ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 4. AGRICULTURE Part I. Texas Department of Agriculture Chapter 1. General Procedures Subchapter D. Miscellaneous Provisions 4 TAC sec.1.91 The Texas Department of Agriculture (the department) adopts new sec.1.91, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3941). The new section is adopted to require the department to review all sections in Chapter 1 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.12.001 and sec.12.006, which provide the Texas Department of Agriculture with the authority to adopt rules necessary to the administration of the Texas Agriculture Code; and, the Texas Government Code, sec.2001.004, which provides the department with the authority to adopt rules of practice setting forth the nature and requirements of all formal and informal administrative procedures available. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508837 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 3. Boll Weevil Eradication Program Subchapter C. Prohibition of Planting of Cotton and Requirements for Participation in the Eradication Program 4 TAC sec.3.56 The Texas Department of Agriculture (the department) adopts an amendment to sec.3.56, concerning assessment of penalties; destruction of cotton, without changes to the proposed text as published in the June 6, 1995, issue of the Texas Register (20 TexReg 4111). The amendment as adopted will allow the department to adjust penalties against growers for non-reporting and/or non-payment of assessments as required for participation in the boll weevil eradication program. The amendment will provide for penalties for non-reporting and/or non-payment of assessments according to the length of time past due and based on the assessment rate. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code, sec.74.118, which provides the Texas Department of Agriculture with the authority to adopt rules setting a reasonable schedule of penalty fees to be assessed against growers who do not meet reporting of acreage and/or participation in cost sharing requirements. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 12, 1995. TRD-9508679 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 2, 1995 Proposal publication date: June 6, 1995 For further information, please call: (512) 463-7583 Subchapter F. Miscellaneous Provisions 4 TAC sec.3.200 The Texas Department of Agriculture (the department) adopts new sec.3.200, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3942). The new section is adopted to require the department to review all sections in Chapter 3 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, Chapter 74, Subchapter D, which provides the Texas Department of Agriculture with the authority to adopt rules regarding election procedures, rules for establishment of foundation rules, procedures and methods of treatment, rules for producer participation, rules for collection of assessments and assessment penalties and rules establishing boll weevil quarantines. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508838 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 5. Quarantines General Provisions 4 TAC sec.5.6 The Texas Department of Agriculture (the department) adopts new sec.5.6, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3942). The new section is adopted to require the department to review all sections in Chapter 5 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is proposed under the Texas Agriculture Code, Chapter 71, which provides the Texas Department of Agriculture with the authority to establish quarantines and to adopt other rules necessary for the protection of agricultural and horticultural interests. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508839 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 6. Boll Weevil Control 4 TAC sec.6.6 The Texas Department of Agriculture (the department) adopts new sec.6.6, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3942). The new section is adopted to require the department to review all sections in Chapter 6 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code (the code), sec.74.006, which provides the Texas Department of Agriculture with the authority to adopt rules necessary for the efficient enforcement and administration of the code Chapter 74, Subchapter A, relating to boll weevil control. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508840 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 7. Pesticides 4 TAC sec.7.36 The Texas Department of Agriculture (the department) adopts new sec.7.36, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3943). The new section is adopted to require the department to review all sections in Chapter 7 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Texas Farm Bureau and the Texas Citrus and Vegetable Association commenting in favor of the regulation. Comments were also received from the Chemical Connection, Texas Rural Legal Aid, Incorporated and three other individuals. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.76.004, which provides the Texas Department of Agriculture with the authority to adopt rules for carrying out the provisions of Chapter 76. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508841 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 8. Agricultural Hazard Communication Regulations 4 TAC sec.8.13 The Texas Department of Agriculture (the department) adopts new sec.8.13, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3943). The new section is adopted to require the department to review all sections of Chapter 8 and determine what, if any sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Texas Farm Bureau and the Texas Citrus and Vegetable Association commenting in favor of the regulation. Comments were also received from the Chemical Connection, Texas Rural Legal Aid, Incorporated and three other individuals. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.125.014, which provides the Texas Department of Agriculture with the authority to adopt rules and procedures reasonably necessary to carry out the purposes of Chapter 125, relating to agricultural hazard communication. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508842 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 9. Plant Quality Miscellaneous Provisions 4 TAC sec.9.40 The Texas Department of Agriculture (the department) adopts new sec.9.40, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3943). The new section is adopted to require the department to review all sections in Chapter 9 and determine what, if any sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.71.042, which provides the Texas Department of Agriculture with the authority to adopt rules necessary for the protection of plants form diseases and insect pests; sec.94.003, which provides the department with the authority to adopt rules relating to citrus maturity; and sec.121.007, which authorizes the department to adopt rules relating to the grading of roses. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508843 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 11. Herbicide Regulations 4 TAC sec.11.11 The Texas Department of Agriculture (the department) adopts new sec.11.11, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3944). The new section is adopted to require the department to review all sections of Chapter 11 and determine what, if any sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Texas Farm Bureau and the Texas Citrus and Vegetable Association commenting in favor of the regulation. Comments were also received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, Chapter 75, which provides the Texas Department of Agriculture with the authority to adopt rules to designate regulated herbicides, set license fees for herbicide dealers, to establish recordkeeping requirements for herbicide dealers and applicators, to exempt applications from permit or other requirements, and to establish financial responsibility requirements for herbicide applicators. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508844 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 13. Apiary Equipment Brands 4 TAC sec.13.10 The Texas Department of Agriculture (the department) adopts new sec.13.10, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3944). The new section is adopted to require the department to review all sections in Chapter 13 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, Chapter 131, Subchapter C, which provides the Texas Department of Agriculture with the authority to maintain a system for registration of apiary equipment brands. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508845 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 15. Consumer Services Division Miscellaneous Provisions 4 TAC sec.15.200 The Texas Department of Agriculture (the department) adopts new sec.15.200, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3944). The new section is adopted to require the department to review all sections in Chapter 15 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, Chapter 13, which provides the Texas Department of Agriculture with the authority to adopt rules relating to weights and measures standards, inspection and registration of weights and measures, Texas public weighers, liquefied petroleum gas meters, and ranch scales; sec.14.003; which authorizes the department to adopt rules relating to public grain warehouses; sec.17.005, which authorizes the department to adopt procedures for registration of alcohol fuel equipment and standards for alcohol fuels; sec.96.002 which authorizes the department to prescribe standards for grain sampling and qualifications for grain samples; and sec.132.003, which authorizes the department to adopt rules for enforcement of the Texas Egg Law. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508846 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 17. Marketing and Development Division Miscellaneous Provisions 4 TAC sec.17.200 The Texas Department of Agriculture (the department) adopts new sec.17.200, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3945). The new section is adopted to require the department to review all sections in Chapter 17 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.12.0175, which provides the Texas Department of Agriculture with the authority to establish programs promoting Texas grown products; sec.41.022, which provides the department with the authority to adopt rules relating to elections held by commodity boards; sec.146.021, which provides the department with the authority to establish import-export processing facilities for livestock and collect fees for use of those facilities; sec.15.018, which provides the department with the authority to adopt rules relating to farmers market nutrition programs; and sec.45.004, which provides the department with the authority to adopt rules for administration of the Texas-Israel Exchange Fund. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508847 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 18. Organic Standards and Certification 4 TAC sec.18.18 The Texas Department of Agriculture (the department) adopts new sec.18.18, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3945). The new section is adopted to require the department to review all sections in Chapter 18 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is proposed under the Texas Agriculture Code, sec.18.002, which provides the Texas Department of Agriculture with the authority to adopt rules necessary for administration and enforcement of the department's organic certification program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508848 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 19. Seed Division Texas Seed Law 4 TAC sec.19.14 The Texas Department of Agriculture (the department) adopts new sec.19.14, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3945). The new section is adopted to require the department to review all section in Chapter 19 and determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. The Texas Seed Trade Association commented generally in favor of the proposal, and noted that it is not aware of any seed law regulations that are significantly unneeded, outmoded or in need of amendment. Comments on the proposal were also received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is adopted under the Texas Agriculture Code, sec.61.002, which provides the Texas Department of Agriculture with the authority to adopt rules necessary to administer and enforce the Texas Seed Law. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508849 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 Chapter 27. Aquaculture Regulations 4 TAC sec.27.150 The Texas Department of Agriculture (the department) adopts new sec.27.150, concerning expiration provision, without changes to the proposed text as published in the May 30, 1995, issue of the Texas Register (20 TexReg 3946). The new section is adopted to require the department to review all sections in Chapter 27 to determine what, if any, sections need to be repealed, replaced or amended. The new section provides an expiration date of August 31, 1996, for all sections that are not repealed, amended, or reaffirmed by the department by that date. Comments on the proposal were received from the Chemical Connection and one other individual. These commenters do approve of the practice of reviewing and reevaluating agency rules to assure that the existing rules are meeting the needs of the public in the most efficient and reasonable manner. However, they expressed concern that the proposed section establishes a process which will result in an automatic elimination of rules without an opportunity for the public and affected persons to comment. The department does not intend to and will not establish a process of automatic elimination of rules without an opportunity to comment; the department agrees with the commenters that such a process would be bad public policy. All sections which the department identifies to be repealed or amended under the new section will be repealed or amended in accordance with the procedures required by the Texas Administrative Procedures Act, which will include the 30-day comment period and public hearings if required or requested. The department also intends to seek the input of interested and affected individuals and entities in the development of any amendments or repeals of rules which have a special impact on the public health and safety, such as in the area of pesticide regulation. One commenter also requested that if the department does want to establish a "sunset" process for its rules, it should provide notice of the process in greater detail, outlining what steps will be taken and what the schedule will be. The department disagrees with this comment and believes that publication of a more specific notice and specific schedule would not allow the department the flexibility needed in the establishment of the process and timelines for review and adoption of changes due to the large number of rules involved and the diverse subject matter of those rules. The target date of August 31, 1996, provides a reasonable, self-imposed deadline for the department and provides the public with notice that review will be accomplished within that timeframe. The new section is proposed under the Texas Agriculture Code, sec.134.005, which provides the Texas Department of Agriculture with the authority to carry out the aquaculture program. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508850 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: August 4, 1995 Proposal publication date: May 30, 1995 For further information, please call: (512) 463-7583 TITLE 7. BANKING AND SECURITIES Part VII. State Securities Board Chapter 109. Transactions Exempt from Registration 7 TAC sec.109.13 The State Securities Board adopts an amendment to sec.109.13, concerning the uniform limited offering exemption, without changes to the proposed text as published in the April 7, 1995, issue of the Texas Register (20 TexReg 2577). The amendment corrects a typographical error and updates a citation to SEC Regulation A. The rule will allow persons using the exemption to more easily locate the federal regulations cited in the rule. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1. Section 28-1 provides the Board with the authority to adopt rules and regulations necessary to carry out and implement the provisions of the Securities Act, including rules and regulations governing registration statements and applications; defining terms; classifying securities, persons, and matters within its jurisdiction; and prescribing different requirements for different classes. The amendment is also adopted under Texas Civil Statutes, Article 581, sec.5.T. Section 5.T provides that the Board may prescribe new exemptions by rule. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508722 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: August 3, 1995 Proposal publication date: April 7, 1995 For further information, please call: (512) 305-8300 TITLE 16. ECONOMIC REGULATION Part VIII. Texas Racing Commission Chapter 303. General Provisions Subchapter B. Powers and Duties of the Commission 16 TAC sec.303.33 The Texas Racing Commission adopts an amendment to sec.303.33, concerning subpoenas without changes to the proposed text published in the June 2, 1995, issue of the Texas Register (20 TexReg 4032). The amendment is adopted to ensure that the commission's adjudicatory processes will be conducted in accordance with the interests of justice. The amendment requires the commission to pay all taxes associated with travel expenses for witnesses who are not state employees. The amendment also permits the executive secretary to authorize the payment of a witness fee of not more than $200 per day. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.2001.004, Government Code, which requires the commission to adopt rules of practice; and sec.2001.103, Government Code, which authorizes the commission to adopt rules specifying the compensation travel expenses for witnesses. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508787 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 Chapter 305. Licenses for Pari-mutuel Racing Subchapter B. Individual Licenses Specific Licensees 16 TAC sec.305.44 The Texas Racing Commission adopts an amendment to sec.305.44, concerning trainer's licenses without changes to the proposed text published in the June 2, 1995, issue of the Texas Register (20 TexReg 4032). The amendment is adopted to ensure that applicants for a pari-mutuel trainer's license will have notice of the standards for licensing. The amendment requires the standard for passing a trainer's text to be printed on the test. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.7.02, which authorize the commission to adopt rules specifying the qualifications and experience for occupational licenses. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508788 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 Chapter 309. Operation of Racetracks Subchapter B. Horse Racetracks Facilities for Employees 16 TAC sec.309.183 The Texas Racing Commission adopts an amendment to sec.309.183, concerning living quarters for licensees at horse racetracks without changes to the proposed text as published in the June 2, 1995 issue of the Texas Register (20 TexReg 4032). The amendment is adopted to ensure that pari-mutuel racing will attract high quality trainers and horses currently running in other states. The amendment permits a horse racetrack to allow licensees to sleep in barns and tack rooms, provided the barns and tack rooms are constructed of fire retardant materials and other safety features. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.6.06 which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508790 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 Chapter 311. Conduct and Duties of Individuals Subchapter B. Specific Licensees Licensees for Horse Racing 16 TAC sec.311.159 The Texas Racing Commission adopts an amendment to sec.311.159, concerning conduct in the stable area without changes to the proposed text as published in the June 2, 1995 issue of the Texas Register (20 TexReg 4033). The amendment is adopted to ensure that pari-mutuel racing will attract high quality trainers and horses currently running in other states. The amendment permits licensees to sleep in barns and tack rooms at horse racetracks, provided the barns and tack rooms are constructed of fire retardant materials and have other safety features. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.6.06 which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508789 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 Chapter 313. Officials and Rules of Horse Racing Subchapter E. Training Facilities Licenses for Horse Racing 16 TAC sec.313.503 The Texas Racing Commission adopts an amendment to sec.313.503, concerning the requirements for the physical plant of a licensed training facility without changes to the proposed text as published in the June 2, 1995 issue of the Texas Register (20 TexReg 4033). The amendment is adopted to ensure that more training tracks will be eligible for a training facility license, thereby increasing the number of locations at which a trainer may obtain an official workout. The amendment reduces the required width of a training track to 40 feet on each straightaway and turn. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3. 02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.7.02, which authorizes the commission to adopt rules specifying the qualifications for various types of licenses. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508791 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 Chapter 319. Veterinary Practices and Drug Testing Subchapter A. General Provisions 16 TAC sec.319.7 The Texas Racing Commission adopts an amendment to sec.319.7, concerning the medication labeling requirements for certain medications for greyhounds without changes to the proposed text as published in the June 2, 1995, issue of the Texas Register (20 TexReg 4034). The amendment is adopted to ensure that the health and safety of greyhounds participating in pari-mutuel racing will be protected. The amendment permits a veterinarian to prescribe certain medications for entire kennels of greyhounds without having to list the names of the greyhounds on the medication container. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Civil Statutes, Article 179e, sec.3.02, which authorize the commission to adopt rules for conducting racing with wagering and for administering the Texas Racing Act and sec.6.06 which authorizes the commission to adopt rules relating to all aspects of the operation of pari-mutuel racetracks. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508792 Paula Cochran Carter General Counsel Texas Racing Commission Effective date: August 15, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 794-8461 EXAMINING BOARDS Part XI. Board of Nurse Examiners Chapter 215. Nurse Education 22 TAC sec.215.2, sec.215.12 The Board of Nurse Examiners adopts amendments to sec.215.2 and sec.215.12, concerning Definitions and Curriculum, without changes to the proposed text as published in the June 9, 1995, issue of the Texas Register (20 TexReg 4192). In the Spring of 1993 the board approved for publication "Essential Competencies of Texas Graduates of Education Programs in Nursing", a publication of the Board of Nurse Examiners and the Board of Vocational Nurse Examiners. A pilot project was initiated in the fall of 1993 to assess whether or not the essential competencies published were, in fact, appropriate for nursing education programs in Texas. The 14 schools that participated in the project met in January 1995 to evaluate the process and provided feedback for rule development. Their comments were addressed by the Advisory Committee on Education who recommended draft language to the members of the Board of Nurse Examiners at their board meeting in May. The adopted amendments will incorporate essential competencies into nursing curricula. No comments were received regarding adoption of the amendments. The amendments are proposed under the Nursing Practice Act, (Texas Civil Statutes), Article 4514, sec.1, which provides the Board of Nurse Examiners with the authority and power to make and enforce all rules and regulations necessary for the performance of its duties and conducting of proceedings before it and Article 4518, sec.1, which authorizes the board to prescribe and publish minimum requirements and standards for a course of study in programs which prepare professional nurse practitioners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 14, 1995. TRD-9508802 Louise Waddill, Ph.D., R.N. Executive Director Board of Nurse Examiners Effective date: August 4, 1995 Proposal publication date: June 9, 1995 For further information, please call: (512) 835-8675 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 5. Property and Casualty Insurance Subchapter E. Texas Catastrophe Property Insurance Association 28 TAC sec.5.4001 The Texas Department of Insurance adopts an amendment to sec.5.4001, the plan of operation of the Texas Catastrophe Property Insurance Association (TCPIA), with changes to the proposed text as published in the January 13, 1995 issue of the Texas Register (20 TexReg 196). The amendment to the plan were considered by the Commissioner of Insurance in a public hearing on July 11, 1995, Docket Number 2153; the public hearing was originally scheduled for July 6, 1995, and was re-scheduled to July 11. Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas legislature in 1971 and is composed of all property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to coastal residents who are unable to obtain such coverage in the voluntary market. Currently the TCPIA provides this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy Counties. The adopted amendments are necessary to update sec.5.4001 (hereafter referred to as the "plan of operation" or "the plan") to incorporate amendments to Article 21.49 of the Insurance Code enacted by the 72nd Texas Legislature in House Bill 2 (Acts 1991, 72nd Legislature, Regular Session, Chapter 242) and the 73rd Legislature in House Bill 1461 (Acts 1993, 73rd Legislature, Regular Session, Chapter 685) and to incorporate changes resulting from the adoption of certain Departmental administrative rules. As a result of comments, the Department has made nine changes to the amendments as published. Four of these changes are corrections of typographical errors, and five of the changes are more substantive in nature but do not introduce new subject matter or affect additional persons than those subject to the proposal as originally published. These five changes include: (1) A change in the executive committee membership in subsection (b) (2)(M). Subsection (b)(2)(M) as adopted provides that the executive committee shall consist of at least three, and not more than four, of the directors of the association (this revises the previous limitation to three members on the executive committee), and that the board of directors may elect an additional director to be a member of the executive committee for the sole purpose of ensuring the inclusion of at least one insurer, one agent, and one public member on the executive committee. Subsection (b)(3)(A), relating to number of officers of the TCPIA, is amended to conform this provision to the changes adopted in subsection (b)(2)(M). This change will allow the TCPIA board of directors to elect a fourth executive committee member if necessary to ensure the inclusion of at least one insurer, one agent, and one public member on the executive committee. (2) Deletion of language in subsection (b)(4)(B)(iii)(III) (-a-)(-2-), relating to TCPIA legal counsel, that elaborates on the standard for when legal counsel may request consent of the TCPIA to represent the TCPIA in potential conflict-of-interest situations in representation before the Commissioner, the Department, and the Legislature. The deleted language is unnecessary because it simply repeats part of the Comments to Rule 1.06 of the Texas Disciplinary Rules of Professional Conduct adopted by the Texas Supreme Court. The legal counsel is governed by this standard regardless of whether it is specifically stated in the plan of operation. (3) Deletion of subclauses (II) and (III) in subsection (b)(4)(B)(iv) and deletion of subclause (III) in subsection (b)(4)(C)(iv). These changes are necessary to clarify that retained counsel serves at will. (4) Changes in subsection (b)(4) to include ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas in determination of conflicts of interest and appearances of conflict of interest of legal counsel. These changes are necessary in subsections (b)(4)(B)(ii)(I)(-d-), (b)(4)(B)(iii)(I) and (II) and (IV)(-c-), (b)(4)(C)(ii)(-d-), (b)(4)(C)(iii)(I)- (IV) to clarify that such ethics opinions, in addition to the Texas Disciplinary Rules of Professional Conduct and the official comments to these rules, are to be used in determining a conflict of interest or an appearance of a conflict of interest of TCPIA legal counsel. (5) Deletion of the word "primarily" in subsection (b)(4)(B)(ii)(I) (-c-) qualifications for legal counsel to represent the TCPIA before the Commissioner, the Department, and the Legislature. This change is necessary to provide a wider selection of competent attorneys because it would not limit the field to only those attorneys employed by large law firms. The four changes to correct typographical errors include: (1) A typographical error in the published definition of "catastrophe loss" in subsection (a)(2)(G)is corrected; the definition as published is revised to read "A loss to property insured by a policy of Texas windstorm and hail insurance." (2) A typographical error in the published text in subsection (a)(N)(iii), relating to the definition of "net direct premiums" is corrected to read the same as subsection (a)(N)(ii) in the plan of operation before these latest revisions: "For association policies with inception dates on and after January 1, 1983 through December 31, 1987. . . ." (3) A typographical error in the published text in subsection (c)(2)(B)(ii) for the policy inception date for procedures for determining the percent of participation respecting TCPIA policies is changed from December 31, 987, to December 31, 1987. (4) An error in subsection (c)(2)(B)(ii), relating to participation in TCPIA for policies after January 1, 1983, to the citation reference of subsection (a)(2)(M)(i) (III) is corrected to read subsection (a)(2)(N)(i)(III). Pursuant to Article 21.49 of the Insurance Code, the plan of operation of the TCPIA means the plan for providing windstorm and hail insurance in a catastrophe area; the plan is to provide for the efficient, economical, fair, and nondiscriminatory administration of the TCPIA. The plan of operation includes a plan for the equitable assessment of TCPIA members; underwriting standards; procedures for the acceptance and cession of reinsurance; procedures for determining the amount of insurance to be provided to specific risks; time limits and procedures for processing applications; and other provisions as deemed necessary to carry out the purposes of Article 21.49. The adopted amendments correct words, phrases, definitions, internal references, gender references, and punctuation; update statutory cites as a result of codification; revise subsection headings; and re-designate paragraphs, subparagraphs, clauses, subclauses, items and subitems where necessary. In addition, all references to "Board" or "State Board of Insurance" are amended throughout the plan where necessary to reflect either the "Department" or "Commissioner," whichever term is appropriate in the context of the amended provision. The terms "Board" and "State Board of Insurance" are retained in those provisions that reference actions occurring prior to the elimination of the Board enacted in House Bill 1461 by the 73rd Legislature. These technical editing amendments have no substantive impact on the plan of operation. Substantive amendments to subsection (a) of the plan include incorporating a definition of "indirect losses" based on the Insurance Code, Article 21.49, sec.8B. Subsection (b) is amended in paragraph (1)(C) to provide that the annual meeting of the TCPIA members shall be held at such time and place in March of each year as may be designated by the TCPIA board of directors. This amendment will allow flexibility to the TCPIA in scheduling and holding its annual meeting. Subsection (b)(2)(D), relating to the term of office of directors, is amended to conform to the Insurance Code, Article 21.49, sec.5(h), to provide that a person may hold a seat on the board of directors for not more than three consecutive full terms, not to exceed nine years. Subsection (b)(2)(M) is amended to provide that the executive committee shall consist of at least three, and not more than four, of the directors of the association and that the board of directors may elect an additional director to be a member of the executive committee for the sole purpose of ensuring the inclusion of at least one insurer, one agent, and one public member on the executive committee. Subsection (b)(3)(A), relating to number of officers of the TCPIA, is amended to conform this provision to the changes adopted in subsection (b)(2)(M). This change will allow the TCPIA board of directors to elect a fourth executive committee member if necessary to ensure the inclusion of at least one insurer, one agent, and one public member on the executive committee. A new paragraph (4), relating to legal counsel for the TCPIA, is added to subsection (b). This new provision complies with the requirements of sec.12A of Article 21.49. Section 12A provides that the TCPIA shall establish a plan in its plan of operation under which the TCPIA's legal representation before the Commissioner, the Department, and the Texas legislature is without conflict of interest or the appearance of a conflict of interest as defined in the Texas Disciplinary Rules of Professional Conduct. Section 12A also requires the TCPIA to adopt procedures for legal counsel in the handling of disputes involving policyholder claims against the TCPIA. Amendments to subsection (b)(7), relating to indemnification of directors, members, officers, and employees, are adopted to provide that the indemnification shall include all costs as well as expenses as specified in that paragraph. Other amendments to that paragraph provide that indemnification is not authorized for reasons of willful malfeasance or dishonesty in addition to those reasons already specified. A new subparagraph added to subsection (c)(3), relating to distributions to members, reflects the provisions of sec.8(i) of Article 21.49 and the catastrophe reserve trust fund agreement for the disbursement of funds from the catastrophe reserve trust fund, established under sec.8(i) of Article 21.49 pursuant to House Bill 1461 passed by the legislature in 1993. This new subparagraph provides that the disbursement of these funds to the TCPIA may only be spent by the TCPIA to pay losses and loss adjustment expenses of policyholders in the event of an occurrence that results in insured losses and operating expenses of the TCPIA greater than $100 million. Subsection (c)(4)(E) , relating to use of funds, is amended to provide that moneys collected or received by the TCPIA may be used to either pay premiums for reinsurance under a reinsurance program approved by the Commissioner or to make payment of net equity of a member to a catastrophe reserve trust fund held by the Department. Subsection (d)(2)(E)(i), relating to receipt of the application for catastrophe insurance, is amended to delete language requiring a policy to be issued or the agent or applicant to be advised that the risk is not acceptable within 15 days after receipt of the application. The 15 days provision is no longer needed since binders are automatically issued upon receipt of the application and the full amount of the premium. Subsection (d)(2)(E)(ii), relating to new or increased coverage, is amended to enable the TCPIA board of directors to approve mailing procedures other than those specified for applications and renewals. Subsection (d)(3)(B)(ii), relating to reduction of a policy by the insured, is amended to delete the requirements of surrender of the policy and the issuance of a new policy. This change will result in cost-efficiency because any reduction in insurance by the insured will not require surrender of the policy and issuance of a new policy; the TCPIA will be able to issue either an endorsement or an amended declaration page in such instances. Subsection (e)(2), relating to the code for windstorm resisting construction applicable to the area inland of the Intracoastal Canal, is amended to delete the reference to the application of the inland building code to properties protected by a seawall constructed by the Corps of Engineers or by other adequate structures or natural physical features of the terrain. This amendment reflects the fact that the inland building code no longer applies to these properties. The Department did not receive any written comments supporting the proposed amendments as published. The Department received written comments opposing certain of the proposed amendments as published from the following: Texas Catastrophe Property Insurance Association; Office of Public Insurance Counsel; and Resolution Oversight Corporation as Special Deputy Receiver of Lloyds, U. S., and Jo Ann Howard & Associates as Special Deputy Receiver of Guaranty County Mutual Insurance Company. Executive Committee Membership (subsections (b)(2)(M) and (b)(3)(A)) COMMENT: Two commenters proposed that subsection (b)(2)(M), relating to executive committee membership be changed to provide that the membership of the executive committee shall consist of at least three and not more than four of the directors of the association and that the TCPIA board of directors may elect an additional director to be a member of the executive committee to ensure inclusion of at least one company, one agent, and one public member on the executive committee. RESPONSE: The Department agrees with this proposal so long as it is clear that the fourth additional executive committee member may be elected for the sole purpose of ensuring the inclusion of one insurer, one agent, and one public member on the executive committee. The Department has changed the text in subsections (b)(2)(M) and (b)(3)(A) accordingly. Legal Counsel (subsection (b)(4)) COMMENT: One commenter proposed deleting the language in subsection (b)(4)(B)(iii)(III)(-a-) (-2-), relating to TCPIA legal counsel and requiring the TCPIA to obtain the advice of a disinterested lawyer in handling potential conflict issues in legal representation before the Commissioner, the Department, and the Legislature because this language is materially different than that proposed by the TCPIA board of directors in their petition and appears to impose greater burdens on the TCPIA board of directors than may be required for other clients in handling potential conflicts under the Texas Disciplinary Rules of Professional Conduct. Also, according to the commenter, this additional requirement does not appear warranted when compared to similar problems with claims counsel who may have conflicts, in which instance such matters may be handled without having to obtain an opinion from a disinterested attorney. RESPONSE: The Department agrees with the deletion of the language in subsection (b)(4)(B)(iii)(III)(-a-)(-2-) requiring the TCPIA to obtain the advice of a disinterested lawyer in handling potential conflict issues in legal representation before the Commissioner, the Department, and the Legislature because it is unnecessary. This standard is set out in the Comments to Rule 1.06 of the Texas Disciplinary Rules of Professional Conduct adopted by the Texas Supreme Court. The legal counsel is governed by this standard regardless of whether it is specifically stated in the plan of operation. COMMENT: One commenter suggested that subsections (b)(4)(B) (iv) and (b)(4)(C)(iv), relating to review and termination of legal counsel, be amended to clarify that retained counsel serves at will and is subject to termination upon five days written notice. The commenter also proposed that subsections (b)(4)(B)(iv) and (b)(4)(C)(iv) be amended to require the termination of counsel for engaging in continual conflicts of interest or appearances of conflicts of interests. 32>RESPONSE: The Department agrees and has amended subsections (b)(4)(B)(iv) and (b)(4)(C)(iv) to clarify that retained counsel serves at will but the Department does not agree with the second part of this proposal (requiring the termination of counsel for engaging in continual conflicts of interest or appearances of conflicts of interests) which would arguably treat TCPIA differently from other entities in their rights to terminate legal counsel. COMMENT: This same commenter proposed that subsections (b)(4)(B)(iii) and (b)(4)(C)(iii), relating to conflict of interest of legal counsel, be amended to include opinions and rulings of the State Bar of Texas involving the Texas Disciplinary Rules of Professional conduct. 32>RESPONSE: The Department agrees and has changed the text in subsections (b)(4)(B)(ii)(I)(-d-), (b)(4)(B) (iii)(I) and (II) and (IV)(-c-), (b)(4)(C)(ii)(-d-), (b)(4)(C)(iii)(I)-(IV) to include ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas. COMMENT: This commenter also proposed that subsection (b)(4)(B)(ii)(I)(-c-), relating to qualifications of legal counsel, be amended to delete the word "primarily" in the qualification that requires "experience in and practice primarily in the areas of insurance and administrative law." According to the commenter, this would provide a wider selection of competent attorneys to choose from because it would not limit the field to only those attorneys employed by large law firms. 32>RESPONSE: The Department agrees and has changed the text in subsection (b)(4)(B) (ii)(I)(-c-) accordingly. Net Equity Distributions (subsection (c)(3)) 32>COMMENT: One commenter suggested that subsections (c)(3)(A) and (c)(3) (G), relating to distributions to the members, be amended to ensure that no distributions of "net equity" be distributed to insurers unless the Commissioner makes a finding that the catastrophe reserve trust fund created by Article 21.49, sec.8(i) of the Insurance Code, is sufficiently funded to respond to potential catastrophic events. RESPONSE: The Department does not believe that this change is necessary because under the proposed text of subsections (c)(3)(A) and (c)(3)(G) the distributions must be approved by the Commissioner, and it is within the Commissioner's discretion to review any factors the Commissioner deems necessary before granting such approval, including the sufficiency of the funding level of the catastrophe reserve trust fund. COMMENT: Another commenter proposed that the plan of operation in subsection (c)(3)(B), relating to distributions to members, be changed to exempt receivership estates from the provisions of this subsection so that disbursement of funds in the form of net equity may be made from the catastrophe reserve trust fund to the receiver of an insurance company which is in permanent receivership pursuant to Article 21.28 of the Insurance Code, and proposed specific language to accomplish this change. RESPONSE: The Department disagrees with this proposal. Article 21.49, sec.8(i) of the Insurance Code provides for the establishment of the catastrophe reserve trust fund and that the fund shall be kept and maintained by the Texas Department of Insurance pursuant to the written agreement between the TCPIA, the Department, the state treasurer, and the comptroller. Legal title to the money and investments in the fund is in the Texas Department of Insurance unless or until paid out as provided by the written agreement. The state treasurer, as custodian, shall administer the funds strictly and solely as provided by the agreement and the state may not take any action with respect to the fund other than as specified by this act and the agreement. Thus, by law, the disbursement of funds from the catastrophe reserve trust fund is governed by the agreement and Article 21.49; the plan of operation simply reflects the provisions of the agreement on disbursement of funds, and any change in the plan of operation will have no effect on the disbursement of funds to the receiver of an insurer in receivership. 32>COMMENT: This same commenter suggested that the plan of operation in subsection (c)(4)(E), relating to distributions to members be changed to require the TCPIA to pay to the receiver of any member insurer the balance of any net equity attributable or credited to that member if that member insurer is in permanent receivership pursuant to Article 21.28 of the Insurance Code, and proposed specific language to accomplish this change. RESPONSE: The Department disagrees with this proposal. Article 21.49 sec.8(i) and the agreement provide that at the end of each calendar year or policy year the TCPIA may pay the net equity of each member insurer, including all premium and other revenues of the TCPIA in excess of incurred losses and operating expenses to the catastrophe reserve trust fund. Amending the plan of operation to include the proposed requirement will have no effect because the statute and the agreement provide that TCPIA may pay such net equity, and the plan of operation cannot override the statute and the agreement. Typographical Errors COMMENT: One commenter indicated four typographical errors: (1) An error in the definition of "catastrophe loss" in subsection (a)(2)(G) which as proposed read "a loss to property insurance" and it should read "a loss to property insured." (2) A typographical error in subsection (a)(N)(iii), relating to net direct premiums, which should have the same dates (January 1, 1983 through December 31, 1987) as subsection (a)(N)(ii) in the current plan of operation before these latest revisions. (3) A typographical error in subsection (c)(2)(B)(ii) in the policy inception date for procedures for determining the percent of participation respecting TCPIA policies. The date as published read December 31, 987, and should read December 31, 1987. (4) An error in subsection (c)(2)(B)(ii), relating to participation in TCPIA for policies after January 1, 1983, which as published had an incorrect citation reference to subsection (a)(2)(M)(i) (III) and should read subsection (a)(2)(N)(i)(III). RESPONSE: The Department agrees and has corrected all of these typographical errors. The amendment is adopted pursuant to the Insurance Code, Articles 21.49 and 1.03A, and the Government Code sec.sec.2001.004-2001.038. Article 21.49, sec.5(c) of the Insurance Code provides that the Commissioner of Insurance by rule shall adopt the TCPIA plan of operation with the advice of the TCPIA board of directors. Section 5(f) of Article 21.49 provides that any interested person may petition the Commissioner to modify the plan of operation in accordance with the Administrative Procedure Act (Government Code title 10, subtitle A, Chapter 2001). Article 21.49, sec.5, subsections (c) and (f), by their terms delegate the foregoing authority to the State Board of Insurance. However, under Article 1.02 of the Insurance Code, as amended by the 73rd Texas Legislature in House Bill 1461 (Acts 1993, 73rd Legislature, Regular Session, Chapter 685, sec.1.01), a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1. 03A, as enacted by the 73rd Texas Legislature in House Bill 1461 (Acts 1993, 73rd Legislature, Regular Session, Chapter 685, sec.1.03), provides that the Commissioner of Insurance may adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code sec.sec.2001.004-2001.038 (Administrative Procedure Act) authorize and require each state agency to adopt rules of practice stating the nature and requirements of available formal and informal procedures and prescribe the procedures for adoption of rules by a state agency. The following statute is affected by this rule: Insurance Code, Article 21. 49. sec.5.4001. Plan of Operation. (a) Definitions. (1) Words defined in Act. Unless the context clearly dictates the contrary, words defined in the Texas Catastrophe Property Insurance Pool Act (the Insurance Code, Article 21.49, as amended) and not specifically defined in this section shall have the same definition when used in this section as they have in such Act. The terms "this section" and "plan of operation" are used interchangeably herein. (2) Definitions in the section. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise. (A) Act-The Texas Catastrophe Property Insurance Pool Act, Senate Bill 31, Acts of the 62nd Legislature, 1971, as amended; codified as the Insurance Code, Article 21.49, as amended. (B) Application-An application for catastrophe insurance. (C) Association-The Texas Catastrophe Property Insurance Association. (D) Board-The State Board of Insurance. (E) Board of directors-The board of directors of the Texas Catastrophe Property Insurance Association. (F) Catastrophe insurance-For the purpose of this plan of operation, means Texas windstorm and hail insurance. (G) Catastrophe loss-A loss to property insured by a policy of Texas windstorm and hail insurance. "Catastrophe losses" means more than one catastrophe loss. (H) Chair of the board-The chair of the board of directors of the Texas Catastrophe Property Insurance Association. (I) Commissioner-Commissioner of Insurance of the State of Texas. (J) Corporeal property-Tangible personal property. (K) Department-Texas Department of Insurance. (L) Indirect losses-Personal Lines. (i) Except as provided in clause (iii) of this subparagraph, a policy of windstorm and hail insurance issued by the association for a dwelling as defined by the Department in the association's rates and rules manual, must include coverage for: I. wind-driven rain damage, regardless of whether an opening is made by the wind; II. loss of use, meaning additional living expenses; and III. consequential losses. (ii) Except as provided in clause (iii) of this subparagraph, a policy of windstorm and hail insurance issued by the association for tenant contents of a dwelling or other residential building must include coverage for: I. loss of use, meaning additional living expenses; and II. consequential losses. (iii) The association is not required to: I. offer coverage for indirect losses as provided in clauses (i) and (ii) of this subparagraph unless the coverage was excluded from a companion policy issued in the voluntary market; or II. provide loss of rents or loss of rental value coverage as part of a loss of use coverage or additional living expense coverage to a secondary or non-primary residence. (M) Member-An insurer required to be a member of the association by the Act, sec.4, or where the context indicates, any duly authorized agent or representative of such insurer. "Members" shall mean more than one member. (N) Net direct premiums- (i) For association policies with inception dates on and after January 1, 1993, "net direct premiums" shall mean all statewide direct written premiums (excluding direct written premiums in catastrophe area as designated by the Commissioner and shall be the sum of the following: (I) 90% of the direct written premiums of the extended coverage line of business and 90% of the direct written premiums on the other allied lines of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary; (II) 90% of the extended coverage and other allied lines portion of the direct written premiums on the multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary; and (III) 50% of the direct written premium or such other percentage as may be determined by the board of directors of the association, without further action by the Commissioner, upon analysis of appropriate statistics for wind, hail, water damage, and all other perils, on the homeowner's multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary and farm and ranch owners' multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary, provided, no adjustment of five percentage points or less shall be made, and further provided, that no adjustment shall be made in less than three years from the last prior adjustment; (IV) the extended coverage and other allied lines portion of the following policies, which shall be calculated as follows: (-a-) 40% of the total premium for any commercial policy issued under a composite rate; or (-b-) 40% of the total policy premium or the combined actual extended coverage and other allied lines premium charged whichever is greater, for any property insurance policy written by an insurance company that is not authorized to transact property insurance in Texas, and which is affiliated under common management or control of an insurance company licensed to transact property insurance in Texas. (ii) For association policies with inception dates on and after January 1, 1988, through December 31, 1992, "net direct premiums" shall mean all statewide direct written premiums (excluding direct written premiums in the catastrophe area as designated by the State Board of Insurance) restored to manual level and further adjusted to the manual rate level applicable to the catastrophe area as designated by the State Board of Insurance and shall be the sum of the following: (I) 90% of the direct written premiums of the extended coverage line of business and 90% of the direct written premiums on the other allied lines of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance which the association shall obtain from the Department and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary; (II) 90% of the extended coverage and other allied lines portion of the direct written premiums on the multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary; (III) 50% of the direct written premium or such other percentages as may be determined by the board of directors of the association, without further action by the Commissioner, upon analysis of appropriate statistics for wind, hail, water damage, and all other perils, on the homeowner's multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary and farm and ranch owners' multiple peril line of business as reported in accordance with the property statistical plan promulgated by the Commissioner for property insurance, which the association shall obtain from the Department, and as may be furnished to the association by the Department after review of the insurer's annual statement, other reports, and other statistics the Department shall deem necessary, provided, no adjustment of five percentage points or less shall be made, and further provided, that no adjustment shall be made in less than three years from the last prior adjustment. (IV) the extended coverage and other allied lines portion of the following policies, which shall not be restored to manual rate levels, and which shall be calculated as follows: (-a-) 40% of the total policy premium or the combined actual extended coverage and other allied lines premium charged, whichever is the greater, for any commercial policy issued pursuant to the Insurance Code, Article 5.13-2 or Article 5.26(c), or for policies issued pursuant to the Insurance Code, Article 5.31; or (-b-) 40% of the total policy premium or the combined actual extended coverage and other allied lines premium charged, whichever is greater, for any property insurance policy written by an insurance company that is not authorized to transact property insurance in Texas, and which is affiliated under common management or control of an insurance company licensed to transact property insurance in Texas. (iii) For association policies with inception dates on and after January 1, 1983 through December 31, 1987, inclusive, net direct premiums means the sum of the following premiums: (I) 90% of the direct written premiums on the extended coverage line of business as reflected on line two, column (1), of the insurer's last Texas annual statement; (II) 90% of the extended coverage portion of the direct written premiums on the multiple peril line of business as reported on line eight, column (1), of the insurer's last Texas annual statement; and (III) 40% of the direct written premiums on the homeowners' multiple peril line of business as reported on line four, column (1), of the insurer's last Texas annual statement. (iv) For association policies with inception dates on and after January 1, 1978, through December 31, 1982, inclusive, net direct premiums means the sum of the following premiums: (I) 90% of the direct written premiums on the extended coverage line of business as reflected on line two, column (1), of the insurer's last Texas annual statement; (II) 90% of the extended coverage portion of the direct written premiums on the multiple peril line of business as reported on line eight, column (1), of the insurer's last Texas annual statement; and (III) 40% of the direct written premiums on the homeowners' multiple peril line of business as reported on line four, column (1), of the insurer's last Texas annual statement. (O) Secretary-treasurer-The secretary-treasurer of the Texas Catastrophe Property Insurance Association. (P) Texas windstorm and hail insurance-Deductible insurance against direct loss and indirect losses resulting from a direct loss to insurable property as a result of windstorm or hail as such terms shall be defined and limited in policies and forms approved by the Commissioner. The deductible amount which shall be applied to all risks written by the association shall be determined by the board of directors and approved by the Commissioner. (Q) Vice chair or vice chair of the board-The vice chair of the board of directors of the Texas Catastrophe Property Insurance Association. (b) Operational Procedures of the Texas Catastrophe Property Insurance Association. (1) Members. (A) Membership. The membership of the Texas Catastrophe Property Insurance Association shall consist of all insurers required to be members of the association by the Act, sec.4; provided, however, that all insurers which were not members of the association prior to the effective date of Senate Bill 659, 64th Legislature, 1973, and which became members of the association by virtue of Senate Bill 659 shall participate in the association commencing on January 1, 1974, in the same manner as for all other members of the association, provided, further, that for the purposes of determining participation in the association two or more members having a common ownership or operating in this state under common management or control shall be treated as if they constituted a single member. (B) Notice of meetings. Written or printed notice stating the place, day, and hours of the meeting, and in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 50 days before the date of the meeting, either personally or by mail, by or at the direction of the chair of the board of directors, the secretary- treasurer, or other person calling the meeting, to each member entitled to vote as such meeting. (C) Meetings. The annual meeting of the members shall be held at such time and place in March of each year as may be designated by the board of directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the day designated for any annual meeting of the members, the board of directors shall cause the election to be held at a special meeting of the members as soon thereafter as conveniently may be. The board of directors shall designate the place for the annual meeting of the members, but if no place is so designated, then the meeting shall be held at the office of the association. The board of directors, the chair of the board of directors, or 25% of the members of the association may call a special meeting of the members and designate any place as the place of such meeting. If no such designation is made, the place of such meeting shall be the aforesaid office of the association. (D) Quorum. Twenty-five percent of the members represented by person or by proxy shall constitute a quorum at a meeting of the members. If less than 25% of the members are represented at a meeting, a majority of the outstanding members so represented may adjourn the meeting from time to time without further notice. At the next meeting after adjournment at which a quorum shall be present or represented, any business may be transacted at the meeting as originally notified. The members represented at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough persons to leave less than a quorum. (E) Voting. (i) The secretary-treasurer of the association shall make, at least 10 days before each meeting of the members of the association, a complete list of the members entitled to vote at such meeting, arranged in alphabetical order, with the address of each member and the number of votes allocated to each member which list, for a period of 10 days prior to such meeting, shall be kept on file at the principal office of the association and shall be subject to inspection by any member or its agent at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any member during the whole time of such meeting. Failure to comply with the requirements of this clause shall not affect the validity of any action taken at such meeting. (ii) There shall be 1,000 outstanding votes allocated to the members of the association by the secretary-treasurer. The secretary-treasurer shall determine the percentage of each member's participation in the writings, expenses, profits, and losses of the association computed on the date of the end of the last calendar year preceding such annual meeting at which information necessary to make such computation is available from the Department, and shall allocate to each member a like percentage of the total outstanding votes allocated to the members of the association. Each member shall be entitled to vote its allocated number of outstanding shares at the annual meeting and each special meeting until the next annual meeting of the association at which time the outstanding votes shall be again allocated to the members in the manner set forth previously. (iii) A member may vote by proxy executed in writing by the member. No proxy shall be valid after the next annual meeting after the date of its execution unless otherwise provided in the proxy. Each proxy shall be revocable unless expressly provided therein to be irrevocable. (iv) The votes allocated to a member may be voted by such officer, agent, or proxy as the bylaws of such member may authorize or, in the absence of such authorization, as such member may determine. (v) Voting on any question or in any election may be by voice vote or by show of hands unless the presiding officer shall order, or any member shall demand, that voting be by written ballot. (F) Rules. To the extent applicable, Robert's Rules of Order shall govern the conduct of and procedure at all meetings of the members. (2) Directors. (A) Election. At the first annual meeting of members and at each annual meeting thereafter, the members shall elect the appropriate number of directors from the membership of the association in accordance with subparagraph (B) of this paragraph. Directors, other than from the membership, shall be appointed in accordance with subparagraph (C) of this paragraph. The total number of directors of the association shall be nine. (B) Directors elected from the membership. (i) Five directors shall be five different insurers licensed in Texas and members of the association and elected by the members. No member shall fill more than one seat on the board of directors. (ii) No later than 60 days prior to the annual meeting in March 1992, the board of directors shall nominate the five-member companies to serve on the board of directors. In making such nominations, the board of directors shall consider the following factors in nominating a member to serve. (I) A minimum of three members shall be companies with multistate operations. (II) A minimum of one member shall be a company domiciled in the State of Texas. (III) Consideration should be given to voluntary market shares of members; voluntary participation in the catastrophe area; specific expertise in the underwriting, claims handling, or reinsurance of insurance required to be provided by the association; companies that represent as far as possible the view of the member companies; and other factors deemed relevant by the board of directors. (iii) No later than 60 days prior to the annual meetings, the chair committee of not less than three, nor more than seven, member companies, each to act through its designated representative, said committee to represent as far as possible the view of the member companies. Said committee shall prepare and present to member companies a list of nominations for the board of directors. (iv) Members also have the right to nominate any member by submitting such nominee's name to the nomination committee. In order to be eligible for election to the board of directors, a member must be nominated at least 30 days prior to the annual meeting at which directors are elected. (C) Directors appointed by the Commissioner. The number of directors composed of licensed local recording agents and members of the public shall be four. Each of these directors must be from different counties in the designated catastrophe area. (i) The Commissioner shall nominated by the Office of the Public Insurance Counsel to serve on the board of directors. The public representatives shall be persons who are policyholders of the association as of the date of appointment. (ii) The Commissioner shall recording agent representatives to serve on the board of directors. (D) Term of office. Each director shall hold office for the term of three years from the date of the election or appointment or until a successor shall have been elected or appointed. The terms of the directors shall be staggered so that three directors shall be elected by the membership of the association and/or appointed by the Commissioner annually. A person may hold a seat on the board of directors for not more than three consecutive full terms, not to exceed nine years. (E) Regular meetings. A regular meeting of the board of directors shall be held with notice to the directors at least ten days before each regular meeting as provided for in this subsection. Notice of any regular meeting of the directors shall also be given to the Department in care of the associate commissioner of property-casualty, or such other person as may be designated by the Commissioner, as required by the Texas Insurance Code, Article 21.49, sec.5(k). Public notice of meetings shall be given as required by the Government Code, Chapter 551 . (F) Notice of regular or emergency meeting. (i) Notice of any regular meeting shall be given to the directors at least ten days prior thereto by notice delivered personally or mailed to each director at his/her business address or by telegram, or such other reasonable means of notice to provide actual notice to each director. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, so addressed with postage thereon prepaid. If the notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. If the notice is by other reasonable means, the association shall maintain a written record of the method of notification. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice to the director of such meeting, except where a director attends a meeting for the express purpose of objection to the transaction of any business because the meeting is not lawfully called or convened. (ii) In case of emergency or urgent public necessity, notice to directors and to the Department shall be given at least two hours before a meeting is convened. Notice to the public shall be given as required for an emergency meeting pursuant to the Government Code, sec.551.045. (iii) Any meeting of the board of directors of the association conducted by conference call is subject to the same requirements applicable to other meetings of the board of directors. (G) Regular or emergency meetings. Regular or emergency meetings of the board of directors may be called by the chair of the board or at the request of any two directors. The person or persons authorized to call a meeting of the board of directors may fix any place as the place for holding any meeting of the board of directors called by them. If no place is designated, then the office of the association shall serve as the place of such meeting. (H) Statement of purpose of meeting required. The business to be transacted at, and the purpose of, any regular or emergency meeting of the board of directors shall be specified in the notice to directors and in notice required by statute as required by the Government Code, Chapter 551. (I) Quorum. A majority of the number of directors fixed by this section shall constitute a quorum for the transaction of business at any meeting of the board of directors. Action taken by a majority of the directors present at a meeting at which a quorum is present shall be the act of the board of directors. If at any meeting of the board of directors there shall be less than a quorum present, a majority of those present may adjourn the meeting from time to time until a quorum is obtained. (J) Presumption of assent. A director of the association who is present at the meeting of the board of directors at which action on any matter is taken shall be presumed to have assented to the action taken unless the director's dissent shall be entered in the minutes of the meeting, or unless the director shall file a written dissent to such action with the person acting as secretary of the meeting before the adjournment thereof, or shall forward such dissent by registered mail to the secretary of the association immediately after the adjournment of the meeting. Such right to dissent shall not be available to a director who voted in favor of such action. (K) Compensation. By resolution of the board of directors, the directors may be reimbursed for their actual expenses. No other payment shall be made to directors other than provided herein, except however, that nothing herein shall be construed as preventing any director from serving the association in any other capacity and receiving reimbursement for actual expenses incurred. (L) General powers. The board of directors shall have the management of the business and affairs of the association and may exercise all of the powers herein enumerated and all other powers incidental or appropriate thereto, subject only to the restrictions imposed by law. Included among the powers of the board of directors, but not in limitation thereof, are the following: (i) to make and change regulations not inconsistent with this section for the management of the business affairs of the association; (ii) to purchase or otherwise acquire for the association any property, rights, or privileges which the association is authorized to acquire; (iii) to remove any officer for cause, summarily without cause, and in their discretion, from time to time, to dissolve the powers and duties of any officer and to confer such powers and duties upon any other person for the time being; remove or suspend such subordinate officers, attorneys, or representatives as they may deem necessary and to determine their duties, and fix, and from time to time change their salaries or remuneration, and to require security as and when they think fit; (v) to confer upon any officer of the association remove, and suspend subordinate officers, employees, and representatives; (vi) to determine who shall be authorized on the association's behalf to make and sign bills, notes, acceptances, endorsements, checks, releases, receipts, contracts, and other instruments; (vii) to delegate any of the powers of the board of directors in relation to the ordinary business of the association to any standing or special committee, or to any officer or agent (with power to subdelegate) upon such terms as they may deem appropriate; (viii) to contract with a servicing facility to perform such services for the association as it may deem appropriate; (ix) to approve expenses, levy assessments, including preliminary assessments; (x) to have all other powers and to perform all other duties reasonably necessary to accomplish the purposes of the Act. (M) Executive committee. An executive committee shall consist of at least three, and not more than four, of the directors of the association and shall include the chair, vice-chair, and secretary-treasurer. At least one director appointed by the Commissioner must be elected as an officer. The board of directors may elect an additional director to be a member of the executive committee for the sole purpose of ensuring the inclusion of at least one insurer, one agent, and one public member on the executive committee. To the extent provided by resolution or resolutions of the board of directors, the executive committee shall have and may exercise the powers delegated by the board of directors in the day-to-day administrative management of the association. Such committee shall keep regular minutes of its proceedings and report the same to the board of directors. The delegation to a committee of authority consistent with this section shall not operate to relieve the board of directors, or any member thereof, of any responsibility imposed upon the board of directors or member by law. (N) Vacancies. (i) A particular directorship shall be considered to be vacant upon the resignation of the member holding such directorship. (ii) Any vacancy occurring in the directors elected from the membership may be filled at the next meeting of the board of directors following the occurrence of such vacancy. Subject to the provisions of subparagraph (B) of this paragraph, such vacancy shall be filled by the affirmative vote of a majority of the remaining directors elected from the membership though less than a quorum. A director elected to fill a vacancy shall be elected for the unexpired term of the predecessor in such directorship. (iii) Any vacancy occurring by the Commissioner shall of a new director in accordance with the provisions of subparagraph (C) of this paragraph. (3) Officers. (A) Number. The officers of the association shall be the chair of the board of directors, the vice chair of the board of directors, and the secretary- treasurer, all of whom shall be elected by the board of directors. No two offices may be held by the same person. The chair, vice-chair, and secretary- treasurer shall serve on the executive committee. At least one director appointed by the Commissioner must be elected as a member of the executive committee. (B) Election and term of office. The officers of the association may be elected annually by the board of directors at the first meeting of the board of directors held after each annual meeting of the members. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until the officer's successor shall have been duly elected and shall have qualified or until the officer's death or until the officer shall resign or shall have been otherwise removed. The board of directors shall provide for a rotation of directors elected as officers at least every two years. (C) Removal of officers. Any officer or agent elected or appointed by the board of directors may be removed by the board of directors whenever in its judgment the best interests of the association would be served thereby or otherwise in accordance with this section, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. A vacancy in any office because of death, resignation, removal, disqualification, or otherwise may be filled by the board of directors for the unexpired portion of the term. (D) Chair of the board of directors. The chair of the board of directors shall preside at all meetings of the members and at all meetings of the directors, appoint and discharge employees and persons representing the association subject to the approval of the directors, fix the compensation of employees and such representatives, make and sign contracts and agreements in the name of the association, and appoint committees. The chair shall see that the books, reports, statements, and certificates are properly kept, made, and filed if necessary, and [he] shall generally do and perform all acts incident to the office of chair of the board of directors or which may be authorized or required by law, by this section, or by the board of directors, not inconsistent herewith. (E) Vice chair of the board of directors. The vice chair of the board of directors elected by the board of directors shall have such powers and shall perform such duties as shall be assigned by the board of directors not inconsistent herewith. (F) Secretary-treasurer. The secretary-treasurer shall: (i) keep the minutes of the members and of the board of directors' meetings in one or more books provided for that purpose; (ii) see that all notices are duly given as required by the provisions of this plan of operation. In case of the secretary-treasurer's absence or refusal or neglect to give the required notice, such notice may be given at the direction of the chair of the board of directors, of the directors, or of the members upon whose request the meeting is called; (iii) be custodian of the association's records; (iv) keep a register of the post office address of each member; (v) annually determine each member's participation in the association in the manner required by the Act and shall keep a register of each member's percentage of participation; (vi) have the custody of all funds, securities, evidences of indebtedness, and other valuable documents of the association, the secretary-treasurer shall receive and give or cause to be given receipts and acquittances for monies paid in on account of the association and shall pay out of the funds on hand all just debts of the association of whatever nature upon maturity of the same, the secretary-treasurer shall enter or cause to be entered in the books of the association to be kept for that purpose full and accurate accounts of all monies received and paid out on account of the association, and whenever required by the board of directors, the secretary-treasurer shall keep or cause to be kept such other books as would show a true record of the reserves, expenses, losses, gains, assets, and liabilities of the association; and (vii) in general, perform all duties incident to the officer of secretary- treasurer and such other duties as from time to time may be delegated by the chair of the board of directors or by the board of directors. (4) Legal Counsel. (A) Types of Representation. The association may engage one or more attorneys to provide the following: (i) legal representation, in matters other than disputes involving policyholder claims, before the Commissioner, the Department and the Texas Legislature; (ii) legal representation in any dispute involving a policyholder claim against the association; and (iii) legal advice and assistance relating to any other matter within the authority and responsibility of the association. (B) Legal Representation, in Matters Other than Disputes Involving Policyholder Claims, Before the Commissioner, the Department and the Texas Legislature. (i) Selection. The association board of directors shall select, in accordance with this plan of operation, legal counsel to provide legal representation on behalf of the association, in matters other than disputes involving policyholder claims, before the Commissioner, the Department and the Texas Legislature. (ii) Qualifications. (I) To be engaged to provide such legal representation, an attorney must: (-a-) be licensed to practice law in Texas for at least five years; (-b-) maintain professional liability insurance with an insurer authorized to do business in Texas in an amount of not less than $1 million; (-c-) be experienced in and practice in the areas of insurance and administrative law; (-d-) have no impermissible conflict of interest before representation is undertaken, in accordance with the Texas Disciplinary Rules of Professional Conduct adopted by the Texas Supreme Court and the Comments prepared by the Model Rules Committee of the State Bar of Texas and amended by Supreme Court Order (Government Code, Title 2, Subtitle G, Appendix A, Article 10, sec.9) and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas; and (-e-) have never been suspended or disbarred from the practice of law or convicted of a felony. (II) The board of directors of the association may adopt additional qualifying criteria for legal counsel representing the association in matters specified in this subparagraph by amending this plan of operation. (iii) Conflict of Interest. (I) In representing the association pursuant to this subparagraph, legal counsel shall be governed by the conflict-of-interest and the-appearance-of- conflict-of-interest rules under the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas. (II) A decision relating to a conflict of interest or appearance of a conflict of interest on the part of legal counsel under this subparagraph shall be based on the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas. No other laws or rules shall apply in determining the existence of conflict of interest or the appearance of conflict of interest under this plan of operation. (III) Procedures for Handling Conflict of Interest Issues Raised by Legal Counsel. (-a-) If legal counsel has reason to believe that legal counsel's representation of the association pursuant to this paragraph may result in a conflict of interest or the appearance of a conflict of interest, legal counsel shall immediately report, either verbally or in writing, such fact and the surrounding circumstances, including full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and any advantages involved, to the chair of the board and the general manager and either: (-1-) withdraw from such representation; or (-2-) if the legal counsel believes that there will be no materially adverse effect upon the association by such representation, request the approval of the association board of directors for legal counsel to engage in such representation. (-b-) After review of all disclosed facts relating to the potential conflict of interest or appearance of conflict of interest, if the board of directors approve legal counsel's request to continue representation in the matter reported and the legal counsel also believes that there will be no materially adverse effect upon the association by such representation, the legal counsel may continue such representation. (-c-) The chair of the board and the general manager shall prepare the written decision of the board of directors as to continued representation or denial of continued representation in such matter together with the reasons for that decision and file the written decision with the association's official records and forward a copy of the decision to legal counsel. (IV) Procedures for Handling Conflict of Interest Issues Raised by Persons Other than Legal Counsel. (-a-) If a member of the association's board, the chair of the board, or the general manager believe that representation by legal counsel in any matter pursuant to this subparagraph may result in a conflict of interest or the appearance of a conflict of interest, such person shall report the perceived conflict of interest or appearance of a conflict of interest to the chair of the board. (-b-) The chair of the board shall contact legal counsel and request a meeting or a telephone conference with the board of directors and legal counsel to discuss such perceived conflict. (-c-) During such meeting or teleconference the board of directors shall determine, in accordance with the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas, whether a conflict of interest or the appearance of a conflict of interest exists and following such meeting or teleconference, the board of directors shall adopt and issue a written decision. (-1-) If the board of directors determine that no conflict of interest or appearance of conflict of interest exists, the written decision shall state the reasons for such decision and that the legal counsel may continue to represent the association in the particular matter. (-2-) If the board of directors determine that a conflict of interest exists, the written decision shall state the reasons for such decision and state either that the legal counsel may not represent the association in the matter or that the board of directors consent to the representation by legal counsel and that legal counsel may represent the association in the matter so long as the legal counsel also believes that there will be no materially adverse effect upon the association by such representation. (-d-) A written decision prepared under this subdivision shall be included in the official records of the association and a copy of the decision shall be forwarded to the legal counsel. (iv) Review and Termination. The association's executive committee, together with the general manager of the association, shall review annually with the legal counsel the performance of such legal counsel and report their findings to the board of directors in executive session. Representation of the association by legal counsel may be terminated at any time by the board of directors. (C) Legal Representation in Any Dispute Involving a Policyholder Claim Against the Association. (i) Selection. The general manager of the association shall select, in accordance with this plan of operation, legal counsel to represent the association in handling disputes involving policyholder claims against the association. Selection of legal counsel to represent the association in such disputes shall be made on a case-by-case basis. (ii) Qualifications. (I) To be engaged to provide such legal representation, an attorney must: (-a-) be licensed to practice law in Texas for at least five years; (-b-) maintain professional liability insurance with an insurer authorized to do business in Texas in an amount of not less than $1 million; (-c-) be experienced in the defense of claims against insurers; (-d-) have no impermissible conflict of interest before representation is undertaken, in accordance with the Texas Disciplinary Rules of Professional Conduct adopted by the Texas Supreme Court and the Comments prepared by the Model Rules Committee of the State Bar of Texas and amended by Supreme Court Order (Government Code, Title 2, Subtitle G, Appendix A, Article 10, sec.9) and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas; and (-e-) have never been suspended or disbarred from the practice of law or convicted of a felony. (II) The board of directors of the association may adopt additional qualifying criteria for legal counsel representing the association in matters involving policyholder claims against the association by amending this plan of operation. (iii) Conflict of Interest. (I) In representing the association pursuant to this subparagraph, legal counsel shall be governed by the conflict-of-interest and the-appearance-of- conflict-of-interest rules under the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas. (II) A decision relating to a conflict of interest or appearance of a conflict of interest on the part of legal counsel under this subparagraph shall be based on the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas. No other laws or rules shall apply in determining the existence of conflict of interest or the appearance of conflict of interest under this plan of operation. (III) In determining whether legal counsel has a conflict of interest, as defined in the Texas Disciplinary Rules of Professional Conduct and the official Comments to these rules and ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas, the general manager shall require the legal counsel to submit to the general manager in writing evidence that a thorough conflicts check has been conducted to assure that no conflict of interest exists. Such evidence of a conflicts check shall be maintained by the general manager in the association's records as confidential and not available for public inspection. (IV) The general manager may approve, in accordance with Rule 1.06(c) of the Texas Disciplinary Rules of Professional Conduct and the official Comments to this rule and any related ethics opinions issued by the Professional Ethics Committee of the Supreme Court of Texas, an attorney to represent the association in a matter involving a policyholder claim against the association in which a potential conflict of interest may exist if: (-a-) the attorney reasonably believes the representation of the association will not be materially adversely affected; and (-b-) the general manager consents to such representation after full disclosure of the existence, nature, implications, and possible adverse consequences of the common representation and the advantages involved, if any. (V) If legal counsel accepts an engagement from the association to represent it in a dispute involving a policyholder claim against the association and fails to disclose a conflict of interest, as required in this clause, such legal counsel shall be barred for a period of five years, from the date on which the conflict of interest is disclosed to the association, from representing the association as legal counsel in any dispute involving a policyholder claim against the association. (iv) Review and Termination. (I) The general manager shall report to the executive committee at each of its regular meetings all information relating to the selection of and the service of legal counsel in handling policyholder claims against the association. (II) At the general manager's discretion or at the direction of the executive committee, the general manager shall discharge legal counsel from any matter involving a policyholder claim against the association on five days' written notice to the legal counsel. (5) Fiscal year. The fiscal year of the association shall be the calendar year. (6) Waiver of notice. Whenever any notice is required to be given to any member or director of the association under the provision of this section a waiver thereof in writing signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice. (7) Protection of directors, members, officers, and employees. The association shall indemnify each former, present, and future director, member, officer, and employee of the association against, and each such director, member, officer, and employee shall be entitled without further act on his/her part of indemnity from the association for, all costs and expenses (including the amount of judgments and the amount of reasonable settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the association itself) reasonably incurred by him/her in connection with or arising out of any action, suit, or proceeding in which he/she may be involved by reason of his/her being or having been a director, member, officer, or employee of the association or of any other association or company which he/she serves as a director, member, officer, or employee at the request of the association, whether or not he/she continues to be such director, member, officer, or employee at the time of incurring such costs or expenses; provided, however, that such indemnity shall not include any costs or expenses incurred by any such director, member, officer, or employee in respect of matters as to which he/she shall be finally adjudged in any such action, suit, or proceeding to be liable for willful misconduct in the performance of his/her duty as such director, member, officer, or employee, or in respect of any matter in which any settlement is effected in any amount in excess of the amount of expenses which might reasonably have been incurred by such director, member, officer, or employee had such litigation been conducted to a final conclusion; provided, further, that in no event shall anything herein contained be so construed as to protect, or to authorize the association to indemnify such director, member, officer, or employee against any liability to the association or to its members to which he/she would otherwise be subject by reason of his/her willful misfeasance or malfeasance, bad faith, dishonesty, gross negligence, or reckless disregard of the duties or responsibilities involved in the conduct of his/her office or employment as such director, member, officer, or employee. The foregoing right of indemnification shall inure to the benefit of the heirs, executors, or administrators of each such director, member, officer, or employee and shall be in addition to all other rights to which such director, member, officer, or employee may be entitled as a matter of law. This indemnification shall in no way indemnify a member of the association from participating in the writings, expenses, profits, and losses of the association in the manner set out in this plan of operation or the Act. (8) Annual report. The secretary-treasurer shall file with the Department annually a statement which shall summarize the transactions, conditions, operation, and affairs of the association during the preceding calendar year at such times and covering such periods as may be designated by the Department. Such statement shall contain such matters and information as are prescribed by the Department and shall be in such form as required by the Department. (c) Financial Operation of the Association. (1) Collection, investment, and allocation of funds. (A) Collection. The secretary-treasurer shall collect all of the premiums received by the association from the sale of catastrophe insurance, all assessments levied against the members, and all proceeds from the investment of funds. (B) Investment. All funds collected by the association which are not otherwise required to be expended as provided in paragraph (4) of this subsection may be retained in a checking account or accounts in any bank or banks doing business in the State of Texas and/or may be invested only in the following: (i) in interest-bearing time deposits or certificates of deposit in any bank or banks doing business in the State of Texas; and/or (ii) in treasury notes of the government of the United States of America; and/or (iii) in money market funds which invest exclusively in the bonds or other evidence of indebtedness of the United States of America or any of its agencies when such obligations are guaranteed as to principal and interest by the United States of America; except, however: (I) such money market funds may make loans to or purchases of the described bonds and other evidence of indebtedness from a solvent bank or securities broker, registered under the Securities Act of 1934, under an agreement (commonly called a "repurchase agreement") which provides for the purchase by the money market fund of the type of securities described and which agreement matures in 90 days or less and provides for the repurchase by such entity of the same or similar securities purchased by the money market fund, provided that the total market value of such securities shall equal or exceed the amount of such loan or repurchase when it is made; and (II) such loan collateral or securities purchased from any one bank or securities broker may not exceed the greater of 5.0% of the assets of the money market fund or 5.0% of the amount of capital, surplus, or individual profits of such bank or securities broker; and/or (iv) in such other investments as may be proposed by the board of directors and approved by the Commissioner. The board of directors shall determine what portion of such funds shall be retained in a checking account or accounts and what portion of such reserve shall be invested in the investments listed in this subparagraph, as well as which specific investments, if any, shall be made. (C) Allocation. (i) Each year the association will prepare a statement of earnings by syndicate year. All premiums written, commissions paid, unearned and earned premiums, loss and loss expenses paid and pending will be charged to the syndicate year. All general expense and interest income received will be charged or credited to the current syndicate year. Syndicate year is determined by the effective date of a policy. For example, policies written in calendar year 1972 with an effective date of 1972 will be charged to the syndicate year 1972. All premiums and loss-loss expense transactions affecting these policies will be assigned to syndicate year 1972. Likewise, all premiums and loss-loss expense transactions in calendar year 1972 affecting policies with an effective date of 1971 will be charged to syndicate year 1971. (ii) Each company will apply their participation percentage applicable to each syndicate year. (2) Assessment of members. (A) Assessment. If the chair of the board of directors or any members of the board of directors determine that an assessment of the members is necessary, a special meeting of the board of directors shall be called to determine if the funds then available to the association are: (i) of insufficient size to provide adequately for the operating expenses of the association for the remainder of the then existing fiscal year of the association (or if such special meeting is within 60 days of the end of the then fiscal year, the board of directors may also determine if the funds available to the association during the next fiscal year will be insufficient to adequately provide for the operating expenses of the association for the next succeeding fiscal year); and/or (ii) of insufficient size to adequately provide for an existing catastrophe loss or losses. If the board of directors shall determine funds available to the association are of insufficient size under the provisions of this clause and/or clause (i) of this subparagraph, then it shall assess the members of the association in such amount as it shall deem reasonable and necessary to provide for such operating expense and/or such catastrophe loss of losses. (B) Amount of assessment. The board of directors shall determine which members of the association shall participate in any assessment for operating expenses and/or catastrophe losses. This determination shall be computed on a syndicate year basis rather than on a calendar year basis. The designated members of the association shall participate in any assessment levied in the proportion that the net direct premiums of such member written in this state during the preceding calendar year bears to the aggregate net direct premiums written in this state by all members of the association as furnished to the association by the Department after review of annual statements, other reports, and required statistics; provided, however, that if at the time of such assessment the Department has not furnished to the association information necessary to compute a member's participation during the preceding calendar year, then each member's participation shall be based upon information furnished to the association from the last calendar year in which such information is available and, upon obtaining the necessary information from the Department, the association shall reassess or refund to each member such amounts as are necessary to properly reflect such member's participation; provided, further, that a member shall be entitled to receive the following credit for insurance, similar to catastrophe insurance, written in such catastrophe area, except that in no event shall the final percentage of participation after application for credit for voluntary writings in the catastrophe area be less than 20% nor more than 190% of the company's percentage of statewide windstorm and hail premiums modified by applicable offset factors, nor more than 170% of the company's percentage of statewide windstorm and hail premium modified by applicable offset factors for policies with inception dates on and after January 1, 1984. (i) Participation in Texas Catastrophe Property Insurance Association for policies after January 1, 1988. Procedure for determining the percent of participation respecting association policies with inception dates on or after January 1, 1988, for members of the Texas Catastrophe Property Insurance Association reflecting credit for voluntary premiums written in the designated area. (All premiums are for the most recent preceding calendar year ending December 31, as furnished by the Department ). Column 1(a) Statewide net direct premiums for extended coverage and other allied lines. Column 1(b) Statewide net direct premiums for extended coverage and other allied lines portion of the multiple peril line. Column 1(c) Statewide net direct premiums for homeowners and farm and ranch owners. Column 2 The sum of the statewide net direct premiums at 90% of the extended coverage and other allied lines, and 50% of the homeowners and farm and ranch owner's, or such percentage as may be determined in accordance with subsection (a)(2)(i)(III) of this section (90% of column 1(a)%+ plus 90% of column 1(b) plus 50% of column 1(c). Column 3 Each company's percentage of the net direct premiums as described in column 2, which is the basis for indicating normal required participation in the Texas Catastrophe Property Insurance Association prior to credits for voluntary writings in the designated area. Column 4 Total windstorm and hail premiums in the designated area (association premiums plus voluntary premiums). Column 5 Normal company quota of total windstorm and hail premiums: column 3 x column 4. Column 6 Each company's voluntary writings in the designated area multiplied by the same percentages as shown in column 2. Note: Maximum credit shall be limited to company's normal quota. Column 7 Each company's maximum possible allocation after applying credits for voluntary writings (column 5 minus column 6). Negative allocation to be shown as zero. Column 8 Percentage participation of each member company in Texas Catastrophe Property Insurance Association, prior to application of offset. Note: The offset figure measures the excess premiums developed by maximum credits in column 6. Column 9 Percentage participation of each member company in Texas Catastrophe Property Insurance Association prior to application of minimum-maximum factors. Column 10 Assignment after application of 20% minimum or 170% maximum of column 3. Column 11 Net assignment of association. (After application of offset following minimum-maximum limitations). (ii) Participation in Texas Catastrophe Property Insurance Association for policies after January 1, 1983. Procedure for determining the percent of participation respecting association policies with inception dates on and after January 1, 1983, through December 31, 1987, inclusive, for members of the Texas Catastrophe Property Insurance Association reflecting credit for voluntary premiums written in the designated area. (All premiums are for the most recent preceding calendar year ending December 31.) Column 1(a) Statewide direct written premiums for extended coverage from Texas annual statement, page 14, line 2, column 1, and other allied lines from line 3, column 1. Column 1(b) Statewide direct written premiums for the extended coverage and other allied lines portion of the multiple peril line from Texas annual statement, page 14, line 8, column 1. Column 1(c) Statewide direct written premiums for homeowners and farm and ranch owners from Texas annual statement, page 14, line 4, column 1, and line 5, column 1. Column 2 The sum of the statewide direct written premiums at 90% of the extended coverage and other allied lines, and 50% of the homeowners and farm and ranch owners, or such percentage as may be determined in accordance with subsection (a)(2)(i) (III) of this section[)]. 90% of column 1(a)%+ 90% of column 1(b)%+ 50% of column 1(c).) Column 3 Each company's percentage of the net direct premiums as described in column 2, which is the basis for indicating normal required participation in the Texas Catastrophe Property Insurance Association prior to credits for voluntary writings in the designated area. Column 4 Total windstorm and hail premiums in the designated area (association premiums plus voluntary premiums). Column 5 Normal company quota of total windstorm and hail premiums: column 3 x column 4. Column 6 Each company's voluntary writings in the designated area multiplied by the same percentage as shown in column 2 previously. Note: Maximum credit shall be limited to company's normal quota. Column 7 Each company's maximum possible allocation after applying credits for voluntary writings (column 5 minus column 6). Negative allocation to be shown as zero. Column 8 Percentage participation of each member company in Texas Catastrophe Property Insurance Association, prior to application of offset. Note: The offset figure measures the excess premiums developed by maximum credits in column 6. Column 9 Percentage participation of each member company in Texas Catastrophe Property Insurance Association prior to application of minimum-maximum factors. Column 10 Assignment after application of 20% minimum or 190% maximum of column 3 for policies with an inception date during 1983 or 170% maximum of column 3 for policies with inception dates on or after January 1, 1984. Column 11 Net assignment in association. (After application of offset following minimum- maximum limitations.) (iii) Participation in Texas Catastrophe Property Insurance Association for policies after January 1, 1978. Procedure for determining the percent of participation respecting association policies with inception dates on and after January 1, 1978, through December 31, 1982, inclusive, for members of the Texas Catastrophe Property Insurance Association reflecting credit for voluntary premiums written in the designated area. (All premiums are for the most recent preceding calendar year ending December 31.) Column 1(a) Statewide direct written premiums for extended coverage from Texas annual statement, page 14, line 2, column 1. Column 1(b) Statewide direct written premiums for the extended coverage portion of the multiple peril line from Texas annual statement, page 14, line 8, column 1. Column 1(c) Statewide direct written premiums for homeowners and farm and ranch owners from Texas annual statement, page 14, line 4, column 1. Column 2 The sum of the statewide direct written premiums at 90% of the extended coverage and 40% of the homeowners. (90% column 1(a)%+ 90% of column 1(b)%+ 40% of column 1(c).) Column 3 Each company's percentage of the net direct premiums as described in Column 2, which is the basis for indicating normal required participation in the Texas Catastrophe Property Insurance Association prior to credits for voluntary writings in the designated area. Column 4 Total windstorm and hail premiums in the designated area. (association premiums plus voluntary premiums). Column 5 Normal company quota of total windstorm and hail premiums: column 3 x 4. Column 6 Each company's voluntary writings in the designated area multiplied by the same percentages as shown in column 2 previously. Note: Maximum credit shall be limited to company's normal quota. Column 7 Each company's maximum possible allocation after applying credits for voluntary writings (column 5 minus column 6). Negative allocation to be shown as zero. Column 8 Percentage participation of each member company in the Texas Catastrophe Property Insurance Association, prior to application of offset. Note: The offset figure measures the excess premiums developed by maximum credits in column 6. Column 9 Percentage participation of each member company in Texas Catastrophe Property Insurance Association prior to application of minimum-maximum factors. Column 10 Assignment after application of 20% minimum or 190% maximum of column 3. Column 11 Net assignment in association. (After application of offset following minimum-maximum limitations.) FIGURE 1: 28 TAC 5.4001(c)(2)(B)(iii) (iv) The Department shall furnish to the association the amount of net direct premiums of each member company written on property in this state and the aggregate net direct premiums written on property in this state by all member companies during the preceding calendar year as reported by member companies to the Department. Within a reasonable time after the receipt of same from the Department, the association shall notify each member company, in writing, sent by certified mail, the amount of the net direct premiums written on property in this state during the preceding calendar year by the member company to whom notice is given, including the net direct premiums on similar insurance voluntarily written in the catastrophe area, upon which such company's percentage of participation will be determined. Such notice shall state that such notification, and the content thereof, is an act, ruling, or decision of the association and that the member company to whom such notice is given shall be entitled to appeal therefrom within 30 days from the date of such act, ruling, or decision as shown on said notice in accordance with the Insurance Code, Article 21.49, sec.9. Thereafter, the association shall determine the percentage of participation for each member company in the manner provided in the plan of operation and shall notify each member company thereof, in writing, sent by certified mail. Such notice shall state that such notification, and the content thereof, is an act, ruling, or decision of the association insofar as the mathematical determination of the percentage of participation is concerned and that the member company to whom such notice is given shall be entitled to appeal therefrom within 30 days from the date of such act, ruling, or decision as shown on said notice in accordance with the Insurance Code, Article 21.49, sec.9. (C) Notice of assessment. Notice of assessment shall be sent to each member, within 30 days of the meeting of the board of directors at which such assessment was levied, by certified mail, return receipt requested, addressed to the office of such member as it appears on the books of the association. Such notice shall state the member's allocated amount of assessment and shall inform each member of the sanctions imposed by subparagraph (D) of this paragraph for the failure to pay such assessment within the time prescribed by this section. Such notice shall also state that such notification, and the content thereof, is an act, ruling, or decision of the association insofar as the amount of the assessment for such company is concerned and that a member company to whom such notice is given shall be entitled to appeal therefrom within 30 days from the date of such act, ruling, or decision as shown on said notice, in accordance with the Insurance Code, Article 21.49, sec.9; provided, however, that the right of appeal provided for herein shall not include the subject matter of any act, ruling, or decision of the association determining the amount of net direct premium of such member company or the percentage of participation for such member company when notice of the amount of such net direct premium or such percentage of participation has previously been given by the association in accordance with subparagraph (B)(iv) of this paragraph. The time period for an appeal of an act, ruling, or decision of the association respecting net direct premiums or percentage of participation is computed from the date of the act, ruling, or decision of the association respecting same. (D) Failure to pay assessment. (i) Each member shall remit to the association payment in full of its assessed amount of any assessment levied by the board of directors within 30 days of receipt of notice of assessment. If the association has not received payment in full of a member's allocated amount of assessment within 40 days of notice of the receipt by the member of the notice of assessment, then the association shall report to the Commissioner the fact that such assessment has not been paid, and the Commissioner shall immediately issue an order suspending such member's certificate of authority to transact the business of insurance in the State of Texas until such time as the association certifies to the Commissioner that such assessment has been paid in full. Removal of a member's certificate of authority to transact business in the State of Texas by the Commissioner shall in no way affect the right of the association to proceed against such member in any court of law or equity in the United States for any remedy provided by law or contract to the association, including, but not limited to, the right to collect such member's assessment. In addition to any other remedy provided herein, the board of directors may offset assessments due from a member against any amounts in any account of such delinquent member. (ii) A member by mailing payment of its allocated amount of assessment, as provided herein, shall not thereby waive any right it may have to contest the computation of its allocated amount of assessment. Such contest shall not, however, toll the time within which assessments shall be paid or the report to be made to the Commissioner or the action to be taken by the Commissioner upon receipt of such report, all as set out in clause (i) of this subparagraph. (E) Inability to pay assessment by reason of insolvency. In the event a member of the association is placed in temporary or permanent receivership under order of a court of competent jurisdiction based upon a finding of insolvency, and such member has been designated an impaired insurer by the Commissioner, and in the event it is necessary to obtain additional funds to provide for operating expenses and losses in the year the insurer is declared impaired, the aggregate net amount not recovered from such insolvent insurer shall be reallocated among the remaining members of the association in accordance with the method of determining participation as determined in the plan of operation. (3) Distributions to the members. (A) The only distributions to members which may be made on or after May 1, 1985, without the prior approval of the Commissioner are for the recovery of assessments made on or after May 1, 1985, which are not recoverable as a tax credit by the members under the Insurance Code, Article 21.49, sec.19. Any other distribution shall be for the sole purpose of paragraph (4)(C) or (4)(G) of this subsection and requires the prior approval of the Commissioner. The Commissioner may not unreasonably refuse to approve a request to distribute funds. In making any distribution, the board of directors may offset amounts otherwise due to a member with amounts then due from that member. (B) If the association obtains a disbursement of funds from the catastrophe reserve trust fund maintained by the Department pursuant to Section 8 (i) of the Act, the funds disbursed to the association may be spent by the association only to pay losses and loss adjustment expenses of policyholders in the event of an occurrence or a series of occurrences within the defined catastrophe area that results in insureds losses and operating expenses of the association greater than $100 million. Funds disbursed from the catastrophe reserve trust fund maintained by the Department may not be distributed to any member of the association for any purpose, and any of these amounts disbursed to the association from the catastrophe reserve trust fund that remain unspent after payment of all losses and loss adjustment expenses arising out of such occurrence or series of occurrences shall be remitted to the Department or to the Treasurer of the State of Texas for deposit in the catastrophe reserve trust fund. (4) Use of funds. All monies collected or received by the association on or after May 1, 1985, are required to be expended in the following ways and in the following sequence: (A) first, to pay the expenses and claims of the association; (B) second, to reimburse members for amounts reallocated from insolvent insurers' inability to pay, as provided in paragraph (2)(E) of this subsection, to the extent such amounts are not recoverable as a tax credit under the Insurance Code, Article 21.49; (C) third, to reimburse members for assessments made on or after May 1, 1985, which are not recoverable as a tax credit by the members under the Insurance Code, Article 21.49; (D) fourth, to reimburse members for the time value of money for the period of time between the assessment date on or after May 1, 1985, and the distribution date; (E) fifth, to either pay premiums for reinsurance under a reinsurance program approved by the Commissioner to cover some or all of the claims liabilities of the association, or to make payment of the net equity of a member, including all premium and other revenue of the association in excess of incurred losses and operating expenses, to a catastrophe reserve trust fund to be held by the Texas Department of Insurance; (F) sixth, to establish a reserve for catastrophe losses; (G) seventh, as distribution to members of the association after approval by the Commissioner. (d) Catastrophe Insurance. (1) The policy. (A) Approval. The association shall cause to be issued policies providing for catastrophe insurance and application forms therefor. The board of directors shall submit such policies and application forms to the Commissioner for approval. The Commissioner shall approve or reject such policies and application forms within 30 days of their submission. If the Commissioner takes no action regarding such forms and applications within such 30-day period, the forms and applications shall be deemed to have been approved by the Commissioner. The Commissioner shall not be required to approve or reject such forms and applications as a group-the Commissioner may approve some policies and/or forms and reject other policies and/or forms provided, however, that if the Commissioner rejects a form, the Commissioner shall send to the association the reasons for such rejection. No application for or policy of catastrophe insurance shall be used by the association prior to its approval by the Commissioner. (B) Insurable property. The property eligible for catastrophe insurance shall be that property defined as "insurable property" in the Act, provided, however, that the term "insurable property" shall not include: (i) motor vehicles; and (ii) any structure consisting, in whole or in part, of a mobile home except as a mobile home may be described as being insurable property in subsection (f) of this section. (C) Limits of liability. (i) The maximum limits of liability shall be determined by statute and set forth in the rules manual of the association adopted pursuant to sec.5.4501 of this title (relating to Rules and Regulations for Texas Catastrophe Property Insurance Association). (ii) In the event that the value of any risk exceeds the maximum amounts set forth in the rules manual, the association may waive the coinsurance requirements and charge a rate on a negotiated basis in accordance with procedures subject to review by the Department. (iii) Limits of liability for risks required to be insured by the association shall be adjusted for inflation as part of the annual hearing on property rates by the Commissioner to reflect any changes in the cost of construction or residential values in the catastrophe areas as determined by credible indexes. Indexing of liability limits shall apply after January 1, 1992. (D) Rates, rating plans, and rate rules applicable. The rates, rating plans, and rate rules applicable shall be those established pursuant to the Act, sec.8. (2) Applicant, acceptance, and rejection. (A) Forms. Any person having an insurable interest in insurable property located in a catastrophe area shall be entitled to apply to the association for catastrophe insurance in the manner provided herein. All applications for catastrophe insurance shall be made on forms prescribed by the board of directors of the association and approved by the Commissioner as provided in paragraph (1)(A) of this subsection. Such application forms shall contain a statement as to whether or not there are any unpaid premiums due from the applicant for insurance on the property. All applications shall be made on behalf of the applicant by a local recording agent. (B) Local recording agent. Commissions to be paid to a licensed agent shall be a percentage of the premium produced as may be determined by the board of directors. In event of cancellation of a policy, or if an endorsement is issued which requires premiums to be returned to the insured, the agent shall refund ratable commission on the unearned portion of canceled liability and on reductions in premiums at the same rate at which commissions were originally paid. (C) Submission. Application for catastrophe insurance shall be on the prescribed form and shall be accompanied by payment of the full amount of the premium and the inspection fee, if any. (D) Inspection of the risk. The board of directors shall determine the manner and scope which risks are to be inspected prior to the issuance of a policy of catastrophe insurance. The board of directors may issue a policy of catastrophe insurance on certain types of risks without an inspection provided that the application is accompanied by such information as the board of directors may require. The board of directors shall prepare a set of regulations dealing with the inspection of risks. Such regulations shall be submitted to the Commissioner for approval. The Commissioner may reject all or any portion of such regulations within 10 days of the date of their submission. If the Commissioner shall fail to reject all or any part of such regulations within 30 days of the date of their submission, then such regulations shall be deemed to have been approved. (E) Receipt of the application. (i) After receipt of the application, the full amount of the premium (and inspection fee, if any) and any required inspection report, the association shall: (I) cause a policy of catastrophe insurance to be issued; or (II) advise the agent or applicant that the risk is not acceptable, but will be acceptable if improvements are made by the applicant (in which case the association shall promptly advise the agent or applicant what improvements should be made to the property to make it acceptable; when the association has been satisfied that such improvements have been made and any additional inspection fee, if any, has been paid, then the association shall cause to be issued a policy of catastrophe insurance); or (III) advise the agent or applicant that the risk is not acceptable, and state the reasons therefor. The reasons for which a risk shall not be acceptable for catastrophe insurance are: (-a-) the risk is not insurable property as such term is defined in the Act and this section; (-b-) the amount of insurance requested is in excess of the limits of liability as set forth in this plan of operation or by law; (-c-) the risk fails to meet reasonable underwriting standards. Reasonable underwriting standards shall include, but shall not be limited to: (-1-) the amount of insurance requested, together with other insurance, is within relationship to the reasonable value (actual cash value or replacement cost value) of the property insured; (-2-) the physical condition of the property, such as its construction, maintenance, or general deterioration; (-3-) its present use or housekeeping; (-4-) in violation of law, public policy, morals and the character or integrity of the property owner or occupant; (-d-) such other reason as may be determined by the board of directors and approved by the Commissioner. (ii) New or increased coverage will be effective on the date received by the association or effective on the date the application is mailed if sent by registered or certified mail, or by United States Postal Service Express Mail, or if sent by regular mail that is hand cancelled by the United States Postal Service, or if sent by such other similar mailing procedure as approved by the board of directors, prior to the time specified in this clause as an exception, unless the application for new or increased coverage stipulates a later date. Renewal policies will be effective to provide continuous coverage if the request for a renewal is received on or before the expiration of the existing policy. Exception: no new or increased coverage shall be accepted when a windstorm designated as a hurricane by the United States Weather Bureau is in the Gulf of Mexico or within the boundaries of 80 degrees west longitude and 20 degrees north latitude. This exception does not apply to any renewal policy affording windstorm coverage if the expiring policy was written by the Texas Catastrophe Property Insurance Association and if the application for renewal was received by the Texas Catastrophe Property Insurance Association on or before the expiration of the existing Texas Catastrophe Property Insurance Association policy or if mailed by registered or certified mail or United States Postal Service Express Mail or by regular mail that is hand-cancelled by the United States Postal Service, or if sent by such other similar mailing procedure as approved by the board of directors, prior to the expiration of the existing Texas Catastrophe Property Insurance Association policy. (3) Cancellation. (A) By the association. (i) The association shall not cancel a policy of catastrophe insurance issued under this section except for: (I) nonpayment of premium; or (II) evidence of fraud or material misrepresentation; or (III) cause which would have been grounds for nonacceptance of the risk under this plan of operation had such cause been known to the association at the time the policy was issued; or (IV) any cause arising subsequent to the issuance of the policy which would have been grounds for nonacceptance of the risk under this plan of operation had such cause existed at the time of acceptance. (ii) Upon cancellation of a policy of catastrophe insurance issued under this paragraph, the association shall send to the insured notice of cancellation together with a statement of the reason therefor and a statement of the reason the insured has the right to appeal as hereinafter provided. Upon cancellation of a policy of catastrophe insurance by the association, the association shall refund to the insured the excess of paid premium according to the standard pro rata table. (B) By the insured. (i) A policy of catastrophe insurance may be canceled at any time: (I) by the insured upon demand and surrender of the policy; or (II) by an agent, or some other person, firm, or corporation if such agent, person, firm, or corporation shall finance the payment of all or a portion of the premium of such policy and there is a balance due for the financing of such premium and such balance, or any portion thereof is not paid within ten days after the due date, and such agent, person, firm, or corporation to whom such balance is due has: (-a-) requested cancellation of the policy and returned the policy with proof that the insured was notified of such return; or (-b-) requested the association to cancel such policy by notice mailed to the insured and any others shown in the policy as having an insurable interest in the policy, in which case the association shall refund the excess of paid premium according to the standard short rate table. (ii) A policy of catastrophe insurance may be reduced at any time in which case the association shall, upon demand, refund the excess of paid premium according to the standard short rate table. (4) Payment of claims. (A) Report of loss. All losses shall be reported by agents to the association in the manner prescribed by the board of directors. (B) Adjustment of loss. All losses shall be adjusted in the manner designated by the board of directors. The assignment of losses shall be on an equitable basis to qualified insurance adjusters at such fee as shall be determined by the board of directors. (C) Payment of losses. After report of the loss in the manner specified by the board and the adjustment of the loss as provided for herein, the association shall remit to the insured any sums owing to the insured in the manner specified in the catastrophe insurance policy, or in the absence of such specification, in the manner specified by the board of directors. (D) Notice of appeal. (i) The association shall, immediately upon total or partial denial of a claim of any person insured pursuant to the Insurance Code, Article 21.49, give written notice by certified mail, return receipt requested, to such person of the right to appeal such total or partial denial under the Insurance Code, Article 21.49, sec.9 and/or sec.9A. An offer of less than the amount claimed on the claimant's proof of loss is considered a partial or total denial of a claim. The notice must, at a minimum, contain the following information placed in a prominent position: (I) a clear, accurate, and complete description and statement of the partial or total denial of the claim; (II) a statement that the person has the right to appeal the association's determination either to the Commissioner under the Insurance Code, Article 21.49, sec.9; or bring an action against the association in the county in which the covered property is located or in a district court of Travis County under the Insurance Code, Article 21.49, sec.9A. A person may not proceed under both the Insurance Code, sec.9 and sec.9A, for the same determination by the association; (III) a statement that, under applicable law, an aggrieved person who chooses to appeal to the Commissioner must make a written request to the Commissioner within 30 days after such determination of the association; (IV) a statement of the date of such determination; (V) a statement that a person who files a written notice of appeal to the Commissioner is entitled to a hearing in either the county in which the covered property is located or in Travis County; and (VI) language which describes the time limit for filing an appeal as specified in clause (ii) of this subparagraph. (ii) An act, ruling, or decision of the association is deemed to be timely filed with the Commissioner if an appeal is sent to the chief clerk of the Department by first-class or by certified or registered United States mail in an envelope or wrapper properly addressed and stamped and deposited in the mail one day or more before the last day for filing the appeal, if the appeal is received by the chief clerk's office not more than ten days subsequent to the due date for filing. (e) Building Codes. (1) Code for windstorm-resisting construction applicable to the area seaward of the Intracoastal Canal. This code contains requirements for the construction of buildings to minimize damage to such buildings by severe windstorms which occur along the Gulf Coast. Where specific requirements for particular devices or methods of construction are specified, alternate methods or practices which are considered equal may be used. Such consideration is to based on sound engineering practice and experience. The degree of protection against damage from windstorm provided by these requirements cannot be assured for tornadoes, but such compliance should be helpful to some degree in reducing tornado damage. The requirements herein are applicable only to properties located seaward of the Intracoastal Canal on the Texas coastline (or seaward of the boundary authorized to be established by the Commissioner by the Insurance Code, Article 21.49, as amended). The requirements herein shall apply, on or after October 10, 1988, to new construction of, and additions or repairs to, structures located seaward of the Intracoastal Canal in areas previously exempt from the requirements of this paragraph. The property previously exempt was that property protected by a sea wall constructed by the Corps of Engineers. (A) Wind pressure. (i) When considered. All buildings and structures shall be designed to resist a horizontal wind pressure on all surfaces exposed to the wind, allowing for wind in any direction, in accordance with the following table. No allowance shall be made for the shielding effect of other buildings or structures. The height is to be measured above the average level of the ground adjacent to the building or structure. FIGURE 2: 28 TAC 5.4001(e)(1)(A)(i) (ii) Exterior walls. Exterior walls shall be designed to withstand the pressures specified in clause (i) of this subparagraph, acting either inward or outward. (iii) Roofs. (I) The roofs of buildings and structures shall be designed and constructed to withstand pressures, acting outward normal to the roof surface, equal to 1 1/4 times the pressures specified in clause (i) of this subparagraph. The height is to be taken as the vertical distance from the average elevation of the ground adjoining the building to the average elevation of the roof. (II) Roofs or sections of roofs with slopes greater than 30 degrees shall be designed and constructed to withstand pressures, acting inward normal to the surface, equal to those specified in clause (i) of this subparagraph and applied to the windward slope only. (III) Overhanging eaves and cornices shall be designed and constructed to withstand outward pressures equal to twice those specified in clause (i) of this subparagraph. (iv) Chimneys, tanks and towers. Chimneys, tanks, solid towers, and similar structures shall be designed and constructed to withstand the pressures specified in clause (i) of this subparagraph multiplied by the following factors: Shape in horizontal cross section Factor Square or rectangular 1.00 Hexagonal or octagonal 0.80 Round or elliptical 0.60 (v) Other structures. The design wind pressures for structures not covered in this paragraph shall be in accordance with generally accepted engineering practice and shall be subject to the approval of the building official. (vi) Stability. The overturning moment due to wind pressure shall not exceed 50% of the moment of stability due to the dead load only, unless the building or structure is securely anchored to the foundation to resist this force. (vii) Roofing materials. Roofing materials must pass the U.L. Standard 997 or a comparable test certified by the Commissioner and be installed as required by the Department, to promote wind resistance of the materials. (B) Anchorage. (i) Heavy timber construction (as defined in the Texas Commercial Property Rating Manual in effect prior to September 1, 1994. Every roof girder and every roof beam shall be anchored to an exterior or interior wall or to a properly designed interior column. Wall beams and plates shall be anchored to the wall with approved type anchors not more than four feet apart. Roof planking where supported by a wall shall be anchored to such wall at intervals not exceeding four feet. Roof trusses shall be securely anchored of bearing. Monitor and saw tooth construction shall be anchored to the main roof construction. Anchors shall consist of steel or iron bolts or straps of sufficient strength and ample anchorage to resist vertical uplift of the roof as required in subparagraph (A) (iii) of this paragraph. (ii) Ordinary construction (masonry). (I) All trimmers and at least one beam or joist in every four feet resting on masonry walls shall be secured to such walls by approved metal anchors attached at or near the bottom in a manner to be self-releasing. Each end of a trimmer, beam, or joist that is supported by a girder shall be secured or tied in an approved manner to such girder or to a trimmer, beam, or joist correspondingly supported from the opposite side of such girder. Anchors and ties shall be so arranged as to form continuous ties between opposite masonry walls. (II) Where floor or roof joists or beams run parallel to masonry walls, such walls shall be secured to four or more joists of the floor or roof construction by approved metal anchors at maximum intervals of eight feet for dwellings, and six feet in other buildings. (III) Wall plates and roof construction shall be anchored to the walls at least every six feet, except that wall plates and roof construction shall be anchored at intervals of four feet to hollow concrete masonry walls which do not have cast-in-place reinforced concrete tie beams. (IV) Wooden girders shall be anchored to the walls and fastened to each other with suitable steel straps placed near the bottom of the girder. (V) At least every third rafter shall be anchored to the ceiling joists or partitions directly beneath by not less than the equivalent of 1-x-6-inch boards securely nailed. Such braces shall be attached to the rafters at their mid points or at the third points if two are used per rafter. In peaked roofs opposite rafters shall be laterally braced to each other at the ridge in a manner satisfactory to the building official. (VI) Roof trusses shall be securely anchored to masonry walls at points of bearing. (VII) Anchors shall consist of steel or iron bolts or straps of sufficient strength and ample anchorage to resist vertical uplift of the roof as required in subparagraph (A)(iii) of this paragraph. (iii) Wood frame construction. (I) Sills shall be anchored to the foundation walls to develop a strength equivalent to 1/2-inch bolts with proper washes embedded six inches in concrete foundation walls and spaced six feet apart. (II) Rafters shall be anchored to the wall plate by approved metal anchors attached to at least every other rafter or shall be otherwise anchored in an approved manner. (III) In all buildings 20 feet or more in width where joists run at right angles to the rafters, the rafters shall be tied to the ceiling joists with wood or metal ties nailed to the foot of alternate rafters and extending across four joists well nailed to each joist. (IV) Girders resting on masonry foundation walls or piers shall be anchored thereto with not less than 1/2-inch bolts embedded at least six inches in masonry. (V) Wooden columns and posts shall be securely anchored to their foundations and to the members which they support. (VI) At least every third rafter shall be anchored to the ceiling joists or partitions directly beneath by not less than the equivalent of one-by-six-inch board securely nailed. Such braces shall be attached to the rafters at their mid points or at the third points if two are used per rafter. (VII) Each rafter shall be laterally braced to the opposite rafter at a point underneath the ridge, in order to form a brace known as the "A" type of "collar beam," except that roof construction of the "exposed cathedral type" or "exposed shed type" may have such bracing omitted when the rafters are securely anchored and braced in an approved manner. Roof framing and trussing of all other types of roof construction shall be anchored by an approved method. (C) Roof covering installation. (i) General requirements for all roof coverings. Roof coverings shall be securely attached to the roof in accordance with the manufacturer's instructions and specifications and with the methods approved by the building official. Nails, clips, and similar attaching devices shall be galvanized or otherwise suitably corrosion resistant. (ii) Prepared shingle roof coverings. (I) Wood roof decks to which prepared shingles are applied shall be solidly sheathed. Sheathing shall be well seasoned and dry. Sheathing boards shall be at least one inch nominal dimension boards not over six inches wide. Plywood sheathing shall be at least 5/8 of an inch thick. (II) Attic spaces shall be vented with vent openings so placed as to circulate air in all parts of the attic. (III) Nails shall be of sufficient length to extend through the roof deck (sheathing). (IV) Thick-butt asphalt shingles shall be nailed in the thick portion of the shingle. (V) All butts or tabs of asphalt shingles shall be securely spotted or tabbed with a plastic, fibrous, asphalt cement or anchored by clips or locks, and all edges at eaves and gable shall be set in such cement three inches back from the edge. (VI) Metal drip edges shall be nailed to the roof deck with nails not less than ten inches on centers. (iii) Built-up roof coverings. (I) For built-up roof coverings cant strips shall be provided at the angle of roof and vertical surfaces. (II) Built-up roof coverings shall be carried at least six inches above the cant strip to a reglet in the parapet and covered with metal flashing caulked into the reglet. Reglet may be omitted at parapet walls provided two layers of felt or the equivalent are carried across the top of the parapet under coping and down the parapet to the lower edge of the cant strip. The said layers are to run vertically, properly lapped and cemented to the parapet. (III) All resinous places in the wood roof deck shall be covered with sheathing paper or unsaturated felt. (IV) The first layer or anchor sheet shall be not less than 30-pound felt nailed six inches on center along with a two-inch lap and nailed 12 inches on center both ways in the area between laps with tin caps and one-inch nails; or shall be not less than two layers of 15-pound felt lapped 18 inches and nailed through both sheets on six-inch centers along the lap and on 12-inch centers in the area between laps with tin caps and one-inch nails; or where the underside of the roof sheathing is to be exposed and its appearance considered, the first layer shall be not less than a 30-pound felt or two layers of 15-pound felt nailed six inches on centers along the rafters with tin caps and 1-1/4 inch nails, and nailed 12 inches on centers both ways, between rafters, with tin caps and 3/4 inch nails. (V) Each additional sheet above the anchor sheet shall be thoroughly mopped between layers with a bituminous compound so that no layers touch an unmopped layer. Bituminous compound for mopping plys together shall be air refined asphalt or coal tar pitch but shall not be any type of emulsion, cold or cut back liquid cement, oil, or grease. (VI) Gravel stop and drip strips, and eave and gable drips shall be not less that Number 26 gauge galvanized metal, 165 ounce copper or 0. 024 inch aluminum, with not less than three-inch flange on roof and nailed with not less than 3/4 inch nails spaced not more than six inches apart. (iv) Roll roofing. (I) Roll roofing shall be applied only over a smooth surface. Roll roofing shall not be applied over shingle roofs. (II) Roll roofing applied in a shingle layer shall be spot mopped and applied by concealed nail method with a minimum 3-inch head lap and a minimum 6-inch end lap properly cemented. Nail spacing shall be not less than four inches on centers. (III) Nails that secure roll roofing to the roof deck shall be driven at least 3/4 of an inch from the edge of the sheet. (v) Tile roofing. (I) Tile roofing shall be laid over not less than one layer of 30-pound asphalt felt securely fastened by nailing with tin caps. (II) All tile shall be thoroughly watered with a hose before application. (III) Every tile shall be laid full length in portland cement mortar and in addition the first three horizontal courses shall be nailed. Under certain conditions additional nailing may be required to prevent the tile from slipping. Mortar shall be not less than one part cement and three parts sand and not more than 25% lime by volume. (IV) All nails for flashing and tiles shall be copper. (vi) Corrugated metal roofing, protected metal roofing, corrugated and flat sheet asbestos cement roofing. (I) When roofings of the previously mentioned types are applied to wood roof decks, they shall be secured with drive screws of sufficient length to extend through the roof deck. When applied directly to purlins and other roof members they shall be secured with bolted strap fasteners. Properly designed clip fasteners that are approved may be used in accordance with the conditions of such approval. Drive screws at least four inches in length may be used to secure these roofings directly to wood purlins. (II) Aluminum roofing when fastened to steel roof structures shall be insulated against electrogalvanic action. (vii) Insulated steel deck roofing. Insulated steel deck shall be secured by spot welding of clips or spot welding the sheets to the steel purlins, or by equivalent means. (D) Construction walls. During erection masonry walls shall not be built higher than ten times their thickness unless adequately braced or until provision is made for the prompt installation of permanent bracing at the floor or roof level immediately above the story under construction. (2) Code for windstorm resisting construction applicable to the area inland of the Intracoastal Canal. To be eligible for catastrophe insurance properties located inland of the Intracoastal Canal on the Texas coastline (or inland of the boundary authorized to be established by the Commissioner by the Insurance Code, Article 21.49 as amended) shall be designated in the manner indicated in the Standard Building Code, as amended as of May 8, 1973. (3) Limitations on applicability of building codes. Notwithstanding any other provision of this section, the building code set forth in this subsection shall be applicable only in the following counties: Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy. (4) Insurable property for windstorm and hail insurance. A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area covered at the time by a building code recognized by the association shall be considered an insurable property for windstorm and hail insurance from the association without compliance with the inspection or approval requirements of Insurance Code, Article 21.49 sec.6A(a) or the plan of operation. A structure constructed, repaired, or to which additions were made before January 1, 1988, that is located in an area not covered by a building code recognized by the association shall be considered an insurable property for windstorm and hail insurance from the association without compliance with the inspection or approval requirements of Insurance Code, Article 21.49 sec.6A(a), or the plan of operation if that structure has been previously insured by a licensed insurance company authorized to do business in this state and the risk is in essentially the same condition as when previously insured, except for normal wear and tear, and without any structural change other than a change made according to code. Evidence of previous insurance includes a copy of a previous policy, copies of canceled checks or agent's records that show payments for previous policies, and a copy of the title to the structure or mortgage company records that show previous policies. (f) Mobile Homes. (1) General provisions. The terms, conditions, and underwriting requirements set forth in this subsection apply to the Texas special mobile home windstorm and hail insurance policy covering all mobile homes which may be insurable property as described in this subsection, located in the designated catastrophe areas and written by the Texas Catastrophe Property Insurance Association. In the event of a conflict in the provisions of this subsection and subsections (a)-(e) of this section, the terms and conditions and underwriting requirements set forth herein in this subsection as relating to mobile homes shall be, in all respects, controlling; otherwise the provisions of subsections (a)-(e) of this section remain in full force and effect. (2) Insurable property. The property eligible for catastrophe insurance under this subsection shall be that property defined as "insurable property" in the Act, provided, however, that the term "insurable property" shall not include motor vehicles or any structure consisting, in whole or in part, of a mobile home unless the same is a structure, transportable in one or more sections, which is eight body feet or more in width and is 32 body feet or more in length, which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein, and which is physically attached to the land, immovable, and is constructed, blocked, supported, anchored, secured, and installed in accordance with the underwriting requirements set forth in paragraph (3)(C) and (E) of this subsection. (3) Underwriting requirements. In order for a mobile home to be insured by the association, it must meet the following underwriting requirements: (A) The property eligible for catastrophe insurance shall be that property defined as "insurable property" in the Act, provided, however, that the term "insurable property" shall not include motor vehicles or any structure consisting, in whole or in part, of a mobile home unless the same is a structure, transportable in one or more sections, which is eight body feet or more in width and is 32 body feet or more in length, which is built on a permanent chassis and designed to be used as a dwelling with or without a permanent foundation when connected to the required utilities, and includes the plumbing, heating, air-conditioning, and electrical systems contained therein, and which is physically attached to the land, immovable, and is constructed, blocked, supported, anchored, secured, and installed in accordance with the underwriting requirements set forth in subparagraphs (C) and (E) of this paragraph. (B) Each mobile home shall meet the following reasonable underwriting standards which shall include, but shall not be limited to: (i) the amount of insurance requested, together with other insurance is within reasonable relationship to the actual cash value of the property involved; (ii) consideration of the physical condition of the property, such as its construction, maintenance, or general deterioration; (iii) consideration of its present use or housekeeping; (iv) whether its use is in violation of law, public policy and morals, (v) and the consideration of the character or integrity of the property owner or occupant. (C) Each mobile home manufactured after December 31, 1975, shall be designed for location in or as though destined for the catastrophe area where wind records are hereby found to indicate wind forces of 125 miles per hour, or greater, and shall be constructed in accordance with such design as set forth in either the Texas Mobile Homes Standards Code adopted by the Texas Department of Labor and Standards pursuant to the provisions of Texas Civil Statutes, Article 5221f, or the Mobile Home Construction and Safety Standards established under the Housing and Community Development Act of 1974, Title VI, titled The National Mobile Home Construction and Safety Standards Act of 1974 (42 United States Code sec.5401, et seq) as may be appropriate under Texas Civil Statutes, Article 5221f, sec.5. (D) Each mobile home described in subparagraph (C) of this paragraph or sold by a dealer, as that term is defined in Texas Civil Statutes, Article 5221f, after August 31, 1975, shall bear a seal of approval issued by the Texas Department of Labor and Standards. (E) Each mobile home shall be blocked, anchored, and secured, and an appropriate support, and anchoring systems shall be installed as will resist overturning and lateral movement (sliding) of the mobile home in the manner and in accordance with the Texas Mobil Home Standards Code adopted by the Texas Department of Labor and Standards pursuant to the provisions of Texas Civil Statutes, Article 5221f, or the Mobile Home Construction Safety Standards established under the Housing and Community Development Act of 1974, Title VI, titled The National Mobile Home Construction and Safety Standards Act of 1974 (42 United States Code sec.5401, et seq) for mobile homes located in the catastrophe area, as may be appropriate under Texas Civil Statutes, Article 5221f, sec.5. (F) Coverage shall not be provided for loss or damage to: (i) awnings, carports, and patio covers, whether permanently attached or not; (ii) outdoor radio or television antennas including their lead-in wiring, masts, or towers; (iii) fences; (iv) seawalls, property line, and similar walls; (v) greenhouses, hot houses, slat houses, trellises, pergolas, or cabanas; (vi) wharfs, docks, piers, boathouses, bulkheads, or other structures located over or partially over water and the property therein or thereon; (vii) lawns, trees, shrubs, or plants; (viii) patio covers, screening, and supports enclosing or partially enclosing pools, patios, or other areas, whether a separate structure or attached to a building (however, with reference to this exclusion, nothing therein shall be construed to exclude loss to screening and supports of porches which are a part of a building); (ix) paint or waterproofing material applied to the exterior of the buildings or structures covered hereunder. (G) This association shall not be liable for loss or damage caused by: (i) blizzard or change in temperature; (ii) sand or dust; (iii) snowstorm; (iv) tidal wave; (v) high water, or overflow, whether driven by wind or not; nor (vi) for any loss or damage caused by rain, whether driven by wind or not, unless the wind or hail shall first make an opening in the walls or roof of the described building, and shall then be liable only for loss to the interior of the building, or the insured property therein, caused immediately by rain entering the building through such openings. This association shall not be liable under this coverage for damage caused by ensuing fire. (H) The liability of the association for loss or damage to a mobile home shall: (i) not exceed the lowest of: (I) the difference between the actual cash value of the insured property immediately before the loss and its actual cash value immediately after the loss; or (II) the cost of repairing the damage; or (III) the actual cash value of the insured property immediately preceding the loss; or (IV) the cost of replacing the insured property; or (V) the limit of liability stated in the declarations; and the liability thus determined shall, in addition, be subject to any deductible amount stipulated in the policy; (ii) in any loss involving part of a pair, set, or series of objects, pieces, or panels (whether interior or exterior), be determined by reference to: (I) a fair and reasonable proportion of the part of the total value of the pair, set, or series; or (II) the reasonable cost of repairing or replacing the damaged part so as to match the remainder as closely as reasonably possible under the circumstances; or (III) the reasonable cost of providing a reasonably acceptable alternative decorative effect or utilization, as the circumstances may warrant. The association does not guarantee the availability of parts or replacements and shall not, in the event of such damage to or loss of a part, be obligated for the value of, or to repair or replace, the entire pair, set, or series. (I) The association shall not be liable on any one loss with respect to personal effects for more than $250 on money, coin collections, or other numismatic property and paraphernalia; gold bullion; silver bullion; passports; airline, railroad, and other tickets; securities; manuscripts, stamps or other philatelic property and paraphernalia; any one article of jewelry including, but without being limited to, watches, necklaces, bracelets, gems, precious and semiprecious stones, and articles of gold and platinum; art, including, but without being limited to, paintings, sculptures, drawings, etchings, ceramics, and china; heirlooms; furs, including any article containing fur which represents its principal value; or guns. (J) No forms may be used to provide catastrophe insurance for a mobile home risk unless such form has been specifically approved by the Commissioner for use in insuring mobile homes risks by the association. (K) Catastrophe insurance shall not provide insurance coverage for any one insurable risk in excess of $84,000 on the mobile home and on household goods contained therein, which shall include all personal property usual to a residence of the insured and the insured's family. (L) The limit of liability for mobile homes shall be adjusted annually for inflation at a rate that reflects any change in the BOECK Index or other index that may accurately reflect changes in the cost of construction or residential values in the catastrophe area. Such adjustment shall be made by the Commissioner as part of the annual rate hearings held pursuant to Article 5.101 of the Insurance Code. (4) Application. (A) The legislature of the State of Texas has declared that an adequate market for windstorm, hail, and fire insurance for insurable property, which is immovable property at fixed locations, is necessary to the economic welfare of the State of Texas and has further declared that mobile homes have become a primary housing resource of many of the citizens of the state. (B) An applicant for catastrophe insurance shall apply to the association for a policy of insurance, and such application shall contain a declaration to the effect that the mobile home is physically attached to the land, immovable, and such application shall be accompanied by the following: (i) a certificate of inspection applicable to mobile homes manufactured after December 31, 1975, to the effect that such mobile home has been constructed in accordance with the underwriting requirements set forth in paragraph (3)(C) of this subsection. Such certificate of inspection may be made by the manufacturer of such mobile homes, by the terms of which the construction of such mobile home is warranted to be in accordance with the underwriting requirements set out in paragraph (3)(C) of this subsection. The association may rely upon such warranty in the issuance of a policy of catastrophe insurance. This warranty is made by the manufacturer, and not the policyholder. The certificate of inspection with reference to such mobile home may be made by the Texas Department of Labor and Standards or by such or approved by it, or by an inspector designated by the association. Appropriate evidence satisfactory to the association of the issuance of a seal of approval by the Texas Department of Labor and Standards issued pursuant to the provisions of Texas Civil Statutes, Article 5221f, may, at the option of the association, satisfy the requirements of this paragraph; and (ii) a certificate or other appropriate evidence required by the association evidencing the issuance of a seal of approval by the Texas Department of Labor and Standards issued pursuant to Texas Civil Statutes, Article 5221f, sec.8(b), as to mobile homes manufactured prior to January 1, 1976, and sold by a dealer, as that term is defined in Texas Civil Statutes, Article 5221f, subsequent to August 31, 1975; (iii) a certificate of inspection to the effect that such mobile home has been properly blocked, supported, anchored, secured, and installed as required by paragraph (3)(E) of this subsection. Such certificate of inspection may be made by an installer as that term is defined in Texas Civil Statutes, Article 5221f, by a certificate addressed to the association, by the terms of which the blocking, supporting, anchoring, securing and installing of such mobile home is warranted to be in accordance with such underwriting standard. The association may rely upon such warranty in the issuance of a policy of catastrophe insurance, or the certificate of inspection may be made by an inspector designated by the association. The warranty referred to herein is made by the installer and not the policyholder; (iv) in the event an inspector is designated by the association for any of the purposes set forth herein, the person applying for catastrophe insurance shall pay a reasonable fee to the association for each such inspection. The reasonableness of the fee shall be subject to review by the Commissioner. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 13, 1995. TRD-9508711 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: August 3, 1995 Proposal publication date: January 13, 1995 For further information, please call: (512) 463-6327 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part II. Texas Parks and Wildlife Department Chapter 53. Finance License Fees and Boat and Motor Fees 31 TAC sec.53.7 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing, July 6, 1995, adopted new sec.53.7, concerning license exemptions, with changes to the proposed text as published in the June 2, 1995, issue of the Texas Register (20 TexReg 4034). Proposed sec.53.7(a) was adopted as proposed. Proposed sec.53.7(b) was not adopted by the Commission as this language was judged to be redundant. House Bill 1785, enacted in the 74th session of the Texas Legislature deletes the statutory language for four categories of fishing license exemptions. Adoption of the new rule was required to maintain certain fishing license exemptions. The new rule will exempt four categories of persons from fishing license requirements: (1) residents under 17 years of age, (2) non-residents under 17 years of age, (3) non-residents 65 years of age or older from Kansas and Louisiana, and (4) non-residents 64 years of age or older from Oklahoma. The department received one public comment regarding the proposed new rule. The respondent was not in favor of license exemptions for non-residents from Kansas, Oklahoma and Louisiana. The agency received no comments from groups or associations concerning the proposed rule. Texas has reciprocal agreements with Kansas, Oklahoma and Louisiana regarding license exemptions for certain individuals. The agency believes that maintaining these reciprocal agreements will continue exemption of Texas residents from license requirements in these states. The new section is adopted under authority of Parks and Wildlife Code, sec.46.002(a) and sec.46.004(b), which provides the Parks and Wildlife Commission with authority to waive license fees or set license fees at a discounted rate for these four categories. sec.53.7. License Exemptions. The following categories of persons are exempt from fishing license fees from the licensing period beginning September 1, 1995 and thereafter: (1) residents under 17 years of age; (2) non-residents under 17 years of age; (3) non-residents 65 years of age or older from Kansas and Louisiana; and (4) non-residents 64 years of age or older from Oklahoma. This agency hereby certifies that rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, July 10, 1995. TRD-9508658 Paul Shinkawa Acting General Counsel Texas Parks and Wildlife Department Effective date: August 2, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 389-4642 Stamps 31 TAC sec.53.15 The Texas Parks and Wildlife Commission, in a regularly scheduled public hearing held June 1, 1995, adopted an amendment to sec.53.15 (concerning stamp exemptions), with changes to the proposed text as published in the April 28, 1995, issue of the Texas Register (20 TexReg 3132). Proposed amended sec.53.15(a) was adopted with amendment. The proposed quail stamp exemption was not adopted by the Commission as a result of failure of pending legislation to be enacted in the legislature. Proposed new sec.53.15(b)-(d) were not adopted by the Commission. Proposed amendment of sec.53.15(e) was adopted as proposed. The rule as adopted (1) decreases the costs of participation of residents in activities promoting hunting and fishing activities and (2) decreases cost to non-resident seeking spring turkeys. The rule will increase the hunting opportunity for both residents and non- residents. The department received no comments concerning the proposed rule. The amendment is adopted under the authority of Parks and Wildlife Code, Chapter 43, which provides the Parks and Wildlife Commission with authority to exempt persons from certain hunting and fishing stamp requirements. sec.53.15. Stamp Exemptions. (a) The commission grants the director authority to exempt persons participating in any event organized for the primary purpose of promoting participation in fishing or hunting activities from the requirement to purchase the following stamps: (1) white-winged dove stamp; (2) archery hunting stamp; (3) turkey stamp; (4) waterfowl stamp; (5) saltwater sportfishing stamp; (6) freshwater trout stamp; and (7) muzzleloader hunting stamp. (b) All non-resident spring turkey hunting license holders are exempt from requirements for acquisition and possession of the turkey stamp. This agency hereby certifies that rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, July 10, 1995. TRD-9508659 Paul Shinkawa Acting General Counsel Texas Parks and Wildlife Department Effective date: August 2, 1995 Proposal publication date: April 28, 1995 For further information, please call: (512) 389-4642 License Deputies 31 TAC sec.53.25 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing, July 6, 1995, adopted new sec.53.25, concerning license deputy issuance and collection fees, with changes to the proposed text as published in the June 2, 1995, issue of the Texas Register (20 TexReg 4034). Several fees were proposed as ranges. The general non-resident issuance and collection fee was set at $3.00, the non-resident special hunting issuance and collection fee was set at $2.00, the nonresident five-day special hunting issuance and collection fee was set at $1.00, the nonresident spring turkey hunting issuance and collection fee was set at $2.00, and special resident fishing issuance and collection fee was set at $.75. Proposed sec.53.25(b), concerning collection fee for the Lake Texoma license, proposed the issuance and collection fee as $.75 and would have become effective January 1, 1996. However, the Commission set the effective date for this collection fee amount to correspond to the effective date for the other fees, and set effective date as September 1, 1995. House Bill 2216, enacted in the 74th session of the Texas Legislature deleted the exact statutory amounts of license deputy issuance and collection fees. The statutory amounts were replaced with general Commission authority to set these amounts; however, the amounts cannot be set below current levels. The new rule codifies the license deputy issuance and collection fees in the absence of statutory language. The rule further sets the effective date as September 1, 1995. The department received one public comment in favor of the proposed license deputy issuance and collection fees. There were no organizations or groups providing public comment relating to this proposal. The Agency agreed with the single comment in favor of the proposed changes to license deputy issuance and collection fees. The new rule is adopted under authority of Parks and Wildlife Code, sec.12. 702(b) (new section added in House Bill 2216), which provides the Parks and Wildlife Commission with authority to set license deputy issuance and collection fees. sec.53.25. License Deputy Issuance and Collection Fees. The following license deputy issuance and collection fee amounts are effective from the licensing period beginning September 1, 1995, and thereafter: (1) resident combination hunting and fishing-$1.00; (2) duplicate resident combination hunting and fishing -$.50; (3) resident hunting-$.50; (4) special resident hunting-$.50; (5) duplicate hunting-$.50; (6) general nonresident hunting-$3.00; (7) resident trapper-$.75; (8) nonresident special hunting-$2.00; (9) nonresident five-day special hunting-$1.00; (10) nonresident banded bird hunting-$.75; (11) nonresident spring turkey hunting-$2.00; (12) turkey stamp-$.50; (13) white-winged dove stamp-$.50; (14) archery hunting stamp-$.50; (15) waterfowl hunting stamp-$.50; (16) muzzleloader hunting stamp-$.50; (17) nongame stamp-$.50; (18) conservation permit-$.50; (19) resident fishing-$.50; (20) special resident fishing-$.75; (21) non-resident fishing-$.50; (22) fishing duplicate-$.50; (23) temporary nonresident fishing-$.50; (24) temporary resident sportfishing-$.50; (25) saltwater sportfishing stamp-$.50; (26) freshwater trout stamp-$.50; (27) saltwater trotline tags-$.50; (28) individual bait shrimp trawl tags-$.75; (29) tarpon tag-$2.00; and (30) duplicate tarpon tag-$.50. (31) Lake Texoma fishing-$.75. This agency hereby certifies that rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, July 10, 1995. TRD-9508660 Paul Shinkawa Acting General Counsel Texas Parks and Wildlife Department Effective date: August 2, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 389-4642 Chapter 59. Parks Park Entrance and User Fees 31 TAC sec.59.2 9.2 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing, July 6, 1995, adopted an amendment to sec.59.2, concerning park entrance and use fees, with changes to the proposed text as published in the June 2, 1995, issue of the Texas Register (20 TexReg 4035). The Commission adopted only the changes proposed to sec.59.2(j)-(k). Action on all other proposed changes was deferred. The Commission also deferred action on the proposed amendment to sec.59.3, concerning facility use fees. This proposal also appeared in the June 2, 1995 issue of the Texas Register (20 TexReg 4035). House Bill 1785, enacted in the 74th session of the Texas Legislature provides the Commission with authority to provide discounts to park entrance fees for those residents who become 65 years of age after August 31, 1995. The amendment as adopted provides citizens who become 65 years of age after August 31, 1995 with a discount of 50% on park entrance fees. The department received no public comment regarding the proposed amendment. The amendment is adopted under authority of Parks and Wildlife Code, sec.13. 015, which provides the Parks and Wildlife Commission with authority to set certain park user fees. sec.59.2. Park Entrance and Use Fees. (a) An entrance/use fee will be levied at state parks. The fee will grant entry and presence privileges for a specific 24-hour period or part thereof, regardless of the number of times of entry during the valid period. At the end of each 24-hour period, the fee will become due for the succeeding 24-hour period or part thereof. (b) An annual $25-$50 entrance permit and use fee may apply at certain state parks where entrance fees are prescribed in lieu of a daily entrance fee. The annual permit will admit the purchaser and all occupants of his private, noncommercial vehicle, but will not apply to commercial, quasi-public, or public buses, or other such vehicles. A duplicate permit will be available at a rate of $8.00 each. A replacement permit will be available at a rate of $2. 00 each. (c) Annual permits are not valid for conducted tours, or for fishing privileges on fishing piers. (d) A Youth Group Annual Entrance Permit may be purchased by youth organizations composed of individuals age 18 and under for an annual fee of $50- $300. The group must have state or national affiliation and be sponsored by a governmental agency or nonprofit organization, as defined under the Internal Revenue Code, sec.501. The permit is valid for entry only at parks with a per vehicle entrance fee and is nontransferable. No more than 50 persons, including adult supervisors will be admitted with each permit and the number of vehicles may be limited by the park superintendent. Additional permit(s) is required if the group exceeds 50 persons. Permit is valid for 12 months from date of purchase. To purchase the group permit, eligible organizations must submit an application along with the required fee to the chief, park operations, or designee, for approval. The permit authorizes entry of vehicles carrying group members provided the adult sponsor presents the permit(s) at the park entrance and identifies each vehicle carrying group members. (e) An entrance and use fee of $2.00 to $6.00 per motorized vehicle per day will apply at parks designated by the department in lieu of an annual or parklands passport. Where variable entrance and use fees are authorized by the commission, they may be set on an individual park basis. (f) An entrance fee will apply on a per person basis at parks designated by the department. (g) The executive director may, at his discretion, temporarily waive any entrance fees or conditions thereof established in this section at any park when construction activities at the park adversely affect public enjoyment of the recreational opportunities normally available. The executive director may discount or waive entrance fees in order to enhance utilization of existing facilities. (h) No entrance fee will be charged or collected at parks unless the department deems it feasible to collect the fees. (i) Persons entering parks by boat, bicycle, or on foot are authorized to use a valid annual park entrance permit receipt in lieu of paying an individual entrance fee. An individual presenting a receipt must be the same person to whom the annual permit was issued or a member of the original permit holder's immediate family. Individuals eligible for park entry as specified herein may be accompanied by as many as three other persons. (j) Persons whose date of birth is before September 1, 1930 and veterans of the armed services of the United States who, as a result of military service, have a service-oriented disability as defined by the Veterans Administration, consisting of the loss of the use of a lower extremity or of a 60% disability rating and who are receiving compensation from the United States government because of the disability, will not be required to pay an entrance fee at state parks. Residents of this state whose birth date is after August 31, 1930 and who is a holder and in possession of a valid State Parklands Passport shall pay 50% of the normal entrance fee rounded to the nearest higher whole dollar. Non- residents of this state whose birth date is after August 31, 1930 shall pay the normal entrance fee. State parklands passports will be issued to eligible persons at state parks and the Austin headquarters. A driver's license, birth certificate, military discharge papers, or any other suitable identification considered sufficient proof for establishing the age and identity of an individual must be presented at the time the passport is issued to persons 65 years of age and over. Disabled veterans must establish eligibility by presenting one of the following: (1) disabled veteran's of Texas license plate receipt; (2) veteran's award letter (which establishes the degree of service-connected disability); (3) tax exemption letter for Texas veterans. (k) All motor vehicles carrying either a person whose date of birth is before September 1, 1930 or other eligible holders of a state parklands passport may enter the park without payment of an entrance fee. All motor vehicles carrying a resident of this state whose date of birth is after August 31, 1930 and who is also the holder and in possession of a valid state parklands passport may enter a park site upon payment of 50% of the normal entrance fee for that site, rounded to the nearest higher whole dollar. This passport does not exempt the holder from payment of fees for fishing privileges or tour fees required in certain units of the state park system. (l) A duplicate state parklands passport may be issued for use on additionally owned motor vehicles. A replacement for a state parklands passport may be issued when the original registration or windshield sticker is lost, stolen, damaged, or the motor vehicle is sold, traded, or stolen, or when the motor vehicle windshield is replaced. (m) Entrance fees established in subsections (b) and (d) of this section will apply to all private aircraft noncommercial motorized vehicles which includes two or more-wheeled vehicles. Commercial, quasi-public, or public buses or other vehicles are excluded. (n) Persons entering parks by bus, where entrance and use fees are charged on a per-car basis, will be charged as follows: adults, $1.00-$3.00 each, minimum $4.00-$20; children 12 years of age and under, $.50-$1.50 each, minimum $4.00- $20. (o) Students, teachers, bus drivers, and children on group, school-sponsored visits to historic sites or parks for educational purposes may enter at the rate of $.50-$1.00 per person at historic sites where a tour fee is charged or at a park where entrance and use fees are charged on a per-vehicle basis. The group or class must be accompanied by an adult supervisor(s). The $.50 per person fee applies to individuals from all public or private schools, colleges, and universities offering accredited courses. (p) Students of any age are entitled to the student historic site tour fee. Students 19 and over are required to present a current, valid student identification card. (q) Persons entering parks on foot, bicycle, or by boat where entrance and use fees are charged on a per-car basis will be charged an individual rate of $1.00- $3.00 for adults and $.50- $1.50 for children 12 years of age and under. (r) The valid time period for daily entrance fees will be: (1) for day use, the time period encompassing the day-use opening hours of the park on the date on which admission is paid; and (2) for overnight use, a 24-hour period beginning at 2:00 p.m. on the date admission is paid. (s) At the discretion of the executive director, any person or persons may be exempted from the provisions of this section if the entry of such person or persons to a park or parks is necessary or desirable in order to provide a service for the state. The executive director is authorized to issue such entrance fee waivers under certain circumstances and conditions. A written record shall be maintained of all such exemptions. (t) The executive director is authorized to establish an entrance fee in accordance with these sections at any site hereafter established as a state park when he deems such action is appropriate and in accord with applicable statutes. (u) Any fees established in this section may be waived or reduced at the discretion of the executive director for public use of a park during special events or exhibitions. (v) The executive director may designate the amount of use fee and entrance fee within the total amount provided for by this section. This agency hereby certifies that rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, July 10, 1995. TRD-9508661 Paul Shinkawa Acting General Counsel Texas Parks and Wildlife Department Effective date: August 2, 1995 Proposal publication date: June 2, 1995 For further information, please call: (512) 389-4642 Chapter 65. Wildlife Subchapter N. Early Season Migratory Game Bird Proclamation 31 TAC sec.65.314, sec.65.316 The Texas Parks and Wildlife Commission adopts amendments to sec.65.314 and sec.65.316, concerning the Early Season Migratory Game Bird Proclamation, without changes to the proposed text as published in the February 17, 1995, issue of the Texas Register (20 TexReg 1106). The amendment to sec.65. 314 revises all hunting season dates for 1995-1996 to adjust for calendar shift while retaining the same opening dates, season lengths, open areas, and season segments as 1994-1995, except for rails and gallinules; and creates a split season for rails and gallinules that would be concurrent with the early teal and duck seasons. Total season length would remain the same (70 days). Last year the rail and gallinule season was 70 consecutive days (September 1-November 9). The amendment allows additional hunting opportunity for rails and gallinules during waterfowl hunting season, when most potential rail and gallinule hunters are in the field. It would allow rail and gallinule hunting on state waterfowl management areas that have been closed to rail and gallinule hunting in the past, and should increase hunter days afield and the variety of species the waterfowl hunter can take. As a result of the amendment to sec.65.314 and sec.65.316, concerning Extended Falconry Season, is also amended to conform with the changes made to the provisions for taking rail and gallinule. The amendments are necessary to implement the department policy of maximizing recreational opportunity within the tenets of sound biological practice. The amendments will function by changing hunting season dates for some species of migratory game birds. Two commenters supported the 60-day, 15-bird daily bag regulations and 11 opposed the same. The department responds that the 60-day, 15-bird regulation was instituted with the intention that it remain in place for at least three years, at which time staff will evaluate its biological impact. The 1995-1996 season will be the second year of the 60-day, 15-bird provisions. Eleven individuals wanted the dove season to extend to the end of October in the Central Zone. The department responds that it could not both extend the dove season in the Central Zone to the end of October and simultaneously retain the two-week late-January season and still be within the 60-day season length approved by the commission. The department received 579 signatures and 7 public hearing comments from persons opposed to all-day dove hunting. Most came from the North Zone counties of Stephens (227), Throckmorton (97), Taylor (57), Jack (47), Wilbarger (46), and Shackelford (43). The specific request is to change the mourning dove shooting hours to half-days, noon to sunset only. The department responds that there is no biological justification for such a change at this time, but that hunters and landowners will be surveyed to gauge opinion and support for such a change. No changes were made as a result of any of the public comments. The amendments are adopted under Texas Parks and Wildlife Code, Chapter 64, Subchapter C, which provides the Texas Parks and Wildlife Commission with authority to regulate seasons, means, methods, and devices for taking and possessing migratory game bird wildlife resources. This agency hereby certifies that rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, July 10, 1995. TRD-9508656 Paul Shinkawa Acting General Counsel Texas Parks and Wildlife Department Effective date: August 2, 1995 Proposal publication date: February 17, 1995 For further information, please call: (512) 389-4642