 
determine that an applicant has met all the requirements specified in these 
sections and any other information reasonably required by the board. 
   
  (c) All applicants are required to have successfully passed all parts (Part I, 
Part II, Part III and Physiotherapy) of the National Board of Chiropractic 
Examiners Examination to be eligible to sit for the Texas Board Exam. 
 
     
  sec.71.12. National Board Examination 
 
  (a) The board determines that the written Examination by the National Board of 
Chiropractic Examiners complies in all material respects with the requirements 
of the Texas Chiropractic Act, Article 4512b. The passing score on each Part of 
the National Board Examination is determined by a criterion-referenced standard 
setting approach, in which the passing score is set at a scaled score of 375. 
   
  (b) All applicants must comply with the application process and qualification 
criteria of the Texas Chiropractic Act, Article 4512b, sec.10, as well as all 
applicable board rules. 
   
  (c) All applicants shall take and pass Parts I, II, III and Physiotherapy of 
the National Board Examination. 
   
  (d) Each applicant shall request that a true and correct copy of the 
applicant's score report be submitted to the executive director, and other 
evidence of having achieved a passing grade on each Section of the National 
Board Examination as the executive director may determine. 
 
  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 3, 1994. 
 TRD-9450397 
  Patte B. Kent 
 Executive Director 
 Texas Board of Chiropractic Examiners 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 305-6700 
         
             Chapter 75. Rules of Practice 
  
  22 TAC sec.75.1 
 
  The Texas Board of Chiropractic Examiners proposes new  s75.1, concerning 
Grossly Unprofessional Conduct. The section defines those actions which will be 
considered to be unprofessional conduct or dishonorable conduct of a character 
likely to deceive or defraud the public, or other actions calculated to endanger 
the lives of patients. 
 Patte B. Kent, Executive Director, has determined that for the first five-year 
period the new sections is in effect, there will be no fiscal implications for 
state or local governments as a result of enforcing or administering the 
section. 
 Ms. Kent also has determined that for each year of the first five years the new 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be that the enforcement process will be standardized and the rule 
will more accurately mirror the statute. There will be no effect to small or 
large businesses. There is no anticipated economic cost to persons who are 
required to comply with the section as proposed. 
 Comments on the proposal may be submitted to Patte B. Kent, 333 Guadalupe, 
Tower III, Suite 825, Austin, TX 78701 and must be received no later than 30 
days from the date of publication of the proposal in the Texas Register. 
 New sec.75.1 is proposed under the authority of the Texas Chiropractic Act, 
sec.sec.4a, 4(c) and 14a. The Act, sec.4a authorizes the Board to make rules as 
may be necessary for the performance of its duties, the regulation of the 
practice of chiropractic, and the enforcement of the Act. The Act, sec.4(c) 
prohibits the Board, in part, from adopting a rule relating to the meaning of 
the practice of chiropractic except for a rule that defines an unacceptable 
practice of chiropractic and prescribes a penalty for committing the act. The 
Act, sec.14a authorizes disciplinary action against licensees who commit, among 
other things, acts of grossly unprofessional conduct or dishonorable conduct. 
 The Act, sec.sec.4a, 4(c) and 14a is affected by the proposed new rule. 
 
 
  sec.75.1. Grossly Unprofessional Conduct 
 
  (a) It shall be considered grossly unprofessional conduct for a licensee: 
 
  (1) to maintain unsanitary or unsafe equipment; 
   
  (2) to fail to use the word "chiropractor," "Doctor, D.C.," or "Doctor of 
Chiropractic, D.C." in all advertising, signs, letterheads, etc.; 
   
  (3) to engage in sexual misconduct with a patient within the 
chiropractic/patient relationship; 
   
  (4) to exploit patients through the fraudulent use of chiropractic services 
which result in financial gain for a licensee or a third party. The rendering of 
chiropractic services becomes fraudulent when the services rendered or goods or 
appliances sold by a chiropractor to a patient are clearly excessive to the 
justified needs of the patient as determined by accepted standards of the 
chiropractic profession; 
   
  (5) to submit a claim for chiropractic services, goods, or appliances to a 
patient or a third-party payor which contains charges for services not actually 
rendered or goods or appliances not actually sold; 
   
  (6) to fail to disclose, upon request by a patient or his or her duly 
authorized representative, the full amount charged for any service rendered or 
goods supplied; 
   
  (7) to use instruments, diagnostic techniques, or adjunctive therapy 
modalities and procedures, which do not come within the scope of chiropractic as 
defined by Texas Civil Statutes, Article 4512b, sec.1. 
     
  (b) Penalties for engaging in gross unprofessional conduct shall be determined 
in accordance with sec.75. 10 of this title (relating to Administrative Fines 
and Penalties). 
 
  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 3, 1994. 
 TRD-9450396 
  Patte B. Kent 
 Executive Director 
 Texas Board of Chiropractic Examiners 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 305-6700 
         
             Chapter 80. Practice of Chiropractic 
  
  22 TAC sec.80.1, sec.80.2 
 
  The Texas Board of Chiropractic Examiners proposes new  s80.1, concerning 
Delegation of Authority and sec.80.2, concerning Titles. 
 New sec.80.1 sets out the circumstances under which a chiropractor may delegate 
authority to a student to perform manipulations or adjustments. This section 
also authorizes the delegation of tasks and procedures other than manipulations 
or adjustments to properly trained and qualified individuals acting under the 
licensee's supervision. 
 New sec.80.2 sets forth the titles a chiropractor may use. 
 Patte B. Kent, Executive Director, has determined that for the first five-year 
period the new sections are in effect, there will be no fiscal implications for 
state or local governments as a result of enforcing or administering the 
sections. 
 Ms. Kent also has determined that for each year of the first five years the new 
sections are in effect the public benefit anticipated as a result of enforcing 
the sections will be that specific requirements for delegation to assistants and 
the specificity of allowable titles will be more clear and more accessible to 
the general public. There will be no effect to small or large businesses. There 
is no anticipated economic cost to persons who are required to comply with the 
sections as proposed. 
 Comments on the proposal may be submitted to Patte B. Kent, 333 Guadalupe, 
Tower III, Suite 825, Austin, TX 78701 and must be received no later than 30 
days from the date of publication of the proposal in the Texas Register. 
 New sec.80.1 is proposed under the authority of the Texas Chiropractic Act, 
sec.sec.4a, 5a and 6. The Act, sec.4a authorizes the Board to make rules as may 
be necessary for the performance of its duties, the regulation of the practice 
of chiropractic, and the enforcement of the Act. The Act, sec.5a establishes the 
circumstances under which a student may engage in clinical practice. The Act, 
sec.6 authorizes the Board to establish guidelines relating to tasks and 
procedures that a chiropractor may delegate to an assistant. 
 New sec.80.2 is proposed under the authority of the Texas Chiropractic Act, 
sec.4a and Texas Civil Statutes, Article 4590e, The Healing Arts Identification 
Act. This section is also proposed under the authority of Attorney General 
Opinion Number JM-1279. The Texas Chiropractic Act, sec.4a authorizes the Board 
to make rules as may be necessary for the performance of its duties, the 
regulation of the practice of chiropractic, and enforcement of the Act. The 
Healing Arts Identification Act sets forth the titles that may appropriately be 
used by certain health care professionals. The Attorney General opinion 
concludes that use of the title "chiropractic physician" does not violate the 
Healing Arts Identification Act. 
 The Texas Chiropractic Act, sec.sec.1,4a and Texas Civil Statutes, Article 
4590e are affected by the proposed new rules. 
 
 
  sec.80.1. Delegation of Authority. 
 
  (a) Except as provided in this section, a licensee shall not delegate to a 
non-licensee authority to perform chiropractic adjustments or manipulations. 
   
  (b) A licensee may delegate authority to perform chiropractic adjustments or 
manipulations to a student enrolled in an accredited chiropractic college, 
provided that: 
 
  (1) the chiropractic adjustment or manipulation is performed as part of a 
regular curriculum; and 
   
  (2) the chiropractic adjustment or manipulation is performed under the 
supervision of a licensee who is physically present at the time of the 
adjustment. 
     
  (c) A licensee shall have the authority to delegate to any qualified and 
properly trained person or persons acting under the licensee's supervision any 
other task or procedure which is within the scope of practice, as defined in 
Texas Civil Statutes, Article 4512b, sec.1. 
   
  (d) A licensee shall not delegate any authority to a licensee whose license 
has been suspended or revoked during the effective period of thesuspension. 
 
     
  sec.80.2. Titles. 
 
  (a) A licensee may use any of the following titles: 
 
  (1) chiropractor; 
   
  (2) doctor of chiropractic; 
   
  (3)  D.C.; 
   
  (4) doctor, D.C.; 
   
  (5) chiropractic physician; or 
   
  (6) any derivative of the previously listed terms with the exception of the 
term "chiropractic physician" which shall not be modified or altered in such a 
manner that would result in the use of the title "physician" by itself. 
     
  (b) Regardless of which of the previous titles a licensee chooses to use, 
licensee shall in professional use of his or her name use one of the following 
terms or titles to be in compliance with the Healing Arts Identification Act, 
Article 4590e: 
 
  (1) chiropractor; 
   
  (2)  doctor, D.C.; 
   
  (3) doctor of chiropractic; 
   
  (4) D.C. 
 
  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 3, 1994. 
 TRD-9450394 
  Patte B. Kent 
 Executive Director 
 Texas Board of Chiropractic Examiners 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 305-6700 
         
                   
  TITLE 25. HEALTH SERVICES 
 Part I. Texas Department of Health 
  Chapter 181. Vital Statistics 
  
  Miscellaneous Provisions 
 
  25 TAC sec.181.28 
 
  Texas Department of Health, Bureau of Vital Statistics proposes new 
sec.181.28, relating to format, style, content and type of paper used for the 
issuance of certified copies of vital records issued by the department and local 
registrars. The section covers the criteria for minimum built in safety features 
of security paper to be used for the issuance of such records; the format, 
content and style of records to be issued, and the procedures for issuance. 
 Richard B. Bays, Chief, Bureau of Vital Statistics has determined that for the 
first five-year period and the years following, there will minimal fiscal 
implication or cost to local or state government in purchasing security paper. 
There will be no cost to small businesses or individuals and no impact on local 
employment. 
 Mr. Bays, also has determined the benefits to the public, state and local 
governments will be a decrease in the number of fraudulent entitlement claims 
and the use of altered documents, resulting in a corresponding reduction of 
expenses in these programs. 
 Comments on the proposed rule may be submitted to Richard B. Bays, State 
Registrar, Bureau of Vital Statistics, Texas Department of Health, 1100 West 
49th Street, Austin, Texas 78756-3191, (512) 458-7692. Public comments will be 
accepted for 30 days after publication in the Texas Register. 
 The new section is proposed under authority of the Health and Safety Code, 
sec.192.003, which provides the Board of Health (board) with authority to adopt 
necessary rules for collecting, recording, transcribing, compiling and 
preserving vital statistics; sec.194.004 which requires the state registrar to 
prepare and issue detailed instructions necessary for the uniform observance of 
Title 3, Vital Statistics and maintenance of a perfect system of registration; 
sec.191.051 which provides that certified copies shall be in a form approved by 
the department; and  s12.001, which provides the board with the authority to 
adopt rules for the performance of every duty imposed by law on the board, the 
department, or the Commissioner of the department. 
 The new section affects Health and Safety Code, Title 3, Vital Statistics. 
 
 
  sec.181.28. Instructions and Requirements for Issuance of Certified Copies of 
Vital Records by the State Registrar or Local Registrar. 
 
  (a) Birth certificates. 
 
  (1) The state registrar or local registrar shall issue only two types of 
records for births: 
 
  (A) a full reproduction of the legal portion of the original record as filed 
in their office with any addendum(s); or 
   
  (B) an abstract or certification of birth facts, taken from the original 
record except for probate records and delayed records which may not be 
abstracted. An abstract or certification of birth facts shall be issued in one 
of four styles: 
 
  (i) a standard abstract or certification; 
   
  (ii) a wallet-sized abstract or certification; 
   
  (iii) a typewritten abstract in accordance with Title 3, Health and Safety 
Code, sec.192.005 and  s192.011, or when the condition of the original record 
does not permit full reproduction; or 
   
  (iv) an heirloom style abstract or certification. 
       
  (2) Each certified copy of a record, or abstract of a record, shall be issued 
over the signature or facsimile thereof of the officer to whom the record is 
entrusted, shall bear the seal of their office, and shall bear a statement of 
certification: 
 
  (A) either as a part of the custodian's local files; or 
   
  (B) as authorized to be issued from the state registrar's files. 
     
  (3) All certified copies or abstracts of birth records shall include at a 
minimum: 
 
  (A) state or local file number; 
   
  (B) given name(s); 
   
  (C) surname; 
   
  (D) date of birth; 
   
  (E) state, and city or county of birth; 
   
  (F) sex; 
   
  (G) father's name; 
   
  (H) mother's maiden name; 
   
  (I) date of filing; 
   
  (J) date issued; 
   
  (K) certification statement; 
   
  (L) signature or facsimile signature of registrar; and 
   
  (M) the seal of their office. 
       
  (b) Death certificates. 
 
  (1) The state registrar or local registrar shall issue only two types of death 
certificates: 
 
  (A) a full reproduction of the original record and any addenda as filed in 
their office; or 
   
  (B) a certification or abstract of death facts, taken from the original 
record. 
     
  (2) All certification or abstracts of death records shall include as a 
minimum: 
 
  (A) state or local file number; 
   
  (B) given name(s); 
   
  (C) surname; 
   
  (D) date of death; 
   
  (E) date of birth; 
   
  (F) state and city or county of death; 
   
  (G) sex; 
   
  (H) date of filing; 
   
  (I) date issued; 
   
  (J) certification statement; 
   
  (K) signature or facsimile signature of registrar; and 
   
  (L) the seal of their office. 
       
  (c) Security features. No certified copy or abstract shall be issued unless 
the issuing office provides security features in the paper used for issuance. 
Each sheet or document shall be made on paper which contains as a minimum, the 
following features: 
 
  (1) consecutive numbers; 
   
  (2) background security features; 
   
  (3) a copy void pantograph; 
   
  (4) an engraved border; and 
   
  (5) microline printing or security thread. 
     
  (d) Other permitted security features. Other security features such as, but 
not limited to the following, may also be incorporated in the paper used: 
 
  (1) sensitized security paper; 
   
  (2) prismatic printing; 
   
  (3) erasable fluorescent printing; 
   
  (4) non-optical brighteners; 
   
  (5) complex colors; 
   
  (6) intaglio printing; 
   
  (7) security laminate; 
   
  (8) watermark; or 
   
  (9) latent image. 
     
  (e) Record retention. A record of the date issued, document number, name and 
address and form of identification to whom issued shall be made and maintained 
for a period of three years from the date issued. The application form, with the 
document number inserted, used to apply for a record will fulfill this 
requirement. 
 
  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 8, 1994. 
 TRD-9450622 
  Susan K. Steeg 
 General Counsel, Office of General Counsel 
 Texas Department of Health 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 458-7692 
         
                 Part II. Texas Department of Mental Health and Mental 
Retardation 
  Chapter 409. Medicaid Programs 
  
  Subchapter J. Reimbursement for Services in Institutions for Mental Diseases 
(IMD) 
 
  25 TAC sec.sec.409.371-409.380 
 
  The Texas Department of Mental Health and Mental Retardation (TDMHMR) proposes 
new sec.sec.409.371-409.380, concerning Medicaid reimbursement for inpatient 
hospital services to individuals age 65 and older residing in institutions for 
mental diseases (IMD). The proposed new sections affect Texas Civil Statutes, 
Article 4413(502), sec.16. 
 The proposed new sections would provide the criteria and method for Medicaid 
reimbursement of inpatient hospital services delivered to persons age 65 and 
older in institutions for mental diseases, with rule adoption contingent on the 
approval of a State Plan amendment by the Health Care Financing Administration. 
 Operating agency responsibility for reimbursement of inpatient hospital 
services in IMDs was vested in TDMHMR by the single state Medicaid agency, the 
Health and Human Services Commission, following the approval of a similar rule 
proposal at the July 1994 meeting of the Medical Care Advisory Committee. The 
proposed new sections were additionally approved by the TDMHMR Medicaid Guidance 
Team and the State Medicaid Director. 
 Leilani Rose, director, Financial Services Department, has determined that the 
fiscal implications for state government include an increase in federal funds 
for services to elderly persons in institutions for mental diseases. The gross 
increase in federal revenues is estimated to be $2 million annually when the 
program is fully implemented. The net increase in revenues to the state cannot 
be projected until the costs of establishing and maintaining compliance with 
federal and state program standards can be determined. There are no fiscal 
implications for local government or small businesses as a result of 
administering the sections as proposed. There is no anticipated local economic 
impact. 
 Ernest McKenney, director, Office of Medicaid Administration, has determined 
that the public benefit is the promulgation of rules governing federal programs 
consistent with the Medicaid state plan and federal and state regulations. There 
is no cost to persons who are required to comply with the sections as proposed. 
 Written comments on the proposal may be submitted to Linda Logan, director, 
Policy Development, Texas Department of Mental Health and Mental Retardation, 
P.O. Box 12668, Austin, Texas 78711-2668, within 30 days of publication. 
 The new sections are proposed under the Health and Safety Code, Title 7, 
sec.532.015(a), which provides the Texas Board of Mental Health and Mental 
Retardation with broad rulemaking powers. 
 Texas Civil Statutes, Article 4413(502), sec.16, which provide the Health and 
Human Services Commission with the authority to administer federal medical 
assistance funds, is affected by these proposed new sections. 
 
 
  sec.409.371. Purpose.  The purpose of this subchapter is to describe the 
criteria used to determine whether a provider is eligible to receive Medicaid 
reimbursement for inpatient hospital services to people aged 65 and older in an 
institution for mental diseases (IMD) and to describe the methods by which 
patient and provider eligibility is established and reimbursement is 
accomplished. 
 
   
  sec.409.372. Application.  This subchapter applies to institutions for mental 
disease. 
 
   
  sec.409.373. Definitions.  The following words and terms, when used in this 
subchapter, shall have the following meanings, unless the context clearly 
indicates otherwise. 
   
   Inpatient hospital services-Services provided under the direction of a 
physician in an IMD that meet certain requirements for psychiatric hospitals in 
CFR sec.482.60 (b), (c), and (e) and meets certain utilization review (UR) 
requirements in CFR sec.482.30 (a), (b), (d), and (e) unless the UR requirements 
have been waived pursuant to CFR sec.440.140. 
   
   Institution for mental disease (IMD)-A hospital of more than 16 beds that is 
primarily engaged in providing diagnosis, treatment, or care of persons with 
mental diseases, including medical care, nursing care, and related services. 
   
   Medical review team-A team designated by TDMHMR Office of Medicaid 
Administration, that includes at least one physician or other skilled medical 
professional who is familiar with the care of mentally ill individuals. No team 
member may be employed by or have a significant financial interest in the 
facility under review. 
   
   Mental diseases -Diseases listed as mental disorders in the International 
Classification of Diseases, 9th Edition, modified for clinical applications 
(ICD-9-CM), with the exception of mental retardation. 
   
   Qualified mental health professional-A person acting within the scope of his 
or her training and licensure or certification, who is a: 
 
  (A) certified or licensed social worker as defined by Section 50.001, Human 
Resources Code; 
   
  (B) licensed professional counselor as defined by Section 2, Licensed 
Professional Counselor Act (Texas Civil Statutes, Article 4512g); 
   
  (C) physician who is "practicing medicine" as defined by Section 1.03, Medical 
Practice Act (Article 4495b, Vernon's Texas Civil Statutes) or a person employed 
by any agency of the United States having a license to practice medicine in any 
state of the United States; 
   
  (D) registered nurse as defined in law; or 
   
  (E) psychologist offering "psychological services" as defined by Section 2, 
Psychologists' Certification and Licensing Act (Article 4512c, Vernon's Texas 
Civil Statutes). 
 
     
  sec.409.374. Eligible Population. <ol> Reimbursement for inpatient hospital 
services in an IMD is limited to individuals for whom the TDMHMR Office of 
Medicaid Administration determines services to be reasonable and medically 
necessary and who: 
 
  (1) are 65 years and older; 
   
  (2)  have one or more mental diseases; and 
   
  (3) have no acceptable alternate placement. 
 
     
  sec.409.375. Definition of Services. Inpatient hospital services provided by 
eligible IMD providers for the care and treatment (including room and board) of 
individuals with mental diseases include but are not limited to: 
 
  (1) titration or change in medication; 
   
  (2)  monitoring and assessing by qualified mental health professionals; 
   
  (3) suicide precautions; 
   
  (4) redirection of assaultive or other inappropriate and intrusive behaviors; 
   
  (5) group and individual therapies; and 
   
  (6) structured skills training activities. 
 
     
  sec.409.376. Provider Agreement. <ol> To be eligible to be reimbursed for 
inpatient hospital services as an institution for mental diseases, the provider 
must have in effect an agreement with the TDMHMR Office of Medicaid 
Administration which describes respective responsibilities, including 
arrangements to ensure: 
 
  (1) joint planning efforts; 
   
  (2) development of alternative methods of care; 
   
  (3) access by the agency to the institution, the patient, and the patient's 
records when necessary to carry out the agency's responsibilities; 
   
  (4) recording, reporting, and exchanging medical and social information about 
the patients; and 
   
  (5) other procedures that may be required to achieve the purposes of the 
agreement. 
 
     
  sec.409.377. Provider Qualifications. 
 
  (a) Prior to receiving reimbursement for services, the provider must submit to 
the TDMHMR Office of Medicaid Administration written evidence that the provider: 
 
  (1) is currently accredited as a psychiatric facility by the Joint Commission 
on Accreditation of Healthcare Organizations (JCAHO); 
   
  (2) is currently meeting the requirements specified in CFR sec.440.140(a) 
pertaining to providers of inpatient hospital services in institutions for 
mental disease; and 
   
  (3) is currently under the jurisdiction of the state mental health authority 
and is in substantial compliance with the provisions of the Texas Administrative 
Code, Title 25, Part II, Chapters 402, 403, 404, 405, and 408, relating to 
patient care and treatment in inpatient mental health facilities; 
   
  (4) is serving a patient population in which more than 50 percent currently 
require institutionalization because of a mental disease; and 
   
  (5) immediately admits or readmits and treats both eligible voluntary patients 
seeking services under the provisions of the Health and Safety Code, Chapter 
572, and patients lawfully compelled to accept inpatient mental health treatment 
under the provisions of the Health and Safety Code, Chapters 573 and 574. 
     
  (b) Evidence required in subsection (a) of this section will be validated 
through onsite inspection by a medical review team designated by the TDMHMR 
Office of Medicaid Administration. For each Medicaid patient, the team will 
additionally review: 
 
  (1) the adequacy of services available to meet the patient's current health 
needs and promote the patient's maximum physical well-being; 
   
  (2) the necessity or desirability of the patient's continued placement in the 
facility; and 
   
  (3) the feasibility of meeting the patient's health care needs through 
alternative institutional or noninstitutional care. 
     
  (c) Reimbursement commences on the date of validation of evidence of 
eligibility, which is established by written notice from the TDMHMR Office of 
Medicaid Administration to the provider applicant. 
   
  (d) Eligibility must be renewed periodically at a time designated by the 
TDMHMR Office of Medicaid Administration, not to exceed two years. 
   
  (e) Provider reimbursement for inpatient hospital services as an institution 
for mental diseases is subject to termination with or without notice on the date 
that any of the following occurs: 
 
  (1) loss of JCAHO accreditation; 
   
  (2)  failure to meet requirements specified in CFR  s440.140(a) pertaining to 
providers of inpatient hospital services in institutions for mental disease; 
   
  (3) demonstrated substantial noncompliance with the provisions of Chapters 
402, 403, 404, 405, and 408 of this title (relating to Patient Care and 
Treatment in Inpatient Mental Health Facilities), or with state laws governing 
admission and treatment described in subsection (a)(5) of this section; 
   
  (4) breach of the written agreement described in sec.409.376 of this title 
(relating to Provider Agreement) with the state Medicaid agency; or 
   
  (5) termination of the Medicaid program. 
     
  (f) Providers who receive Medicaid reimbursement for inpatient hospital 
services as institutions for mental diseases are governed by Chapter 409, 
Subchapter B of this title (relating to Contract Appeals), and Chapter 409, 
Subchapter C of this title (relating to Fraud and Abuse and Recovery of Funds). 
 
     
  sec.409.378. Reimbursement Methodology. 
 
  (a) Reimbursements under this subchapter are governed by Chapter 409, 
Subchapter A of this title, relating to General Reimbursement Methodology for 
all Medical Assistance Programs. 
   
  (b) Reimbursements for inpatient hospital services provided to individuals age 
65 years and older in institutions for mental disease are based on the median of 
the per diem costs of those hospitals qualifying as providers under this 
subchapter which received Medicaid reimbursements on at least 50 percent of the 
total days of care provided by the hospital during the cost reporting period. If 
no qualified provider had 50% of its days of care during the cost reporting 
period reimbursed by Medicaid under this subchapter, then reimbursement will be 
based on the median per diem costs of all qualified providers that provided a 
minimum of 10% of all days of care provided during the cost reporting period and 
reimbursed under this subchapter. 
 
     
  sec.409.379. References.  The following laws and rules are referred to in this 
subchapter: 
 
  (1) Code of Federal Regulations, sec.sec.482.60, 482.30, and 440.140; 
   
  (2) Human Resources Code, Section 50.001; 
   
  (3) Texas Civil Statutes, Articles 4495b, 4512c and g; 
   
  (4) Health and Safety Code, Chapters 572-574; 
   
  (5) Chapters 402-405 and 408 of this title; and 
   
  (6) This chapter including: 
 
  (A) Subchapter A of this chapter (relating to General Reimbursement 
Methodology for all Medical Assistance Programs); 
   
  (B) Subchapter B of this chapter (relating to Contract Appeals); and 
   
  (C) Subchapter C of this chapter (relating to Fraud and Abuse and Recovery of 
Funds). 
 
       
  sec.409.380. Distribution.  The provisions of this subchapter shall be 
distributed to the medical director and deputy commissioners, Central Office; 
assistant and associate deputy commissioners and directors, Central Office; 
superintendents/directors of all TDMHMR facilities; advocacy organizations; and 
any person requesting a copy. 
 
  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 9, 1994. 
 TRD-9450693 
  Ann Utley 
 Chair, Texas MHMR Board 
 Texas Department of Mental Health and Mental Retardation 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 206-4516 
         
               Part VIII. Interagency Council on Early Childhood Intervention 
Services 
  Chapter 621. Early Childhood Intervention 
  
  Early Childhood Intervention Service Delivery 
 
  25 TAC sec.621.31 
 
  The Interagency Council on Early Childhood Intervention Services proposes an 
amendment to sec.621.31, concerning formal hearing procedures, in its Early 
Childhood Intervention chapter. The purpose of the amendment is to update legal 
citations and reflect the State Office of Administrative Hearing's involvement 
in the formal hearings process. 
 Mary Elder, executive director, has determined that for the first five-year 
period the section is in effect there will be no fiscal implications for state 
or local government as a result of enforcing or administering the section. 
 Ms. Elder also has determined that for each year of the first five years the 
section is in effect the public benefit anticipated as a result of enforcing the 
section will be current and clear rules concerning established procedures for 
processing contested cases. There will be no effect on small businesses. There 
is no anticipated economic cost to persons who are required to comply with the 
proposed section. 
 Questions about the content of this proposal may be directed to Mary Elder at 
(512) 502-4900. Written comments on the proposal may be submitted to Nancy 
Murphy, Media and Policy Services-064, Texas Department of Human Services E-205, 
P.O. Box 149030, Austin, Texas 78714-9030, within 30 days of publication in the 
Texas Register. 
 The amendment is proposed under the Human Resources Code, sec.sec.73.003, which 
authorizes the Interagency Council on Early Childhood Intervention Services to 
establish rules regarding services provided for children with developmental 
delays. 
 The amendment implements the Human Resources Code, sec. s73.001-73.021. 
 
 
  sec.621.31. Formal Hearing Procedures. 
 
  (a) Purpose. This section covers the formal hearing procedures and practices 
that will be available to persons or parties who request formal hearings before 
the <nl>Interagency Council on Early Childhood Intervention Services (council) 
<ol> [council]. The intended effect of these procedures is to implement the 
contested case provisions of the Administrative Procedure [and Texas Register] 
Act <nl>(APA), Title 10 of the Texas Government Code, sec.2001.001 <ol> [Texas 
Civil Statutes, Article 6252-13a]. These hearing procedures will be used for all 
<nl>providers funded by the council <ol> [hearings provided for in sec.sec.621. 
21-621.30 of this title (relating to Early Childhood Intervention Service 
Delivery)], except instances when the rules provide that another fair hearing 
procedure will be used <nl>or when the council elects to undertake a new or 
different program direction. Hearings will be conducted in accordance with the 
Act, rules of the State Office of Administrative Hearings, and the rules of the 
council. State Office of Administrative Hearing rules may be obtained from that 
office. 
   
  (b) Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
 
  <nl>(1)<ol>[(2)] <nl>Administrative law judge (ALJ)<ol> [Hearing examiner]-Any 
person designated or appointed [by the chairperson of the council] as the agent 
or representative of the <nl>State Office of Administrative Hearings<ol> 
[council] to conduct hearings provided for by rules of the council. 
   
  <nl>(2)<ol>[(1)] Contested case -A proceeding in which the legal rights, 
duties, or privileges of a party are to be determined by the council after an 
opportunity for <nl>an <ol> adjudicated hearing. 
   
  (3) Party-Each person or agency named or admitted as a party by the 
<nl>administrative law judge<ol> [hearing examiner] as having a justiciable 
interest in the matter being considered. 
   
  (4)-(5) (No change.) 
   
  [(6) TDH-The Texas Department of Health. 
   
  [(7) TDHS-The Texas Department of Human Services. 
   
  [(8) TXMHMR-The Texas Department of Mental Health and Mental Retardation. 
   
  [(9) TEA-The Texas Education Agency.] 
     
  (c)  Applicability and scope of rules. 
 
  (1) The provisions of <nl>this section <ol> [these sections] shall apply in 
all cases when the council [or TDH] proposes to cancel <nl>a <ol> [the] contract 
with <nl>a<ol> [the] provider <nl>, withhold funds from a provider, or deny 
continuation funding to a provider. 
   
  (2) <nl>All matters not specifically included in the procedural rules adopted 
by the council shall be governed by the Act and the State Office of 
Administrative Hearings Rules of Procedure. <ol> [The provisions of these 
sections shall apply when the council or TDH proposes to withhold funds of an 
ECI provider.] 
     
  (d) Filing of documents. All petitions, complaints, motions, protests, 
replies, answers, notices, and other pleadings relating to any proceeding 
governed by this section which is pending or to be instituted with the council 
shall be filed with the  <nl>State Office of Administrative Hearings<ol> [ECI 
executive director through the ECI office, 1100 West 49th Street, Austin, Texas 
78756-3179]. They shall be deemed filed only when actually received by <nl>the 
State Office of Administrative Hearings <ol> [such office]. 
   
  (e) Computation of time; extension. 
 
  (1) (No change.) 
   
  (2) The time for the doing of any act under <nl>this section<ol> [these 
sections] may be extended by order of the <nl>administrative law judge<ol> 
[hearing examiner], upon written motion duly filed with him [through the ECI 
office] prior to the expiration of the applicable period of time for the doing 
of same, showing that there is good cause for such extension of time and that 
the need <nl>therefor <ol> [therefore] is not caused by neglect, indifference, 
or lack of diligence of movant. A copy of such motion shall be served upon all 
other parties to the proceeding contemporaneously with the filing thereof. 
     
  (f) Notice and service in proceedings. 
 
  (1) (No change.) 
   
  (2) Notice shall include: 
 
  (A)-(D) (No change.) 
   
  (E) a statement that any party can appear in person or by his <nl>counsel<ol> 
[council] and be heard. 
     
  (3) (No change.) 
   
  (4) The council shall mail the notice of the proposed contract 
cancellation<nl>, withholding of funds, or denial of continuation funding<ol> by 
certified or registered mail to the last known place of address of the person 
entitled to receive such notice. [The agency shall mail the notice of proposed 
withholding of funds by certified or registered mail to the last known place of 
address of the person entitled to receive such notice.] 
   
  (5) A copy of any protest, reply, answer, motion, or other pleadings filed by 
any party in any proceedings subsequent to the institution thereof shall be 
mailed or otherwise delivered by the party filing the same to every other party 
of record. If any party has appeared in the proceeding by attorney or other 
representative authorized under this section to make appearance, service shall 
be made upon such attorney or other representative. [The willful failure of any 
party to make such service shall be sufficient grounds for an entry of an order 
by the hearing examiner, striking a protest or reply, answer, motion, or other 
pleadings for the records.] 
   
  (6) (No change.) 
     
  (g) Request for hearing. Any person who receives a written notice to propose 
to cancel the contract<nl>,<ol> [or a written notice to propose to] withhold 
<nl>funding, or deny continuation funding<ol> [the funds] must file a request 
for hearing with the <nl>Early Childhood Intervention (ECI)<ol> [ECI] 
<nl>Program<ol> executive director through the ECI office, 1100 West 49th 
Street, Austin, Texas 78756-3179 within ten days of receipt of the notice. The 
request for hearing shall be deemed filed only when actually received by such 
office. [Failure to file a request for hearing shall be considered a waiver by 
the person of his right to a fair hearing under Texas law.] Failure to file a 
request for hearing shall be considered a waiver by the person of his right to a 
fair hearing after the action is taken to [withhold the funds or to] cancel the 
contract<nl>, withhold funding, or deny continuation funding, and ECI shall 
proceed to finalize its earlier decision<ol>. The request for hearing <nl>shall 
<ol> [should] include: 
 
  (1)-(3) (No change.) 
     
  [(h)  Docketing and numbering of causes; hearing date. 
 
  [(1) Upon receipt of the request for hearing, which complies with this section 
as to form and content, the ECI executive director shall docket the same as a 
pending proceeding, notify TDH, notify the chairperson of the council, and 
appoint an attorney to represent the council for the hearing. 
   
  [(2) Upon receipt of the notification that a request for hearing has been 
docketed by the ECI executive director, the chairperson of the council shall 
appoint the hearing examiner. 
   
  [(3) The hearing examiner shall set a date on which the hearing on the 
proceedings will be held. Said date will be no sooner than ten days nor later 
than 20 days from the date he or she receives written notification of his or her 
appointment as the hearing examiner. The hearing examiner may subsequently 
postpone or continue the hearing date until a later date if, in his sound 
judgment and discretion, good cause requires a later date. Good cause includes, 
but is not limited to, the consideration that a later date will result in a 
fairer and more just determination of the issues and that the welfare of any 
client will not be substantially endangered by reason of the postponement. The 
hearing examiner is not precluded by this section or any other section from 
ordering a postponement or continuance of the hearing upon the showing of good 
cause.] 
     
  <nl>(h)<ol>[(i)]  Appointment of the hearing examiner. 
 
  (1) Hearings will be conducted by <nl>an administrative law judge<ol> [a 
hearing examiner] appointed by the <nl>State Office of Administrative 
Hearings<ol> [chairperson of the council] upon receipt of a request for hearing 
<nl>from the ECI executive director. 
   
  [(2) The commissioner, or his designee, of TDH, TXMHMR, TEA, and TDHS shall 
designate one attorney employed by each agency to make up a pool of hearing 
examiners from which the chairperson of the council shall appoint a hearing 
examiner and the ECI executive director shall appoint an attorney to represent 
the council for each hearing. The chairperson and the ECI executive director 
will consider the extent of involvement of each agency in the matters being 
contested, and insofar as is practicable, the hearing examiner will be selected 
from the agency with least involvement and the attorney representing the council 
will be selected from the agency with greatest involvement.] 
   
  <nl>(2)<ol>[(3)] The  <nl>administrative law judge<ol> [hearing examiner] 
shall have authority to administer oaths, to examine witnesses, and to rule upon 
the admissibility of evidence and amendments to pleadings. The 
<nl>administrative law judge<ol> [hearing examiner] shall have the authority to 
recess any hearing from day to day. 
   
  [(4) If the hearing examiner dies, becomes disabled, or withdraws or is 
removed from employment or is removed from the case at any time before the final 
decision thereof, the chairperson of the council may appoint another hearing 
examiner who may perform any function remaining to be performed without the 
necessity of repeating the previous proceedings in the case. 
   
  [(5) The ECI executive director may request that the commissioner of TDH, TEA, 
TDHS, or TXMHMR designate one or more employees of any of these agencies with 
particular expertise and experience who are knowledgeable in the subject matter 
of the hearing in question in the evaluation of evidence presented at the 
hearing.] 
     
  <nl>(i)<ol>[(j)] Subpoenas. 
 
  (1)  On <nl>its<ol> [the hearing examiner's] own motion or on the written 
request of any party to the hearing, <nl>ECI<ol> [the hearing examiner] shall 
issue a subpoena to the appropriate sheriff or constable to require the 
attendance of witnesses or the production of documents at the hearing. 
   
  (2) There has to be a show of good cause for the subpoena, i.e., the witnesses 
or documents must have information that is relevant and material to the hearing 
and the subpoena should not result in undue harassment, imposition, 
inconvenience, or expense to a party to the hearing. 
   
  (3) A party or witness may seek to quash the subpoena or move for a protective 
order as provided in Texas Rules of Civil Procedure. 
   
  (4) Witnesses may be subpoenaed from any place in the State of Texas. 
   
  (5) Documents include books, papers, accounts, and similar materials or 
objects. 
   
  (6)  The payment of subpoena costs or fees and the failure to comply with a 
subpoena shall be governed by the Administrative Procedure [and Texas Register] 
Act, <nl>sec.2001.094 and sec.2001.103<ol> [(APTRA), sec.14]. 
     
  <nl>(j) <ol>[(k)] Depositions. The taking and use of depositions in any 
contested case proceeding shall be governed by <nl>the Administrative Procedure 
Act, sec.2001.094 and sec.2001.103<ol> [APTRA,  s14]. 
   
  <nl>(k)<ol>[(l)]  Prehearing conferences. 
 
  (1) In a contested case, the <nl>administrative law judge<ol> [hearing 
examiner], on his own motion or the motion of a party, may direct the parties, 
their attorneys or representatives to appear at a specified time and place for a 
conference prior to the hearing for the purpose of: 
 
  (A) the formulation and simplification of issues; 
   
  (B) the necessity or desirability of amending the pleadings; 
   
  (C)  the possibility of making admissions or stipulations; 
   
  (D) the procedure at the hearing; 
   
  (E) specifying the number of witnesses; 
   
  (F) the mutual exchange of prepared testimony and exhibits; 
   
  (G)  designation of parties; and 
   
  (H) other matters which may expedite the hearing. 
     
  (2) The <nl>administrative law judge<ol> [hearing examiner] will conduct the 
prehearing conference in such manner and with the necessary authority to 
expedite the conference while reaching a fair, just, and equitable determination 
of any matters or issues being considered. 
   
  (3) The <nl>administrative law judge<ol> [hearing examiner] will have the 
minutes of the conference recorded in an appropriate manner and will issue 
whatever orders are necessary covering the said matters or issues. 
   
  (4)  Any action taken at the prehearing conference shall be reduced to 
writing, signed by the parties, and made a part of the record. 
     
  <nl>(l)<ol>[(m)]  Motions. Any motion relating to a pending proceeding 
governed by this section shall, unless made during a hearing and dictated into 
the record, be written and shall set forth the relief sought, the specific 
reasons and grounds therefore, and shall be supported by affidavit if based upon 
matters which do not appear of record. Motions not made during a hearing shall 
be filed with the <nl>administrative law judge<ol> [hearing examiner], who shall 
act upon it at the earliest practicable time. 
   
  <nl>(m)<ol>[(n)]  Hearing procedure. 
 
  (1) The <nl>administrative law judge's<ol> [hearing examiner's] duties. The 
<nl>administrative law judge<ol> [hearing examiner] will preside over and 
conduct the hearing. On the day and time designated for the hearing, the 
<nl>administrative law judge<ol> [hearing examiner] shall: 
 
  (A) convene and call the hearing to order; 
   
  (B)  state the purpose of and the legal authority for the hearing; 
   
  (C)  announce that a record of the hearing will be made; 
   
  (D) outline the procedure and order of presentation that will be followed; 
   
  (E)  administer oaths to those who intend to testify; and 
   
  (F) take any and all other actions as authorized by applicable law and these 
sections to provide for a fair, just, and proper hearing. 
     
  (2) Order of presentation. 
 
  (A) After making the necessary introductory and explanatory remarks on the 
purpose of the hearing, [etc.,] the <nl>administrative law judge<ol> [hearing 
examiner] will begin receiving testimony and evidence from the witnesses. 
   
  (B) Each party may present evidence and testimony and cross-examine or ask 
clarifying questions of any witness who presents evidence or testimony. 
   
  (C) The party who proposes to withhold funds or who proposes to cancel the 
contract has the burden of proving that the actions or proposed actions are 
justified; provided, however, that the order of proceeding may be altered or 
modified by the <nl>administrative law judge<ol> [hearing examiner] upon 
agreement of the parties or upon his own motion when such action will expedite 
the hearing without prejudice to any party. 
   
  (D) When the party first proceeding finishes his case, the remaining party or 
parties will be allowed to present evidence and testimony in the same manner. 
Each witness is subject to cross-examination and clarifying questions by other 
participants to the proceedings. 
   
  (E) The <nl>administrative law judge<ol> [hearing examiner] may limit the 
number of witnesses whose testimony will be repetitious, and <nl>he<ol> [the 
hearing examiner] may also establish time limits for testimony so long as all 
viewpoints are given a reasonable opportunity to be expressed. 
   
  (F) The <nl>administrative law judge<ol> [hearing examiner], at his 
discretion, may allow final arguments or take the case under advisement, note 
the time, and close the hearing. For sufficient cause, the <nl>administrative 
law judge<ol> [hearing examiner] may hold the record open for a stated number of 
days for the purpose of receiving additional evidence into the record. 
     
  (3) Consolidation. The <nl>administrative law judge<ol> [hearing examiner], 
upon his own motion or upon motion by any party, may consolidate for hearing two 
or more proceedings which involve substantially the same parties or issues. 
Proceedings before the  <nl>administrative law judge<ol> [council] shall not be 
consolidated without consent of all parties to such proceedings, unless the 
<nl>administrative law judge<ol> [hearing examiner] finds that such 
consolidation will be conducive to a fair, just, and proper hearing and will not 
result in unwarranted expense or undue delay. 
   
  (4) Conduct and decorum during the hearing. Every party, witness, attorney, 
representative, or other person shall exhibit in all hearings proper dignity, 
courtesy, and respect for the <nl>administrative law judge <ol> [hearing 
examiner] and all other persons participating in or observing the hearing. The 
<nl>administrative law judge<ol> [hearing examiner] is authorized to take 
whatever action he deems [necessary and] appropriate to maintain the proper 
level of decorum and conduct, including, but not limited to, recessing the 
hearing to be reconvened at another time or place or excluding from the hearing 
any party, witness, attorney, representative, or other person for such period 
and upon such conditions as the <nl>administrative law judge<ol> [hearing 
examiner] deems fair and just. 
   
  (5) The hearing record. The hearing record will include: 
 
  (A)  all pleadings, motions, and intermediate rulings; 
   
  (B) evidence received or considered; 
   
  (C) a statement of matters officially noticed; 
   
  (D) questions and offers of proof, objections, and rulings of them; 
   
  (E) proposed findings and exceptions; 
   
  (F) any decision, opinion, or report by the <nl>administrative law judge<ol> 
[hearing examiner]; and 
   
  (G) all staff memoranda or data submitted to or considered by the 
<nl>administrative law judge <ol> [hearing examiner] or members of the council 
who are involved in making the decision. 
     
  (6) Recording the hearing. 
 
  (A) The <nl>administrative law judge<ol> [hearing examiner] may keep either a 
stenographic or magnetic tape record of the hearing proceeding. A court reporter 
may be present to record the hearing. <nl>The expenses of the court reporter 
shall be borne by the party requesting the service. 
   
  (B) In those cases when a magnetic tape recording of the formal hearing is 
made, the <nl>administrative law judge<ol> [council] shall make such recording 
available to any party requesting permission to hear or, with appropriate 
protective measures, allow such recording to be duplicated. 
     
  (7) Assessing the cost of a transcript. 
 
  (A) In accordance with <nl>the APA, sec.2001.059<ol> [APTRA,  s13(g)], 
proceedings, or any part of them, shall be transcribed on written request of any 
party. The council may pay the cost of the transcript or assess the cost to one 
or more parties. 
   
  (B) In the event a final decision of the council is appealed to the district 
court wherein the council is required to transmit to the reviewing court a 
written transcript of the hearing proceeding, or any part thereof, the council 
may: 
 
  (i) require the appealing party to file with the agency the original and one 
copy of such written transcript; or 
   
  (ii)  acquire such written transcript directly from the court reporter or 
other person preparing the same and thereafter assess the cost of the original 
and one copy of such transcript against the appealing party as reimbursement for 
the cost of same. 
       
  (8) Rules of evidence. The <nl>administrative law judge<ol> [hearing 
examiner], at a hearing, a reopened hearing, or a rehearing will apply the rules 
of evidence under <nl>the APA,  s2001. 201-2001.88<ol> [APTRA, sec.14(a)], and 
[also] the following rules. 
 
  (A)  Consolidation. The <nl>administrative law judge<ol> [hearing examiner] 
may consolidate the testimony of parties or persons if the evidence can be 
effectively consolidated into one document or the testimony of one witness. The 
standard by which the <nl>administrative law judge shall<ol> [hearing examiner 
should] judge this consolidation is whether each party or person can offer 
unique or new evidence that has not been previously introduced. Any party under 
oath may make an offer of proof of the testimony or evidence excluded through 
consolidation by dictating into the record or submitting in writing the 
substance of the proposed testimony prior to the conclusion of the hearing. 
   
  (B) Documentary evidence. Documentary evidence should be presented in its 
original form but if the original is not readily available, documentary evidence 
may be received in the form of copies or excerpts. On request, parties shall be 
given an opportunity to compare the copy with the original. When numerous 
documents are offered, the <nl>administrative law judge<ol> [hearing examiner] 
may limit the documents in his discretion, or require the abstracting of the 
relevant data from the documents and presentation of the abstracts in the form 
of exhibits; provided, however, that before making such requirement, the  
<nl>administrative law judge<ol> [hearing examiner] shall require that all 
parties of record or their representatives be given the right to examine the 
documents from which such abstracts were made. Any party may make an offer of 
proof of the documents which are excluded by <nl>the administrative law 
judge's<ol> [a hearing examiner's] decision to remove only typical or 
representative documents. 
   
  (C) Exhibits. 
 
  (i) Form. Exhibits of documentary character shall be limited to facts material 
and relevant to the issues involved in a particular proceeding, and the parties 
shall make a reasonable effort to introduce exhibits which will not unduly 
encumber the files and records of the agency. 
   
  (ii)  Tender and service. The original of each exhibit offered shall be 
tendered to the <nl>administrative law judge<ol> [hearing examiner] or a 
designee for identification and shall be offered to the parties for their 
inspection prior to offering or receiving the same into evidence. 
   
  (iii)  Excluded exhibits. In the event an exhibit has been identified, 
objected to, and excluded, it shall be given an exhibit number for purposes of 
identification and shall be included in the record under seal. 
   
  (iv)  After hearing. Unless specifically directed by the <nl>administrative 
law judge <ol> [hearing examiner], no exhibit will be permitted to be filed in 
any proceeding after the conclusions of the hearing except in a reopened hearing 
or a rehearing. 
     
  (D) Admissibility of prepared testimony and exhibits. When a proceeding will 
be expedited and the interests of the parties will not be prejudiced 
substantially, evidence may be received in written form. The prepared testimony 
of a witness upon direct examination, either in narrative or question and answer 
form, may be incorporated in the record as if read or received as an exhibit, 
upon the witness being sworn and identifying the same as a true and accurate 
record of what his testimony would be if he were to testify orally. The witness 
shall be subject to clarifying questions and to cross-examination and his 
prepared testimony shall be subject to a motion to strike either in whole or in 
part. 
   
  (E) Official notice. Official notice by the <nl>administrative law judge<ol> 
[hearing examiner or the agency] shall be governed by <nl>APA, sec.2001.090<ol> 
[APTRA, sec.14]. Further, official notice may be taken of any statute, 
ordinance, or duly promulgated and adopted rules or regulations of any 
governmental agency. The <nl>administrative law judge <ol> [hearing examiner] 
shall indicate during the course of a hearing that information of which he will 
take official notice. When  <nl>the administrative law judge's <ol> [a hearing 
examiner's] findings are based upon official notice of a material fact not 
appearing in the evidence of record, the <nl>administrative law judge<ol> 
[hearing examiner] shall set forth in his proposal for decision those items with 
sufficient specificity so as to advise the parties of the matters which have 
been officially noticed. The parties shall have the opportunity to show to the 
contrary through the filing of exceptions to the <nl>administrative law 
judge's<ol> [hearing examiner's] proposal for decision. 
     
  (9) Informal disposition of case. Unless precluded by law, informal 
disposition may be made of any contested case by stipulation, agreed settlement, 
consent order, or default. 
   
  (10) Agreements in writing. No stipulation or agreement between the parties, 
their attorneys or representatives, with regard to any matter involved in any 
proceeding shall be enforced unless it shall have been reduced to writing and 
signed by the parties or their authorized representatives, dictated into the 
record during the course of a hearing, or incorporated in an order bearing their 
written approval. This subsection does not limit a party's ability to waive, 
modify, or stipulate away any right or privilege afforded by this section. 
     
  <nl>(n)<ol>[(o)] Action after the hearing. 
 
  (1) Reopening of hearing for new evidence. 
 
  (A) The <nl>administrative law judge<ol> [hearing examiner] may reopen a 
hearing where new evidence is offered which was unobtainable or unavailable at 
the time of the hearing. 
   
  (B) The <nl>administrative law judge<ol> [hearing examiner] will reopen a 
hearing to include such new evidence as part of the record if the 
<nl>administrative law judge<ol> [hearing examiner] deems such evidence 
necessary for a proper and fair determination of the case. The reopened hearing 
will be limited to only such new evidence. 
   
  (C)  Notice and procedural requirements will be the same as for the original 
hearing. 
     
  (2) Proposal for decision. 
 
  (A) The <nl>administrative law judge<ol> [hearing examiner] shall prepare a 
proposal for decision within ten days after the hearing is closed and provide 
copies of the same to all parties. <nl>This time may be extended by the 
administrative law judge due to workload issues. 
   
  (B) Each party having the right and desire to file exceptions and briefs shall 
file them with the <nl>administrative law judge<ol> [hearing examiner] within 
the time designated by the <nl>administrative law judge<ol> [hearing examiner]. 
   
  (C) Parties desiring to do so shall file written replies to these exceptions 
and briefs as soon as possible after receiving same, and within the time 
designated by the <nl>administrative law judge<ol> [hearing examiner]. 
   
  (D) All exceptions and replies to them shall be succinctly stated. 
     
  (3) Filing. At any time after the record has been closed in a contested case, 
and prior to the administrative decision becoming final in such case, all 
briefs, exceptions, written objections, motions (including motion for 
rehearing), replies to the foregoing, and all other written documents shall be 
filed with the <nl>administrative law judge <ol> [hearing examiner]; and 
further, the party filing such instrument shall provide copies of the same to 
all other parties of record by first class United States mail or personal 
service and certify, in writing thereon, the names and addresses of the parties 
to whom copies have been furnished, as well as the date and manner of service. 
   
  (4) Final decision. 
 
  (A) The final decision will be rendered by a majority of a quorum of the 
council<nl>, unless the authority to render a final decision is delegated to the 
administrative law judge. 
   
  (B) All final decisions shall be in writing and shall set forth the findings 
of fact and conclusions <nl>of law<ol> required by law, either in the body of 
the order or by reference to the <nl>administrative law judge's<ol> [hearing 
examiner's] proposal for decision. 
   
  (C) All final decisions shall be signed by each member of the council who made 
up the quorum which rendered the final decision. 
   
  (D)  A copy of all final decisions shall be timely provided to all parties as 
required by law. 
   
  (E) When a contract has been canceled, either upon a final decision of the 
council or by mutual agreement prior thereto, <nl>or a decision to deny 
continuation funding,<ol> the provider shall notify parents of all children 
served by the provider that ECI approval has been canceled. If the provider 
fails to so notify the parents and furnish satisfactory documentation to the 
council within 30 days that such notification has been made, the ECI executive 
director may thereupon serve such notice upon said parents. 
       
  <nl>(o)<ol>[(p)] Decisions and orders. 
 
  (1) Motion for rehearing. A decision is final, in the absence of a timely 
motion for rehearing, on the expiration of the period for filing a motion for 
rehearing and is final and appealable on the date of rendition of the order 
overruling the motion for rehearing, or on the date the motion is overruled by 
operation of law. If the council finds that an imminent peril to the public 
health, safety, or welfare requires immediate effect of a final decision in a 
contested case, the finding in a decision shall be recited as well as the fact 
that the decision is final and effective on the date rendered, in which event 
the decision is final and appealable on the date rendered and no motion for 
rehearing is required as a prerequisite for appeal. 
   
  (2) Final decision. [Unless otherwise specifically stated by the statute, the] 
<nl>The <ol>final decision must be rendered within <nl>30<ol> [25] days after 
the date the hearing is finally closed. <nl>The time period for the final 
decision shall be extended if the conclusions of law or findings of fact are not 
submitted timely to the council by the administrative law judge. 
   
  (3)  Appeals. Except as otherwise provided in paragraph (1) of this 
subsection, a motion for rehearing is a prerequisite to an appeal. A motion for 
rehearing must be filed within five days after the date of rendition of a final 
decision. 
     
  <nl>(p)<ol>[(q)] Hearing procedure for denial of the continuation of a grant 
to a provider. The hearing procedure described in subsections (a) -
<nl>(o)<ol>[(p)] of this section shall govern all such proceedings <nl>except 
that in subsection (n)(4)(C) of this section concerning the hearing procedure 
the party who has been denied the continuation of funding and is requesting that 
the decision of the council to deny funding be reversed has the burden of 
proving that such an action is justified<ol> [with the following exceptions]. 
 
  [(1) Subsection (h) of this section on the hearing procedure, will be changed 
so that the party who has been denied the continuation of a grant and is 
requesting that the decision of the council to deny funding be reversed has the 
burden of proving that such an action is justified. 
   
  [(2) Subsection (o) of this section on the action after the hearing will be 
changed to provide that the hearing examiner will render the final order or 
decision in the hearing, as the designee of the council.] 
 
  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 8, 1994. 
 TRD-9450604 
  Nancy Murphy 
 Section Manager, Media and Policy Services 
 Interagency Council on Early Childhood Intervention Services 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 450-3765 
         
                     
  TITLE 28. INSURANCE 
 Part I. Texas Department of Insurance 
  Chapter 5. Property and Casualty Insurance 
  
  Subchapter A. Automobile Insurance 
 
  Miscellaneous Interpretations 
 
  28 TAC sec.5.206 
 
  The Texas Department of Insurance proposes new sec.5.206, which designates 
geographic areas as underserved for automobile liability insurance for purposes 
of determining credits to offset an insurer's quota of assignments through the 
Texas Automobile Insurance Association. The new section is necessary to 
designate the ZIP Codes within Texas that are underserved and for which policies 
written in the ZIP Code will give rise to credits under the Plan of Operation 
for the Texas Automobile Insurance Plan Association. 
 The Department will consider the adoption of new sec.5.206 in a public hearing 
under Docket Number 2129, scheduled for 8:00 a.m. on December 16, 1994 in Room 
100 of the Texas Department of Insurance Building, 333 Guadalupe Street in 
Austin, Texas. 
 Birny Birnbaum, Chief Economist-Associate Commissioner for Policy and Research, 
has determined that for the first five-year period the proposed new section is 
in effect there will be no fiscal implications as a result of enforcing or 
administering the rule for local government, small businesses, or local 
economies. There will be no additional cost to state government as a result of 
administering and enforcing the rule. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
new section is in effect the public benefit anticipated as a result of enforcing 
the new section will be an increase in the availability of automobile insurance 
in underserved areas, as contemplated by Texas Insurance Code Article 21.81 
sec.3(e). There is no anticipated cost to parties who are required to comply 
with the rule. 
 Comments on the proposal may be submitted to Chief Clerk, Texas Department of 
Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, Mail 
Code 113-2A, within 30 days following the date of this publication. 
 The new rule is proposed under Insurance Code, Articles 1.03A and 21.81, 
sec.3(e). Article 1.03A authorizes the Commissioner to adopt rules and 
regulations for the conduct and execution of the duties and functions of the 
department as authorized by statute. Article 21.81 requires that the 
Commissioner designate underserved geographic areas by rule. 
 The following Articles of the Insurance Code are affected by this rule: 
sec.5.206 Article 21.81. 
 
 
  sec.5.206. Designation of Underserved ZIP Codes. 
 
  (a) FIGURE 1: 28 TAC sec.5.206(a) 
   
  (b) FIGURE 2: 28 TAC sec.5.206(b) 
   
  (c) FIGURE 3: 28 TAC sec.5.206(c) 
   
  (d) FIGURE 4: 28 TAC sec.5.206(d) 
   
  (e) Class 0. Any ZIP Code not listed in subsections (a)-(d) of this section 
are designated as a Class 0 ZIP Code. 
   
  (f) Changes to designations. After initial designation of a ZIP Code, the 
designation may not be decreased (to a lower numbered class) for three years. 
Any such decrease in designation shall not be effective until one year after the 
changed designation is adopted as an amendment to this rule. An increase in the 
designation of a ZIP Code (to a higher numbered class) may occur at any time by 
amending this rule. 
   
  (g) In designating ZIP Codes as Class 0, 1, 2, 3 or 4, the Commissioner shall 
principally use the share of average vehicles on policies in force in assigned 
risk and non-standard markets as a percentage of total average vehicles on 
polices in force by ZIP Code. 
   
  (h) The Department shall publish quarterly a listing of the number of average 
vehicles on policies in force by company by ZIP Code in this state. This 
information will enable the Texas Automobile Insurance Plan Association, 
insurers and the public to make the necessary credit calculations and allow all 
interested parties to monitor which ZIP Codes may be underserved in the future. 
 
  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 9, 1994. 
 TRD-9450708 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-6327 
         
                 Chapter 21. Trade Practices 
  
  Subchapter J. Prohibited Trade Practices 
 
  28 TAC sec.21.1002 
 
  The Texas Department of Insurance proposes new sec.21.1002, which would 
prohibit the use of unfair underwriting guidelines by private passenger 
automobile and residential property insurers. Unfair underwriting guidelines are 
defined as those which are not related to the risk of loss for insuring a hazard 
(person, property or vehicle) or the expense in issuing or servicing the policy 
and those which are based, in whole or in part, on race, color, religion, 
national origin or familial status. The new section is necessary to prevent the 
unfair practice in the business of insurance by some insurers in using unfair 
underwriting guidelines. Use of unfair underwriting guidelines causes consumers 
to either be denied insurance or be placed in insurance companies with higher 
rates than those companies for which the consumer would otherwise qualify. The 
new section also provides safe harbors for companies to comply with or determine 
whether they are in compliance with the rule. 
 The Department will consider the adoption of new sec.21.1002 in a public 
hearing under Docket Number 2125, scheduled for 8:00 a.m. on December 16, 1994 
in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street 
in Austin, Texas. 
 Birny Birnbaum, Chief Economist-Associate Commissioner, has determined that for 
the first five-year period the proposed new section will be in effect there will 
be no fiscal implications as a result of enforcing or administering the rule for 
local government, small businesses, or local economies. There will be no 
additional cost to state government as a result of administering and enforcing 
the rule because the department's enforcement budget will not change as a result 
of this rule. To the extent necessary to enforce these new sections, the 
department will shift resources from other enforcement actions. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
new section is in effect the public benefit anticipated as a result of enforcing 
the new section will be the elimination of unfair practices in the business of 
insurance; greater availability and affordability of insurance; greater ability 
of Texas consumers to obtain insurance at fair rates; and greater ability of 
Texas consumers to comply with the Texas Safety Responsibility Law, which 
effectively requires drivers to obtain automobile liability insurance. These 
benefits will arise from the more beneficially competitive insurance markets 
which will result from the elimination of the unfair practices. 
 There is no anticipated new direct economic cost to persons who are required to 
comply with the proposed new section for underwriting guidelines that are 
specifically listed in the safe harbor section of the rule. 
 There is an anticipated new direct economic cost to persons who are required to 
comply with the proposed new section for those guidelines which must be 
eliminated as being in violation of the rule. This cost is to notify the 
company's agents and underwriters of the elimination of the guideline. These 
costs may range from $100 to $100,000 per company, depending on the number of 
agents and underwriters and the method used in notifying them. There is no 
anticipated economic cost of higher losses or expenses as a result of the 
elimination of any underwriting guideline which is not related to risk of loss 
or size of expense, because, by definition, such underwriting guidelines do not 
identify an increase in loss or expense. 
 For companies that have underwriting guidelines which comply with subsection 
(a) but are not listed in the safe harbor provision of the rule, the company is 
not required to obtain approval of the use of the guideline and thus there are 
no new economic costs to comply with the rule. However, if the company seeks to 
have the department amend this section by adding the underwriting guideline to 
subsection (c), it will incur new economic costs of between $100 and $100,000 to 
participate in rule making proceedings. 
 For companies that have underwriting guidelines for which they have no data to 
determine whether use of the underwriting guideline complies with subsection (a) 
of the rule, the company is not required to obtain approval of the use of the 
guideline and thus is not required to incur any cost under the rule. However, if 
the company seeks to collect data on the underwriting guideline and/or have the 
department amend this section by adding the underwriting guideline to subsection 
(c), it will incur new economic costs of between $100 and $100,000 to collect 
the necessary data and/or to participate in rule making proceedings. 
 Comments on the proposal may be submitted to Chief Clerk, Texas Department of 
Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, Mail 
Code 113-2A, within 30 days following the date of this publication. 
 The new rule is proposed under Insurance Code, Articles 1.03A, 5.98, and 21. 
21, sec.13. Article 1.03A authorizes the Commissioner to adopt rules and 
regulations for the conduct and execution of the duties and functions of the 
department as authorized by statute. Article 21.21, sec.13 authorizes the 
Department to promulgate rules and regulations to accomplish the purposes of 
Insurance Code, Articles 21.20 and 21.21. Article 5.98 authorizes the Department 
to adopt reasonable rules that are appropriate to accomplish the purposes of 
Insurance Code, Chapter 5, including Article 5.09 (prohibiting any distinction 
or discrimination in favor of an insured having a like hazard, which occurs when 
an underwriting guideline unrelated to risk or expense is used to place a 
consumer in a different company within a company group). 
 The following Articles of the Insurance Code are affected by this rule: 
sec.21.1002-Articles 5.09 and 21.21. 
 
 
  sec.21.1002. Unfair Underwriting Guidelines. 
 
  (a) Prohibition. Unless otherwise expressly authorized by law, a private 
passenger automobile or residential property insurer or agent shall not use an 
unfair underwriting guideline in making a decision to cancel, non-renew, limit 
the coverages made available to, or refuse to issue a policy to a consumer. The 
failure to comply with this subsection constitutes an unfair practice in the 
business of insurance in violation of the Insurance Code, Article 21.21, and 
shall be subject to the provisions thereof. 
   
  (b) Definition of "unfair underwriting guideline." An underwriting guideline 
is unfair if any one of the following applies. 
 
  (1) The underwriting guideline is not related to the risk of loss for insuring 
the consumer or the expense in issuing or servicing the policy. 
   
  (2) The underwriting guideline is based, in whole or in part, on race, color, 
religion, national origin or familial status. 
     
  (c) Definition of "related to risk or expense." An underwriting guideline is 
"not related to the risk of loss for insuring the consumer or the expense in 
issuing or servicing the policy" unless higher losses or higher expenses are 
shown to be associated with the characteristic through a standard statistical 
procedure that meets all of the requirements of paragraphs (1)-(3) of this 
subsection. 
 
  (1) The statistical procedure must control for all other underwriting 
guidelines and rating factors which have been approved by the department as 
being in compliance with subsection (a) of this section and all other 
underwriting guidelines of the insurer. 
   
  (2) The statistical procedure must show, to a 95% confidence level or higher, 
that consumers who satisfy the underwriting guideline have, on average, lower 
losses or cause the insurer to incur lower expenses than those consumers who do 
not satisfy the underwriting guideline. 
   
  (3) The analysis of the underwriting guideline must be based on sound 
actuarial principles. 
     
  (d) Safe Harbors. An underwriting guideline that meets the requirements of one 
of the safe harbors set out in paragraphs (1), (2), or (3) of this subsection is 
deemed to be in compliance with subsection (a) of this section. However, an 
insurer subject to subsection (a) of this section is not required to obtain the 
prior approval of the Department or rely on the safe harbor protections of this 
subsection to use an underwriting guideline. 
 
  (1) Underwriting guidelines for private passenger automobile insurance based 
on the following characteristics comply with subsection (a) of this rule: 
 
  (A) average miles driven in a year or other specified time period; 
   
  (B) accidents in which a person to be insured under the policy was 
substantially at fault and which resulted in bodily injury or property damage; 
   
  (C) a final conviction in any court in the United States, forfeiture of bond, 
or payment of a fine or an amount accepted by the court if the conviction, 
forfeiture or payment was a result of an allegation that a violation of a law 
regulating the operation of motor vehicles was committed; 
   
  (D) the making of a fraudulent insurance claim; 
   
  (E) number of years of driving experience or number of years licensed to 
drive. 
     
  (2) Underwriting guidelines for residential property insurance based on the 
following characteristics comply with subsection (a) of this rule: 
 
  (A) the physical condition of the property to be insured, provided the 
underwriting guideline has specific and objective measures to evaluate the 
hazard; 
   
  (B) claim experience on a residential property policy arising out of the 
consumer's negligence; 
   
  (C) if a structure to be insured is vacant or unoccupied for more than 60 
days; 
   
  (D) the existence of a physical hazard, if the hazard presents a significant 
risk of loss directly related to the perils to be insured against. Residential 
property or traffic patterns shall not be considered to be physical hazards; 
   
  (E) the making of a fraudulent insurance claim; 
   
  (F) conviction for arson. 
     
  (3) Additional underwriting guidelines may be added to the lists in subsection 
(c)(1) and (2) of this section pursuant to the rule making procedures under the 
Government Code, Chapter 2001. The provisions set out in subparagraphs (A) and 
(B) of this paragraph shall also apply to a petition to amend this section. 
 
  (A) If an insurer makes the petition, that insurer's use of the underwriting 
guideline shall not be a violation of subsection (a) of this section for the 
period beginning on the date the petition for rule making is filed with the 
department. If the rule is not adopted, the safe harbor ends thirty days after 
either the entry of an order denying the petition or withdrawal of the proposed 
rule. 
   
  (B) If requested by the petitioner, the commissioner may postpone ruling on 
the petition to permit any interested person to collect data on the underwriting 
guideline for such period as the commissioner deems necessary. The commissioner 
may also add data elements to any applicable statistical plan as necessary. 
       
  (e) Definition Of "Underwriting Guideline." For the purposes of this rule, an 
"underwriting guideline" is a rule, standard, marketing decision, guideline, or 
practice, whether written, oral or electronic, used by an insurer or its agent 
to examine, bind, accept, reject, cancel or limit coverages made available to 
groupings of consumers. 
   
  (f) Definition Of "Consumer." For the purposes of this rule, a "consumer" is 
the person making the application to insure a person, property or vehicle. A 
"consumer" includes both existing insureds and applicants for insurance. 
   
  (g) Definition of "Rating factors." For the purposes of this rule, "rating 
factors" are all territories, rating classifications, discounts and surcharges 
promulgated or approved by the department. 
   
  (h) Other Laws Not Excepted. Compliance with subsection (a) of this section 
does not constitute an exemption from other rules or regulations of the 
department or statutory requirements. 
 
  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 4, 1994. 
 TRD-9450492 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-6327 
         
           
  28 TAC sec.21.1004 
 
  The Texas Department of Insurance proposes new sec.21.1004, which would 
prohibit discrimination on the basis of race, color, religion, or national 
origin and, to the extent not justified by sound actuarial principles, on the 
basis of geographic location, disability, sex, or age, in making a decision 
whether to sell or cancel a policy or certificate of insurance. The new section 
is necessary to prevent the unfair practice in the business of insurance of 
using underwriting guidelines based on race, color, religion, or national origin 
and, to the extent not justified by sound actuarial principles, on the basis of 
geographic location, disability, sex, or age, in making a decision whether to 
sell or cancel a policy or certificate of insurance and thereby causing those 
consumers to either be denied insurance or be placed in insurance companies with 
higher rates than those companies for which the consumer would otherwise 
qualify. 
 The Department will consider the adoption of new sec.21.1004 in a public 
hearing under Docket Number 2126, scheduled for 8:00 a.m. on December 16, 1994 
in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street 
in Austin, Texas. The Department encourages any interested party with data or 
statistical analyses regarding the types of discrimination which are the subject 
of this rule to provide the Department with that data and statistical analyses 
at or before the hearing. This request includes, but is not limited to, data and 
statistical analyses related to whether the types of discrimination meet the 
three requirements for being "related to risk or expense" set out in proposed 
sec.21.1002(c) of this title. 
 Birny Birnbaum, Chief Economist-Associate Commissioner, has determined that for 
the first five-year period the proposed new section will be in effect there will 
be no fiscal implications as a result of enforcing or administering the rule for 
local government, small businesses, or local economies. There will be no 
additional cost to state government as a result of administering and enforcing 
the rule because the department's enforcement budget will not change as a result 
of this rule. To the extent necessary to enforce these new sections, the 
department will shift resources from other enforcement actions. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
new section is in effect the public benefit anticipated as a result of enforcing 
the new section will be the elimination of unfair practices in the business of 
insurance; greater availability and affordability of insurance; greater ability 
of Texas consumers to obtain insurance at fair rates; and greater ability of 
Texas consumers to comply with the Texas Safety Responsibility Law, which 
effectively requires drivers to obtain automobile liability insurance. These 
benefits will arise from the more beneficially competitive insurance markets 
which will result from the elimination of the unfair practices. 
 There is an anticipated new direct economic cost to individuals who are 
required to comply with the proposed new section. This cost is to notify the 
company's agents and underwriters of the elimination of guidelines that do not 
comply with this section. These costs may range from $100 to $100,000 per 
company, depending on the number of agents and underwriters and the method used 
in notifying them. There are no additional economic costs. 
 Comments on the proposal may be submitted to Chief Clerk, Texas Department of 
Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, Mail 
Code 113-2A, within 30 days following the date of this publication. 
 The new rule is proposed under Insurance Code, Articles 1.03A and 21.21, 
sec.13. Article 1.03A authorizes the Commissioner to adopt rules and regulations 
for the conduct and execution of the duties and functions of the department as 
authorized by statute. Article 21.21, sec.13 authorizes the Department to 
promulgate rules and regulations to accomplish the purposes of Insurance Code, 
Articles 21.20 and 21.21. 
 The following Articles of the Insurance Code are affected by this rule: 
sec.21.1004-Article 21.21. 
 
 
  sec.21.1004. Discrimination in the Sale of Insurance. 
 
  (a) Prohibition. An insurer, agent, or other person licensed to engage in the 
business of insurance shall not discriminate, in whole or in part, on the basis 
of race, color, religion, or national origin and, to the extent not justified by 
sound actuarial principles, on the basis of geographic location, disability, 
sex, or age, in making a decision whether to bind, accept, reject, cancel or 
limit coverages made available to a consumer. The failure to comply with this 
subsection constitutes an unfair trade practice in the business of insurance in 
violation of the Insurance Code, Article 21.21, and shall be subject to the 
provisions thereof. 
   
  (b) Scope. This section applies to any person or entity licensed by the 
department to engage in the business of insurance in this state, including, but 
not limited to, agents, property and casualty insurers, life, health and 
accident insurers, title insurers, capital stock companies, mutual companies, 
county mutual companies, fraternal benefit societies, local mutual aid 
associations, statewide mutual assessment companies, Lloyd's plan companies, 
reciprocal or inter insurance exchanges, stipulated premium insurance companies, 
group hospital service companies, health maintenance organizations, farm mutual 
insurance companies, risk retention groups, and surplus lines carriers. 
 
  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 4, 1994. 
 TRD-9450493 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-6327 
         
           
  28 TAC sec.21.1005 
 
  The Texas Department of Insurance proposes new sec.21.1005, which would 
prohibit the use of underwriting guidelines by private passenger automobile 
insurers based on the purchase of types or amounts of coverage in excess of the 
minimum automobile liability coverage required by law. The new section is 
necessary to prevent the unfair practice in the business of insurance by some 
insurers in using underwriting guidelines based on the purchase of types or 
amounts of coverage in excess of the minimum automobile liability coverage 
required by law and thereby causing those consumers to either be denied 
insurance or be placed in insurance companies with higher rates than those 
companies for which the consumer would otherwise qualify. This rule was proposed 
in a petition for rule making by James Mallett of Dallas, Texas. 
 The Department will consider the adoption of new sec.21.1005 in a public 
hearing under Docket Number 2127, scheduled for 8:00 a.m. on December 16, 1994 
in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street 
in Austin, Texas. The Department encourages any interested party with data and 
statistical analyses regarding the underwriting guideline which is the subject 
of this rule to provide the Department with that data and statistical analyses 
at or before the hearing. This request includes, but is not limited to, data and 
statistical analyses related to whether the underwriting guideline meets the 
three requirements for being "related to risk or expense" set out in proposed 
sec.21.1002(c) of this title. 
 Birny Birnbaum, Chief Economist-Associate Commissioner, has determined that for 
the first five-year period the proposed new section will be in effect there will 
be no fiscal implications as a result of enforcing or administering the rule for 
local government, small businesses, or local economies. There will be no 
additional cost to state government as a result of administering and enforcing 
the rule because the department's enforcement budget will not change as a result 
of this rule. To the extent necessary to enforce these new sections, the 
department will shift resources from other enforcement actions. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
new section is in effect the public benefit anticipated as a result of enforcing 
the new section will be the elimination of unfair practices in the business of 
insurance; greater availability and affordability of insurance; greater ability 
of Texas consumers to obtain insurance at fair rates; and greater ability of 
Texas consumers to comply with the Texas Safety Responsibility Law, which 
effectively requires drivers to obtain automobile liability insurance. These 
benefits will arise from the more beneficially competitive insurance markets 
which will result from the elimination of the unfair practices. 
 There is an anticipated new direct economic cost to persons who are required to 
comply with the proposed new section. This cost is to notify the company's 
agents and underwriters of the elimination of the guideline. These costs may 
range from $100 to $100,000 per company, depending on the number of agents and 
underwriters and the method used in notifying them. There is no anticipated 
economic cost of higher losses or expenses as a result of the elimination of 
this underwriting guideline because it is not related to risk of loss or size of 
expense. 
 Comments on the proposal may be submitted to Chief Clerk, Texas Department of 
Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, Mail 
Code 113-2A, within 30 days following the date of this publication. 
 The new rule is proposed under Insurance Code, Articles 1.03A, 5.98, and 21. 
21, sec.13. Article 1.03A authorizes the Commissioner to adopt rules and 
regulations for the conduct and execution of the duties and functions of the 
department as authorized by statute. Article 21.21, sec.13 authorizes the 
Department to promulgate rules and regulations to accomplish the purposes of 
Insurance Code, Articles 21.20 and 21.21. Article 5.98 authorizes the Department 
to adopt reasonable rules that are appropriate to accomplish the purposes of 
Insurance Code, Chapter 5, including Article 5.09 (prohibiting any distinction 
or discrimination in favor of an insured having a like hazard, which occurs when 
this underwriting guideline unrelated to risk or expense is used to place a 
consumer in a different company within a company group). 
 The following Articles of the Insurance Code are affected by this rule: 
sec.21.1005-Articles 5.09 and 21.21. 
 
 
  sec.21.1005. Prohibition Of Underwriting Guidelines Based On The Purchase Of 
Types Or Amounts of Coverage In Excess Of Minimum Limits Liability Coverage. 
 
  (a) Prohibition. A private passenger automobile insurer or agent shall not use 
an underwriting guideline based, in whole or in part, on whether an insured or 
applicant for automobile insurance purchases types or amounts of coverage in 
excess of the minimum automobile liability coverage required to show proof of 
financial responsibility under the Texas Safety Responsibility Law, Texas Civil 
Statutes, Article 6701h. The failure to comply with this section constitutes an 
unfair trade practice in the business of insurance in violation of the Insurance 
Code, Article 21.21, and shall be subject to the provisions thereof. 
   
  (b) Definition Of "Underwriting Guideline." For the purposes of this rule, an 
"underwriting guideline" is a rule, standard, marketing decision, guideline, or 
practice, whether written, oral or electronic, used by an insurer or its agent 
to examine, bind, accept, reject, cancel or limit coverages made available to 
groupings of consumers. 
 
  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 4, 1994. 
 TRD-9450490 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-6327 
         
           
  28 TAC sec.21.1006 
 
  The Texas Department of Insurance proposes new sec.21.1006, which would 
prohibit the use by private passenger automobile and residential property 
insurers of underwriting guidelines involving the credit history of a person or 
persons applying for insurance. The new section is necessary to prevent the 
unfair practice in the business of insurance by some insurers in using 
underwriting guidelines involving the consumer's credit history and thereby 
causing those consumers to be denied insurance or be placed in insurance 
companies with higher rates than those companies for which the consumer would 
otherwise qualify. 
 The Department will consider the adoption of new sec.21.1006 in a public 
hearing under Docket Number 2128, scheduled for 8:00 a.m. on December 16, 1994 
in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street 
in Austin, Texas. The Department encourages any interested party with data and 
statistical analyses regarding the underwriting guideline which is the subject 
of this rule to provide the Department with that data and statistical analyses 
at or before the hearing. This request includes, but is not limited to, data and 
statistical analyses related to whether the underwriting guideline meets the 
three requirements for being "related to risk or expense" set out in proposed 
sec.21.1002(c) of this title. 
 Birny Birnbaum, Chief Economist-Associate Commissioner, has determined that for 
the first five-year period the proposed new section will be in effect there will 
be no fiscal implications as a result of enforcing or administering the rule for 
local government, small businesses, or local economies. There will be no 
additional cost to state government as a result of administering and enforcing 
the rule because the department's enforcement budget will not change as a result 
of this rule. To the extent necessary to enforce these new sections, the 
department will shift resources from other enforcement actions. 
 Mr. Birnbaum also has determined that for each year of the first five years the 
new section is in effect the public benefit anticipated as a result of enforcing 
the new section will be the elimination of unfair practices in the business of 
insurance; greater availability and affordability of insurance; greater ability 
of Texas consumers to obtain insurance at fair rates; and greater ability of 
Texas consumers to comply with the Texas Safety Responsibility Law, which 
effectively requires drivers to obtain automobile liability insurance. These 
benefits will arise from the more beneficially competitive insurance markets 
which will result from the elimination of the unfair practices. 
 There is an anticipated new direct economic cost to persons who are required to 
comply with the proposed new section. This cost is to notify the company's 
agents and underwriters of the elimination of the guideline. These costs may 
range from $100 to $100,000 per company, depending on the number of agents and 
underwriters and the method used in notifying them. There is no anticipated 
economic cost of higher losses or expenses as a result of the elimination of 
this underwriting guideline because it is not related to risk of loss or size of 
expense. 
 Comments on the proposal may be submitted to Chief Clerk, Texas Department of 
Insurance, 333 Guadalupe Street, P.O. Box 149104, Austin, Texas 78714-9104, Mail 
Code 113-2A, within 30 days following the date of this publication. 
 The new rule is proposed under Insurance Code, Articles 1.03A, 5.98, and 21. 
21, sec.13. Article 1.03A authorizes the Commissioner to adopt rules and 
regulations for the conduct and execution of the duties and functions of the 
department as authorized by statute. Article 21.21, sec.13 authorizes the 
Department to promulgate rules and regulations to accomplish the purposes of 
Insurance Code, Articles 21.20 and 21.21. Article 5.98 authorizes the Department 
to adopt reasonable rules that are appropriate to accomplish the purposes of 
Insurance Code, Chapter 5, including Article 5.09 (prohibiting any distinction 
or discrimination in favor of an insured having a like hazard, which occurs when 
this underwriting guideline, which is unrelated to risk or expense, is used to 
place a consumer in a different company within a company group). 
 The following Articles of the Insurance Code are affected by this rule: 
sec.21.1006-Articles 5.09 and 21.21. 
 
 
  sec.21.1006. Prohibition Of Underwriting Guidelines Based On Credit History. 
 
  (a) Prohibition. A private passenger automobile or residential property 
insurer or agent shall not use an underwriting guideline based, in whole or in 
part, on the credit history of a person insured or to be insured under a policy. 
This section does not prohibit an insurer from refusing to offer an installment 
payment plan to a consumer who has, within the preceding two years, defaulted in 
the payment of premiums to an insurer and caused a lapse in the policy. The 
failure to comply with this subsection constitutes an unfair trade practice in 
the business of insurance in violation of the Insurance Code, Article 21.21, and 
shall be subject to the provisions thereof. 
   
  (b) Definition Of "Underwriting Guideline." For the purposes of this rule, an 
"underwriting guideline" is a rule, standard, marketing decision, guideline, or 
practice, whether written, oral or electronic, used by an insurer or its agent 
to examine, bind, accept, reject, cancel or limit coverages made available to 
groupings of consumers. 
 
  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 4, 1994. 
 TRD-9450491 
  D. J. Powers 
 Chief Clerk and General Counsel 
 Texas Department of Insurance 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-6327 
         
 Texas  Workers' Com 
 Commission 
               Chapter 108. Fees 
  
  28 TAC sec.108.1 
 
  The Texas Workers' Compensation Commission proposes new  s108.1, concerning 
charges for copies of public records. The commission is simultaneously 
withdrawing the proposal of new sec.108.1 published in the September 20, 1994 
issue of the Texas Register (19 TexReg 7323) and republishing this proposed new 
rule. The new rule is proposed to comply with House Bill 1009, 73rd Legislature, 
1993 which mandates each state agency to promulgate rules specifying the charges 
the agency will establish for copies of public information. The charges listed 
in the proposed new rule are in accordance with the recently approved General 
Services Commission rules specifying the costs and methods that a state agency 
may use to recover the costs of providing copies of public records. The new rule 
proposes a framework within which the commission may recover the cost to provide 
copies of public records to persons requesting the copies. The rule also 
provides that the commission may waive these charges under certain 
circumstances, and authorizes the executive director of the commission to 
determine whether a public benefit exists on a case-by-case basis. 
 Janet Chamness, chief of budget for the commission, has determined that for 
each year of the first five years the rule as proposed will be in effect there 
will be no fiscal impact on state or local government as a result of enforcing 
or administering the rule. The commission will be able to recover costs for 
providing copies of public records in circumstances where such a practice would 
provide the most benefit to the commission and the state. Consistent with Texas 
General Services Commission approval, the Texas Workers' Compensation Commission 
has previously charged for copies of public records. The fees are calculated 
based on the agency's full cost of providing the service. There will be no 
effect on local employment or the local economy. 
 Ms. Chamness also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated is more efficient resource 
utilization, since the commission will be able to recover costs for providing 
copies of public records as a result of uniform procedures throughout state 
government for recovery of costs associated with providing public information. 
There is no anticipated economic cost to persons who are required to comply with 
the rule. Consistent with Texas General Services Commission approval, the Texas 
Workers' Compensation Commission has previously charged for copies of public 
records. Any costs, which would result from adoption of this rule, are the 
direct outgrowth of the legislative directive contained in House Bill 1009, not 
the result of the proposal and adoption of this rule. 
 The Texas Workers' Compensation Commission maintains a separate fee schedule 
for obtaining copies of workers' compensation claimant files, which are 
confidential under the Texas Labor Code, and for costs of audits and reviews 
required within the commission's regulatory authority. 
 Comments on the proposal may be submitted for 30 days after publication of the 
proposed rule in the Texas Register, to Elaine Crease, Texas Workers' 
Compensation Commission, Office of General Counsel, Mailstop #4-D, 4000 South 
IH-35, Austin, Texas 78704-7491. Requests for a public hearing on this proposal 
should be submitted separately. 
 The new rule is proposed under the provisions of sec.5 of Acts 1993, 73rd 
Legislature, Chapter 428, House Bill 1009; the Government Code sec.sec.552.230, 
552.261, and 552.263; and the Texas Labor Code, sec.402.061 and sec.402.064. 
House Bill 1009 and the Government Code sections authorize the agency to 
promulgate reasonable rules of procedure under which public records may be 
inspected efficiently, safely, and without delay, and require the agency to 
prescribe rules specifying the charges the agency will make for copies of public 
records. The Texas Labor Code, sec.402.061 authorizes the commission to adopt 
rules as necessary for the implementation and enforcement of the Texas Workers' 
Compensation Act. The Texas Labor Code,  s402.064 authorizes the commission to 
set reasonable fees for services provided to persons requesting services from 
the commission. 
 The proposed new rule affects agency operations under the following statutes: 
the Government Code, Chapter 552, and the Texas Labor Code, sec.402. 064. 
 
 
  sec.108.1. Public Records. 
 
  (a) Definitions. The following words and terms, when used in this rule, shall 
have the following meanings, unless the context clearly indicates otherwise. 
 
  (1) Letter of Certification-A letter signed and sealed by the executive 
director of the commission, or stamped and sealed by his delegate, attesting to 
authenticity of attached document(s). 
   
  (2) Readily Available Records-Records that already exist in printed form, or 
information that is stored electronically and is ready to be printed or copied 
without requiring any programming, or information that already exists on a 
microfiche or microfilm, but not information that requires a substantial amount 
of time to locate or prepare for release, for example, as a result of required 
redaction for the purpose of deleting information that is confidential by law. 
   
  (3) Standard-size copy-A printed impression on one side of a piece of paper 
that measures up to 8 1/2 inches by 14 inches. A piece of paper that is printed 
on both sides shall be counted as two copies. A copy of a public record made 
available to a requestor in any other available format is not a standard-size 
copy. 
     
  (b)  Public Record Requests. The Texas Labor Code,  s402.021 provides that the 
Open Records Act applies to a record of the commission or the Texas Workers' 
Compensation Research Center. Except where limited by law, the following 
provisions will apply to all requests for review of the commission's public 
records pursuant to the Texas Government Code, Chapter 552. 
 
  (1) All public records requests shall be treated equally. 
   
  (2) All public records requests and appointments for inspection must be in 
writing and should be directed to the Office of Executive Communication, the 
commission's public records coordinator. 
   
  (3) A request for official records shall include the name, address and 
telephone number of the requestor, and a detailed description of the records in 
sufficient detail to permit efficient gathering of the requested information. 
   
  (4) The commission shall make every reasonable effort to provide the 
information in the manner requested and in a reasonable time without disruption 
of normal business activities. 
   
  (5)  The following requirements apply to confidentiality of records. 
 
  (A)  The commission will not provide records considered to be confidential by 
law or otherwise prohibited from release under the Texas Government Code, the 
Texas Labor Code or other provisions of law, unless the requestor is legally 
eligible for such information. The commission will comply with all copyright 
laws. 
   
  (B) If the commission considers that the requested records fall within an 
exception under the Government Code, and that the records should be withheld, by 
the tenth calendar date after the date of receiving the written request, the 
commission will ask for an opinion from the attorney general about whether the 
records are within that exception, if there has not been a previous 
determination on that issue. 
   
  (C) Confidential claim files, arbitrator lists, and requests for information 
excepted from disclosure in the Texas Government Code, Chapter 552, will not be 
made available except under a court order, Attorney General directive, or other 
legal process. 
     
  (6)  The following requirements apply to examination of information. 
 
  (A)  Records access for purposes of inspection will be available by 
appointment only and will only be available during the regular business hours of 
the commission. 
   
  (B) A person requesting to examine commission records in the offices of the 
commission must complete the examination without disrupting the normal 
operations of the commission and not later than the tenth day after the date 
that the records are made available to the person. Upon written request by the 
requestor within the ten-day period, the commission will extend the examination 
period by increments of ten days, not to exceed a total of 30 days. 
   
  (C) A person may not remove any commission record from the offices of the 
commission. If the requestor desires a copy of information after examination of 
commission records, copies will be provided by commission staff and the 
requestor will be charged in accordance with this rule. 
   
  (D)  If the safety of any public record or the protection of confidential 
information is at issue, or when compliance with a request for inspection would 
be unduly disruptive to the ongoing business of the commission, physical access 
may be denied and the option of receiving copies of the records at the fees 
stated in this rule shall be provided. 
   
  (E) In response to requests for inspection, the commission shall not charge 
for making available for inspection readily available information maintained in 
standard-size form. The commission may charge for preparing and making available 
information that is maintained in other than standard size and not readily 
available. Preparation may involve retrieval of information from a database or 
redaction of confidential information. In such cases, the commission may recover 
the cost of personnel time. 
     
  (7) The provision of copies of records or the inspection of records may be 
delayed or interrupted by the commission if the records are in active use by the 
commission, are needed for use by the commission, or are in storage. The period 
of interruption will not be charged against the requestor's ten day period to 
examine the records. If the information is unavailable because it is in active 
use or in storage, the requestor shall receive written notification of the delay 
and, if necessary, the office of executive communication will arrange a 
subsequent appointment for inspection of records when the information is 
available for inspection or duplication. 
   
  (8) Costs of duplication shall be the responsibility of the requesting party 
in accordance with the fees imposed by this rule. Fees are due and payable at 
the commission at the time of receipt of the copies of public records. However, 
if mail, expedited, or fax delivery is requested, fees are due in advance. 
   
  (9) When a particular request will involve considerable time and resources, 
the commission will advise the requesting party of what may be involved and will 
provide an estimate of the date of completion and the charges that may result. 
   
  (10) If the anticipated charges of this rule exceed $100, the commission may 
require a bond for payment of costs or cash prepayment equal to the total 
anticipated charges prior to the requested information. 
   
  (11) The commission may, in its discretion, waive fees if it serves a general 
public purpose. The executive director of the Texas Workers' Compensation 
Commission is authorized to determine whether a public interest benefit exists 
to the general public on a case-by-case basis. 
     
  (c) Charges and Fees for Copies of Public Records. 
 
  (1) Copies of 50 pages or less of standard-size copies of readily available 
records will be charged $.10 per page. 
   
  (2) Copies of 51 pages or more of standard-size copies of readily available 
records will be charged $.85 for the first page and $0.15 for each subsequent 
page. 
   
  (3)  Copies of standard-size copies of not readily available records will be 
charged $1.00 for the first page and $.30 for each subsequent page. 
   
  (4)  If certification of copies is requested, a letter of certification will 
be provided for an additional charge of $1.00, which will be added to the 
computed fee for each requested letter of certification. Several pages copied 
from a single file may require only one letter of certification. 
   
  (5)  Charges for non-standard copies will be as follows: 
 
  (A) Audiotape $1.00 each; 
   
  (B) Videotape $2.50 each; 
   
  (C) Diskette $1.00 each; 
   
  (D) Magnetic Tape (2400 Reel-to-reel) $10.00 each; 
   
  (E) Magnetic Tape Cartridge (Type 3480) $10.00 each; 
   
  (F) Paper $.50 each; and 
   
  (G) Duplication of Photographic Images $5.00 per image plus commercial photo 
reproduction costs and postage 
       
  (d) Personnel Charge. 
 
  (1) The charge for personnel costs incurred in processing a request for public 
information is $15 an hour, which is the average hourly cost, including fringe 
benefits, to the state for classified state employees as of May 31, 1993. this 
charge will be prorated as appropriate. 
   
  (2)  Personnel charges will be added to the computed fee for personnel time 
incurred in processing non-standard copy requests and for access to public 
records which are not readily available. 
   
  (3) Personnel charges will not be added to requests for information that is 
readily available in standard-size form. 
     
  (e) Overhead Charge. 
 
  (1) In response to a request for information that is not readily available or 
which is in excess of 50 pages of readily available information, the commission 
may include in the charges direct and indirect costs, in addition to the 
personnel charge, at a rate of 20% of the personnel charge. This overhead charge 
covers such costs as depreciation of capital assets, rent, maintenance and 
repair, utilities and administrative overhead. 
   
  (2) An overhead charge will not be billed in connection with requests for 
copies of 50 pages or less of information that is readily available in standard-
size form. 
     
  (f) Remote Document Retrieval Charge. The actual cost of retrieving a document 
from an off-site storage location will be charged. If a remote retrieval charge 
is assessed, no personnel charge will be assessed. 
   
  (g) Computer Resource Charges. 
 
  (1) A computer resource charge is a computer utilization charge for computers 
based on the amortized cost of acquisition, lease, operation, and maintenance of 
computer resources, which might include, but is not limited to, some or all of 
the following: central processing units (CPUs), servers, disk drives, local area 
networks (LANs), printers, tape drives, other peripheral devices, communication 
devices, software, and system utilities. 
   
  (2)  Computer Resource Charges are as follows: 
 
  (A) Mainframe Service Rate of $17.50 per minute; 
   
  (B) Midrange Service Rate of $3.00 per minute; and 
   
  (C) PC or LAN Service Rate of $.50 per minute. 
     
  (3) The charge made to recover the computer utilization is the actual time the 
computer takes to execute a particular program at the applicable rate. 
     
  (h) Programming Time. If a particular request requires the entry of data in 
order to execute an existing program or creation of a new program so that 
information may be accessed, an additional charge of $26 per hour will be added 
to the computed fee for the programmer's time. This charge will be prorated as 
appropriate. 
   
  (i) Miscellaneous Supplies. The actual cost of miscellaneous supplies, such as 
labels, boxes, and other supplies used to produce the requested information will 
be added to the total charge for public information. 
   
  (j) Expedited Handling. A $25 expedited handling charge will be added to 
requests which require completion on a priority basis. 
   
  (k) Delivery Charges. 
 
  (1) U.S. Mail. When requested copies of public records are to be mailed, the 
actual cost of postage and supplies will be added to the computed fee. 
   
  (2) Overnight Courier. When requested copies of public records are to be sent 
by overnight courier or other expedited delivery service, the cost of the 
service will be added to the computed fee unless the requestor furnishes a 
recipient delivery number for use by the commission in delivering the copies to 
the carrier. 
   
  (3) Faxing. The charge for faxing copies is $.10 per page for local telephone 
delivery, $.50 per page for telephone delivery within the same area code, and 
$1.00 per page for telephone delivery to a different area code. The commission 
may not be required to fax 20 or more pages of information and may require 
another form of delivery. 
     
  (l) Annual Re-evaluation of Charges. The charges set forth in this rule may be 
revised annually in accordance with the Texas General Services Commission's 
annual re- evaluation and update for charges for public records. 
 
  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 8, 1994. 
 TRD-9450681 
  Susan Cory 
 General Counsel 
 Texas Workers' Compensation Commission 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 440-3700 
         
                 
  TITLE 30. ENVIRONMENTAL QUALITY 
 Part I. Texas Natural Resource Conservation Commission 
  Chapter 330. Municipal Solid Waste 
  
  The Texas Natural Resource Conservation Commission (TNRCC) proposes amendments 
to sec.330.2 and sec.330.203, concerning requirements for municipal solid waste 
landfills (MSWLFs) designed below the seasonal high-water table. 
 The proposed amendments rules were developed to provide technically-based 
performance standards for those municipal solid waste landfills that, of 
necessity, must be designed below the seasonal high groundwater table. The 
proposed amendments also will allow for landfills to use waste, rather than 
soil, as ballast. 
 As part of the development process for the new municipal solid waste 
regulations that implement the federal Subtitle D requirements, the commission 
created a special advisory committee that assisted staff with the development of 
the State's rules. Although not addressed in the Subtitle D requirements, the 
need for the proposed rule was identified by the advisory group during the 
development of the Subtitle D regulations. 
 In response to the recommendation of the advisory group, a panel of technical 
professionals was organized to study this issue. The members included 
geotechnical engineers, civil and environmental engineers, groundwater 
hydrologists, and geologists. The technical panel researched and discussed the 
issue of requirements for landfills designed below the water table over a four-
month period. The proposed rules resulted from these discussions. 
 The proposed rules have been reviewed by the Regulatory Oversight Committee of 
the Municipal Solid Waste Management and Resource Recovery Advisory Council. The 
Committee conducted a public meeting for input, following which the Committee 
recommended that the rules be published for public comment. 
 Proposed amendments to sec.330.2, "Definitions" would add definitions for 
"Seasonal high-water table" and "Water table." The addition of these definitions 
allows for clarification of certain groundwater terminology which would impact 
the changes found in sec.330.203. The definition for "water table" is a 
definition commonly used by geologists and groundwater hydrologists in the 
field. The definition of "Seasonal high-water table" was developed by the 
advisory group. 
 Proposed amendments to sec.330.203 "Special Conditions (Liner Design 
Constraints)" would replace existing sec.330.203(a) and (b) with new language 
and add sec.330.203(c)-(j) developed by the technical panel. 
 The amendment to sec.330.203(a) requires the owner/operator of a Type I 
landfill to demonstrate that the liner system will not undergo uplift from 
hydrostatic forces during construction. 
 The amendment to sec.330.203(b) requires the owner or operator to insure that 
the liner is stable during the filling and operation of the landfill through a 
suitable combination of dewatering and/or ballast from overlying soil and/or 
waste. 
 If a leachate collection system is necessary, sec.330.203(c) requires the 
leachate collection system to be designed to handle both the leachate generated 
and the groundwater inflow from materials beneath and lateral to the liner 
system. 
 Section 330.203(d) requires the owner or operator to perform a preliminary 
foundation evaluation satisfactory to the executive director prior to excavating 
any unit below the seasonal high water table. 
 Section 330.203(e) requires the owner/operator to address the demonstration 
required by sec.330.203(a)(1)-(3) in the Soil and Liner Quality Control Plan 
(SLQCP). 
 Section 330.203(f) requires the owner/operator to submit a ballast evaluation 
report (BER) to the agency for review and approval. 
 Section sec.330.203(g) requires any dewatering systems to be operated until the 
executive director determines that such systems are no longer required. 
 Section 330.203(h) provides that the executive director may require owners or 
operators of Type IV landfill excavations that extend below the seasonal high 
water table to meet one or more provisions in this subsection. 
 Section 330.203(i) allows for the use of waste as ballast if approved by the 
executive director. In order to use waste as ballast, the following are 
required. First, the first five feet or the total thickness of the ballast, 
whichever is less, shall be free of brush or bulky items. Second, the weight of 
the liner system must be sufficient to offset any unbalanced upward or inward 
hydrostatic forces on the liner by a factor of 1.5 when waste is used for 
ballast. Waste used for ballast shall have a density of not less than 1, 000 
pounds per cubic yard. If a trash compactor having a minimum weight of 40, 000 
pounds is used, no compaction density verification will be required. Third, the 
SLQCP and the BER shall include methods to verify compaction density of 1, 000 
pounds per cubic yard if a 40,000 pound compactor is not used. 
 Section 330.203(j) provides that the seasonal high water table shall be 
adjusted upward, if necessary, as additional data become available after a 
permit is issued. 
 All comments must be received within 30 days following the date of this 
publication. 
 Stephen Minick, Division of Budget and Planning, has determined that, for the 
first five years these sections as proposed are in effect, there will be fiscal 
implications as a result of enforcement and administration of the sections. The 
effect on state government will be a marginal increase in workload and 
associated costs of the technical review and approval of the proposed 
performance requirements for landfill ballast. These cost increases are not 
anticipated to be significant and will not require additional staff or budget 
authority. The sections as proposed will have direct fiscal implications for 
local governments operating affected municipal landfill facilities. The fiscal 
implications will be equivalent to the effects on any private facility operator. 
Local governments served by private waste disposal facilities will be 
potentially affected indirectly as a result of the reflection of changes in 
operating costs of affected landfill in adjusted disposal service costs. 
 The effects of the proposed sections on affected landfill operators will be a 
general, net reduction in operating costs. Operators will realize increased 
costs of demonstration of compliance with proposed performance standards. These 
increases, however, are anticipated to be fully offset by potential savings in 
costs of compliance with landfill ballast requirements. Both costs and cost 
savings can only be determined on a case-by-case basis and will vary with 
facility size, location and site-specific conditions. It is generally estimated 
that technical demonstration costs could vary from $50,000 up to $200,000, but 
could fall outside of this range in specific circumstances. Potential cost 
savings are anticipated to be even more variable. Savings have not been 
estimated on a unit cost basis, but potential direct cost savings of up to $5 
million have been projected for larger representative facilities. Actual cost 
savings will not only vary considerably on a case-by-case basis, but will also 
depend on longer term effects of increased revenues and expanded landfill 
capacity as a function of utilization of wastes as ballast. The number of 
facilities directly affected by the proposed rules cannot be determined exactly, 
but it is estimated that up to half of the operating facilities outside of the 
arid western part of the state, or approximately 80 facilities, would be covered 
upon adoption of the proposal. The potential number of facilities that could 
become subject to the rule with modification or vertical expansion of facilities 
into existing water tables is unknown. It is not anticipated that the proposed 
sections will have direct effects on small businesses. 
 Mr. Minick also has determined that for the first five years these sections as 
proposed are in effect, the public benefit anticipated as a result of 
enforcement of and compliance with the sections will be reductions in 
construction and operating costs of certain municipal solid waste disposal 
facilities, potential savings to consumers and recipients of solid waste 
disposal services, more cost-effective management and regulation of solid waste 
disposal and more effective utilization of landfill capacity in the state. There 
are no anticipated costs to other persons required to comply with these sections 
as proposed. 
 Written comments may be submitted to Clark Talkington, Municipal Solid Waste 
(MSW) Division at TNRCC Building F, First Floor, Room 1206, 12015 North 
Interstate 35, Austin, Texas 78753. 
 Please mail written comments to Clark Talkington, Technical Assistance/Special 
Projects Section, Municipal Solid Waste Division, Texas Natural Resource 
Conservation Commission, P.O. Box 13087, Austin, Texas 78711-3087. For further 
information contact Clark Talkington at (512) 239-6731 or Hector Mendieta at 
(512) 239-6694. 
   
  Subchapter A. General Information 
 
  30 TAC sec.330.2 
 
  The amendment is proposed under the Texas Water Code, sec.5.103, which 
provides the Texas Natural Resource Conservation Commission with the authority 
to adopt any rules necessary to carry out the powers and duties under the 
provisions of the Texas Water Code. 
 The rule affects Texas Health and Safety Code, Chapter 361, the Texas Solid 
Waste Disposal Act (the Act). 
 
 
  sec.330.2. Definitions.  The following words and terms, when used in this 
section, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
  <nl>   Seasonal high water table-The highest measured or calculated water 
level in an aquifer or other water-bearing zone during investigations for a 
permit application and/or any groundwater characterization studies at a site. 
The area to be considered is usually the MSWLF facility. If, however, activities 
have occurred or are occurring on or near the facility during investigation that 
would lower the water table at the facility, a sufficiently larger area than the 
facility shall be tested or adequate calculations shall be used to estimate the 
seasonal high water table including the effects of such activities. 
   
  <nl>   Water table-The upper surface of the zone of saturation at which water 
pressure is approximately equal to atmospheric pressure, except where that 
surface is formed by a confining unit. 
 
  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 4, 1994. 
 TRD-9450531 
  Mary Ruth Holder 
 Director, Legal Services Division 
 Texas Natural Resource Conservation Commission 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 239-6087 
         
           
  Subchapter H. Groundwater Protection Design and Operation 
 
  30 TAC sec.330.203 
 
  The amendment is proposed under the Texas Water Code, sec.5.103, which 
provides the Texas Natural Resource Conservation Commission with the authority 
to adopt any rules necessary to carry out the powers and duties under the 
provisions of the Texas Water Code. 
 The proposed amendment affects Texas Health and Safety Code, Chapter 361, the 
Texas Solid Waste Disposal Act (the Act). 
 
 
  sec.330.203. Special Conditions (Liner Design Constraints). 
 
  (a)  <nl>The owner or operator of a Type I landfill shall demonstrate that the 
liner system will not undergo uplift from hydrostatic forces during its 
construction by using one or more of the following methods:<ol> [If ground water 
is encountered in the disposal excavations, or in cases where excavations extend 
below the seasonal high-water table, material with a weight equivalent to one 
foot of compacted clay liner for every two feet of static water head shall be 
used as a basis for the construction of a liner between the deposited solid 
waste and the ground water. The total thickness of the liner shall consist of no 
less than three feet of soil with a permeability coefficient of no more than 
1x10[sup]-7 cm/sec, a liquid limit of no less than 30, a plasticity index of no 
less than 15, and a percent passing Number 200 sieve of no less than 30, plus an 
additional thickness of other material as required in this subsection. Pressure 
release systems may be used to reduce the amount of liner support construction.] 
 
  <nl>(1)  providing calculations satisfactory to the executive director that 
the weight of the liner systems, including any ballast, is sufficient to offset 
by a factor of 1.2 any otherwise unbalanced upward or inward hydrostatic forces 
on the liner; or 
   
  <nl>(2) incorporating an active or passive dewatering system in the design to 
reduce upward or inward hydrostatic forces on the liner by a factor of 1.2 and 
by providing calculations satisfactory to the executive director that the 
dewatering system will perform to adequately reduce those forces; or 
   
  <nl>(3) providing evidence satisfactory to the executive director that the 
soil surrounding the landfill is so poorly permeable that ground water can not 
move sufficiently to exert force that would damage the liner; or 
   
  <nl>(4) providing evidence that the seasonal high water table is below the 
deepest planned excavation. 
     
  (b)  <nl>The owner or operator shall ensure that the liner is stable during 
the filling and operation of the landfill through a suitable combination of 
dewatering and/or ballast, if determined to be required in subsection (a)(1) -
(3) of this section. These methods shall not be used without prior approval of 
the executive director. <ol> [Leachate-collection systems (LCS) used in 
conjunction with liner ballast shall be designed to allow leachate levels to be 
maintained at or below 30 cm during the operating life of the unit and through 
the closure and post-closure periods.] 
   
  <nl>(c) Any required leachate collection system shall be designed to handle 
both the leachate generated and the groundwater inflow from materials beneath 
and lateral to the liner system. The maximum volume of groundwater inflow shall 
be calculated based on determination of the permeability and potentiometric 
conditions of the liner system and of the materials surrounding the liner 
system. 
   
  <nl>(d) Prior to excavating any unit below the seasonal high water table, the 
owner or operator shall perform a preliminary foundation evaluation satisfactory 
to the executive director. The foundation evaluation shall consider stability, 
settlement, and constructability. 
   
  <nl>(e) The Soil and Liner Quality Control Plan (SLQCP) as required in 
sec.330.205(a)(3)(B) of this title (relating to Soils and Liner Quality Control 
Plan) shall include the following information for landfills to which subsection 
(a)(1)-(3) of this section are applicable: 
 
  <nl>(1) the methods and tests to be used to verify that the liner will not 
undergo uplift during construction and until ballast placement, if required, is 
complete; and 
   
  <nl>(2) the measures and tests that will be used to verify that any required 
ballast meets the criteria established, including but not limited to 
inspections, compaction, weight and density of material, thickness, and top 
elevations. 
     
  <nl>(f)  If ballast is used, a Ballast Evaluation Report (BER) in a format 
specified by the executive director shall be submitted in triplicate to the 
Municipal Solid Waste Division for review and approval. Verbal approval may be 
obtained from the executive director, which will be followed by written 
confirmation. If no response is provided within 14 days of the date on which the 
BER document is date-stamped by the Municipal Solid Waste Division, the BER may 
be considered approved. If the executive director determines that the BER is 
incomplete or that the test data provided are insufficient to support the 
evaluation conclusions, additional test data or other information may be 
required. The BER shall include: 
 
  <nl>(1) verification that the liner did not undergo uplift during 
construction, using the method identified in the SLQCP; 
   
  <nl>(2) certification that ballast met the criteria established in this 
section and in the SLQCP; and 
   
  <nl>(3) signature and seal of the registered professional engineer performing 
the evaluation and signature of the site operator or his authorized 
representative. 
     
  <nl>(g)  Any dewatering systems used to ensure liner stability during 
construction and filling shall be operated until the executive director 
determines that such systems are no longer required. 
   
  <nl>(h) At the discretion of the executive director, owners or operators of 
Type IV landfill excavations that extend below the seasonal high water table may 
be required to meet one or more provisions in this subsection. 
   
  <nl>(i) The executive director may determine on a site-specific basis that 
waste can be used as ballast. If so, the site operating plan for the landfill 
shall contain the following requirements. 
 
  <nl>(1) The first five feet or the total thickness of the ballast, whichever 
is less, placed on the liner system shall be free of brush and large bulky 
items, which would damage the underlying parts of the liner system or which 
cannot be compacted to the required density. 
   
  <nl>(2) If waste is used for ballast, a wheeled trash compactor having a 
minimum weight of 40,000 pounds, or equivalent equipment, shall be properly 
utilized to reach a compaction density of at least 1,000 pounds per cubic yard. 
For purposes of determining the required ballast thickness, a density of 
compacted waste of 1,000 pounds per cubic yard shall be used. The weight of the 
liner system must be sufficient to offset any unbalanced upward or inward 
hydrostatic forces on the liner by a factor of 1.5 when waste is used for 
ballast. 
   
  <nl>(3) The Soil and Liner Quality Control Plan (SLQCP) shall also include the 
method(s) to be used to verify that compaction of waste used for ballast is to a 
density of not less than 1,000 pounds per cubic yard. If a trash compactor 
having a minimum weight of 40,000 pounds is used, no compaction density 
verification will be required. 
   
  <nl>(4)  If waste is used for ballast, the Ballast Evaluation Report (BER) 
shall also include verification that a trash compactor having a minimum weight 
of 40, 000 pounds was used or, if not, that compaction was at least 1,000 pounds 
per cubic yard. 
     
  <nl>(j) The seasonal high water table shall be adjusted upward, if necessary, 
as additional data become available after a permit is issued. 
 
  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 4, 1994. 
 TRD-9450532 
  Mary Ruth Holder 
 Director, Legal Services Division 
 Texas Natural Resource Conservation Commission 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 239-6087 
         
                   
  TITLE 34. PUBLIC FINANCE 
 Part I. Comptroller of Public Accounts 
  Chapter 3. Tax Administration 
  
  Subchapter O. State Sales and Use Tax 
 
  34 TAC sec.3.357 
 
  The Comptroller of Public Accounts proposes an amendment to sec.3.357, 
concerning labor relating to nonresidential real property repair, remodeling 
restoration, maintenance, new construction, and residential property. The 
amendment allows for the labor separation of nontaxable charges for unrelated 
services subsequent to the execution of a contract that includes taxable real 
property repair and remodeling services. The amendment is retroactive. Other 
amendments are made to comply with a change made by the 73rd Legislature, 1993. 
The exemption for repairs to property damaged by fire, floods, and other 
accidents is restricted to repairs only when the damage is caused by an event 
that causes the governor or president to declare a disaster area. These 
amendments are effective the same date as the statute effective date. 
 Mike Reissig, chief revenue estimator, has determined that for the first five-
year period the rule will be in effect there will be no significant revenue 
impact on the state or local government. 
 Mr. Reissig also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be in providing new information regarding tax responsibilities. This 
rule is adopted under the Tax Code, Title 2, and does not require a statement of 
fiscal implications for small businesses. There is no significant anticipated 
economic cost to individuals who are required to comply with the proposed rule. 
 Comments on the proposal may be submitted to Joe A. Galvan, Jr., Manager, Tax 
Administration Division, P.O. Box 13528, Austin, Texas 78711. 
 Thie amendment is proposed under the Tax Code, sec.111.002, which provides the 
comptroller with the authority to prescribe, adopt, and enforce rules relating 
to the administration and enforcement of the provisions of the Tax Code, Title 
2. 
 The amendment implements sec.151.0101. 
 
 
  sec.3.357. Labor Relating to Nonresidential Real Property Repair, Remodeling, 
Restoration, Maintenance, New Construction, and Residential Property. 
 
  (a) Definitions. The following words and terms, when used in this section, 
shall have the following meanings, unless the context clearly indicates 
otherwise. 
 
  (1) (No change.) 
   
  <nl>(2) Disaster area-An area declared a disaster by the Governor of Texas 
under the Government Code, Chapter 418, or the President of the United States 
under 42 United States Code, sec.5141. 
   
  <nl>(3)<ol>[(2)] Labor-For the purposes of this section, labor means all 
components of a transaction or contract directly related to the remodeling, 
repair, or restoration other than those components attributable to materials 
incorporated into the realty. Unrelated components, such as charges by engineers 
and architects, are also part of the labor component unless separately stated to 
the customer. 
   
  <nl>(4)<ol>[(3)] Maintenance on real property-For operational and functioning 
improvements to realty, maintenance means scheduled, periodic work necessary to 
sustain or support safe, efficient, continuous operations, or to prevent the 
decline, failure, lapse, or deterioration of the improvement. Taxable real 
property services covered by sec.3.356 of this title (relating to Real Property 
Service) do not qualify as maintenance. 
 
  (A) As it relates to maintenance, the term "scheduled" means anticipated and 
designated to occur within a given time period or production level. 
   
  (B) As it relates to maintenance, the term "periodic" means ongoing or 
continual or at least occurring at intervals of time or production which are 
generally predictable. 
     
  <nl>(5)<ol>[(4)] New construction -All new improvements to real property 
including initial finish out work to the interior or exterior of the 
improvement. An example would be a multiple story building which has only had 
its first floor finished and occupied. The initial finishing out of each 
additional floor prior to initial occupancy will be considered new construction. 
New construction also includes the addition of new footage to an existing 
structure. 
   
  <nl>(6)<ol>[(5)] Nonprofit hospital -A public or private hospital licensed 
under the Health and Safety Code, Chapter 241 or Chapter <nl>577 <ol> [555], 
that is operated as a charitable or nonprofit establishment. 
   
  <nl>(7)<ol>[(6)] Real property -Land including structures and other 
improvements embedded in or permanently affixed to the land. 
   
  <nl>(8)<ol>[(7)] Remodeling or modification-To make over, rebuild, replace, or 
upgrade existing real property. However, the replacement of an item within an 
operating and functioning unit in accordance with paragraph  <nl>(4)<ol> [(3)] 
of this subsection is not taxable remodeling or modification. Finish out work 
performed after initial finish out has been done is remodeling even though the 
improvement has not been occupied. An example would be a shopping complex 
completely finished by the developer prior to renting to tenants. A prospective 
tenant wants a different color scheme before taking possession. The repainting 
by the developer is remodeling. 
   
  <nl>(9)<ol>[(8)] Repair-To mend or bring back as near as can be to its 
original working order real property which was broken, damaged, or defective. 
However, minor repair work performed on operational and functioning improvements 
to realty within the meaning of paragraph <nl>(4)<ol> [(3)] of this subsection 
is not taxable repair. 
   
  <nl>(10)<ol>[(9)] Residential property-Property intended for use as a family 
dwelling or a multifamily apartment or housing complex, nursing homes, 
condominiums, or retirement homes. The term includes homeowners association-
owned and apartment-owned swimming pools, apartment-owned laundry rooms for 
tenants, and other common areas for tenants' use. Managers' offices will only be 
residential if the space occupied by the office is 5.0% or less of the total 
space of the residence. The term does not include hotels or any other facilities 
which are subject to the hotel occupancy tax or any other area open to 
nonresidents. 
   
  <nl>(11)<ol>[(10)] Restoration-An activity performed to bring back as near as 
can be to its original condition real property which is still operating and 
functional but that has faded, declined, or deteriorated, that is not work 
performed within the meaning of paragraph <nl>(4)<ol> [(3)] of this subsection. 
   
  <nl>(12)<ol>[(11)] Unrelated service. A service will be considered as 
unrelated if: 
 
  (A) it is not a service involving the repair, remodeling, or restoration of 
real property, nor a service taxed under other provisions of the Tax Code, 
Chapter 151; 
   
  (B) it is of a type which is commonly provided on a stand-alone basis; and 
   
  (C) the performance of the unrelated service is distinct and identifiable. 
Examples of an unrelated service which may be excluded from the tax base include 
engineering plans or architectural designs. 
       
  (b) Tax responsibilities of persons who repair, remodel, or restore 
nonresidential real property. 
 
  (1)-(6) (No change.) 
   
  (7) When both remodeling and new construction are being performed under the 
same contract, the parties to the contract should separately identify taxable 
from nontaxable labor in a construction contract and the charges applicable to 
each or the entire contract will be presumed to be for repair, restoration, and 
remodeling. Documentation which clearly defines the work being performed should 
be retained by both parties to show that had the new construction and remodeling 
been done independently of each other, the cost of each would be reasonably near 
the allocation of charges. Examples of acceptable documentation include written 
contracts which detail the scope of work, bid sheets, tally sheets, schedules of 
values and blueprints. If there is not a written contract signed by both parties 
clearly showing agreement as to the taxable and nontaxable work being performed, 
the <nl>customer and<ol> [owner should provide] the <nl>service provider must 
prepare, at the time of the transaction, <ol>[contractor with] a  
<nl>written<ol> certification verifying the [contractor's] allocation of 
<nl>charges for<ol> remodeling and new construction [labor]. The comptroller may 
recalculate the charges if the allocation appears unreasonable and either party 
may be held responsible for the additional tax due. 
   
  (8) Repainting is presumed to be a restoration or remodeling activity unless 
it meets the definition of maintenance found in subsection <nl>(a)(4)<ol> 
[(a)(3)] of this section. Persons performing repainting or other restoration 
activities should collect sales tax on their total charge unless their customer 
provides a properly completed exemption certificate as outlined in subsection 
(c)(2) or (4) of this section. 
   
  <nl>(9) Where nontaxable unrelated services and taxable services are sold or 
purchased for a single charge and the portion relating to taxable services 
represents more than 5.0% of the total charge, the total charge is presumed to 
be taxable. The presumption may be overcome by the service provider at the time 
the transaction occurs by separately stating to the customer a reasonable charge 
for the taxable services. However, if the charge for the taxable portion of the 
services is not separately stated at the time of the transaction, the service 
provider may later establish for the comptroller or for the purchaser, through 
documentary evidence, the percentage of the total charge that relates to 
nontaxable unrelated services. Examples of acceptable documentation include 
written contracts detailing the scope of work, bid sheets, tally sheets, 
schedules of values and blueprints. 
     
  (c) Exemptions. 
 
  (1) (No change.) 
   
  (2) A charge for labor to maintain real property is not taxable. Persons 
providing maintenance on real property are liable for tax on all materials used. 
A service provider's customer must be able to substantiate by way of maintenance 
schedules or work orders or other evidence that the services meet the definition 
in subsection <nl>(a)(4)<ol> [(a)(3)] of this section. If the person performing 
the service does not have a written contract, but is only hired as needed, the 
service provider must presume that the labor is for repair or restoration and 
collect tax. If the service provider's customer has documentation to prove that 
the labor qualifies as maintenance, the customer may issue an exemption 
certificate in lieu of paying tax to the service provider. The certificate must 
state that the labor is maintenance as defined in subsection <nl>(a)(4) <ol> 
[(a)(3)] of this section, rather than repair or restoration, as defined in 
subsection <nl>(a)(9)(11) <ol> [(a)(8) and (10)] of this section, and that the 
customer will be liable for any additional tax due in the event that it is 
determined that repairs rather than maintenance were performed. Repairs or 
restoration performed under a claimed maintenance contract will not change a 
nontaxable maintenance contract into a taxable repair or restoration contract as 
long as the charges attributable to repairs and restoration are 5.0% or less of 
the overall charge. Note: The 5.0% test applies to each contract and 
subcontract. For example, if five different companies provide lump-sum contracts 
for services, each contract stands alone in determining if taxable services are 
5.0% or less of that contract. In the absence of a written contract, the 5.0% 
test will apply to each billing or invoice to the customer. Maintenance 
contracts or services billed with repair and restoration as defined in 
subsection <nl>(a)(9) and (11)<ol> [(a)(8) and (10)] of this section, that 
exceed 5.0% will be taxable in total unless the charges for repairs and 
restoration are separately identified to the customer in the contract or 
billing. <nl>However, see subsection (b)(9) of this section. 
   
  (3) Modifying parts of existing structures for the sole purpose of supporting 
the addition of new space will not change a new construction contract into a 
remodeling contract as long as the charges attributable to remodeling are 5.0% 
or less of the overall charge. Examples include changing a one-story building to 
a two-story building and adding a stairway to the existing structure to provide 
access to the new space, or removing a wall to add additional structural support 
in the process of adding on a new room outside the original structural space. 
Contracts with remodeling charges exceeding 5.0% will be taxable in total unless 
the charges for remodeling are separately identified to the customer. 
<nl>However, see subsection (b)(9) of this section. 
   
  (4) (No change.) 
   
  (5) <nl>The labor to repair real or tangible personal<ol> [Repairing] property 
[lost or] damaged <nl>within a disaster area by the condition or occurrence that 
caused the area to be declared a disaster area is exempt from tax if the 
charge<ol> [by fire, flood, explosion, natural disasters, or other accident] for 
<nl>labor is separately stated to the customer. The materials used to perform 
the repairs are taxable<ol> [which a casualty claim could have been filed if the 
property was insured will be considered new construction. See sec.3.291 of this 
title (relating to Contractors)]. A person having property repaired under this 
paragraph should issue the service provider an exemption certificate in lieu of 
tax. The service  <nl>provider must presume<ol> [provider's presumption is] that 
all work is taxable until <nl>the customer issues <ol> an exemption certificate 
<nl>covering the separately stated labor portion of the bill. If the charge for 
the repair is lump-sum, the total charge is taxable <ol> [is issued]. 
   
  (6) (No change.) 
     
  (d)-(g) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 9, 1994. 
 TRD-9450679 
  Martin Cherry 
 Chief, General Law 
 Comptroller of Public Accounts 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-4028 
         
               Chapter 9. Property Tax Administration 
  
  Subchapter C. Appraisal District Administration 
 
  34 TAC sec.9.411 
 
  The Comptroller of Public Accounts proposes new sec.9.411, concerning 
application for pollution control property exemption. The new section prescribes 
the form and contents of an application for a pollution control property 
exemption and requires appraisal districts to make available to taxpayers a 
model application form developed by the Comptroller of Public Accounts. The new 
section is necessary because Tax Code, sec.11.31, provides an ad valorem tax 
exemption for property used to control land, water, and air pollution. 
 The new rule sets forth the contents of the application form and the sequence 
in which the contents must be displayed. The rule permits appraisal districts to 
duplicate the model form developed by the comptroller or use a different form 
than the comptroller's, provided the form uses the same language and sequence as 
the model form. In addition, in special circumstances and with the comptroller's 
written consent, an appraisal district may use a form that deletes information 
required by the model form or sets forth the information required by the form in 
a different sequence or different language than the comptroller's model form. 
 Mike Reissig, chief revenue estimator, has determined that for the first five-
year period the rule will be in effect there will be no significant revenue 
impact on the state or local government. 
 Mr. Reissig also has determined that for each year of the first five years the 
rule is in effect the public benefit anticipated as a result of enforcing the 
rule will be in providing new information regarding property tax 
responsibilities. No effect on small businesses is anticipated. There is no 
significant anticipated economic cost to persons who are required to comply with 
the proposed rule. 
 Comments on the proposal may be submitted to Joe Vogel, Manager, Property Tax 
Division, P.O. Box 13528, Austin, Texas 78711-3528. 
 The new section is proposed under the Tax Code, sec.11.43, which requires the 
comptroller to prescribe the contents of an application form for each type of 
exemption. 
 The new section implements the Tax Code, sec.11.31. 
 
 
  sec.9.411. Exemption Application for Pollution Control Property. 
 
  (a) Each appraisal office shall prepare and make available exemption 
applications for pollution control property. 
   
  (b) Each application shall contain spaces for the property owner to provide 
the following information: 
 
  (1) the name and address of the property owner; 
   
  (2)  the street address or other description of the property on which the 
pollution control facility, device or equipment is installed; 
   
  (3)  whether the property qualifies for a pollution control property 
exemption, including the following information: 
 
  (A) whether the applicant is in the business of manufacturing, producing a 
product or service that prevents, monitors, or reduces or controls air, water, 
or land pollution; 
   
  (B)  whether the property is used for residential purposes; 
   
  (C)  whether the property is used for scenic, park, or recreational purposes; 
   
  (D) whether the property is a motor vehicle; 
   
  (E) the date the property was acquired; 
   
  (F) when construction began, was completed, or is expected to be completed; 
   
  (G) whether the property is subject to a tax abatement agreement and the date 
on which the agreement was executed; and 
   
  (H) whether the property is installed to wholly or partly meet or exceed laws, 
rules, or regulations designed to control, reduce, monitor, or prevent 
pollution; 
     
  (4) a statement of the penalties prescribed by Penal Code, sec.37.10, for 
making or filing an application containing a false statement; and 
   
  (5) instructions stating the following: 
 
  (A)  that the property owner need not apply for the exemption annually; 
   
  (B) that the chief appraiser may require that the property owner reapply for 
the exemption; and 
   
  (C) that the applicant has a duty to notify the chief appraiser if eligibility 
for the exemption ends. 
       
  (c)  Each application shall require the applicant to sign and date the 
application. 
   
  (d) Each application shall require that the applicant attach the pollution 
control use determination issued by the Texas Natural Resource Conservation 
Commission or its successor, provided the property owner has sought and received 
a use determination from the Texas Natural Resource Conservation Commission. 
   
  (e) The chief appraiser may duplicate the model form developed by the 
comptroller or use a different form that sets out the information listed in 
subsections (b)-(d) of this section in the same language and sequence as the 
model form. 
   
  (f) In special circumstances, the chief appraiser may use a form that provides 
additional information, deletes information required by this section, or sets 
out the required information in different language or sequence than that 
required by this section, if the form has been previously approved by the 
manager of the Property Tax Division, Comptroller of Public Accounts. 
   
  (g) The form developed by the comptroller may be obtained from the Comptroller 
of Public Accounts, Property Tax Division, P.O. 13528, Austin, Texas, 78711-
3528. 
 
  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 8, 1994. 
 TRD-9450613 
  Martin Cherry 
 Chief, General Law 
 Comptroller of Public Accounts 
    Earliest possible date of adoption: December 16, 1994 
 For furthjjer information, please call: (512) 463-402l8 
         
                 Part IV. Employees Retirement System of Texas 
  Chapter 81. Insurance 
  
  34 TAC sec.sec.81.1, 81.3, 81.5, 81.7 
 
  The Employees Retirement System of Texas proposes amendments to sec.sec.81.1, 
81.3, 81.5, and 81.7, concerning insurance. The amendments will clarify 
eligibility and coverage areas for participants, including retirees, coverage 
availability for surviving dependents of retirees and slain law officers, and 
former employees and dependents eligible under COBRA; clarify direct premium 
payment procedures and effects of nonpayment, and application of the state 
benefits contribution to coverages; clarify insurance coverage procedures for 
returning employees after Family and Medical Leave Act and military active duty 
leave. 
 William S. Nail, general counsel, has determined that there will be no fiscal 
implications as a result of enforcing or administering the amendments and there 
will no effect on small businesses. 
 Mr. Nail also has determined that the public benefit anticipated as a result of 
the proposed amendments will be streamlined procedures for enrollment and 
processing of insurance coverage, improved communication of benefits 
availability and cost savings. There is no economic cost to persons who are 
required to comply with the amendments as proposed. 
 Comments on the proposed amendments may be submitted to William S. Nail, 
General Counsel, Employees Retirement System of Texas, P.O. Box 13207, Austin, 
Texas 78711-3207. 
 The amendments are proposed under the Insurance Code, Article 3.50-2, sec.4, 
which provides the board of trustees with the authority to promulgate all rules, 
regulations, plans, procedures, and orders reasonably necessary to implement and 
carry out the purposes and provisions of the Texas Employees Group Insurance 
Benefits Act. 
 Other codes/statutes affected: Insurance Code, Articles 3.50-2 and 3.70-2(L) ; 
FMLA, 29 United States Code, sec.2601 et seq, Public Law 103-2; COBRA, 42 United 
States Code Annotated,  s300bb-1 et seq; Uniformed Services Employment and 
Reemployment Rights Act of 1994, Public Law 103-353, October 13, 1994. 
 
 
  sec.81.1. Definitions.  The following words and terms, when used in this 
chapter, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
  <nl>   Age of employee -The age to be used for determining optional term life 
and voluntary AD&D insurance premiums will be the employee's attained age as of 
the employee's first day of active duty within a contract year. 
   
  <nl>   Annuitant-A person as defined in the Act. 
   
   Dependent-The spouse of an employee or retiree and unmarried children under 
25 years of age, including: 
 
  (A)-(F) (No change.) 
   
  (G) <nl>an eligible child, as defined in this subsection, <ol> [a child, 
excluding a child of the spouse who does not reside with the employee/retiree, ] 
for whom the employee/retiree must provide medical support pursuant to a valid 
order from a court of competent jurisdiction; or 
   
  (H) any such child, regardless of age, who lives with or whose care is 
provided by an employee or retiree on a regular basis if such child is mentally 
retarded or physically incapacitated to such an extent as to be dependent upon 
the employee or retiree for care or support, as the trustee shall determine. 
Mentally retarded or physically incapacitated means any medically determinable 
physical or mental condition which prevents the child from engaging in self-
sustaining employment, provided that the condition commences prior to such 
child's attainment of age 25, the child was eligible and covered under the plan 
immediately prior to reaching age 25, and that satisfactory proof of such 
condition and dependency is submitted by the employee/retiree within 31 days 
following such child's attainment of age 25. As a condition to the continued 
coverage of a child as a mentally retarded or physically incapacitated dependent 
beyond the age of 25, the [insurance] carrier or health maintenance organization 
shall have the right to require periodic certification of the child's physical 
or mental condition but not more frequently than annually [after the two-year 
period] following the child's attainment of age 25. 
     
   Leave [of absence] without pay-The status of an employee who is certified 
[monthly] by <nl>a department <ol> [an agency] administrator to be absent from 
duty [for a reason other than being disabled] who has not received 
<nl>compensation or<ol> a refund of retirement contributions based upon the most 
recent term of employment. [Such a leave is limited to a maximum period of 
duration in the current Appropriations Act.] 
 
   
  sec.81.3. Administration. 
 
  (a)-(b) (No change.) 
   
  (c) Health maintenance organizations. 
 
  (1) (No change.) 
   
  (2) An HMO seeking board approval must satisfy the following conditions. 
 
  (A)-(B) (No change.) 
   
  (C) The HMO must have been providing services in the area for which 
application is made for at least 12 months prior to the date the application is 
filed with the <nl>system <ol> [Employees Retirement System of Texas] <nl>and 
must demonstrate the capacity to provide adequate services, as determined by the 
system, to the program participants. For a request for an expansion of a 
contiguous service area, the HMO must be providing services in the expanded area 
on the date the application is filed with the system and must demonstrate the 
capacity to provide adequate services, as determined by the system, to the 
program participants in the expanded area.<ol> [This requirement shall also 
apply to a request for an expansion of service area if the expansion results in 
the establishment of a service area requiring a separate rating structure or an 
extension of the HMO's service area into another area in which one or more HMOs 
are currently providing services to state employees or retirees.] 
   
  (D)-(G) (No change.) 
     
  (3) -(5) (No change.) 
     
  (d) Funding. 
 
  (1) Contributions. Premiums for coverage provided under the <nl>program<ol> 
[Uniform Group Insurance Program] are funded from three sources: state 
contributions, <nl>system <ol> [Employees Retirement System of Texas] 
contributions, employee and retiree contributions. The [state] legislature 
appropriates monies to fund group insurance benefits for all [state] employees 
<nl>as defined in the Act<ol>. Monies for employees compensated from funds other 
than the General Appropriations Act are appropriated from the official operating 
budget of the respective [state] department. In addition, the <nl>system <ol> 
[Employees Retirement System of Texas] may contribute an additional amount, as 
determined by the trustee, for payment of premiums for employees and retirees. 
An employee or retiree who applies for coverage for which the monthly premium 
exceeds the state's or employing <nl>department's <ol> [agency's] and the 
<nl>system's<ol> [Employees Retirement System of Texas'] contribution must pay 
the excess amount. 
   
  (2) Payment of premiums. Deductions from monthly compensation or annuities and 
direct payment of premiums are two methods of payments used for the 
employee's<nl>, retiree's, or other participant's<ol> share of premiums. 
 
  (A) Employee deductions. An employee or retiree who applies for coverage for 
which the monthly premium exceeds the state or employing <nl>department<ol> 
[agency] and the <nl>system<ol> [Employees Retirement System of Texas] 
contributions must authorize in writing on a form prescribed by the <nl>system 
<ol> [Employees Retirement System of Texas] a deduction from his <nl>or her <ol> 
monthly compensation or annuity to pay the difference. If an employee's monthly 
compensation <nl>or retiree's annuity<ol> is insufficient to provide for the 
appropriate deduction, the employee  <nl>or retiree<ol> must pay premiums 
directly as explained in subparagraph (B)(i) of this paragraph. Failure to make 
the required payment of premiums <nl>by the due date<ol> will result in the 
cancellation of all coverages <nl>not fully funded by the state contribution. A 
person entitled to the state contribution will retain member only health and 
basic life coverage provided the state contribution is sufficient to cover the 
premium for such coverage. If the state contribution is not sufficient for 
member only coverage in the health plan selected by the employee or retiree, the 
employee or retiree will be enrolled in the basic plan except as provided for in 
sec.81.7(i)(2)(B) of this title (relating to Enrollment and Participation). 
   
  (B) Direct payment of premiums. Persons who are eligible participants in the 
program and who are not on a payroll or who are not receiving an annuity from a 
state retirement system from which the appropriate premiums may be deducted or 
whose salary or annuity are insufficient to allow for a full required deduction 
must pay premiums directly as indicated in the following. 
 
  (i)<nl> A person who is eligible to receive but is not actually receiving an 
annuity, a person whose retirement annuity is temporarily suspended, a person 
whose annuity is insufficient, a person who is receiving or eligible to receive 
an annuity under the ORP, a former elected official, a former employee of the 
legislature, and a surviving spouse and/or dependent child/children of a 
deceased employee or retiree must pay monthly premiums in advance directly to 
the system. A person in a leave without pay status, a person whose salary is 
insufficient, and a non-salaried board member must pay monthly premiums in 
advance through the employee's employing department. Premium payments are due on 
the first day of the month covered and must be postmarked or received by the 
system or the employing department, whichever is appropriate, within 30 days of 
the due date to avoid cancellation of coverage. Failure to make the required 
premium payment by the due date will result in cancellation of all coverages not 
fully funded by the state contribution, if applicable. A person entitled to the 
state contribution will retain member only health and basic life coverage 
provided the state contribution is sufficient to cover the premium for such 
coverage. If the state contribution is not sufficient for member only coverage 
in the health plan selected by the employee or retiree, the employee or retiree 
will be enrolled in the basic plan except as provided for in sec.81.7(i) (2)(B) 
of this title. <ol> [A person whose retirement annuity is temporarily suspended, 
a person in a leave of absence without pay status, and a person in an extended 
sick leave without pay status must pay premiums monthly in advance. A person 
whose retirement annuity is temporarily suspended must submit premiums directly 
to the Employees Retirement System. A person in leave of absence without pay 
status and a person in extended sick leave without pay status shall submit 
premiums through the employee's employing agency. Premium payments are due on 
the first day of the month covered and must be postmarked or received by the 
Employees Retirement System or the employing agency, whichever is appropriate, 
within 30 days of the due date to avoid cancellation of coverage.] 
   
  (ii)-(iii) (No change.) 
   
  [(iv) A person, other than those described in clause (i) or (ii) of this 
subparagraph, must pay premiums in advance and may elect to pay either monthly, 
every three months, every six months, or annually. The full premium for the 
payment period option chosen must be paid directly to the Employees Retirement 
System and is due on the first day of the first month covered by the payment 
period. The premium payment must be postmarked or received by the Employees 
Retirement System within 30 days of the due date to avoid cancellation of 
coverage. A person who fails to complete a payment period option election prior 
to the first premium due date will be required to pay premiums in advance every 
month until an election is filed with the Employees Retirement System.] 
 
           
  sec.81.5. Eligibility. 
 
  (a)-(b) (No change.) 
   
  (c)  Retirees. A retiree is eligible for <nl>health and dental<ol> coverage on 
the day he or she becomes an annuitant. [A retiree must be insured in the health 
benefits plan before he or she is eligible to apply for any life insurance 
coverage. In addition,]  <nl>A<ol> [a] retiree is eligible for optional life 
insurance coverage only if the retiree was enrolled <nl>in<ol> [for] optional 
life insurance coverage on the <nl>day<ol> [date] before becoming an annuitant. 
<nl>A retiree is eligible for dependent life insurance coverage only if the 
retiree was enrolled in dependent life insurance coverage on the day before 
becoming an annuitant.<ol> Retirees may not increase the amount of life 
insurance for which they have been enrolled, but may cancel life coverage at any 
time. Canceled life insurance coverages may never be reinstated. <nl>A retiree 
is not eligible for disability or accidental death and dismemberment coverage. 
 
  (1)-(2) (No change.) 
     
  (d) (No change.) 
   
  (e) Surviving dependents. 
 
  (1)-(2) (No change.) 
   
  <nl>(3) A surviving dependent child of a retiree may, after the death of the 
retiree and if the retiree leaves no surviving spouse, elect to continue 
coverage in the health and dental benefits plans in which the retiree was 
enrolled on the day of death of the retiree. A surviving dependent child may 
continue such coverage until the dependent child becomes ineligible as defined 
in sec.81.1 of this title (relating to Definitions). 
   
  <nl>(4) A surviving spouse or a dependent child of a paid law enforcement 
officer employed by the state or a custodial employee of the institutional 
division of the Texas Department of Criminal Justice who suffers a violent death 
in the course of performance of duty is eligible to continue or enroll in health 
and dental coverages. A surviving spouse or natural or adopted children of the 
deceased peace officer may enroll within 90 days from the date of death. Other 
eligible dependent children may continue health and dental coverages in effect 
on the date of death. 
     
  (f)-(i) (No change.) 
   
  (j) Continuation of health and dental coverages only for certain spouses and 
dependent children of employees/retirees, and for certain terminating employees, 
their spouses, and dependent children (as provided by the Consolidated Omnibus 
Budget Reconciliation Act, Public Law 99-272). 
 
  (1) The surviving spouse and/or dependent child/children of a deceased 
employee or retiree who are not eligible to continue coverage under the 
provisions of the Act or subsection (e) of this section, who are not entitled to 
benefits under the Social Security Act, Title XVIII, and who are not covered 
under any other group health plan unless that plan subjects them to a 
preexisting conditions limitation or exclusion, may continue for up to 36 months 
the health and dental coverages only that were in effect immediately prior to 
the date of death of the employee/retiree. A formal election must be made to 
continue coverage by the surviving spouse and/or the dependent child/children. 
The formal election must be postmarked or received by the <nl>system <ol> 
[Employees Retirement System] within 60 days of the date of notice contained in 
the notice of right to continue coverage form <nl>or by the date coverage 
terminated, whichever is later. 
   
  (2) An employee whose employment has been terminated voluntarily or 
involuntarily (other than for gross misconduct) <nl>, whose work hours have been 
reduced such that the employee is no longer eligible for the program as an 
employee, or whose coverage has ended following the maximum period of leave 
without pay as provided for in sec.81.7(i)(2)(A) of this title <ol>, except for 
those persons not eligible pursuant to sec.81.11(c) of this title (relating to 
Termination of Coverage), and/or his or her spouse and/or dependent 
child/children who are not eligible to continue coverage under the provisions of 
the Act or subsection (g) or (h) of this section, who are not entitled to 
benefits under the Social Security Act, Title XVIII, and who are not covered 
under any other group health plan<nl>, or who were covered by a plan<ol> 
[unless] that [plan] subjects them to a preexisting conditions limitation or 
exclusion, may continue for up to 18 months the health and dental coverages only 
without the basic term life that were in effect immediately prior to the date of 
the <nl>loss of coverage<ol> [termination of employment]. A formal election must 
be made to continue coverage by the [former] employee and/or his or her spouse 
and/or dependent child/children. The formal election must be postmarked or 
received by the  <nl>system<ol> [Employees Retirement System] within 60 days of 
the date of notice contained in the notice of right to continue coverage form 
<nl>or by the date coverage terminated, whichever is later. 
   
  (3) (No change.) 
   
  (4) A spouse who is divorced from an employee/retiree and/or the spouse's 
dependent child/children who are not otherwise eligible to continue coverage 
under the provisions of the Act or subsection (d) of this section, who are not 
entitled to benefits under the Social Security Act, Title XVIII, and who are not 
covered under any other group health plan<nl>, or who are covered by a plan<ol> 
[unless] that [plan] subjects them to a preexisting conditions limitation or 
exclusion, may continue for up to 36 months the health and dental coverages only 
that were in effect immediately prior to the date the divorce decree is signed. 
The employee/retiree or the divorced spouse or the divorced spouse's dependent 
child/children must notify the <nl>system <ol> [Employees Retirement System] 
through the employing  <nl>department<ol> [agency] or retiree <nl>benefits<ol> 
[insurance] coordinator of the divorce within 60 days from the date the divorce 
decree is signed. A formal election must be made to continue coverage by the 
divorced spouse and/or the dependent child/children. The formal election must be 
postmarked or received by the <nl>system<ol> [Employees Retirement System] 
within 60 days of the date of notice contained in the notice of right to 
continue coverage form <nl>or by the date coverage is terminated, whichever is 
later. 
   
  (5) A dependent child under 25 years of age who marries, who is not entitled 
to benefits under the Social Security Act, Title XVIII, and who is not covered 
under any other group health plan<nl>, or who are covered by a plan<ol> [unless] 
that [plan] subjects the child to a preexisting conditions limitation or 
exclusion, may continue for up to 36 months the health and dental coverages only 
that were in effect immediately prior to the date of the marriage. The married 
child or the employee/retiree must notify the <nl>system <ol> [Employees 
Retirement System] through the employing  <nl>department<ol> [agency] or retiree 
<nl>benefits<ol> [insurance] coordinator of the marriage within 60 days from the 
date of the marriage. A formal election must be made by the married child to 
continue coverage. The formal election must be postmarked or received by the 
<nl>system <ol> [Employees Retirement System] within 60 days of the date of 
notice contained in the notice of right to continue coverage form <nl>or by the 
date coverage is terminated, whichever is later. 
   
  (6) A dependent child who has attained 25 years of age, who is not otherwise 
eligible to continue coverage indefinitely under the provisions of the Act or 
subsection (d) of this section, who is not entitled to benefits under the Social 
Security Act, Title XVIII, and who is not covered under any other group health 
plan<nl>, or who is covered by a plan<ol> [unless] that [plan] subjects the 
child to a preexisting conditions limitation or exclusion, may continue for up 
to 36 months the health and dental coverages only that were in effect 
immediately prior to the date of the child's 25th birthday. The child or 
employee/retiree must notify the <nl>system <ol> [Employees Retirement System] 
through the employing  <nl>department<ol> [agency] or retiree <nl>benefits<ol> 
[insurance] coordinator within 60 days of the child's 25th birthday. A formal 
election must be made by the 25-year-old child to continue coverage. The formal 
election must be postmarked or received by the <nl>system<ol> [Employees 
Retirement System] within 60 days of the date of notice contained in the notice 
of right to continue coverage form <nl>or by the date coverage is terminated, 
whichever is later. 
   
  (7)-(9) (No change.) 
 
       
  sec.81.7. Enrollment and Participation. 
 
  (a) Full-time employees and their dependents. 
 
  (1) <nl>A new employee, other than a part-time state agency employee, will 
automatically be enrolled in the basic plan of health and life insurance, 
effective on his or her first day of active duty with the State of Texas. To 
enroll eligible dependents, elect to enroll in an approved HMO and/or elect 
optional coverages, the employee must complete a form on the first day of active 
duty or within 30 days from that date. The employee may decline any and all 
coverages in the program by completing a form on or before the first day of 
active duty.<ol> [A new full-time employee will automatically be enrolled in the 
basic plan of health and life insurance, effective on his or her first day of 
active duty with the State of Texas. An employee waives basic plan coverage by 
electing optional coverage and/or enrolling in an approved HMO. In order to 
elect additional optional coverages or enroll in an HMO in lieu of the basic 
plan of insurance, the employee must submit an application to the Employees 
Retirement System through his or her employing agency on the form provided by 
the Employees Retirement System. An employee may decline any and all coverage in 
the program by submitting a written statement indicating that he or she wishes 
to decline.] 
   
  (2)  Applications for coverages to be effective on the day the employee begins 
active duty must be <nl>completed <ol> [submitted to the agency insurance 
coordinator] on or before that day. Coverages for which the application is 
submitted after the first day of active duty and within 30 days after that day 
will be effective on the first day of the month following the date of 
application. Applications submitted after the first 31 days will be governed by 
subsection (f) of this section. 
   
  (3) Coverages for dependents of an employee will be effective on the same day 
the employee's coverage becomes effective if an application is submitted on or 
before the effective date of the employee's coverage. If the application is 
submitted within 30 days after the employee's effective date, the dependent's 
coverage will be effective on the first day of the month following the date of 
application. <nl>Coverage for a newly eligible dependent, other than a dependent 
referred to in paragraph (4) of this subsection, <ol> [New dependents' coverage] 
will be effective on the date the person becomes a dependent if an application 
is submitted on or within 30 days after the date the dependent first becomes 
eligible. If the application is submitted more than 30 days after the employee's 
effective date or the date the dependent is first eligible, as the case may be, 
the application will be governed by the rules in subsection (f) of this section. 
<nl>The requirement that an application must be submitted within 30 days after a 
dependent first becomes eligible is waived if the level of health, dental, 
and/or life coverages were in effect prior to the acquisition of the newly 
eligible dependent; however, an application must be completed before 
verification of coverage will be provided to the carrier(s). 
   
  (4) Unless not in compliance with Chapter 85 of this title (relating to 
Flexible Benefits), a newborn natural child or eligible newborn grandchild will 
be covered immediately and automatically from the date of birth in the health 
plan in effect for the employee or retiree. 
 
  (A) (No change.) 
   
  (B) If health<nl>, dental, and/or life coverages<ol> [coverage] for dependent 
children  <nl>were<ol> [was] already in effect, an application to add a 
subsequent newborn natural child or eligible newborn grandchild must be 
completed before verification of coverage for the newborn dependent will be 
provided to the [health] carrier. 
     
  (5)-(6) (No change.) 
     
  (b)-(c)  (No change.) 
   
  (d) Surviving dependents. A surviving spouse and dependents of a deceased 
employee who, at the time of death, met the age and service requirements to 
qualify for a retirement benefit or survivor's annuity and who met the program 
eligibility requirements in accordance with the Act may continue coverage as 
provided in sec.81.5(e) of this title (relating to Eligibility). A surviving 
spouse and dependents of a deceased retiree may continue coverage as provided in 
sec.81.5(e) of this title [(relating to Eligibility)]. A surviving spouse, who 
is receiving an annuity, shall make premium payments by deductions from the 
annuity as provided in sec.81.3(d)(2)(A) of this title (relating to 
Administration). A surviving spouse, who is not receiving an annuity, may make 
payments as provided in sec.81.3(d)(2)(B) of this title [(relating to 
Administration)]. The surviving spouse <nl>or eligible dependents<ol> must apply 
to continue coverage for himself or herself and dependents within 30 days after 
notification in writing of eligibility to make application. 
   
  (e) Special rules for additional or alternative coverages. 
 
  (1) An employee/retiree must be <nl>enrolled <ol> [insured] in [a] health 
<nl>coverage<ol> [insurance plan] provided by the program [or enrolled in an 
approved HMO before the employee/retiree is eligible] to apply for any [of the] 
optional coverages [provided by the program]. Only an employee or retiree or a 
former officer or employee specifically authorized to join the program may apply 
for optional coverages. 
   
  (2) (No change.) 
   
  (3) A participant electing optional additional coverage and/or HMO coverage in 
lieu of the basic plan of insurance is obligated for the full payment of 
premiums. If the premiums are not paid, all coverages <nl>not fully funded by 
the state contribution <ol> will be canceled. <nl>A person entitled to the state 
contribution will retain member only health coverage provided the state 
contribution is sufficient to cover the premium for such coverage. If the state 
contribution is not sufficient for member only coverage in the health plan 
selected by the employee or retiree, the employee or retiree will be enrolled in 
the basic plan except as provided for in sec.81.7(i) (2)(B) of this title. 
   
  (4)-(5) (No change.) 
     
  (f) Changes in coverages beyond the first 31 days of eligibility. 
 
  (1) An employee or retiree who wishes to add or increase coverage, add 
eligible dependents to the self-insured health plan, or change coverage from an 
HMO to the self-insured health plan more than 30 days after the initial date of 
eligibility must make application for approval by providing evidence of 
insurability acceptable to the system. Unless not in compliance with Chapter 85 
of this title [(relating to Flexible Benefits)], coverage will become effective 
on the first day of the month following the date approval is received by the 
employee's [agency] benefits coordinator or by the system, if the applicant is a 
retiree or an individual in a direct pay status. If the applicant is an employee 
in a leave without pay status, <nl>the approved change in coverage <ol> [it] 
will become effective on the date the employee returns to active duty if the 
employee returns to active duty within 30 days of the approval letter. If the 
date the employee returns to active duty is more than 30 days after the date on 
the approval letter, the approval is null and void; and a new application shall 
be required. An employee or retiree may withdraw the application at any time 
prior to the effective date of coverage by submitting a written notice of 
withdrawal. 
   
  (2)-(4) (No change.) 
   
  (5) An employee, retiree, <nl>or other participant<ol> [COBRA continuant, 
surviving spouse, TRS annuitant, ORP annuitant, elected state official, former 
member or employee of the legislature, or judge], who is enrolled in an approved 
HMO and permanently moves his or her place of residence out of that HMO's 
service area to a location where the participant is no longer eligible to be 
enrolled in any approved HMO, will be allowed to enroll in the self-insured 
health plan and other optional coverages held immediately prior to the date of 
change in residence. Coverage in the HMO will be canceled on the last day of the 
month in which the previously described <nl>employee, retiree, or other<ol> 
participant moved from the service area, and the coverages in the self-insured 
health plan will become effective on the day following the day HMO coverage is 
canceled. The evidence of insurability rule shall not apply in these cases. The 
preexisting conditions exclusion shall apply if the return to the self-insured 
health plan occurs within 12 months of the initial date of coverage under the 
current term of employment, as defined in subsection (g)(3) of this section. 
   
  (6) (No change.) 
   
  (7) Persons wishing to change from one HMO to another HMO in the same service 
area<nl>,<ol> [or] change from the self-insured health plan to an HMO<nl>, 
enroll in a dental plan, or change dental plans<ol> will be allowed an annual 
opportunity to do so. Such opportunity will be scheduled prior to September 1 of 
each year at times announced by the system. [The preexisting conditions 
exclusion and evidence of insurability provision will not apply in these cases. 
Coverages in the new HMO will be effective September 1.] Persons in a declined 
or canceled status may apply for coverages in an HMO for which they are eligible 
<nl>and a dental plan <ol> during the annual [limited] enrollment period. 
Coverage in the HMO will be effective September 1. An employee who re-enrolled 
after the close of the annual opportunity but prior to September 1 of the same 
calendar year shall have until August 31 of that calendar year to make changes 
as allowed above to be effective September 1. 
   
  (8)-(9) (No change.) 
   
  (10) An eligible dependent spouse or child who <nl>has health coverage<ol> [is 
insured] as an employee [for health coverage] under the <nl>program<ol> [Uniform 
Group Insurance Program] becomes eligible for coverage as a dependent on the day 
following termination of [state] employment. Eligible dependent children who 
<nl>have health coverage in the program as dependents of <ol> [are insured as 
dependents for health coverage under the Uniform Group Insurance Program by] an 
employee who terminates [state] employment also become eligible for coverage on 
the day following termination of employment. In order to be eligible for 
coverage, dependents must meet the definition of dependent contained in  s81.1 
of this title (relating to Definitions) and be enrolled for coverage by the 
[state] employee of whom they are the eligible dependent and who is enrolled for 
health coverage under the program. The effective date of coverage will be the 
first day of the month following termination of employment if an application is 
submitted on or within 30 days following the date the dependent(s) become 
eligible under this rule. 
   
  (11) Notwithstanding the effective dates of coverages, as defined in 
paragraphs (1)-(9) of this subsection, an employee, retiree or other eligible 
participant in the <nl>program <ol> [Uniform Group Insurance Program] may 
complete an application or applications during the annual [limited] enrollment 
period to make coverage changes, as determined by the trustee, to be effective 
September 1. 
     
  (g) (No change.) 
   
  (h) Reinstatement in the program. 
 
  (1) (No change.) 
   
  (2) An employee who is a member of the Texas National Guard or any of the 
reserve components of the United States Armed Forces and who is in a military 
leave without pay status or who must terminate employment as the result of an 
assignment to active military duty may, upon return to <nl>active<ol> [state] 
employment, reinstate all <nl>program<ol> [Uniform Group Insurance Program] 
coverages that were in effect immediately prior to the commencement of active 
military duty, as long as the return to <nl>active<ol> [state] employment occurs 
within 90 days of the release from active military duty. An employee may also 
reinstate the coverage of the employee's dependent, who is a member of the Texas 
National Guard or any of the reserve components of the United States Armed 
Forces and whose coverage is terminated as the result of an assignment to active 
military duty. To reinstate canceled coverages, submission of evidence of 
insurability acceptable to the [insurance] carrier [and the pre-existing 
condition exclusion] will not apply. <nl>Provided all applicable preexisting 
conditions exclusions were satisfied at the time coverages were canceled, no 
additional preexisting conditions exclusions will apply upon reinstatement of 
coverages. If not, any remaining period of preexisting conditions exclusions 
must be satisfied upon reinstatement.<ol> The application to reinstate such 
coverages must be submitted during the 30 days following the day the employee 
returns to active [state] employment. In the case of the dependents, the 
application to reinstate such coverages must be submitted within 30 days 
following the release from active duty. Applications for coverages to be 
effective on the day the employee returns to active [state] employment must be 
submitted to the <nl>benefits<ol> [state agency insurance] coordinator on or 
before the first day of the return to active [state] employment. Coverages for 
which the application is submitted after the first day of the return to active 
state employment and within 30 days after that day will be effective on the 
first day of the month following the date of application[; however, applications 
completed and signed by the employee on the first calendar day of the month will 
be effective on that day]. 
   
  (3) Employees whose coverages were canceled during a period of leave without 
pay due to a certified work-related disability may, upon return to active duty 
status, reinstate all coverages that were in effect on the day immediately prior 
to entering the leave without pay status, except as provided in sec.81.11(c)(4) 
of this title (relating to Termination of Coverage), and provided application to 
reinstate such coverages is made within 30 days of the return to active duty. 
Evidence of insurability <nl>will <ol> [shall] not apply. <nl>The preexisting 
conditions exclusions will apply upon return to active duty. <ol> Coverages 
applied for on the first day of return to active duty will be effective on that 
day unless the employee completes the application indicating coverages are to be 
effective on the first day of the month following the date the employee returns 
to active duty. Coverages applied for after the first day of return to active 
duty and within 30 days after that day will be effective on the first day of the 
month following the date of application[; however, coverages applied for on the 
first day of the month will be effective on that day]. 
   
  <nl>(4) Employees whose coverages were cancelled during a period of leave 
without pay as a result of the Family and Medical Leave Act of 1993 may, upon 
return to active duty, reinstate all coverages that were in effect on the day 
immediately prior to entering the leave without pay status, provided application 
to reinstate such coverages is made within 30 days of the return to active duty. 
To reinstate cancelled coverages, submission of evidence of insurability 
acceptable to the carrier will not apply. Provided all applicable preexisting 
conditions exclusions were satisfied at the time coverages were cancelled, no 
additional preexisting conditions exclusions will apply upon reinstatement of 
coverages. If not, any remaining period of preexisting conditions exclusions 
must be satisfied upon reinstatement. 
     
  (i) Continuing coverage in special circumstances. 
 
  (1) (No change.) 
   
  (2) <nl>Continuation of health, dental, and life coverages for employees in a 
leave without pay status.<ol> [An employee in a leave without pay status may 
continue the types and amounts of health, life, and dental coverages in effect 
on the date the employee entered that status for a maximum period of up to 12 
months. The maximum period may be extended for up to 12 additional months for a 
total of 24 continuous months, provided the extension is certified by the 
department to be for educational purposes. During this period, the employee, 
other than an employee whose leave without pay status is a result of the Family 
and Medical Leave Act of 1993 (Public Law 103-3), may not change coverage except 
that, employees in a leave without pay status may: add new dependents, including 
newborns; reduce or cancel coverage; and make such coverage changes as are 
permitted during the annual enrollment period as described in subsection (f)(7) 
of this section. Disability income coverage for an employee in a leave without 
pay status will be suspended beginning on the first day of the month in which 
the employee enters the leave without pay status and continuing for those months 
in which the employee remains in that status. Suspended disability income 
coverage for an employee returning to active duty from a leave without pay 
status will be reactivated effective on the first day the employee returns to 
active duty if the entire period of unpaid leave was certified by the agency as 
approved leave without pay. The coverages of an employee whose leave without pay 
status is a result of the Family and Medical Leave Act of 1993 may continue at 
the same level of benefits and contributions that would have been in place if 
the employee had not taken the leave.] 
 
  <nl>(A) An employee in a leave without pay status may continue the types and 
amounts of health, life, and dental coverages in effect on the date the employee 
entered that status for a maximum period of up to 12 months. The maximum period 
may be extended for up to 12 additional months for a total of 24 continuous 
months, provided the extension is certified by the department to be for 
educational purposes. Disability income coverage for an employee in a leave 
without pay status will be suspended beginning on the first day of the month in 
which the employee enters the leave without pay status and continuing for those 
months in which the employee remains in that status. Suspended disability income 
coverage for an employee returning to active duty from a leave without pay 
status will be reactivated effective on the first day the employee returns to 
active duty if the entire period of unpaid leave was certified by the department 
as approved leave without pay. 
   
  <nl>(B) An employee whose leave without pay is a result of the Family and 
Medical Leave Act of 1993 will continue to receive the state contribution during 
such period of leave without pay. The employee must pay premiums directly as 
defined in sec.81.3(d)(2)(B)(i) of this title. Failure to make the required 
payment of premiums by the due date will result in the cancellation of all 
coverages except for member only health and basic life coverage. The employee 
will continue in the health plan in which he or she was enrolled immediately 
prior to the cancellation of all other coverages. If a premium beyond the state 
contribution for member only health and basic life coverage is owed, the 
employee must make the required payment of premiums directly to the employing 
department upon return to active duty. 
     
  (3)-(4) (No change.) 
   
  (5) Continuation of health and dental coverage [benefits] for a surviving 
spouse and/or dependent child/children of a deceased employee or retiree. The 
surviving spouse and/or dependent child/children of a deceased employee/retiree, 
who, in accordance with sec.81. 5(j)(1) of this title [(relating to 
Eligibility)], elects to continue coverage may do so by submitting the required 
election notification and enrollment forms to the <nl>system <ol> [Employees 
Retirement System]. The enrollment form, including all premiums due for the 
election/enrollment period, must be postmarked or received by the <nl>system 
<ol> [Employees Retirement System] on or before the date indicated on the 
continuation of coverage enrollment form. Continuing coverage will begin on the 
first day of the month following the month in which the employee/retiree dies, 
provided all group insurance premiums due for the month in which the 
employee/retiree died and for the election/enrollment period have been paid in 
full. 
   
  (6) Continuation of health and dental coverage [benefits] for a covered 
employee whose employment has been terminated, voluntarily or involuntarily 
<nl>(other than for gross misconduct), whose work hours have been reduced such 
that the employee is no longer eligible for the program as an employee, or whose 
coverage has ended following the maximum period of leave without pay as provided 
in sec.81.7(i)(2) (A) of this title. An<ol> [A terminated] employee, his or her 
spouse and/or dependent child/children, who, in accordance with sec.81.5(j)(2) 
of this title [(relating to Eligibility)], elects to continue health and dental 
coverages may do so by submitting the required election notification and 
enrollment forms to the <nl>system<ol> [Employees Retirement System]. The 
enrollment form, including all premiums due for the election/enrollment period, 
must be postmarked or received by the <nl>system <ol> [Employees Retirement 
System] on or before the date indicated on the continuation of coverage 
enrollment form. Continuing coverage will begin on the first day of the month 
following the month in which the  <nl>employee's coverage ends<ol> [covered 
employee terminates employment], provided all group insurance premiums due for 
the month in which the  <nl>coverage ends<ol> [employee terminates] and for the 
election/enrollment period have been paid in full. 
   
  (7) Continuation of health and dental coverage [benefits] for a spouse who is 
divorced from an employee/retiree and/or the spouse's dependent child/children. 
The divorced spouse and/or the spouse's dependent child/children (not provided 
for by  s81.5(a) of this title [(relating to Eligibility)]) of an 
employee/retiree who, in accordance with sec.81.5(j)(4) of this title [(relating 
to Eligibility)], elects to continue coverage may do so by submitting the 
required election notification and enrollment forms to the <nl>system<ol> 
[Employees Retirement System]. The enrollment form, including all premiums due 
for the election/enrollment period, must be postmarked or received by the 
<nl>system <ol> [Employees Retirement System] on or before the date indicated on 
the continuation of coverage enrollment form. Continuing coverage will begin on 
the first day of the month following the month in which the divorce decree is 
signed, provided all group insurance premiums due for the month in which the 
divorce decree is signed and for the election/enrollment period have been paid 
in full. 
   
  (8) Continuation of health and dental coverage [benefits] for a dependent 
child under 25 years of age who marries. A dependent child under 25 years of age 
who marries and who, in accordance with sec.81.5(j)(5) of this title [(relating 
to Eligibility)], elects to continue coverage may do so by submitting the 
required election notification and enrollment forms to the <nl>system <ol> 
[Employees Retirement System]. The enrollment form, including all premiums due 
for the election/enrollment period, must be postmarked or received by the 
<nl>system <ol> [Employees Retirement System] on or before the date indicated on 
the continuation of coverage enrollment form. Continuing coverage will begin on 
the first day of the month following the month in which the dependent child's 
marriage occurred, provided all group insurance premiums due for the month in 
which the dependent child's marriage occurred and for the election/enrollment 
period have been paid in full. 
   
  (9) Continuation of health and dental coverage [benefits] for a dependent 
child who has attained 25 years of age. A 25-year-old dependent child (not 
provided for by sec.81.5(d) of this title [(relating to Eligibility)] ) of an 
employee/retiree who, in accordance with sec.81.5(j)(6) of this title [(relating 
to Eligibility)], elects to continue coverage may do so by submitting the 
required election notification and enrollment forms to the <nl>system<ol> 
[Employees Retirement System]. The enrollment form, including all premiums due 
for the election/enrollment period, must be postmarked or received by the 
<nl>system <ol> [Employees Retirement System] on or before the date indicated on 
the continuation of coverage enrollment form. Continuing coverage will begin on 
the first day of the month following the month in which the dependent child of 
the employee/retiree attains 25 years of age, provided all group insurance 
premiums due for the month in which the dependent child attained age 25 and for 
the election/enrollment period have been paid in full. 
   
  (10) (No change.) 
   
  (11) Continuation coverage defined. Continuation coverage as provided for in 
paragraphs (5)-(10) of this subsection means the continuation of only health and 
dental coverage benefits which meet the following requirements. 
 
  (A) (No change.) 
   
  (B) Period of coverage. The coverage shall extend for at least the period 
beginning on the first day of the month following the date of the cessation of 
coverage event and ending not earlier than the earliest of the following: 
 
  (i) in the case of <nl>loss of coverage due to<ol> termination of an 
employee's employment, <nl>reduction in work hours, or end of maximum period of 
leave without pay,<ol> the last day of the 18th calendar month of the 
continuation period; 
   
  (ii) in the case of <nl>loss of coverage due to<ol> termination of an 
employee's employment, <nl>reduction in work hours, or end of maximum period of 
leave without pay,<ol> if the employee, spouse, or dependent child has been 
certified by the Social Security Administration as being disabled as provided in 
sec.81.5(j)(3) of this title [(relating to Eligibility)], the last day of the 
29th calendar month of the continuation period; 
   
  (iii) in any case other than <nl>loss of coverage due to<ol> termination of an 
employee's employment, <nl>reduction in work hours, or end of maximum period of 
leave without pay,<ol> the last day of the 36th calendar month of the 
continuation period; 
   
  (iv)-(vi) (No change.) 
   
  <nl>(vii)<nl> the date on which the participant, covered under any other group 
health plan that subjects him or her to a preexisting conditions limitation or 
exclusion, is no longer subject to the preexisting conditions limitation or 
exclusion in the other plan; 
   
  <nl>(viii)<ol>[(vii)] the date on which the participant, after the date of 
election, becomes entitled to benefits under the Social Security Act, Title 
XVIII. 
     
  (C)-(E) (No change.) 
 
  This agency hereby certifies that the proposal has been reviewed by legal 
counsel and found to be within the agency's authority to adopt. 
 Issued in Austin, Texas, on November 8, 1994. 
 TRD-9450632 
  Charles D. Travis 
 Executive Director 
 Employees Retirement System of Texas 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 867-3336 
         
                     
  TITLE 40. SOCIAL SERVICES AND ASSISTANCE 
 Part XVI. Council on Sex Offender Treatment 
  Chapter 512. Standards of Practice 
  
  40 TAC sec.sec.512.1-512.3 
 
  The Council on Sex Offender Treatment proposes new sec. s512.1-512.3, 
concerning the standards for practice for sex offender treatment providers. The 
new rules are added to provide sex offender treatment providers standards to 
delineate appropriate evaluation and treatment procedures and policies. 
 Eliza May, executive director, Council on Sex Offender Treatment, has 
determined that for the first five years, there will be no fiscal implications 
for state or local government as a result of enforcing or administering the 
rules. 
 Ms. May also has determined that the for each year the rules are in effect the 
public benefit anticipated as a result of enforcing the rules will provide 
assurances to the public that sex offender treatment providers have a set of 
standards in practice that delineate professional expectations for the treatment 
of sexual offenders. There will be no cost to small businesses. There is no 
anticipated economic costs to persons who are required to comply with the rules 
as proposed. 
 A public hearing is scheduled on December 9, 1994 from 10:00 a.m.-11:00 a.m. in 
the Central Services Building, 1711 San Jacinto, Room 402, Austin, Texas. 
 Comments on the proposal may be submitted to Eliza May, Council on Sex Offender 
Treatment, P.O. Box 12546, Austin, Texas 78701. 
 The new rules are proposed under Texas Civil Statutes, Article 4413(51), sec.13 
and sec.15, which provide the Council on Sex Offender Treatment with the 
authority to establish and maintain a registry, develop standards for treatment 
of sex offenders that must be met by sex offender treatment providers. 
 Texas Civil Statutes, Article 4413(51) and the Code of Criminal Procedure, 
Article 42.12 are cross-reference to statute. 
 
 
  sec.512.1. Introduction. 
 
  (a) The Texas Council on Sex Offender Treatment (CSOT) is a state organization 
dedicated to the prevention of sexual assault through effective treatment and 
management of sex offenders. It attempts to carry out its legislative mandate by 
identifying and certifying mental health treatment providers who have the 
appropriate training and experience in the treatment of sex offenders, by 
sponsoring training seminars and conferences, and by disseminating information 
about sex offender treatment to the Texas Legislature, Texas state and local 
governmental agencies, professional organizations, and the public. The Council 
publishes a Registry of Sex Offender Treatment Providers which lists the names, 
addresses and credentials of mental health treatment providers who strive to 
incorporate findings from empirical research into effective evaluation of and 
treatment strategies for sex offenders. 
   
  (b) Sexual deviance is a learned or acquired behavioral disorder but may also 
be influenced by biological factors. Treatment is focused on recognizing, 
changing and managing deviant behavior and the attitudes that promote it. Sexual 
deviance is not considered to be a disease that can be cured. The focus of 
contemporary treatment is on techniques designed to assist sex offenders in 
maintaining control throughout their lifetime. Therefore, treatment should 
include simple, practical techniques that can be used during and after formal 
therapy. 
   
  (c) Sex offender evaluation and treatment requires an approach unfamiliar to 
most mental health professionals. For example, therapists of sex offenders 
exercise substantial control over the lives of their clients because of the 
concern for community protection. For this and other reasons, standards of 
practice specific to the treatment of sex offenders are necessary. 
   
  (d) This document was developed by CSOT to delineate appropriate evaluation 
and treatment procedures and policies. The standards promulgated herein were 
largely adapted from the Practitioner's Handbook of the Association for the 
Treatment of Sexual Abusers (ATSA). They are not intended to supplant the 
standards of the clinician's licensing/certifying board, but are intended to 
supplement them. These standards delineate professional expectations for the 
treatment of sexual offenders. 
 
     
  sec.512.2. CSOT Assertions. 
 
  (a) Sex Offender treatment providers shall: 
 
  (1) be committed to community protection and safety; 
   
  (2) not discriminate against clients with regard to race, religion, gender 
preference or disability; 
   
  (3) treat clients with dignity and respect, regardless of the nature of their 
crimes or conduct; 
   
  (4) be knowledgeable of legal statutes and scientific data relevant to this 
area of specialized practice; 
   
  (5) perform professional duties with the highest level of integrity, 
maintaining confidentiality within the scope of statutory responsibilities; 
   
  (6) insure that the client fully understands the scope and limits of 
confidentiality in the context of his or her particular situation; 
   
  (7) refrain from using professional relationships to further their personal, 
religious, political, or economic interest other than accepting customary fees; 
   
  (8) not engage in sexual relationships with clients (sex between a therapist 
and a client is a third degree felony in Texas); 
   
  (9) fully inform clients in advance of fees for services; 
   
  (10) refrain from knowingly providing treatment services to a client who is in 
treatment with another professional without initial consultation with the 
current provider; 
   
  (11) make appropriate referrals when the therapist is not qualified or is 
otherwise unable to offer services to a client; 
   
  (12) insure that colleagues are qualified by training and experience before 
making a referral to them; 
   
  (13) when withdrawing services, minimize possible adverse effects on the 
client and the community by continuing treatment until the client has been 
admitted elsewhere; 
   
  (14) take into account the legal/civil rights of the clients, including the 
right to refuse therapy; 
   
  (15) make no claims regarding the efficacy of treatment that exceed what can 
be reasonably expected and supported by empirical literature; 
   
  (16) avoid drawing conclusions or rendering opinions that exceed the present 
level of knowledge in the field or the expertise of the evaluator; and 
   
  (17) attempt to resolve with the clinician and/or report to the appropriate 
licensing or regulatory authority unethical, incompetent, and dishonorable 
treatment or evaluation practices. 
     
  (b) Sex offender treatment providers assert the following. 
 
  (1) Community safety takes precedence over any conflicting consideration, and 
ultimately, is in the best interests of the offenders. 
   
  (2) Inappropriate or unethical treatment damages the credibility of all 
treatment and presents an unnecessary risk to the community. 
   
  (3) Sex offender treatment providers shall have no history of criminal or 
sexually deviant acts. 
   
  (4) Criminal investigation, prosecution, and court orders for treatment can be 
components of effective intervention. 
   
  (5) Where possible, therapists should actively involve community supervision 
officers, child protective services workers, and victim therapists in case 
management. 
   
  (6) A voluntary client accepted for treatment should be held to the same 
standards of compliance as are mandated offenders. 
   
  (7) It is imprudent to release an untreated sex offender without providing 
offense-specific evaluation and treatment or specialized supervision. 
   
  (8) Without external pressure many sex offenders will not follow through in 
treatment. Internal motivation improves the prognosis, but is not a guarantee of 
success. 
   
  (9) Many sex offenders require comprehensive, long-term, offense-specific 
treatment. Currently, cognitive-behavioral approaches that utilize sex offender 
peer groups and drug intervention appear to be the most effective and best 
evaluated methods. Self-help or time limited treatment should be used only as an 
adjunct to comprehensive treatment. For some offenders, incarceration without 
treatment may increase the risk of recidivism. 
   
  (10) Each offender will have an individual plan that identifies the issues, 
intervention strategies, and goals of treatment. This plan should outline 
expectations of the offender, his/her family (when possible), and support 
systems. Treatment contracts should include provisions to avert high risk 
situations. Contracts should be re-assessed periodically. 
   
  (11) Progress, or lack thereof, should be clearly documented in treatment 
records. Specific achievements, failed assignments and rule violations should be 
recorded. 
   
  (12) Progress in treatment must be based on specific, measurable objectives, 
observable changes, and demonstrated ability to apply changes in relevant 
situations. For most offenders, progress requires changes in the offender's 
behavior, attitudes, social and sexual functioning, cognitive processes, and 
arousal patterns. These changes should demonstrate increased understanding of 
deviant behavior, victim sensitization, and ability to seek and apply help. 
   
  (13) When an offender has made the changes required in treatment, there should 
be a gradual and commensurate decline of intervention, support, and supervision 
following an offense-specific treatment program. Ongoing support, aftercare and 
monitoring are desirable. 
   
  (14) There will be instances when the clinician should refuse to treat an 
offender because essential ancillary resources do not exist to provide the 
necessary levels of intervention or safeguards. 
   
  (15) When a treatment provider determines that an offender is not making the 
changes necessary to reduce his/her risk to the community, the provider has an 
ethical obligation to refer the client to a more comprehensive treatment program 
and/or to the judicial system. 
   
  (16) Failure on the part of clients to abide by the treatment contract should 
result in referral back to the justice system. 
   
  (17) A therapist may decide to decline further involvement with a client who 
refuses to address any critical aspect of treatment. 
   
  (18) Treatment providers need to immediately notify the appropriate authority 
when a client drops out of Court-ordered treatment. 
   
  (19) Most sex offenders enter the criminal justice system with varying degrees 
of denial regarding their behavior. Overcoming denial is a gradual process 
achieved in treatment. The existence of some degree of denial should not 
preclude an offender entering treatment, although the degree of denial should be 
a factor in identifying the most appropriate form and location of treatment. 
   
  (20) Sex offender treatment is unlikely to be effective unless the offender 
admits his/her behavior. Community based treatment is not appropriate for 
offenders who continue to demonstrate complete denial after a trial period of 
treatment. 
   
  (21) Therapists should not rely exclusively on self report by the offender to 
assess progress or compliance with treatment requirements and/or probation or 
parole orders. Therapists should rely on multiple sources of information 
regarding the offender's behavior and when possible utilize methods such as 
polygraph and phallometric assessment. 
   
  (22) Polygraphs and phallometric measures should not replace other forms of 
monitoring but may improve accuracy when combined with active surveillance, 
collateral verifications, and self-report. Phallometric assessment in Texas must 
be conducted under the supervision of a physician. 
   
  (23) Polygraphy can be effective in encouraging disclosure of prior events and 
adherence to rules. This procedure should not be the only method used to 
determine factual information. 
   
  (24) Phallometric methods cannot be used to prove an individual did or did 
not, or will or will not commit a sexual offense. However, they can be useful in 
identifying sexual preferences and changes in preferences over time. 
   
  (25) Informed, voluntary consent should always be obtained prior to engaging 
clients in aversive conditioning. 
   
  (26) If phallometric assessment or aversive therapies are used with persons 15 
years of age or younger, consent for such assessment and therapy should be 
obtained from the juvenile offender and the offender's parents, and the 
procedures should be reviewed by a multidisciplinary professional or 
institutional advisory group. This will insure that individuals not intimately 
involved in the treatment of the patient have input regarding the 
appropriateness of such methods for the developmental level of the child. 
   
  (27) Individuals under age 13 should not undergo phallometric assessment or 
aversive therapies except in rare cases. 
   
  (28) In cases of intellectually handicapped offenders who are unable to give 
consent, an interdisciplinary review and parental consent are the recommended 
ways to obtain permission to proceed with treatment. 
   
  (29) Removal of an intrafamilial offender from a residence in which children 
reside (instead of the children) is the preferred option. 
   
  (30) Treatment referrals should be offered to the non-offending spouse and 
children in cases where a parent has been removed and to the family where a 
juvenile offender has been removed. 
   
  (31) If the offender has a history of sexual arousal to or reported fantasies 
of sexual contact with children, he or she should be restricted from having 
access to children. If: 
 
  (A) it is determined that sufficient safeguards exist; 
   
  (B) the offender has demonstrated control over his or her deviant arousal; and 
   
  (C) it does not impede the offender's progress in treatment, supervised 
contact may be considered. 
     
  (32) There is evidence to support family participation in the treatment of 
sexual offenders. Where feasible and appropriate, spouses and other family 
members should be included. Victims or vulnerable children should be excluded 
until such time as joint therapy is determined to be appropriate for the 
children. 
   
  (33) The sex offender treatment provider should make every effort to 
collaborate with the victim's therapist in making decisions regarding 
communication, visits and reunification. Sex offender treatment providers should 
be supportive of the victim's wishes regarding contact with the offender. 
Contact should be arranged in a manner that places child/victim safety first. 
When assessing child safety, both psychological and physical well-being should 
be considered. The sex offender treatment provider shall insure that custodial 
parents or guardians of the children have been consulted prior to authorizing 
contact and that contact is in accordance with Court directives. 
   
  (34) If reunification is deemed appropriate, the process should be closely 
supervised. There must be provisions for monitoring behavior and reporting rule 
violations. Victim comfort and safety should also be assessed on a continuing 
basis. The offender's therapist should recognize that supervision during visits 
with children is critical for those whose crimes are against children, or who 
have the potential to abuse children. Caution should be taken when selecting and 
preparing visitation supervisors. 
   
  (35) It is advisable to limit child molesters' decision-making or disciplinary 
authority over minors. 
 
       
  sec.512.3. Issues To Be Addressed in Treatment. <ol> During the past decade, 
the field of sex offender evaluation and treatment has undergone many changes. 
Research and clinical reports are beginning to demonstrate that a number of 
treatment methods may be effective in reducing some forms of sexual deviance. 
Although existing data are inadequate to determine which type of treatment is 
the most effective for which type of offender, the following treatment methods 
are accepted as those most critical to the treatment of sexual deviancy. 
 
  (1) Arousal Control. Control of deviant arousal, fantasies, and urges is a 
priority with most sex offenders. Fantasy and sexual arousal to fantasy are 
precursors to deviant sexual behavior. It should be assumed that most offenders 
have gained sexual pleasure from their specific form of deviance. Arousal 
control methods do not eliminate but only help control arousal. It is therefore 
necessary that clients learn to apply these techniques in everyday situations, 
without reliance on a special apparatus. Arousal control may require periodic 
booster sessions for the remainder of the client's life. Effective arousal 
control must also include methods to control spontaneous deviant fantasies and 
to minimize contact with stimulating objects or persons. Arousal control should 
proceed from the most effective methods for reducing arousal to less effective 
methods. To document changes in arousal control, measurement is essential. 
Currently the most effective measures are obtained using a phallometric device. 
Multiple measures over time are required to determine change reliably. 
   
  (2) Cognitive Therapy. Cognitive distortions are thoughts and attitudes that 
allow offenders to minimize, justify and rationalize their deviant behavior. 
Cognitive distortions allow the offender to overcome prohibitions and progress 
from fantasy to behavior. These distorted thoughts provide the offender with an 
excuse to engage in deviant sexual behavior, and serve to reduce guilt and 
responsibility. Cognitive therapy strives to identify, assess, and modify 
cognition's that promote sexual deviance. Cognitive therapy is considered a 
vital component of treatment. 
   
  (3) Relapse Prevention. Current knowledge of deviant sexual behavior suggests 
that there is a series of behaviors, emotions, and cognition's that is 
identifiable and which precede deviant sexual behavior in a predictable manner. 
The ability to accurately identify these maladaptive behaviors is a primary goal 
for every offender in treatment. Autobiographies, offense reports, interviews 
and cognitive-behavioral chains are used to identify antecedents to offending. 
The ability to intervene can be enhanced by training primary partners and other 
support persons to recognize maladaptive behaviors and to encourage application 
of proper coping behaviors. 
   
  (4) Victim Empathy. Although there is no clear evidence to suggest that sex 
offenders can gain true empathy for victims of abuse, a universal goal of 
treatment is to learn to understand and value others. Highlighting the 
consequences of victimization helps sensitize the offender to the harm he or she 
has done. 
   
  (5) Increasing Social Competence. Sex offenders often have deficits in basic 
social and interpersonal skills. They may lack the ability to develop and 
sustain reciprocal friendships. Many offenders are poor problem-solvers, lack 
assertiveness, and do not adequately manage anger or stress. One goal of 
treatment is to improve the offender's ability to deal effectively with social 
situations and develop meaningful relationships with others. 
   
  (6) Improving Primary Relationships. Failure to develop and maintain a 
reciprocal, loving sexual relationship with an adult partner may lead one to 
seek out alternative sexual outlets. Identifying specific sexual dysfunctions, 
sex therapy, and training in dating skills and erotic techniques may be 
necessary to maintain a functional lifestyle. Failure to involve current 
partners in therapy often leads to the same stresses and failure in the 
relationship that precipitated the sexual deviancy. 
   
  (7) Couples/Family Therapy. To facilitate transition of the offender's partner 
into therapy a variety of treatment modalities are recommended. Individual 
therapy, non-offending spouses groups, and/or parents of victims groups prepare 
the partner for the issues and methods involved in sex offender treatment. 
Marital therapy or couples group therapy focused on sexual offending is 
essential in cases where an offender is to return home. If an offender is to 
eventually live in a home where victims or children reside, a predetermined 
integration sequence should be followed. This should include close supervision 
and a variety of safeguards for the protection of children. 
   
  (8) Support Systems. Involvement of close friends and family in therapy 
provides the offender with a milieu in which support is available. Part of the 
transition to follow-up treatment is less participation in group and individual 
therapy. To compensate for this loss of support and surveillance, the support 
system should assist the offender in avoiding and coping with antecedents to 
sexual deviance. The support system should include individuals from the 
offender's daily life (i.e., family, friends, co-workers, church members and 
extended family). 
   
  (9) Biomedical Approaches. Adjunctive therapy with psychopharmacological 
agents is useful in select cases. Antiandrogens such as depo-provera act by 
reducing testosterone and may be helpful in controlling arousal and libido when 
these factors are undermining progress in therapy or increasing the risk of 
reoffending before significant progress can be made in the cognitive aspects of 
therapy. Antidepressants and medications targeting obsessive compulsive symptoms 
are also useful in some individuals where those symptoms play a role in the 
overall psychodynamic picture. 
   
  (10) Follow-up Treatment. A therapeutic regime that includes follow-up 
significantly increases the likelihood that gains made during treatment will be 
maintained. In order for new habits and skills to be reinforced and to monitor 
compliance with treatment contracts, follow-up treatment should involve periodic 
booster sessions to reinforce and assess maintenance of positive gains made 
during treatment. This can be facilitated by involving the support group, and 
using polygraphy and phallometric assessment. Input from support group members, 
polygraph examinations, and phallometric assessments may serve to deter future 
offenses or alert therapists to problems. 
   
  (11) Comorbid Diagnosis. In some sex offenders there are sufficient signs and 
symptoms to merit an additional diagnosis by DSM IV criteria. These diagnoses 
can be anywhere in the entire spectrum of psychiatric disease. The most common 
are alcohol abuse, substance abuse and affective disorders. Treating an alcohol 
or substance abuse problem should not be assumed to make sex offender treatment 
unnecessary. Occasionally, the delusions and hallucinations of schizophrenia 
will be associated with the individual committing sexual offenses. The comorbid 
diagnoses should be treated with the appropriate therapies concomitantly with 
the treatment for sex offending behavior except in the case of schizophrenia 
where the antipsychotic therapy would obviously take precedence. 
 
  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 October 27, 1994. 
 TRD-9450476 
  Eliza May 
 Executive Director 
 Council on Sex Offender Treatment 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-2323 
         
             Chapter 513. Code of Professional Ethics 
  
  40 TAC sec.513.1, sec.513.2 
 
  The Council on Sex Offender Treatment proposes new sec.513.1 and sec.513.2, 
concerning a code of professional ethics for sex offender treatment providers. 
The new rules are added to provide sex offender treatment providers standards 
for professional ethics appropriate to their work in evaluations and treatment 
procedures related to sexual abusers. 
 Eliza May, executive director, Council on Sex Offender Treatment, has 
determined that for the first five years, there will be no fiscal implications 
for state or local government as a result of enforcing or administering the 
rules. 
 Ms. May also has determined that the for each year the rules are in effect the 
public benefit anticipated as a result of enforcing the rules will provide 
assurances to the public that sex offender treatment providers have a set of 
standards in practice and professional ethics that delineate professional 
expectations for the treatment of sexual offenders. There will be no cost to 
small businesses. There is no anticipated economic costs to persons who are 
required to comply with the rule as proposed. 
 A public hearing is scheduled on December 9, 1994 from 10:00 a.m.-11:00 a.m. in 
the Central Services Building, 1711 San Jacinto, Room 402, Austin, Texas. 
 Comments on the proposal may be submitted to Eliza May, Council on Sex Offender 
Treatment, P.O. Box 12546, Austin, Texas 78701. 
 The new rules are proposed under Texas Civil Statutes, Article 4413(51), sec.13 
and sec.15, which provide the Council on Sex Offender Treatment with the 
authority to establish and maintain a registry, develop standards for treatment 
of sex offenders that must be met by sex offender treatment providers. 
 Texas Civil Statutes, Article 4413(51) and the Code of Criminal Procedure, 
Article 42.12 are the cross-reference to statute. 
 
 
  sec.513.1. Code of Professional Ethics. Sex offender treatment providers are 
trained in dealing with the assessment and treatment of sex offenders. These 
providers constitute a professional discipline which has a membership committed 
to establishing and maintaining the highest level of professional standards 
related to the assessment and treatment of sexual abusers. As such, they are 
conscious of their special skills and aware of their professional boundaries. 
They perform their professional duties with the highest level of integrity and 
appropriate confidentiality, within the scope of their statutory 
responsibilities. They will not hesitate to seek assistance from other 
professional disciplines when circumstances dictate. They are committed to 
protect the public against and will not hesitate to expose unethical, 
incompetent, or dishonorable practices. In order to maintain the highest 
standard of service and consumer protection, they commit themselves to the 
following principles designed to earn the greatest level of public confidence. 
 
   
  sec.513.2. Code of Ethics. 
 
  (a)  Professional Conduct. 
 
  (1)  Each clinician will provide professional service to anyone, regardless of 
race, religion, sex, political affiliation, social or economic status, or choice 
of life style. A provider will not allow personal feelings related to a client's 
alleged or actual crimes or behavior to interfere with professional judgment and 
objectivity. When a therapist cannot offer service to a client for any reason, 
he or she will make a proper referral. Providers are encouraged to devote a 
portion of their time to work for which there is little or no financial return. 
   
  (2) Each provider will refrain from using his or her professional 
relationship, related to the assessment or treatment of a client, to further 
personal, religious, political or economic interests, other than customary fees. 
   
  (3) The proper conduct of each therapist is a personal matter to the same 
degree as it is with any other individual, except when such conduct compromises 
the fulfillment of professional responsibilities or reduces the public trust in 
this specialty area. Consequently, providers are sensitive to predominant 
community standards and the potential impact that either conformity to, or 
deviation from, these standards can have on the quality of their own 
performance, as well as that of their colleagues. 
   
  (4) Each provider has an obligation to engage in continuing education and 
professional growth including active participation in meetings and affairs or 
relevant professional affiliations. 
   
  (5) Each provider will refrain from diagnosing, treating or advising on 
problems outside the recognized boundaries of his/her competence. 
     
  (b) Client Relationships. 
 
  (1)  Each provider, while offering dignified and reasonable support to a 
client, is courteous in making a prognosis and will not exaggerate the efficacy 
of his or her service. 
   
  (2) When engaged in private practice, each provider recognizes the importance 
pertaining to financial matters with clientele. Arrangements for payments are to 
be settled at the beginning of an assessment or a therapeutic relationship. 
   
  (3) Each provider will attempt to avoid relationships with clientele which may 
impair professional judgment or pose a risk of exploiting them. Examples of such 
relationships include, but are not limited to, the following: treatment of 
family members, close friends, employees, or supervisors. 
   
  (4) Sexual intimacy with clients is unethical. Such behavior between a 
therapist and a client constitutes a felony offense in Texas. 
   
  (5) A provider shall not withdraw services to clients in a precipitous manner. 
Each member shall give careful consideration to all factors in the situation and 
take care to minimize possible adverse effects on the client. 
   
  (6) Each provider who anticipates termination or disruption of service to 
clients shall notify the clients promptly and provide for transfer, referral, or 
continuation of service in relationship to the client's needs and preferences. 
   
  (7)  Each provider who serves the clients of a colleague during a temporary 
absence or emergency will serve those clients with the same consideration of 
that afforded any client. 
   
  (8) In their professional role, providers will avoid any action which will 
violate or diminish the legal and civil rights of clients or others who may be 
affected by their actions. 
     
  (c)  Confidentiality. 
 
  (1) Providers will keep records on each client, storing them in such a way as 
to ensure their safety and confidentiality in accordance with the highest 
professional and legal standards. 
   
  (2)  Each provider is responsible for informing clients of the limits of 
confidentiality. Clients should be informed of any circumstances which may 
trigger an exception to the agreed upon confidentiality. The client being 
evaluated or treated then has the option to decide what information to reveal 
and what risks to confidentiality he or she may wish to bear. A written and 
signed document (contract) is recommended. 
   
  (3) Providers in criminal justice settings, or elsewhere, should inform all 
parties with whom they are working of the level of confidentiality which 
applies. They should clarify any circumstances which would constitute exceptions 
to confidentiality, in advance of the service being rendered. Each provider 
should make clear to the client any "conflicts of interests" or dual-client 
relationships which affect his/her current relationship with a client. 
   
  (4) Written permission shall be granted by the client before any data may be 
divulged to other parties. 
   
  (5) When responding to an inquiry for information and when a written release 
by the client is obtained, written and oral reports should present data germane 
to the purpose of the inquiry. Every effort should be made to avoid undue 
invasion of privacy for the client. 
   
  (6) As noted in this section, information is not communicated to others 
without the consent of the client unless the following circumstances occur: 
 
  (A) there exists a clear and immediate danger to the person(s) from the 
client; 
   
  (B) there is an obligation, depending upon one's profession, to comply with 
specific statutes requiring reports of suspected abuse to authorities. Each 
provider is responsible for becoming fully aware of all statutes which pertain 
to the conduct of his or her professional practice. 
       
  (d)  Assessments. 
 
  (1) Providers make every effort possible to promote the client's victim-free 
behavior while at the same time, acting in the best interest of the client, so 
long as others are not placed at identifiable risk. They guard against the 
misuse of assessment data. They respect their clients' rights to know the 
results, the interpretations made, and the basis for the conclusions and 
recommendations drawn from such assessments. They endeavor to ensure that the 
assessments and reports they provide are used appropriately by others as well. 
   
  (2) Unless the client agrees to an exception in advance, each provider 
respects the right of the client to have a complete explanation of the nature 
and purpose of the methodologies, and any foreseeable side effects of the 
assessment, in language which the client is able to understand. 
   
  (3) Each provider will obtain voluntary informed consent, in written form, 
from a client prior to conducting a physiological assessment or engaging in 
treatment. In cases where a question exists regarding the appropriateness of 
administering a test to a particular client, the provider shall seek expert 
guidance from a competent medical or psychological authority prior to testing. 
   
  (4) In court-ordered evaluations, the client should have his or her rights 
read to him and signed, prior to the assessment being initiated. 
   
  (5) The responsible use of assessment measures is of paramount concern and a 
serious responsibility of each provider. Assessments regarding a person's degree 
of sexual dangerousness, suitability for treatment, or other forensic referral 
questions shall not be determined solely on the basis of a phallometric 
assessment. Rather, such data must be properly integrated within a comprehensive 
assessment, components of which are determined by a person who has specific 
training and expertise in making such assessments. 
   
  (6) An assessment should not be used to confirm or deny whether an event or 
crime has taken place. 
   
  (7) In reporting assessment results, providers indicate any reservations that 
might exist regarding validity or reliability because of the circumstances of 
the assessment or the absence of comparative norms for the person being tested. 
Each provider endeavors to ensure that assessment results and interpretations 
are not misunderstood or misused by others. Proper qualifications will be made 
with regard to prediction and "generalizability of data" issues, in order to not 
mislead the consumer of the report. 
   
  (8) Since it is not within the professional competence of providers to offer 
conclusions on matters of law, unless they are trained to do so, they should 
resist pressure to offer such conclusions (e.g., while it would be appropriate 
to address an issue regarding the probability of a client committing certain 
criminal acts within a certain period of time, it would be inappropriate to 
state that "an individual is too dangerous to be released."). 
   
  (9) Each provider should be very cautious in offering predictions of criminal 
behavior for use in imprisoning or releasing individuals. If a provider decided 
that it is appropriate, on the basis of a thorough evaluation in a given case, 
to offer a prediction of criminal behavior, he or she should specify clearly: 
 
  (A) the acts being predicted; 
   
  (B) the estimated probability that these acts will occur during a given period 
of time; and 
   
  (C) the facts on which these predictive judgments are based. 
     
  (10)  Each provider should be thoroughly familiar with the assessment or 
treatment procedures and data used by another provider before providing any 
public comment or testimony pertaining to the validity, reliability, or accuracy 
of such information. 
   
  (11) Each provider will safeguard sexual arousal assessment testing and 
treatment materials. Each provider will recognize the sensitivity of this 
material and use it only for the purpose for which it is intended in a 
controlled phallometric laboratory assessment. Providers will not make such 
materials available to persons who lack proper training and credentials, or who 
would misinterpret or improperly use such stimulus materials. 
     
  (e) Professional Relationships. 
 
  (1) Each provider will refrain from knowingly offering services to a client 
who is in treatment with another professional without initially consulting with 
the parties involved. 
   
  (2) Each provider will act with proper regard for the needs, special 
competencies, and perspectives of not only colleagues who treat sexual abusers 
but other professionals as well. 
   
  (3) Each provider is encouraged to affiliate with professional groups, 
clinics, or agencies operating in the assessment and treatment of sexual 
offenders. Similarly, interdisciplinary contact and cooperation is encouraged. 
     
  (f)  Research and Publications. 
 
  (1) Each provider is obligated to protect the welfare of his or her research 
subjects. Provisions of the "human subjects experimental policy" shall prevail 
as specified by the United States Department of Health, Education and Welfare 
guidelines. 
   
  (2) Each provider will carefully evaluate the ethical implications of possible 
research and has full responsibility to ensure that ethical practices are 
enforced in conducting such research. 
   
  (3) The practice of informed consent prevails. The research participant shall 
have full freedom to decline to participate in or withdraw from the research at 
any time without any prejudicial consequences. 
   
  (4) The research subject shall be protected from physical and mental 
discomfort, harm, and danger that may result from research procedures to the 
greatest degree possible. 
   
  (5) Publication credit is assigned to those who have contributed to a 
publication in proportion to their contribution, and in accordance with 
customary publication practices. 
     
  (g) Public Information and Advertising. All professional presentations to the 
public will be governed by the following standards on public information and 
advertising. 
 
  (1) General Principles. The practice of assessment and treatment of the sex 
offender exists for the public welfare. Therefore, it is appropriate for the 
well trained and qualified practitioner to inform the public of the availability 
of services. However, much needs to be done to educate the public as to the 
services available from qualified persons who engage in the assessment and 
treatment of sexual abusers. Therefore, providers have a responsibility to the 
public to engage in appropriate informational activities and avoid 
misrepresentation or misleading statements in keeping with the following general 
principles and specific regulations: Selection of the therapist by a prospective 
client should be made on an informed basis. Advice and recommendations of third 
parties, such as community corrections officers, attorneys, physicians, other 
professionals, relatives or friends, as well as responses to restrained 
publicity, may be helpful. Advertisements and public communications, whether in 
directories, announcement cards, newspapers or on radio or television, should be 
formulated to convey accurate information which is necessary to make an 
appropriate selection. Self-praising should be avoided. Information that may be 
helpful in some situations would include the following: 
 
  (A) office information such as name, including a group name and names of 
professional associates, address, telephone number, credit card acceptability, 
languages spoken and written, and office hours; 
   
  (B) earned degrees, state licensure and/or other certification, professional 
certification or affiliation; 
   
  (C) description of practice, including the statement that a practice is 
limited to the assessment or treatment of sexual offenders (if appropriate); and 
   
  (D) permitted fee information. 
     
  (2) The proper motivation for community publicity by members who are engaged 
in the assessment and treatment of sexual abusers lies in the need to inform the 
public of the availability of competent professionals. The public benefit 
derived from advertising depends upon the usefulness and accuracy of the 
information provided to the community to which it is directed. 
   
  (3) The regulation of public statements by providers is rooted in the public 
interest. Public statements through which a provider seeks business by use of 
extravagant or brash statements or appeals to fears could mislead or harm the 
lay person. Furthermore, public communications that would produce unrealistic 
expectations in particular cases and would bring about a lack of confidence in 
the profession, would be harmful to the community. The therapist-client 
relationship is personal and unique and should not be established as the result 
of pressures, deception or exploitation of the vulnerability of clients. 
   
  (4) The name under which a provider conducts his or her practice may be a 
factor in the selection process. Use of a name or credentials which could 
mislead referral sources or lay persons is improper. Likewise, one should not 
hold oneself out as being a partner or associate of any agency or firm if he is, 
in fact, not acting in that capacity (e.g., a person engaged in private practice 
who is also employed at a state hospital should make it clear to a prospective 
client in private practice that he is not acting on behalf of a state hospital). 
   
  (5) In order to avoid the possibility of misleading persons with whom he or 
she deals, a provider should be scrupulous in the representation of his or her 
professional background, training and status. Each provider must indicate, if it 
is accurate, any limitations in his or her practice (e.g., a therapist who is a 
member should specify if, while working in a private practice setting, he/she 
needs to operate under the supervision of a licensed professional). 
   
  (6) Providers do not represent their affiliation with any organization or 
agency in a manner which falsely implies sponsorship or certification by that 
organization. 
   
  (7) Regulation of public information and advertising. 
 
  (A) A provider shall not knowingly make a representation about his or her 
ability, background, or experience, or about that of a partner or associate, or 
about a fee or any other aspect of a proposed professional engagement that is 
false, fraudulent, misleading, or deceptive. 
   
  (B) A false, fraudulent, misleading, or deceptive statement or claim is 
defined as a statement or claim which: 
 
  (i) contains a material misrepresentation of fact; 
   
  (ii) omits any material or statement of fact which is necessary to make the 
statement, in light of all circumstances, not misleading; 
   
  (iii) is intended or likely to create an unjustified expectation concerning 
the clinician, or services. 
 
  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 October 27, 1994. 
 TRD-9450475 
  Eliza May 
 Executive Director 
 Council on Sex Offender Treatment 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-2323 
         
                       
  TITLE 43. TRANSPORTATION 
 Part I. Texas Department of Transportation 
  Chapter 22. Use of State Property 
  
  Subchapter B. Use of State Highway Right-of-Way 
 
  43 TAC sec.sec.22.10-22.15 
 
  The Texas Department of Transportation proposes new sec. s22.10-22.15, 
concerning use of state highway right-of-way. 
 Texas Civil Statutes, Article 6665, require the Texas Transportation Commission 
to formulate plans and policies for the location, construction, and maintenance 
of a comprehensive system of state highways and public roads. Texas Civil 
Statutes, Article 6674w-1, empower the commission to lay out, construct, 
maintain, and operate a modern state highway system. Government Code, Chapter 
485, sec.485.004, requires state agencies to cooperate with the Office of the 
Governor's Music, Film, Television, and Multimedia Office to the greatest extent 
possible to promote the development of the music film, television, and 
multimedia industries in this state. Texas Civil Statutes, Article 6673h, 
require the commission to adopt rules concerning the use of highways for bicycle 
events. In accordance with these statutes, the commission proposes the following 
new sections governing certain temporary non-department uses of state highway 
right-of way which serve a public purpose and are consistent with the safety and 
convenience of the traveling public. 
 Section 22.10. Purpose. States the purpose of the subchapter, which is to 
facilitate the use of state highway right-of-way for certain public purposes 
benefitting the general public while being consistent with the safe operation of 
the state highway system. 
 Section 22.11. Definitions. Defines the words and terms used in the subchapter. 
 Section 22.12. Closures. Authorizes the department to close a segment of the 
state highway system for no more than seven days if such action serves a public 
purpose and is consistent with the safety of the traveling public; authorizes 
the submittal of a request for approval of a closure; requires a request for a 
closure in an incorporated area to come from the city; prescribes the content of 
the request; requires a request to be submitted within at least 30 days of the 
closure; provides that the district engineer will approve a closure based on 
criteria concerning public safety, the public purpose of the event, a traffic 
control plan that protects motorists, participants, and spectators, scheduled 
maintenance and construction activities, convenience of abutting property owners 
and residents, environmental impacts, and passage of emergency vehicles; 
provides for a written agreement between the requestor and the department; 
excepts emergency traffic control and maintenance activities pursuant to a 
municipal maintenance agreement from requiring prior department approval; refers 
film and video productions to sec.22.13; excepts certain bicycles races from 
requiring department approval; excepts routine traffic control from requiring 
department approval if the closure is in an incorporated area and does not take 
place on a controlled access highway, but does take place on an arterial highway 
(arterial highway is defined as a roadway containing predominately at-grade 
intersections, allowing continuous access to abutting property, and having 
posted speeds of 45 Mph or less); requires written notice if a request is 
disapproved; provides for an appeal to the assistant executive director, field 
operations. 
 Section 22.13. Film and Video Productions. Requires department approval of a 
production that requires a closure, will disrupt traffic, could damage the 
right-of-way or highway facilities, or affects the safety of the traveling 
public; requires a person or entity requesting approval of a production to first 
contact the Texas Film Commission; requires the requestor to then submit a 
request to the department district, and lists the required information; provides 
that the district engineer will approve a closure based on criteria concerning 
public safety, a traffic control plan that protects motorists, participants, and 
spectators, scheduled maintenance and construction activities, convenience of 
abutting property owners and residents, environmental impacts, and passage of 
emergency vehicles; provides for a written agreement between the requestor and 
the department, and describes the minimum terms and conditions; requires written 
notice if a request is disapproved; provides for an appeal to the assistant 
executive director, field operations. 
 Section 22.14. Vendors. Prohibits the use of state highway right-of-way for the 
purpose of selling goods or services from a vehicle or structure unless 
authorized by law or for the sale of an edible agricultural commodity for a 
period not to exceed 60 days, if that commodity was grown or produced on the 
abutting property; requires person desiring to vend on the right-of-way, as 
authorized in this section, to file an application at the department's district 
office; lists the restrictions placed on the location of authorized vendors, 
which include protection of the traveling public and natural environment; 
restricts the placement of a sign on the right-of-way, vehicle, or structure; 
provides that the district engineer or his or her designee will approve an 
application, subject to necessary additional terms, if the use of right-of-way 
is in compliance with this section; provides for a written agreement between the 
requestor and the department, and describes the minimum terms and conditions; 
requires written notice if a request is disapproved; provides that any decision 
by a designee of the district engineer may be overruled by the district 
engineer. 
 Section 22.15. Signs. Authorizes the placement of special event signs and signs 
to identify a commercial entrance along a highway under construction; provides 
that a contractor for a highway improvement contract will erect a sign to 
indicate a commercial entrance as provided in the plans and specifications for 
the project; requires a person or entity requesting authorization to place a 
special event sign to file an application at the department's local area office 
not fewer than 14 days prior to the date of placement; lists minimum information 
required to accompany the application; provides that the area engineer will 
approve the placement and support for a special event sign found in compliance 
with this section, subject to any necessary additional terms; describes 
restrictions on the placement of signs relating to size, material, location, 
text, lighting, and banner supports; authorizes the executive director or 
designee to waive one or more requirements of this section; authorizes the 
department to remove a sign not maintained in compliance with this section; 
requires the applicant to remove the sign within 24 hours of the event, except 
banners must be removed within seven days; authorizes the department to remove a 
sign which becomes a hazard; provides that a sign not removed as required shall 
be removed by the department, and the applicant is liable for removal and 
disposal costs. 
 Gary K. Trietsch, Director of Traffic Operations, has determined that the 
overall annual cost to the state of enforcing or administering the sections 
cannot be determined due to the inability to estimate the type and quantity of 
requests. The department estimates the following approximate costs to the state 
per request: $50-$300 for closures and film/video productions; $24 for special 
event signs; and $280 for vending. There are no additional cost to local 
governments expected as a result of enforcing or administering the proposed 
sections. 
 Mr. Trietsch has certified that there will be no significant impact on local 
economies or overall employment as a result of enforcing or administering the 
proposed sections. 
 Mr. Trietsch also has determined that for each year of the first five years the 
sections are in effect the public benefit anticipated as a result of 
implementing the sections will be the protection of the safety and convenience 
of the traveling public and the protection of the integrity of the highway 
facility and adjacent right-of-way while authorizing certain events and 
activities on state highway right-of-way which serve a public purpose. 
 There will be no effect on small businesses. There will be an economic cost to 
persons who request to use state highway right-of way as provided in the 
proposed sections. For individuals or entities submitting requests for closures 
or film/video productions, the estimated costs range from $100 to $500 per day 
per request for small events, $500-$1,000 per day per request for medium size 
events, and $1,000-$10,000 per day per request for large events. Most requests 
will involve small events. The department estimates receiving one to two 
requests for large events per year. For individuals or entities requesting 
authority to vend and to place a sign costs will be negligible. 
 Pursuant to the Government Code, Chapter 2001, the Texas Department of 
Transportation will conduct a public hearing to receive comments concerning the 
proposed new sections. A public hearing will be held at 10:00 a.m. on November 
28, 1994 in Room 102 of Riverside Annex, 200 East Riverside, Austin, Texas. The 
hearing will be conducted in accordance with the procedures specified in 43 TAC 
sec.1.5. Those desiring to make comments or presentations may register starting 
at 9:30 a.m. Any interested person may appear and offer comments, either orally 
or in writing, however, questioning of those making presentations will be 
reserved exclusively to the presiding officer as may be necessary to ensure a 
complete record. While any person with pertinent comments will be granted an 
opportunity to present them during the course of the hearing, the presiding 
officer reserves the right to restrict testimony in terms of time and repetitive 
content. Organizations, associations, or groups are encouraged to present their 
commonly held views and identical or similar comments through a representative 
member where possible. Comments on the proposed text should include appropriate 
citations to sections, subsections, paragraphs, etc., for proper reference. Any 
suggestions or requests for alternate language or other revisions in the 
proposed text should be submitted in written form. Presentations must remain 
pertinent to the issue being discussed. A person may not assign a portion of his 
or her time to another speaker. A person who disrupts a public hearing must 
leave the hearing room if ordered to do so by the presiding officer. Persons 
with disabilities who have special communication or accommodation needs and who 
plan to attend the hearing and who may need auxiliary aids or services such as 
interpreters for persons who are deaf or hearing impaired, readers, large print 
or braille, are requested to contact Eloise Lungren, Director of the Public 
Information office, at 125 East 11th Street, Austin, Texas 78701-2383, (512) 
463-8588 at least two work days prior to the hearing so that appropriate 
arrangements can be made. 
 Written comments on the proposed new sections may be submitted to Gary K. 
Trietsch, Director of Traffic Operations, Texas Department of Transportation, 
125 East 11th Street, Austin, Texas 78701-2483. The deadline for receipt of 
written comments will be 5:00 p.m. on December 9, 1994. 
 The new sections are proposed under Texas Civil Statutes, Articles 6666, which 
provide the Texas Transportation Commission with the authority to promulgate 
rules for the conduct of the work of the Texas Department of Transportation, 
Texas Civil Statutes, Article 6673h, which mandate that the Commission adopt 
rules for bicycle use on the state highway system; and Texas Civil Statutes, 
Article 6674w-1, which empower the commission to lay out, construct, maintain, 
and operate a modern state highway system. 
 The sections do not affect other statutes, articles, or codes. 
 
 
  sec.22.10. Purpose.  It is the policy of the department and the commission to 
facilitate the use of state highway right-of-way for certain public purposes 
which benefit the general public while being consistent with the safe operation 
of the state highway system. The sections under this subchapter prescribe the 
policies and procedures governing use of state highway right-of-way for other 
than department business. 
 
   
  sec.22.11. Definitions.  The following words and terms, when used in this 
section, shall have the following meanings, unless the context clearly indicates 
otherwise. 
   
   Area engineer-The chief administrative officer in charge of an area office of 
the department. 
   
   Area office-An office responsible for carrying out the department's primary 
functions at the local level for a designated geographical area within a 
district. 
   
   Arterial Roadway -A roadway which contains predominately at-grade 
intersections, allows continuous access to abutting property, and has posted 
speeds equal to or less than 45 miles per hour. 
   
   Banner-A sign painted or fabricated on fabric mesh or flexible plastic, 
placed between supports above or along a roadway or highway. 
   
   BC Sheets-The latest edition of Barricade and Construction Standards 
published by the department. 
   
   Closure-The temporary restriction, in whole or in part, of vehicular use of a 
segment of the state highway system. 
   
   Commission-The Texas Transportation Commission. 
   
   Controlled access highway-In accordance with applicable state law, a state 
highway on which owners or occupants of abutting lands and other persons are 
denied access to or from the highway except at such points only and in such 
manner as may be determined by the department. 
   
   Department-The Texas Department of Transportation. 
   
   District-A subdivision of the department responsible for the day-to-day 
operations of the department in a specific geographically defined area. 
   
   District engineer -The chief administrative officer of a district of the 
department. 
   
   Executive director -The chief administrative officer of the department. 
   
   Edible agricultural commodity-Any product produced and sold for human 
consumption. 
   
   Film and video production-The on-location creation of a film or video project 
including, but not limited to, feature films, television productions, television 
commercials, documentaries, music videos, and corporate or industrial 
communication productions. 
   
   MUTCD-Manual on Uniform Traffic Control Devices. 
   
   Person-An individual, corporation, organization, business trust, estate, 
trust, partnership, association, and any other legal entity. 
   
   Right-of-way-The entire width of land between the public boundaries or 
property lines of a highway. 
   
   Routine traffic control-The handling of events which last no more than four 
hours, such as parades, marches, and other such events, and use authorized law 
enforcement personnel who accept the responsibility for the traffic control as 
being well within their capabilities to protect and direct all parties involved. 
   
   Sign-Any outdoor sign, display, light, device, figure, painting, drawing, 
message, plaque, poster, or other thing that is designed, intended, or used to 
advertise or inform. 
   
   Special event-An event serving a public purpose and sponsored by a civic or 
non-profit organization, including, but not limited to, fairs, festivals, 
bicycle events, marathons, walkathons, rodeos, and charitable fund-raising 
events, but not including political events or events that could be construed to 
advocate or oppose a candidate for election or influence the passage or defeat 
of a measure on an election ballot. 
   
   State highway system-The system of highways in the state included in a 
comprehensive plan prepared by the department's executive director under the 
direction and with the approval of the commission in accordance with Texas Civil 
Statutes, Article 6674b. 
   
   Texas Film Commission -The office responsible for promoting the development 
of the film industry in the state, currently located in the Office of the 
Governor's Music, Film, Television, and Multimedia Office. 
 
   
  sec.22.12. Closures. 
 
  (a) Policy. The department may authorize the closure of a segment of the state 
highway system for no more than seven days if such action serves a public 
purpose and is consistent with the safety of the traveling public. This section 
prescribes the policies and conditions by which an individual, private entity, 
or governmental entity may obtain such approval. 
   
  (b) Request. 
 
  (1) Who may submit. 
 
  (A)  Unincorporated area. Any individual, private entity, or governmental 
entity may submit a request for approval of a closure in an unincorporated area. 
   
  (B) Incorporated area. Only a municipality may submit a request for approval 
of a closure in an incorporated area. Any individual, private entity, or other 
governmental entity desiring a closure must ask the municipality to submit a 
request to the district engineer. 
     
  (2)  Content of request. A request for approval of a closure must be submitted 
in writing to the appropriate district engineer and must include the following 
information: 
 
  (A) a physical description of the limits of the event, including county names 
and highway numbers, the number of lanes the highway has, and the number of 
lanes to be used, and a map showing the location of the event; 
   
  (B) the proposed schedule of start and stop times at each location; 
   
  (C) a brief description of the proposed activities, including the approximate 
number of people and number and type of equipment involved; 
   
  (D) a traffic control plan which incorporates the requirements of the Texas 
MUTCD; and 
   
  (E) an explanation of the public purpose to be served by the event. 
     
  (3) When submitted. A request for a closure must be submitted at least 30 days 
prior to the date of the proposed event. 
     
  (c) Approval. The district engineer will approve a closure if he or she 
determines that: 
 
  (1) the event requiring the closure serves a public purpose; 
   
  (2) the requestor has designed a satisfactory traffic control plan to protect 
both motorists and all participants and spectators, and the plan will not 
substantially inconvenience the traveling public; 
   
  (3) the event itself will not impair the safety of the traveling public; 
   
  (4) the convenience of abutting property owners and residents is adequately 
protected, and adequate access for such persons to their property is assured; 
   
  (5) the closure does not conflict with scheduled maintenance or construction 
activities; 
   
  (6) the event will not cause substantial negative impacts to the environment, 
including landscape features; and 
   
  (7) there will be appropriate passage allowance for emergency vehicle travel. 
     
  (d) Written agreement. If the district engineer approves the proposed closure, 
the requestor, which will be considered the city if the closure is in an 
incorporated area, must enter into a written agreement with the department, in a 
form prescribed by the department, prior to the closure. The agreement will 
contain terms and conditions the department deems necessary to protect the 
public safety including, but not limited to: 
 
  (1) the physical description of the limits of the event, including county 
names and highway numbers; 
   
  (2)  the proposed schedule of start and stop times at each location; 
   
  (3)  a description of the proposed activities, including the approximate 
numbers of people and equipment involved; 
   
  (4) the traffic control plan; 
   
  (5) a statement that this event serves a public purpose; 
   
  (6) a statement that the requestor shall assume all costs associated with the 
event; 
   
  (7) a traffic enforcement plan, including a letter from the law enforcement 
agency that will be providing the traffic control for the event; 
   
  (8) assurance that there will be appropriate passage allowance for emergency 
vehicle travel; 
   
  (9) a statement that the requestor will avoid or minimize impacts, and will, 
at its own expense, restore or repair damage occurring outside the right-of-way 
and restore or repair the right-of-way, including roadway and drainage 
structures, signs, pavement, etc., to a condition equal to that existing before 
the closure, and, to the extent practicable, restore the natural environment, 
including landscape features; 
   
  (10) a statement that: 
 
  (A) the requestor shall indemnify and save harmless the state, its officers, 
employees, agents, and contractors from claims and liabilities due to the 
activities of the requestor; or 
   
  (B) the city acknowledges its responsibilities for the acts and omissions of 
its officers, employees, agents, and contractors, to the extent permitted by 
applicable law, if the requestor is a city which is unable to provide 
indemnification; 
     
  (11) evidence that the requestor has obtained adequate insurance naming the 
department as a coinsured by the requestor or responsible party in an amount and 
form acceptable to the department for the payment of any damages which may occur 
during the time period of encroachment and to save the state harmless; and 
   
  (12) a statement that the requestor must abide by all applicable federal, 
state, and local environmental laws, regulations, ordinances, and any conditions 
or restrictions required by the department to protect the natural environment 
and cultural resources on the right-of-way. 
     
  (e) Exceptions. 
 
  (1)  General. Closures necessary for emergency traffic control and maintenance 
activities pursuant to a municipal maintenance agreement do not require prior 
department approval. 
   
  (2) Film and video productions. Requests for approval of film and video 
productions must be submitted in accordance with sec.22.13 of this title 
(relating to Film and Video Productions). 
   
  (3)  Bicycle races. A competitive bicycle race that does not involve the 
complete restriction of vehicular traffic in one or both directions such that a 
detour is required is not subject to approval by the department, if the 
sponsoring organization has obtained the approval of the appropriate local law 
enforcement agency or agencies in accordance with the Uniform Act Regulating 
Traffic, Texas Civil Statutes, Article 6701d, sec.179. 
   
  (4) Routine traffic control. A closure involving routine traffic control does 
not require department approval, provided that the closure is in an incorporated 
area and does not take place on a controlled access highway but does take place 
on an arterial roadway. The district engineer shall be notified by facsimile or 
by letter seven days before the routine traffic control event occurs. 
     
  (f)  Disapproval. If a district engineer disapproves a request for approval of 
a closure, he or she will provide written notice describing the basis for the 
determination. 
   
  (g) Appeal. A requestor may appeal a district engineer's disapproval to the 
department's assistant executive director, field operations, by submitting to 
that official by mail or facsimile the information provided to the district 
engineer. 
 
     
  sec.22.13. Film and Video Productions. 
 
  (a) Policy. In accordance with Government Code, Chapter 485, it is the policy 
of the department to cooperate with the Office of the Governor's Music, Film, 
Television, and Multimedia Office to the greatest extent possible to fully 
implement the state's goal of promoting the development of the music, film, 
television, and multimedia industries in Texas. This section is intended to 
encourage and facilitate access to department highway facilities and their 
adjacent right-of-way for the promotion of that goal while protecting the safety 
of the traveling public and the integrity of state highway facilities and right-
of-way. 
   
  (b) Activities included. A person or entity desiring to produce a film, video, 
or other production on a segment of the state highway system must first obtain 
the approval of the department for any activity within state highway right-of-
way that: 
 
  (1) requires a closure of a segment of the state highway system; 
   
  (2) will otherwise disrupt the normal flow of traffic; 
   
  (3) could damage state highway right-of-way or other facilities of the 
department; or 
   
  (4) in anyway affects the safety of the traveling public. 
     
  (c) Request. 
 
  (1)  A person or entity desiring approval for an activity subject to this 
section must first notify the Texas Film Commission. That office will provide 
general information, including instructions on how to submit a request for 
approval to the department. 
   
  (2) After contacting the Texas Film Commission, the person or entity must 
submit, as early as possible, preferably at least 30 days in advance of the 
proposed production, a written request to the department district or districts 
in which the production will occur. The request shall include the following 
information: 
 
  (A) the location of the production, including county name, highway number, and 
description of the physical location; 
   
  (B) the proposed schedule of start and stop times at each location (commonly 
known as preparation and wrap); 
   
  (C) a brief description of the proposed activities, including the proposed 
placement of production company personnel and equipment on state highway right-
of-way; and 
   
  (D) a permit or appropriate documentation as may be required by applicable 
local ordinance of a municipality if the production is within the limits of an 
incorporated area. 
     
  (3) The district engineer may request additional information necessary to make 
his or her determination under subsection (d) of this section. 
     
  (d) Approval. The district engineer will approve the request if he or she 
determines that: 
 
  (1) the proposed production is consistent with the safety and convenience of 
the traveling public; 
   
  (2) the proposed production will not cause substantial negative impacts to the 
environment, including landscape features; 
   
  (3) the proposed production does not conflict with scheduled maintenance or 
construction activities; 
   
  (4) the convenience of abutting property owners and residents is adequately 
protected, and adequate access for such persons to their property is assured; 
and 
   
  (5) if a closure is proposed: 
 
  (A) the requestor has designed to the department's satisfaction a traffic 
control plan to protect both motorists and all participants and spectators, and 
that will not substantially inconvenience the traveling public; and 
   
  (B) there will be appropriate passage allowance for emergency vehicle travel. 
       
  (e) Agreement. If the district engineer approves the proposed production, the 
requestor must execute a written agreement with the department prior to the 
production. The agreement will contain terms and conditions the department deems 
necessary to protect the public safety and the integrity of the facility and 
adjacent right-of-way including, but not limited to: 
 
  (1) the location of the production, including county name, highway number, and 
description of the physical location; 
   
  (2) the schedule of start and stop times at each location; 
   
  (3) a description of the activities, including the placement of people and 
equipment that the requestor will place on state highway right-of-way; 
   
  (4) the traffic control plan, if applicable; 
   
  (5) a statement that the requestor assumes all costs associated with the 
production; 
   
  (6)  a statement that the requestor will avoid or minimize impacts, and will, 
at its own expense, restore or repair damage occurring outside the right-of-way 
and restore or repair the right-of-way, including roadway and drainage 
structures, signs, pavement, etc., to a condition equal to that existing before 
the production, and, to the extent practicable, restore the natural environment, 
including landscape features; 
   
  (7) a statement that the requestor shall indemnify and save harmless the 
state, its officers, employees, agents, and contractors from claims and 
liabilities due to the activities of the requestor; 
   
  (8) suitable documentation that the requestor has obtained adequate insurance 
naming the department as a coinsured by the requestor or responsible party in an 
amount and form acceptable to the department for the payment of any damages 
which may occur during the time period of encroachment and to save the state 
harmless; 
   
  (9) a statement that the requestor will abide by all state and federal 
environmental laws and any conditions required by the department to protect the 
environment; 
   
  (10) if the production requires a closure: 
 
  (A) a traffic enforcement plan, including a letter, by mail or facsimile, from 
the law enforcement agency that will be providing the traffic control for the 
event, or a contact name and telephone number for the responsible law 
enforcement agency; and 
   
  (B) assurance that there will be appropriate passage allowance for emergency 
vehicle travel; and 
     
  (11) such other terms and conditions determined by the district engineer to be 
essential for the protection of the public safety. 
     
  (f) Disapproval. If a district engineer disapproves a request for approval of 
a production, he or she will provide written notice, by mail or facsimile, 
describing the basis for the determination. The district engineer will also 
provide notice of disapproval by telephone if requested by the requestor. 
   
  (g) Appeal. A requestor may appeal a district engineer's disapproval to the 
department's assistant executive director, field operations, by submitting to 
that official by mail or facsimile the information provided to the district 
engineer. 
 
     
  sec.22.14. Vendors. 
 
  (a) Purpose. Encroachment on highways and right-of-ways of the state highway 
system by unauthorized structures and vehicles and by road-side vendors causes 
damage to the system, increases litter, and frequently creates unsafe or 
hazardous conditions. This section prescribes the policies and procedures 
governing use of state highway right-of-way by vendors. 
   
  (b) Policy. 
 
  (1) A person may not park or place any vehicle or structure, wholly or partly 
within the right-of-way of a state highway, for the purpose of selling the same 
or of selling any article, service, or thing from such vehicle or structure, 
except as provided in paragraph (2) of this subsection. 
   
  (2) The prohibition described in paragraph (1) of this subsection does not 
apply to: 
 
  (A)  placing, constructing, or maintaining a structure pursuant to other 
statutory authority; 
   
  (B) an activity undertaken pursuant to the terms of a right-of-way lease 
entered under the provisions of Texas Civil Statutes, Article 6673a-3; 
   
  (C) the sale of an edible agricultural commodity for a period not to exceed 60 
days, within the right-of-way of a state highway other than a controlled access 
facility, if that commodity was grown or produced upon the property immediately 
abutting the affected right-of-way; or 
   
  (D) any other activity expressly authorized by law. 
       
  (c)  Application. A person who desires to engage in an activity, as identified 
in subsection (b)(2)(C) of this section, must file an application to obtain 
authorization to sell goods on the right-of-way at the department's district 
office not fewer than seven calendar days prior to the requested date of 
placement. The application shall be in a form prescribed by the department and 
shall at a minimum require: 
 
  (1) the name, address, and telephone number of the person responsible for the 
request; 
   
  (2) a tax statement or other proof of ownership, leasehold, or written 
permission from the owner of the property; 
   
  (3) the proposed location of the vehicle or structure (distance from the 
roadway); 
   
  (4) the size of the encroachment (height, width, and length); 
   
  (5) the proposed time period of the encroachment; 
   
  (6) the commodities being sold; and 
   
  (7) a section reserved to the department which sets forth such other terms and 
conditions that the department may require. 
     
  (d) Use of rights-of-way restrictions. 
 
  (1) Location. The location approved under subsection (e) of this section shall 
be as far from the edge of the pavement as possible, and may not be in a place: 
 
  (A) where the encroachment may cause sight restriction or a safety problem; 
   
  (B) inside the clear zone as defined in the latest edition of the Department's 
Design Division Operations and Procedure Manual; 
   
  (C) which will conflict with scheduled maintenance or construction actions; 
   
  (D) which will cause substantial negative impacts to the environment, 
including landscape features; or 
   
  (E) where customers could park their vehicles in such a way as to create a 
safety hazard. 
     
  (2) Signs. A person authorized to utilize the right-of-way under this section 
may not place a sign on the right-of-way, vehicle, or the structure. 
     
  (e) Approval. The district engineer or his or her designee will review the 
application and approve the location, subject to any additional terms and 
conditions deemed necessary to protect the safety of the traveling public, if 
the use of right-of-way is in compliance with this section. 
   
  (f) Agreement. If the application is approved, the requestor must enter into a 
written agreement with the department. The agreement will contain terms and 
conditions the department deems necessary to protect the public safety 
including, but not limited to: 
 
  (1) the physical description of the encroachment; 
   
  (2) the approved location of the encroachment; 
   
  (3) the approved time period of the encroachment; 
   
  (4) the commodities being sold; 
   
  (5) a statement that the requestor will avoid or minimize impacts, and will, 
at its own expense, restore or repair damage occurring outside the right-of-way 
and restore or repair the right-of-way, including roadway and drainage 
structures, signs, pavement, etc., to a condition equal to that existing before 
the encroachment, and, to the extent practicable, restore the natural 
environment, including landscape features; 
   
  (6) a statement that the requestor is responsible for any damages or accidents 
which may occur during the time period of encroachment and to save the state 
harmless; 
   
  (7) a statement that the requestor will abide by all applicable federal, 
state, and local environmental laws, regulations, ordinances, and any conditions 
or restrictions required by the department to protect the natural and cultural 
resources of the right-of-way; and 
   
  (8) a statement that if hazardous traffic conditions develop due to the 
presence of the encroachment, the requestor shall correct the measure as the 
department requires. 
     
  (g) Disapproval. If the request is not approved, the department will provide 
written notice describing the basis for the determination. 
   
  (h) Review. Any decision made by a designee of the district engineer may be 
reviewed and overruled by the district engineer. 
 
     
  sec.22.15. Signs. 
 
  (a) Temporary signs. The department may authorize a person or entity to 
temporarily erect, place, and maintain a sign on state highway right-of-way, 
provided that the sign: 
 
  (1) informs the public of a special event which is open to the public; or 
   
  (2)  serves to identify a commercial entrance or driveway along a state 
highway which is under construction if the department determines construction 
activities have temporarily restricted the access or visibility of the adjacent 
commercial area, thus impairing the safety and convenience of the travelling 
public. 
     
  (b) Application. 
 
  (1) Commercial signs. A contractor, working on a highway improvement contract 
pursuant to Texas Civil Statutes, Article 6674 et seq, is authorized to erect a 
sign to indicate a commercial entrance or driveway as provided in the plans and 
specifications developed in conjunction with the project. 
   
  (2) Special events. To obtain authorization for the placement of a special 
event sign on state highway right-of-way, a person or entity must file an 
application at the department's local area office not fewer than 14 calendar 
days prior to the requested date of placement. The application shall be in a 
form prescribed by the department and shall at a minimum include: 
 
  (A) the name, address, and telephone number of the person responsible for the 
request; 
   
  (B)  the proposed location of the sign (distance from the pavement, mounting 
height); 
   
  (C) the proposed text, background color, and legend color for the sign; 
   
  (D) the size of the sign (height, width, thickness, and sign material); 
   
  (E) the proposed method of support of the sign (dimension and material); 
   
  (F) the nature, location, date of the event, and sponsor of the special event, 
if applicable; and 
   
  (G) any additional information requested by the area engineer as necessary to 
make his or her determination under subsection (c) of this section. 
       
  (c)  Approval. The area engineer will approve the placement and support of a 
special event sign found to be in compliance with this section, subject to any 
additional terms and conditions deemed necessary to protect the safety of the 
traveling public by signing and dating the application, and stamping or 
otherwise inscribing the word "approved" on the requestor's application. If the 
area engineer does not approve the request, he or she will send written notice 
describing the basis for the determination. 
   
  (d) Sign restrictions. 
 
  (1) Sign size. 
 
  (A) A sign approved for placement by a contractor on a segment of the state 
highway system must conform with the Texas MUTCD and the BC sheets in effect at 
the time of installation. 
   
  (B) A sign approved for placement under subsection (c) of this section may 
not: 
 
  (i) exceed 16 square feet if placed on the roadside to inform the travelling 
public; 
   
  (ii) exceed four square feet if used to guide participants in a bicycle or 
pedestrian event; 
   
  (iii) exceed three feet from the width of the pavement if the sign is a 
banner; or 
   
  (iv) imitate or resemble any official traffic sign, signal, or device. 
       
  (2) Sign material. A sign approved for placement under subsection (c) of this 
section shall be constructed of heavy cardboard, plastic, fabric mesh, or 
plywood no thicker than 1/4 inches. 
   
  (3) Sign location. A sign approved for placement under subsection (c) of this 
section shall be placed as far from the edge of the pavement as possible (except 
for those signs used to guide participants in a bicycle or pedestrian event 
which shall be placed no less than one foot from the edge of the pavement), and 
may not be placed: 
 
  (A) in a location where it may prevent the driver of a vehicle from having a 
clear and unobstructed view of official signs and approaching or merging 
traffic; 
   
  (B) on any highway appurtenances, including, but not limited to, traffic 
control devices, official signs, sign supports, light standards, poles, and 
delineators; 
   
  (C) on any tree or other natural feature; 
   
  (D) less than 18-1/2 feet above the pavement if the sign is a banner placed 
over the pavement; or 
   
  (E) closer to the pavement edge than official highway signs, except for those 
signs used to guide participants in a bicycle or pedestrian event which shall be 
placed no less than one foot from the edge of the pavement. 
     
  (4) Text of sign. 
 
  (A) A sign approved for placement for a special event under subsection (c) of 
this section shall not contain commercial advertising but may identify the 
event's sponsor by name and the sponsor's trademark. The name of the event's 
sponsor and sponsor's trademark shall be displayed less conspicuously than the 
activity. 
   
  (B)  A sign approved for placement to aid visibility and access for a 
commercial business entrance or driveway may contain: 
 
  (i)  directional text such as "DRIVEWAY" with an accompanying arrow; 
   
  (ii) the type of service such as "GAS," "LODGING," "FOOD," "MALL;" 
   
  (iii) the type of business such as "CLEANERS," "FOOD STORE," and "RESTAURANT." 
       
  (5) Lighting. A sign approved for placement under subsection (c) of this 
section may not display lighting. 
   
  (6) Banner supports. A banner approved for placement above a roadway under 
subsection (c) of this section shall be placed on supports which comply with the 
safety standards of the Texas MUTCD and the BC Sheets, and must be approved by 
department personnel prior to installation. 
   
  (7) Placement of sign. A special event sign location will be allocated on a 
first-come, first-serve basis. A sign approved for placement under subsection 
(c) of this section for a special event may not be placed more than 24 hours 
prior to the event; provided, however, a banner may be installed no more than 30 
days prior to the event. 
     
  (e) Exception. The executive director or his or her designee may waive one or 
more of the requirements of this section not inconsistent with applicable 
statutory law provided that he or she, by written order, specifies the public 
benefits to result from the placement. 
   
  (f) Sign maintenance. A sign approved for placement under subsection (c) of 
this section shall be maintained by the owner in compliance with all 
requirements of this section. The authorization for any sign not maintained in 
accordance with all requirements is deemed void, and the sign may be removed by 
the department in accordance with subsection (g) of this section. 
   
  (g)  Removal. 
 
  (1) A sign authorized for placement under this section shall be removed by the 
applicant within 24 hours of the completion of the event; except banners shall 
be removed within seven days of the completion of the event. 
   
  (2) If a sign becomes a hazard due to inclement weather, inadequate 
maintenance, accidental damage, or other cause, the department will remove the 
sign. 
   
  (3) A special event sign not removed in compliance with paragraph (1) of this 
subsection is subject to removal by the department and the applicant is liable 
for removal and disposal costs as provided by sec.25.10 of this title (relating 
to Signs on State Highway Right-of-Way). 
 
  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 8, 1994. 
 TRD-9450669 
  Diane L. Northam 
 Legal Executive Assistant 
 Texas Department of Transportation 
    Earliest possible date of adoption: December 16, 1994 
 For further information, please call: (512) 463-8630