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 III. Texas Feed and Fertilizer Control Service Chapter 61. Commercial Feed Rules Inspection, Sampling, and Analysis 4 TAC sec.61.41 The Office of the Texas State Chemist, Feed and Fertilizer Control Service adopts an amendment to sec.61.41, concerning Inspection, Sampling and Analysis, without changes to the proposed text as published in the November 3, 1995, issue of the Texas Register (20 TexReg 9107). This rule is being amended to reflect changes in the name of the document referred to and to permit the Service to select alternate methods when such selection is scientifically sound. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agricultural Code, Chapter 141, sec.141.004, which provides the Feed and Fertilizer Control Service with the authority to adopt rules relating to the distribution of commercial feeds. 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 College Station, Texas, on December 6, 1995. TRD-9515887 Dr. George W. Latimer, Jr. State Chemist, Office of the Texas State Chemist Texas Feed and Fertilizer Control Service Effective date: January 1, 1996 Proposal publication date: November 3, 1995 For further information, please call: (409) 845-1121 TITLE 7. BANKING AND SECURITIES Part VII. State Securities Board Chapter 139. Exemptions by Rule or Order 7 TAC sec.139.11 The State Securities Board adopts new sec.139.11, concerning an exemption for transactions involving United States Savings Bonds, without changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7151). The section was adopted in response to public inquiry concerning promotions and other transactions involving U.S. Savings Bonds. The new section will assure certain persons engaging in the sale of U.S. Savings Bonds in accordance with its terms that they are complying with the requirements of The Securities Act. No comments were received regarding adoption of the new section. The section is adopted under Texas Civil Statutes, Article 581, sec.sec.28-1, 5. T, and 12.B. 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. Section 5.T and sec.12.B, respectively, provide that the Board may prescribe transactional and dealer/agent registration 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 legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515881 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: December 27, 1995 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-8300 7 TAC sec.139.16 The State Securities Board adopts an amendment to sec.139.16, concerning an exemption from securities registration for sales to individual accredited investors, with two non-substantive grammatical changes to the proposed text as published in the September 12, 1995, issue of the Texas Register (20 TexReg 7152). The first change relocates the closing parenthesis in the second sentence of subsection (e)(1)(D). The second change, to the last sentence of subsection (h), relocates the phrase, "within six months of the last sale made under this section," to clarify its referent. The amendment clarifies that limited use advertisements may be disseminated by any means, expands the statement contained in limited use advertisements, imposes record retention requirements, and provides a safe harbor for sales, made more than six months after the use of a limited use advertisement, under other exemptions which prohibit public solicitation or advertisements. The section as amended will further facilitate capital raising. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 581, sec.28-1 and sec.5.T. 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. Section 5.T provides that the Board may prescribe new exemptions by rule. sec.139.16. Sales to Individual Accredited Investors. (a)-(d) (No change.) (e) Limited use advertisements. Any limited use advertisement used in connection with an offering under this section must be filed with the Securities Commissioner ten days prior to use in this state. A limited use advertisement may be disseminated by any means, direct or indirect. A limited use advertisement shall contain only the statements required or permitted to be included therein by this subsection. (1) A limited use advertisement shall contain the following items of information: (A) -(C) (No change.) (D) the following statement: "The securities have not been registered with or approved by the Texas Securities Commissioner and are being offered and sold pursuant to the exemption provided by sec.139.16 of the Rules and Regulations of the State Securities Board. This advertisement was filed with the Texas Securities Commissioner on or about (fill in date). The securities are being offered to, and may be purchased by, only those natural persons whose individual net worth, or joint net worth with that person's spouse, at the time of purchase of the securities, exceeds $1 million or natural persons who have an individual income in excess of $200,000 in each of the two most recent years, or joint income with that person's spouse in excess of $300,000 in each of those years, and who have a reasonable expectation of reaching that same income level in the current year." (2) (No change.) (f) Any issuer relying on this exemption shall, upon written request, furnish to the Securities Commissioner the information furnished by the issuer or registered dealer to offerees. Any issuer relying on this exemption must maintain, for a period of at least three years, evidence of the basis for its belief that all purchasers were accredited investors at the time of purchase. (g) Transactions exempt under this section may be combined with offers and sales exempt under The Securities Act, sec.5.H, and sec.109.3(c) of this title (relating to Sales to Financial Institutions and Certain Institutional Investors under The Securities Act, sec.5.H). In this event, the statement required by subsection (e)(1)(D) may be modified to indicate that the securities are also being offered to eligible purchasers under sec.5.H and sec.109.3(c) of this title (relating to Sales to Financial Institutions and Certain Institutional Investors under The Securities Act, sec.5.H). (h) Because this exemption permits limited use advertisements, use of this exemption under certain circumstances could result in other exemptions not being available for other sales due to prohibitions in such exemptions against public solicitation and advertisements. Therefore, issuers or registered dealers who use this exemption should take all necessary steps to document that any sales to persons who are not individual accredited investors, as defined, were not made in response to a limited use advertisement. Users of this section should consult with experienced securities counsel, especially if they anticipate selling, within six months of the last sale made under this section, to any persons who are not individual accredited investors. (i) The use of a limited use advertisement in compliance with this section and in connection with sales under this section will not render exemptions that prohibit public solicitation or advertisements unavailable to sales that are made more than six months after the use of the limited use advertisement. (j) Should the offer and sale of securities fail, for any reason, to comply with all the terms and conditions for use of this section, the issuer may claim the availability of any other applicable exemption. A limited use advertisement that results in an offer to a person who is not an individual accredited investor within the meaning of this section does not alone result in loss of the exemption. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515882 Denise Voigt Crawford Securities Commissioner State Securities Board Effective date: December 27, 1995 Proposal publication date: September 12, 1995 For further information, please call: (512) 305-8300 TITLE 19. EDUCATION Part I. Texas Higher Education Coordinating Board Chapter 9. Public Junior Colleges Subchapter I. Contractual Agreements 19 TAC sec.9.194 The Texas Higher Education Coordinating Board adopts an amendment to sec.9. 194, concerning Contractual Agreements (Contract Instruction), with changes to the proposed text as published in the August 25, 1995, issue of the Texas Register (20 TexReg 6578). The amendment is being made to update a policy that was no longer useful. The rule creates more incentive for offering continuing education courses because of stronger reimbursement from the state. Higher standards that will be monitored are being introduced. There is likely to be more meaningful workforce development that will assist in the economic development of Texas. The president's association supports the change. There were no comments received regarding the proposed amendment. The amendment is adopted under Texas Education Code, sec.130.001, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Contractual Agreements (Contract Instruction). sec.9.194. Continuing Education. Continuing education is a public service component of an institution that provides life-long learning opportunities. These opportunities may be referred to as adult vocational education, workforce education, public or community service programs or extension services. The Coordinating Board recognizes that in order to prepare a literate and trained workforce to be available for economic stability and development requires a true joint partnership between private and public sectors. Accordingly, the Board encourages contractual agreements between postsecondary institutions, business, industry, and other government agencies in order to forge a common partnership of joint planning, facilities, laboratories, delivery systems, and evaluation efforts. The Board policy intends to provide institutional incentives for colleges to work with business, industry, and government in the development of an educated workforce for Texas. (1) Each community and technical college may classify workforce continuing education and other courses as earning semester/quarter credit hours or continuing education units (CEUs). Contact hours reported for courses which result in either credit hours or CEUs will be eligible for formula funding. A course or program that exceeds 360 hours in length must be approved as a technical certificate program except by special justification and approval by the Coordinating Board staff. A course or program that meets or exceeds 780 hours in length must result in the award of appropriate semester/quarter credit hours and in most cases be applicable to an associate degree program. (2) General enrollment or contact training courses that are non-credit and do not result in the award of CEUs are not eligible for any state apportionment funding, but a community and technical college is free to market such non-credit or non CEU training to business, industry and government at whatever rate can be negotiated with the contracting organization. (Exceptions to rules, tchis paragraph and paragraph (1) of this paragraph regarding programs serving incarcerated students must be submitted to the Coordinating Board staff for review and approval). (3) Courses earning CEUs will be subject to the guidelines published by the Southern Association of Colleges and Schools as a condition of eligibility for formula funding. (4) All student enrollments for credit are subject to the provisions of the Texas Academic Skills Program as applicable. (5) Institutions providing courses to organizations for which credits or CEUs are earned and for which tuition is charged must charge out-of-state tuition to non-resident students who are brought from out-of-state for such contract courses. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515785 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 25, 1995 For further information, please call: (512) 483-6160 Chapter 21. Student Services Subchapter A. General Provisions 19 TAC sec.21.2 The Texas Higher Education Coordinating Board adopts amendments to sec.21. 2, concerning Determination of Tuition Rate for Non-resident and Foreign Students without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6055). The amendments are being made to implement provisions of House Bill 1792. The rules change the method for calculating nonresident tuition. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 1792, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Determination of Tuition Rate for Non-resident and Foreign Students. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515781 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 19 TAC sec.21.5 The Texas Higher Education Coordinating Board adopts new sec.21.5 concerning Refund of Tuition and Fees at Public Community/Junior and Technical Colleges without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6055). The amendments are being made to implement changes mandated by passage of House Bill 2640. The rules will require community/junior and technical colleges to refund tuition and fees on a consistent basis. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 2640, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Determination of Tuition Rate for Non-resident and Foreign Students. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515784 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 Subchapter B. Determining Residence Status 19 TAC sec.sec.21.21, 21.26, 21.31, 21.32 The Texas Higher Education Coordinating Board adopts amendments to sec.sec.21. 21, 21.26, 21.31, and 21.32, concerning Determining Residence Status without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6055). The amendments are being made to improve clarity of rules and to implement changes mandated by House Bill 1792 and House Bill 1836. The rules are used to guide decisions regarding admission of students and their classification for tuition determination purposes. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 1792, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Determining Residence Status. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515779 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 Subchapter J. Physician Education Loan Repayment Program 19 TAC sec.sec.21.258, 21.259, 21.261, 21.263 The Texas Higher Education Coordinating Board adopts amendments to sec.sec.21. 258, 21.259, 21.261, and 21.263, concerning Physician Education Loan Repayment Program without changes to the proposed text as published in the August 25, 1995, issue of the Texas Register (20 TexReg 6579). The amendments are being made to implement changes required by Senate Bill 979. The rules will change eligibility requirements for the Physician's Education Loan Repayment Program. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under Senate Bill 979, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Physician Education Loan Repayment 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 December 4, 1995. TRD-9515780 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 25, 1995 For further information, please call: (512) 483-6160 Subchapter BB. Pilot Program for Enrolling Students from Mexico 19 TAC sec.21.938 The Texas Higher Education Coordinating Board adopts amendments to sec.21. 938 concerning Numbers of Students Eligible to Participate in the Pilot Program without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6057). The amendments are being made to guide program operation. Program is scheduled by legislation to start operating in January 1996. The amendments will provide a framework for program operations. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 1792, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Pilot Program for Enrolling Students from Mexico. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515776 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 The Texas Higher Education Coordinating Board adopts the repeal of Subchapter CC, sec.sec.21.950-21.959 concerning Tuition Credit Program without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6058). The rules are being repealed to implement provisions of House Bill 1479 regarding the Early High School Graduation Scholarship Program. The rules will provide $1,000 state scholarships to students graduating high school in no more than 36 months. There were no comments received regarding the proposed amendments. The repeal to the rules is adopted under House Bill 1479, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Determination of Tuition Rate for Non-resident and Foreign Students. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515778 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 Subchapter CC. Early High School Graduation Scholarship Program 19 TAC sec.sec.21.950-21.959 The Texas Higher Education Coordinating Board adopts new Subchapter CC, sec.sec.21.950-21.959 concerning Early High School Graduation Scholarship Program without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6058). The new rules are being made to implement provisions of House Bill 1479 regarding the Early High School Graduation Scholarship Program. The rules will provide $1,000 state scholarships to students graduating high school in no more than 36 months. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 1479, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Determination of Tuition Rate for Non-resident and Foreign Students. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515777 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 Subchapter FF. State Scholarship Program for Ethnic Recruitment 19 TAC sec.sec.21.1010-21.1020 The Texas Higher Education Coordinating Board adopts new Subchapter FF, sec.sec.21.1010-21.1020 concerning State Scholarship Program for Ethnic Recruitment without changes to the proposed text as published in the August 11, 1995, issue of the Texas Register (20 TexReg 6059). The new rules are being made because program funding for this program received a 200% increase therefore rules for the administration of the program are necessary. There are several differences in the eligibility of students to participate in the program. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under House Bill 1792, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning State Scholarship Program for Ethnic Recruitment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515782 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: August 11, 1995 For further information, please call: (512) 483-6160 Subchapter GG. Fifth-Year Accounting Student Scholarship Program 19 TAC sec.sec.21.1030-21.1042 The Texas Higher Education Coordinating Board adopts new Subchapter GG, sec.sec.21.1030-21.1042 concerning Fifth-Year Accounting Student Scholarship Program without changes to the proposed text as published in the September 1, 1995, issue of the Texas Register (20 TexReg 6785). The program is scheduled by legislation to start operating in January 1996. The new rules are needed to guide the program operation. They will provide a framework for program operations. There were no comments received regarding the proposed amendments. The amendments to the rules are adopted under Texas Education Code, Chapter 61, Subchapter N, which provides the Texas Higher Education Coordinating Board with the authority to adopt rules concerning Fifth-Year Accounting Student Scholarship 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 December 4, 1995. TRD-9515783 James McWhorter Assistant Commissioner for Administration Texas Higher Education Coordinating Board Effective date: December 26, 1995 Proposal publication date: September 1, 1995 For further information, please call: (512) 483-6160 TITLE 25. HEALTH SERVICES Part II. Texas Department of Mental Health and Mental Retardation Chapter 401. System Administration Subchapter B. Interagency Agreements 25 TAC sec.401.47 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.401.47, concerning memorandum of understanding: continuity of care for mentally ill and mentally retarded offenders, without changes to the proposed text as published in the October 3, 1995, issue of the Texas Register (20 TexReg 8063). The statutory authority for the section was repealed in Senate Bill 252, Acts 1993, 73rd Legislature, Chapter 488, sec.3. The same bill created the Texas Health and Safety Code, sec.614.013, which mandated a memorandum of understanding (MOU) relating to similar matters; that MOU was adopted in sec.401.59, concerning continuity of care for offenders with mental impairments. The adoption was published in the February 17, 1995, issue of the Texas Register (20 TexReg 1140). No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and with Senate Bill 252, Acts 1993, 73rd Legislature, Chapter 488, sec.3, which repealed the statute mandating the MOU be adopted 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 legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515595 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: December 25, 1995 Proposal publication date: October 3, 1995 For further information, please call: (512) 206-4516 Subchapter E. Contracts Management 25 TAC sec.sec.401.371-401.393 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts on a regular basis the repeal of sec.sec.409.371-401.393, concerning contracts management, without changes to the proposed text as published in the September 22, 1995, issue of the Texas Register (20 TexReg 7557). New sections are contemporaneously adopted in this issue of the Texas Register. The subchapter is repealed to allow for the adoption of new sections which enable the department to act expeditiously and effectively in remedying contractual problems that may affect the life, health, welfare, or safety of people receiving mental health and mental retardation services funded by TDMHMR. The repeals are adopted under the Texas Health and Safety Code, Title 7, sec.532.015, which provides the Texas Board of Mental Health and Mental Retardation with rulemaking powers; and under the provisions of Texas Civil Statutes, Article 4413(502), sec.15, which provide the Health and Human Services Commission with authority over TDMHMR rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515608 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: December 25, 1995 Proposal publication date: September 22, 1995 For further information, please call: (512) 206-4516 25 TAC sec.sec.401.371-401.399 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts on a regular basis new sec.sec.401.371-401.399, concerning contracts management. Sections 401.373, 401.375-401.377, 401.381, 401.384, 401.388, 401. 390-401.393, 401.396, and 401.398 are adopted with changes to the proposed text as published in the September 22, 1995, issue of the Texas Register (20 TexReg 7558). Sections 401.371, 401.372, 401.374, 401.378-401. 380, 401.382, 401.383, 401.385- 401.387, 401.389, 401.394, 401.395, 401.397, and 401.399 are adopted without changes and will not be republished. The existing Chapter 401, Subchapter E, also concerning contracts management, is contemporaneously repealed in this issue of the Texas Register. Language was changed in the definition of "local authority" for consistency and language was added to the definitions of "performance contract" and "priority population" for clarification. A portion of the reference in the definition of "professional services" was deleted. The term "consumers" was changed to "persons served" for consistency in sec.401.375(b). Language was added to sec.401.375(d) and sec.401.376(a)(2) for clarification. In sec.401.377(e) (8) and (g), the term "individuals to be served" was changed to "persons to be served" for consistency. Section 401.377(l) was deleted and subsequent subsections re-designated. The second sentence of sec.401.381(c) was deleted because periodic program reviews and management audits are not government by the "Guidelines for Annual Fiscal Audits of Community MHMR Centers." A portion of the language in sec.401.384(a)(12) was deleted for clarity. Language was added as sec.401.384(a)(16), requiring compliance with the Texas Family Code, sec.231.006. Language was added to the title of Part II and to sec.401.388(k) for clarification. In sec.401.388(b), the word "individuals" was changed to "persons" for consistency and the title of the reference in subsection (i) of the same section was corrected. Language throughout sec.sec.401.390-401.393 referring to contracts exceeding two years was modified for clarity. Section 401.391(c) was deleted. The language "to persons served" in sec.401.396(c)(2)(A) (iv) was deleted. Language identifying the commissioner was added to sec.401. 396(c)(4) for clarification. In sec.401.398, two references were deleted, one corrected, and one clarified. A public hearing was held on October 16, 1995; no oral or written testimony was offered. Public comment was received from the Texas Council of Community Mental Health and Mental Retardation Centers, Austin; Burke Center, Lufkin: and a private citizen. One commenter supported the requirement of fund accounting. Another commenter objected to the requirement of fund accounting. The commenter cited prior experience with fund accounting as extremely cumbersome, labor- intensive, and expensive. The commenter also stated that engaging a new accounting firm to perform annual fiscal audits every six years may be adversely impacted by the requirement for fund accounting because the "learning curve" for the new firm would increase. The commenter suggested that, until a more stable environment evolves regarding managed care, project accounting may be more appropriate and easier accomplished. The department acknowledges that initial implementation of fund accounting will require financial resources; however, requiring fund accounting by September 1, 1996, one year in advance, local authorities will have the opportunity to arrange for resources in preparation of implementation. The department does not agree with the commenter that accounting firms will be adversely impacted and their "learning curve" increased; structured accounts decrease the learning curve for audit firms. Regarding waiting until a more stable environment evolves, fund accounting (the accounting of funds by source) will accommodate whatever environment evolves. Financial accountability of state contracts is a major issue in state government and the department is responsible for ensuring the integrity of public funds. Fund accounting accomplishes this goal. The department further responds that it is not familiar with "project accounting" as suggested by the commenter; however, the description provided by the commenter indicates that it could accomplish the same objectives as fund accounting. The new sections are adopted under the Texas Health and Safety Code, sec.532. 015, which provides the Texas Department of Mental Health and Mental Retardation with broad rulemaking powers, and sec.534.052, which gives the board rulemaking authority for community-based mental health and mental retardation services provided by community centers and other contract providers. sec.401.373. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Acceptable bid or acceptable offer-A bid or offer which has been prepared and submitted according to the timeframes, procedures, and format specified in the procurement package; which indicates the offeror can meet the minimum requirements specified in the procurement package; and which is made by an offeror who is legally eligible to receive state and/or federal funds. Amendment-An attachment to a contract legally executed by authorized parties prior to the expiration of the contract term that alters, deletes, or adds provisions. Board-The Texas Board of Mental Health and Mental Retardation. Commissioner-The commissioner of the Texas Department of Mental Health and Mental Retardation or designee. Community-based services -Mental health and/or mental retardation services provided in the community that are designated in the performance contract, performance memorandum, performance subcontract, designated provider contract, or contracts for community-based residential or nonresidential mental health and mental retardation services. Community center -A community mental health and/or mental retardation center established pursuant to the Texas Health and Safety Code, Chapter 534, Subchapter A. Consultant contract -A contract to retain the services of an individual or organization to study an existing or proposed operation or project, or to provide advice with regard to the operation or project consistent with Texas Government Code, Subchapter B, sec.sec.2254.021 et seq, to exclude engaging registered professional engineers or registered architects for the design or construction of state facilities; private legal counsel; investment counselors; actuaries; or physicians, dentists, or their medical or dental services providers. Contract-Any written document (or series of documents) that obligates a party to pay money to a person or organization in exchange for goods or services from that person or organization or that obligates a party to provide goods or services in exchange for money. Contracting entity -The entity which provides the funds for services pursuant to a contract. Contractor-An entity that provides services for funds pursuant to a contract. Department-A facility or the Central Office of the Texas Department of Mental Health and Mental Retardation. Designated provider -Pursuant to the Texas Health and Safety Code, sec.534.054, a service provider with whom the department contracts for the delivery of a specific community-based mental health or mental retardation service in a specified local service area of the state. The term does not include a local authority. Emergency-A state of imminent peril to the health, safety, or welfare of employees, persons served, or the general public. Employee education and training contract-A contract to acquire professional expertise for in-facility or other in-house training of employees. The term does not refer to training sponsored by another organization at conferences, seminars, or training sessions. Facility-Any state hospital, state school, state center, or other entity which is now or hereafter is made a part of the Texas Department of Mental Health and Mental Retardation. Financial or other interest-The condition that exists when an employee or officer of TDMHMR or a local authority who initiates or approves contracts has or intends employment with a contractor; paid consultation with a contractor; membership on a contractor's board of directors; or ownership of stock, partnership, or other substantial interest in a contractor, as defined in Local Government Code, sec.171.002. The term also applies to the condition that exists when a person related within the second degree of consanguinity or affinity (as described in sec.401.397 of this title (relating to Exhibits) as Exhibit A) to such an employee or officer participates in such activities. Foster or family home placement-A residential placement where the caregiver or caregivers have no more than three unrelated persons with disabilities in their home at any given time and the caregiver or caregivers are providing this service in their primary residence. Fund accounting -Method of accounting in which accounts are established which segregate revenues and other resources, together with all related liabilities, obligations, and reserves, for the purpose of carrying on specific activities or attaining certain objectives in accordance with specific contractual and regulatory requirements. Historically underutilized business (HUB)-A for-profit corporation, sole proprietorship, partnership, or joint venture in which at least 51% of all classes of the shares of stock or other equitable securities are owned by one or more persons who have been historically underutilized (socially disadvantaged) because of their identification as members of the following groups: Black American, Hispanic American, Asian Pacific American, Native American, and Women. These persons must have a proportionate interest and demonstrate active participation in the control, operation, and management of the business. Local authority -An entity to which the Texas Board of Mental Health and Mental Retardation delegates its authority and responsibility within a specified region for the planning, policy development, coordination, resource development and allocation, and for supervising and ensuring the provision of mental health services to persons with mental illness and/or mental retardation services to persons with mental retardation in one or more local service areas pursuant to a performance contract. Local service area-A geographic area composed of one or more Texas counties delimiting the population which may receive services from a local authority. Offeror-An entity that submits to a contracting entity a proposal to be considered for a contract. Performance contract -The contract between the state authority and a local authority in which the state authority agrees to pay the local authority a specified sum for ensuring the provision of specified mental health and/or mental retardation services in a local service area. The term includes a performance memorandum. Persons with a mental disability-Persons with mental illness, mental retardation, or a related condition, or a pervasive developmental disorder, and persons younger than four years of age who are eligible for Early Childhood Intervention services. Plan of service -The systematic, organized compilation of information relevant to the services provided to an individual admitted for services provided using funds received from or through TDMHMR. Priority population -Groups of persons with a mental disability identified in the performance contract or subcontract for whom the department purchases mental health and/or mental retardation services. Procurement package -The invitation for bids or request for proposals and any other associated documentation that serves to describe the requirements of the contract. Professional services -Those services within the scope of the practice of accounting, architecture, optometry, medicine, or professional engineering as defined by state law, or services performed by any licensed architect, optometrist, physician, surgeon, certified public accountant, or professional engineer in connection with his professional employment or practice, as specified in the Texas Government Code, Subchapter A, sec.sec.2254. 001 et seq. Proposal-Documents prepared by an offeror which are submitted to a contracting entity in response to a procurement package provided by the contracting entity. Prospective payment funds-Money which the state authority prospectively provides to a local authority to provide community-based services to certain persons with a mental disability. Such funds are provided through programs including, but not limited to, the Prospective Payment Program (PPP) and the Companion Program. Small business -A corporation, partnership, sole proprietorship, or other legal entity formed for the purpose of making a profit, which is independently owned and operated and has either fewer than 100 employees or less than $1 million in annual gross receipts. Start-up costs -Costs associated with the development of one or more community-based services. State authority -The Texas Department of Mental Health and Mental Retardation (TDMHMR). Subcontract-A contract between the party contracting with the department and the subcontractor which is paid for with funds from the contract with the department. Support services contract-A contract between the department and a contractor to provide specified ancillary and support services for a designated sum in areas including, but not limited to, laundry, housekeeping, grounds maintenance, plant maintenance, food service, vehicle maintenance, and technical services in radiology, laboratory services, and pharmacy. Term-The period of time during which a contract is in effect and which is identified by starting and ending dates. sec.401.375. Accountability. (a) Procurement by government agencies must be conducted so as to obtain the most effective use of public monies. Contracting is the preferred alternative to direct provision of government services when contracting obtains the same or higher quality of services at a lower cost than possible through governmental provision. The department conducts and regulates all procurements using TDMHMR funds to promote maximum free and open competition whenever feasible. (b) The state authority may terminate a contract immediately or remove persons served when the life, health, welfare, or safety of persons served is endangered or could be endangered either directly or through the contractor's willful or negligent discharge of duties under the contract, including failure to deliver services in accordance with the terms and conditions of the contract, or if the department has reason to believe that the contractor has engaged in the misuse of state or federal funds, fraud, or illegal acts. (c) In a cost reimbursement contract, the contractor/subcontractor must substantiate all claims. (d) The department recovers improper payments when it is verified that contractors/subcontractors have been overpaid because of improper billing or accounting practices or failure to comply with the contract terms, e.g., the department will not pay for contracted services not received by the department, and repayment will be claimed, at the proportional rate of payment, for such services. The determination of impropriety is based on federal, state, and local laws and rules; department procedures; contract provisions; or statistical data on program use compiled from paid claims and other sources of data. (e) At the end of each contract period, the contractor must return to the department any state or federal funds received from or through TDMHMR which have not been encumbered. (f) The department may make advance payments to a contractor provided that the contractor is a community center or governmental entity. The purpose of the advance payment must meet a public purpose and sufficient controls must be in place to ensure accomplishment of the public purpose. (g) Equipment and furniture are defined as nonconsumable property having a value of at least $500 and a useful life of more than one year. Equipment and furniture specifically purchased under a contract budget by a governmental entity, a private non-profit entity, or private for-profit entity are subject to an equitable claim by state and federal government as follows: (1) Disposition of property purchased by governmental and private non-profit entities. (A) Control of equipment and furniture. A control system must be maintained by the contractor to ensure adequate safeguards to prevent loss, damage, or theft of the property. Any loss, damage, or theft must be investigated. The control system must indicate the source of funds (state, federal, other) used in the purchase of the equipment and furniture. (B) Disposition of property. Equipment and furniture purchased with state funds by a designated provider and/or other governmental entities become the property of the designated provider and/or other governmental entity. Disposition of equipment and furniture purchased with federal funds by a designated provider and/or other governmental entity must be made according to the provision of federal OMB A-102, A-87, and any other applicable federal regulations. Any real or personal property purchased by a private non-profit provider which are purchased with funds provided by or through TDMHMR belong to the department and cannot be disposed without approval from the department. (2) Disposition of property purchased by private for-profit entities. The purchase of equipment and furniture by private for-profit entities under a specific contract budget should not be approved but such entity should include the depreciation of furniture and equipment as costs of providing the services under the contract. sec.401.376. Methods of Procurement. (a) Criteria for sealed bids. In competitive sealed bids, the contracting entity publicly solicits sealed bids from interested bidders through an invitation for bids (IFB). This method of procurement is used for contracts including, but not limited to, support services contracts. The contracting entity awards a firm fixed-price contract (lump sum or unit price) to the lowest and best bidder whose bid conforms with all terms and conditions of the invitation for bids. Sealed bids are used when the following conditions exist: (1) the exact specification for the service or product to be purchased is available; (2) following solicitation as described in sec.401.377(b)(2)(A) of this title (relating to Sealed Bid and Request for Proposal), two or more responsible bidders are willing and able to compete for the contract; (3) the procurement lends itself to a firm fixed-price contract (unit rate or cost reimbursement with a maximum not to exceed the reimbursable amount); (4) the contract can appropriately be awarded to a responsible bidder on the basis of the lowest and best price; and (5) sufficient time is available for the contracting entity to prepare specifications on which it can purchase the service and for bidders to prepare and submit bids. (b) Criteria for request for proposal. The contracting entity requests proposals from a number of sources by soliciting responses to a request for proposal (RFP) for contracts including, but not limited to, consultant contracts, service contracts, and employee education and training contracts if: (1) the service cannot be quantified and specified in terms of price alone; or (2) negotiation is authorized by applicable law or rule, e. g., the Texas Mental Health and Mental Retardation Act, Texas Health and Safety Code, sec.533.034. (c) Criteria for sole source contracting. The contracting entity solicits an offer from only one source only when the award of a contract is not feasible under sealed bids or RFP procedures. This method of procurement is always used for professional services contracts and contracts for foster or family home placements, and may be used for other types of contracts that meet one or more of the following criteria: (1) noncompetitive negotiation is authorized or required by law or rule, e.g., Texas Government Code, Chapter 2254, Subchapter A prohibits contracting for professional services on a competitive bid basis; (2) the contract is between governmental entities, e.g., a community center and a state facility; (3) in an emergency, it is necessary to proceed without formal advertising because of the delay it causes; (4) the material or service to be procured is available from only one source; (5) no acceptable bids or offers, as defined in sec.401.373 of this title (relating to Definitions) are received; or (6) the purchases are for highly perishable material or medical supplies; or for services for which the prices are established by law; or for experimental, developmental, or research work. sec.401.377. Sealed Bid and Request for Proposal. (a) The provisions of this section apply to both sealed bids and RFPs. (1) Additional requirements relative to sealed bids are contained in sec.401. 378 of this title (relating to Additional Requirements for Sealed Bid). (2) Additional requirements relative to RFPs are contained in sec.401. 379 of this title (relating to Additional Requirements for Request for Proposal). (b) The contracting entity must formally advertise procurements by publishing a notice of the intent to contract when the contract is to be awarded by sealed bid or RFP. (1) Staff must ensure that all solicitations (notice of intent to contract) contain the following minimum information: (A) the service to be purchased; (B) the geographic area to be served; (C) funding limitations; (D) method of payment; (E) the beginning through the ending date of the contract; (F) any limitations on who may submit an offer and any limitations in the services or products to be provided; and (G) the place and method of obtaining a procurement package and the deadlines for obtaining and submitting it. (2) Staff must attempt to reach as many potential contractors as possible. (A) The contracting entity must publicize a solicitation in one or more of the following ways: (i) advertisement in local newspapers; (ii) publication in the Texas Register for contracting entity consultant contracts as required in sec.401.390 (relating to Consultant Contracts); (iii) announcements in professional association newsletters. (B) The contracting entity may additionally solicit offers through announcements by direct mail to all known potential contractors. (C) The contracting entity shall document all transactions concerning contracts. (c) Persons who have questions about a procurement package must request the information according to the instructions in the package. Oral answers to questions about a procurement package are nonbinding. They are not official until released in writing. (d) Unless information is exempted by the Texas Open Records Act, i.e., information which, if released, would give advantage to competitors or bidders, all information in an offer is confidential only until: (1) bid opening; or (2) the contracting entity sends both written notification to the successful offeror(s) and written notification of nonselection to the unsuccessful offeror(s) concerning requests for proposal. (e) The contracting entity has the right to reject all bids/offers submitted in response to a solicitation. The contracting entity may cancel a solicitation for any of the following reasons: (1) funds to purchase goods or services are not available; (2) the supplies or services are no longer required; (3) the bids/offers received indicated that the services requested can be purchased by a different, less expensive method; (4) all otherwise acceptable bids/offers received are for unreasonable prices; (5) staff have reason to believe during the course of the procurement that the bids/offers were collusive or were submitted in bad faith; (6) none of the bids/offers is acceptable; (7) the specifications and costs given in the IFB/RFP were inadequate, ambiguous, or otherwise deficient; or (8) the responsible contracting entity determines cancellation is in the best interest of the department and the persons to be served. (f) The contracting entity has the right to issue addenda prior to the closing date for bids/offers provided all bidders/offerors are provided fair opportunity to respond. All such addenda become, upon issuance, an inseparable part of the specifications which must be met for the bid/offer to be considered. (g) A solicitation suspended because of uncertainty in federal or state regulations, departmental policy or similar requirements may nevertheless be processed if the procurement is still in the best interest of the department and the persons to be served, and uncertainties about purchasability are amenably resolved. (h) The contracting entity develops procurement packages based on a clear and accurate description of the services to be purchased. The contracting entity must include in the package all requirements the offeror must fulfill for the proposals to be evaluated. The contracting entity may not include in the service descriptions any requirement which unduly restricts competition by eliminating or limiting potential contractors' participation in the procurement process. (i) When responding to a solicitation, offerors must respond to all items, including those about financial ability to perform. (j) Upon written request, an unsuccessful offeror is entitled to receive information from the contracting entity concerning why its offer was not accepted. (k) Corrections, deletions, or additions to offers may be made prior to the closing date for solicitations or the date for opening of bids. No oral, telephone, telegraphic, fax, E-mail, or other electronically transmitted corrections, deletions, or additions will be accepted. The offeror must submit either a comprehensive form for this purpose, if provided, or substitute pages in the appropriate number of copies with a letter documenting the changes and the specific pages for substitution. The signatures on the form or the letter must be original and must be of equal authority as the signatures on the offer. (l) For withdrawals, the offeror must submit a letter prior to the closing date. The signature on the letter must be original and must be of equal authority as the signature on the offer. (m) The contracting entity must establish mechanisms beforehand for evaluating the offers including ways of determining responsible offerors, providing information for debriefings, and selecting successful offeror(s) for contract award(s). (n) If a procurement package is to be considered by the contracting entity, the offeror must meet the contracting entity requirements, demonstrate the ability to perform successfully and responsibly under the terms of the prospective contract, and submit the completed offer according to the timeframes, procedures, and format stipulated by the contracting entity in the solicitation. (o) The contracting entity may validate any information in a bid or offer by using outside sources or materials. (1) If the contracting entity validates the information in one offer or application for a specific program site or project, it must apply the process without providing unfair advantage to any offer or range of offers for that site or project. (2) If validation discloses that information provided by an offeror is deliberately false, the offer will be ineligible for consideration. (p) When the purpose of the procurement is to obtain community-based residential or nonresidential services for persons with mental illness or mental retardation (direct services contracts), the determination of the lowest and best bid or offer must address the offerors' response to the procurement package, including: (1) price; (2) the ability of the offeror to perform the contract and to provide the required services; (3) whether the offeror can perform the contract or provide the services within the period required, without delay or interference; (4) the offeror's history of compliance with the laws relating to the offeror's business operations and the affected services and whether the offeror is currently in compliance; (5) whether the offeror's financial resources are sufficient to perform the contract and to provide the services; (6) whether necessary or desirable support and ancillary services are available to the offeror; (7) the character, responsibility, integrity, reputation, and experience of the offeror; (8) the quality of the facilities and equipment available to or proposed by the offeror; (9) the ability of the offeror to provide continuity of services; and (10) the ability of the offeror to meet all applicable written departmental policies, principles, and regulations. (q) Each offeror whose offer meets the screening requirements but is not selected for a contract is entitled to timely notification in writing that the offer is no longer being considered. sec.401.381. Fiscal Requirements. (a) Every effort should be made to contract with contractors who will not require the department to provide start-up funds. As a last resort, contractors who are expanding into a new service area or are just beginning to provide services may, if allowed by program-specific policy and with appropriate TDMHMR approvals, budget and bill for start-up funds. Start-up funds shall be used for operating costs, such as hiring and training staff, purchasing supplies, utilities, maintenance and repairs, and recruiting eligible persons with mental illness or mental retardation. (1) A contractor who requires start-up funds must receive required licensure, accreditation and/or certification to provide contracted services within the timeframe designated in the contract. (2) The contractor shall not provide start-up funding using TDMHMR funds to subcontractors. (3) The contractor will provide documentation to support the amount of start- up funds requested. Justification should be adequately documented to include a projected cash flow analysis. (4) The repayment of the start-up funds must be completed within five years from the date of the payment of the start-up funds. The amount to be repaid is the principal amount with interest equal to the U.S. Treasury commercial paper rate on the date that the start-up funds payment is approved by the Texas Board of Mental Health and Mental Retardation. Payments will be withheld from the contractor's quarterly allocation and transferred to the department for a period of five years. (b) Effective September 1, 1996, local authorities must use fund accounting. (c) In accordance with Texas Health and Safety Code, sec.534.035, periodic program reviews and management audits will be conducted in sufficient quantity and type to provide reasonable assurance that adequate and appropriate fiscal controls exist in community centers. (d) When the local authority provides or subcontracts programs for which there is a matching funds requirement, the local authority is accountable for certifying to the state authority on a quarterly basis that it has sufficient local revenues to meet the requirements for matching funds that exceed state- certified matching funds necessary to meet performance targets specified in the performance contract. sec.401.384. Provisions for Performance Subcontracts and Designated Provider Contracts. (a) Performance subcontracts and designated provider contracts must be consistent with the terms and provisions of the performance contract. Performance subcontracts and designated provider contracts must contain, but are not limited to, provisions stating: (1) the beginning and ending date of the contract; (2) the method of payment and maximum amount payable under the contract; (3) that no person will be excluded from participation in, denied the benefits of, or discriminated against, in any program or activity funded by the contract on the grounds of race, color, national origin, religion, sex, age, disability, or political affiliation; (4) that all records pertinent to the contract, including appropriate plans of service, will be retained by the provider for a period of five years; (5) that all client-identifying information will be maintained by the provider as confidential, in accordance with applicable law and department rules; (6) that the provider is not held in abeyance or barred from the award of a federal or state contract at the time of executing the contract; (7) that any allegation of abuse, neglect, or exploitation of persons served under the contract will be reported in accordance with applicable law, including department rules, rules of the Texas Department of Protective and Regulatory Services, and rules of the Texas Department of Health; (8) that AIDS/HIV workplace guidelines, similar to those adopted by the department, and AIDS/HIV confidentiality guidelines, consistent with state and federal law, will be adopted and implemented by the provider; (9) that if, as a result of a change to a department rule, state or federal law, or community standard, the contractual obligations of the provider are materially changed or a significant financial burden is placed on the provider, the parties may renegotiate in good faith to amend the contract; (10) that the provider will comply with relevant department rules and community standards, certifications, accreditations, and licenses, as specified in the contract; (11) that services will be provided in accordance with the plans of service of persons served; (12) that pursuant to Texas Health and Safety Code, sec.534.060, the state authority and/or local authority and their representatives, including independent financial auditors, shall have unrestricted access to all facilities, records, data, and other information under the control of the local authority or its subcontractors as necessary to enable the state authority and/or local authority to audit, monitor, and review all financial and programmatic activities and services associated with the contract; (13) that the provider shall provide sufficient information to the contracting entity to enable the contracting entity to receive criminal history record information on the provider's applicants or employees, pursuant to the Texas Health and Safety Code, sec.533.007 and the Texas Government Code, sec.411.115; (14) that if an applicant or employee of the provider has a criminal history relevant to his or her employment as described in sec.404.304 of this title (relating to Pre-employment Criminal History Clearance), then the provider will take appropriate action with respect to the applicant or employee, including removing the employee from direct contact with persons with a mental disability served by the provider; and (15) that if a performance subcontract or designated provider contract is for the provision of residential services in a family home, the home will be used only to house disabled persons and may not be used as a restitution center, a home for substance abusers, or a halfway house. For purposes of this paragraph, "family home" and "disabled persons" are defined as in the Community Homes for Disabled Persons Location Act, Texas Human Resources Code, Chapter 123; and (16) A provider contract, bid, or application for a provider contract must include a statement that the contractor is not more than 30 days delinquent in child support payments and eligible to receive payments from state funds as required by the Texas Family Code, sec.231.006. (b) Contracts which require the provider to assume responsibility for the funds of persons with a mental disability must contain provisions which require the provider to have and abide by a written policy for protecting and accounting for such funds in accordance with generally accepted accounting principles and is subject to approval by the contracting entity. sec.401.388. General Requirements for Provider Contractors. (a) A contractor must comply with all applicable federal and state laws, rules, and regulations, and standards. Unless explicitly stated otherwise in this subchapter, a contractor will not be subject to the general personnel rules and policies which affect the activities of employees of the department with which it contracts. (b) A contractor must allow the department unrestricted access to all facilities, service providers, persons served, records, data, and other information under the control of the contractor as necessary to enable the department to audit, monitor, and review all financial and programmatic activities and services associated with the contract. (c) A contractor must keep financial and supporting documents, statistical records, and any other records pertinent to the services for which a claim or cost report was submitted to the department, including plans of service, for a period of five years unless otherwise specified by the department in the provider contract. (d) For the purpose of confidentiality of records identifying persons served, contractors are subject to the requirements of Chapter 403, Subchapter K of this title (relating to Client-Identifying Information). (e) A contractor must disclose to the department if it is currently held in abeyance from or barred from the award of a federal or state contract. A contractor currently held in abeyance from or barred from the award of a federal or state contract may not contract or subcontract with the department. (f) The department may refuse to enter into a provider contract or may terminate a provider contract if it determines that the contractor did not fully and accurately disclose information concerning persons convicted of crimes. If an applicant or employee of the provider has a criminal history relevant to his or her employment as described in sec.404.304 of this title (relating to Pre- employment Criminal History Clearance), then the contractor will take appropriate action with respect to the applicant or employee, including but not limited to removing the employee from direct contact with persons with a mental disability served by the contractor; (g) The contractor operating a Medicaid-contracted facility shall comply with federal regulations relative to supplementation for recipient-residents, as contained in the Social Security Act, sec.1320a-1 through a-9; Title 42 CFR 447.15; Public Law 95-142 (Medicare-Medicaid Antifraud and Abuse Amendments); and TDHS-TDMHMR-TDH joint agency policy interpretations. (h) Before a corporation's offer or provider contract renewal can be considered, the corporation must give the department franchise tax certification. For-profit corporations subject to Texas' franchise tax must provide certification that their payments are current. All other corporations must certify that they are not subject to the franchise tax. (1) If the contractor is or becomes delinquent in the payment of its Texas franchise tax, payment to the contractor may be withheld until such delinquency is remedied. (2) Making a false certification is a material breach of provider contract and grounds for provider contract termination. (i) A contractor must report allegations of abuse, neglect, and exploitation in compliance with federal and state law and departmental rules, as applicable, including but not limited to, Chapter 404, Subchapter A (relating to Abuse, Neglect, and Exploitation in TDMHMR Facilities). (j) A contractor must report to the department any allegation that a professional licensed or certified by the State of Texas and employed by the contractor has committed an action that constitutes a grounds for the denial or revocation of the certification or licensure, e.g., physicians, nurses, psychologists, etc., and the department must immediately submit a copy of the report to the appropriate state board. (k) A provider contract, bid, or application for a provider contract must include a statement that the contractor is not more than 30 days delinquent in child support payments and eligible to receive payments from state funds as required by the Texas Family Code, sec.231.006. sec.401.390. Consultant Contracts. (a) The term of a consultant contract may not exceed two years without prior approval through the Office of Contracts Support. (b) Facilities must submit the following contracts and contract amendments to the Office of Contracts Support to be approved by the appropriate Central Office authorities prior to execution: (1) contracts or contract amendments through which the department will pay the consultant more than $10,000 in a fiscal year; (2) contracts or contract amendments in which the consultant will be paid more than $65/hour; or (3) contracts or contract amendments in which the consultant will be paid more than $400 in a 24-hour period. (c) Central Office staff must submit all consultant contracts and amendments to the Office of Contracts Support to be approved by appropriate Central Office authorities prior to execution. (d) The Office of Contracts Support must coordinate the Texas Register publication of the solicitation, the finding of fact requirements, and the award of the contract for all department contracts and contract amendments in which the consultant will be paid more than $10,000 in a fiscal year. Existing contracts for more than $10,000 may be extended or otherwise amended without advertising if both the department and the contractor agree and the department does not incur additional costs from the contractor. (e) Verification that contracted services were provided as required must be documented in the contract file. For services provided on an hourly or other unit basis, each consultant and a responsible staff member who can certify to the presence and the duties performed by the consultant will record the information required on the "Contract Log for Consultant Services, Professional Services, Direct Care Services," which is referenced in sec.401.397 of this title (relating to Exhibits) as Exhibit B. The consultant and responsible staff member must sign the form, which becomes a part of the contract file. sec.401.391. Professional Services Contracts. (a) The term of a professional services contract may not exceed two years without prior approval through the Office of Contracts Support. (b) Verification that contracted services were provided as required must be documented in the contract file. For services to persons with mental illness or mental retardation provided on an hourly or other unit basis, each contractor and a responsible staff member who can certify to the presence and the duties performed by the contractor will record the information required on a "Contract Log for Consultant Services, Professional Services, Direct Care Services," which is referenced in sec.401.397 of this title (relating to Exhibits) as Exhibit B. (1) The contractor and responsible staff member must sign the form, which becomes a part of the contract file. (2) For contractors who perform services involving large numbers of persons with mental illness or mental retardation, the file and file location of individual case numbers of persons seen may be referenced rather than listed in full. If case numbers are referenced to another file, that file must be readily accessible. (c) Contracts for professional services may not be procured through the use of bids. sec.401.392. Employee Education and Training Contracts. (a) The term of an employee education and training contract may not exceed two years without prior approval through the Office of Contracts Support. (b) Employee education and training contracts may be procured using a method other than sealed bid. sec.401.393. Community-based Residential and Nonresidential Services Contracts. (a) The method of procurement of all service contracts must be in compliance with sec.401.376 of this title (relating to Methods of Procurement). (1) The term of a residential service contract shall not exceed five years. Department contracts that exceed five years require approval through the Office of Contracts Support. (2) The term of a nonresidential service contract may not exceed two years without prior approval through the Office of Contracts Support. (b) The department must require the contractor to: (1) comply with the person's treatment plan, including ensuring consultants are knowledgeable of the plan at the time of placement and that staff providing direct care have received training necessary to implement the plan in accordance with the terms of the contract; and (2) comply with specified rules and standards governing services to persons with mental illness or mental retardation. (c) Contractors for residential services must sign an acknowledgement of awareness of applicable federal and state rules, regulations, laws, and executive orders that govern the provision of services to persons with mental illness or mental retardation using the form referenced in sec.401.397 of this title (relating to Exhibits) as Exhibit C. (d) Contractors must provide insurance, including liability coverage, for the residence or other structure and its contents and any vehicles used to transport persons with mental illness or mental retardation. (e) Contractors providing residential services will assume fiduciary responsibility for trust funds of persons served, unless otherwise specified in the contract requirement. Prior to executing a residential contract, the contractor must submit for Central Office approval a written policy and procedure to protect and account for trust funds according to generally accepted accounting principles and applicable laws, rules, and standards, including, as applicable, sec.405.625 of this title (relating to Rights of Clients Receiving Residential Mental Retardation Services) and sec.407.2 of this title (relating to Trust Funds and Personal Effects). Any amendments to the trust fund policy and procedure must be submitted to Central Office for approval prior to implementation. (f) Quality care must be maintained for all persons served during the transition from one provider to another. sec.401.396. Abeyance and Removal of Current or Potential Contractual Rights. (a) Abeyance is a pending status. It may be imposed immediately, as appropriate, by the department upon a contractor's right to conduct a contract or a potential contractor's right to make an offer or bid for a department contract until an investigation, hearing or trial result is concluded and the department can make a determination about the contractor's or potential contractor's right to contract or subcontract. (1) The department may withhold payments to a contractor during the abeyance. (2) If the final determination is favorable to the contractor, the department must, if applicable, (A) pay the withheld payments for any services that were provided during the abeyance, and (B) resume contract payments. (b) Removal of contractual rights by the department is the abrogation of rights to conduct a contract or to make an offer or bid for a department contract. The removal is for a reasonable and specified time and commensurate with the seriousness of the cause for removing contractual rights. Removal of rights may, but does not have to, be limited to those components of the contractor or potential contractor involved in the conduct leading to removal of rights. (c) The department is authorized to remove contractual rights from an organization or individual for causes including, but not limited to, the following: (1) pleading guilty or nolo contendere, receiving a deferred adjudication, or being found guilty in a court judgment for a violation relating to: (A) obtaining, attempting to obtain, or performing a public or private contract or subcontract; (B) the Organized Crime Control Act of 1970, embezzlement, theft, forgery, bribery, falsification or destruction of records, other forms of fraud, receipt of stolen property, moral turpitude, or any other offense indicating a lack of business integrity or honesty that seriously and directly affects the question of responsibility as a contractor with the department; (C) dangerous drugs, controlled substances, or other drug-related offense; (D) federal antitrust statutes arising from the submission of bids or proposals. (2) violating contract provisions including: (A) failing to perform according to the terms, conditions, and specifications or within the time limit(s) specified in the contract, including but not limited to the following: (i) failing to abide by applicable federal and state statutes, such as those regarding handicapped persons and civil rights; (ii) failing to meet standards that are required by state or federal law, department rule, or department policy concerning contractors; (iii) failing to execute amendments, if required in the contract; (iv) billing for services or merchandise not provided; (v) submitting cost reports containing costs not associated with and/or not covered by the contract; (vi) submitting a false statement or misrepresentation which, if used, may increase individual or statewide rates or fees; (vii) charging fees to persons served contrary to TDMHMR rules or policy; (viii) failing to notify and reimburse the department for services the department paid for when the contractor received reimbursement from a liable third party; (ix) failing to disclose or make available, upon demand, to the department or representatives (including appropriate federal and state agencies and their representatives, including independent financial auditors) any records the contractor is required to maintain; (x) failing to provide and maintain services within standards required by statute, regulation, or contract; (xi) violating the Texas Mental Health and Mental Retardation Act (Texas Health and Safety Code, sec. sec.531.001, et seq) provisions applicable to the contract or any rule or regulation issued under the act; (B) having a record of failure to perform or of unsatisfactory performance according to the terms of one or more contracts or subcontracts if that failure or unsatisfactory performance has occurred within five years or two contracting periods (preceding the determination to remove contractual rights) for long-term contracts, with failure to perform or unsatisfactory performance in evidence at time of determination to remove contractual rights. Failure to perform and unsatisfactory performance includes, but is not limited to, the following: (i) failing to correct contract performance deficiencies after receiving written notice about them from the department; and (ii) failing to repay or make and follow through with arrangements satisfactory to the department to repay identified overpayment or other erroneous payments; (C) rebating or accepting a fee or part of a fee in violation of contractual provisions. (3) submitting an offer or bid that contains a false statement or misrepresentation or omits pertinent facts or documents material to the procurement; (4) any other cause affecting the contractor's or potential contractor's responsibility of such a serious nature that the commissioner of the department or designee determines it to warrant removal of contractual rights. Grounds include, but are not limited to, engaging in any abusive or neglectful practice that results in or could result in death or injury to persons served by the contractor; (5) removal of contractual rights by some other state or federal agency. (d) The department may place a contractor's or potential contractor's contractual rights in abeyance whenever the department finds that there is a reasonable basis to believe that grounds for removal of contractual rights exist. In addition, abeyance may be imposed on a potential contractor if he has an outstanding indictment for an offense that is grounds for removal of contractual rights. The following conditions for removal of contractual rights apply: (1) Violations of contract provisions do not necessarily cause abeyance and/or removal of contractual rights. Depending upon circumstances, the department's options range from a notice to the contractor explaining the violation or cause and requiring corrective actions to the removal of contractual rights. Causes in subsection (c)(1) of this section are established by proof of pleading guilty or nolo contendere, receiving a deferred adjudication of guilt, or being a defendant in a court judgment of guilt for violations relating to charges enumerated in subsection (c)(1) of this section. If an appeal results in a reversal, contractual rights must be restored upon written request, unless another cause for their removal exists. (2) Removal of contractual rights because another state or federal agency has removed contractual rights is based entirely upon the initial agency's official notice that the rights have been removed. (e) In addition to the information required in the notice of adverse action, the required content for notices of abeyance and removal of contractual rights includes: (1) the grounds for the actions. If an indictment filed by the department is underway, the nature of the irregularities is described in general terms without disclosing evidences; (2) the length of the abeyance or removal of contractual rights; (3) a statement that responses to RFPs, IFBs, and other proposals will not be accepted or approved; and (4) a statement of whether the abeyance or removal of contractual rights is in effect throughout the department and for all local authorities. (f) The department may impose additional program-specific requirements if the requirements do not conflict with the abeyance and removal of contractual rights requirements in this section. sec.401.398. References. The following laws and rules are referenced in this subchapter: (1) Chapter 403, Subchapter K of this title, relating to Client-Identifying Information; (2) Chapter 404, Subchapter A of this title, relating to Abuse, Neglect, and Exploitation in TDMHMR Facilities; (3) Chapter 404, Subchapter H of this title, relating to Criminal History Clearances of Applicants for Employment; (4) Chapter 405, Subchapter Y of this title, relating to Client Rights-Mental Retardation Services; (5) Chapter 407 of this title, relating to Financial Services; (6) "Guidelines for Annual Fiscal Audits of Community MHMR Centers," most recent edition, Texas Department of Mental Health and Mental Retardation; (7) Local Government Code, sec.171.002; (8) Organized Crime Control Act of 1970; (9) Public Law 95-142; (10) Social Security Act, sec.sec.1320a-1 through a-9; (11) Title 42 CFR 447.15; (12) Texas Civil Statutes, Article 601b; (13) Texas Family Code, sec.231.006; (14) Uniform Grant and Contract Management Act of 1981, Texas Government Code, Chapter 783; (15) Texas Government Code, Subchapter A, sec.sec.2254.001 et seq; Subchapter B, sec.sec.2254.021 et seq; sec.411.115; and Chapter 572, Subchapter C; (16) Texas Health and Safety Code, Title 7, Chapters 531, 532, 533, 534, 535, and 551; (17) Texas Human Resources Code, Chapter 123; (18) Texas Open Records Act; (19) TDMHMR Contracts Manual; (20) TDMHMR Purchasing and Supply Operating Instruction; and (21) Uniform Grant and Contract Management Standards for State Agencies, Governor's Office of Budget and Planning. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515607 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: December 25, 1995 Proposal publication date: September 22, 1995 For further information, please call: (512) 206-4516 Chapter 402. Client Assignment and Continuity of Services Subchapter C. Transfer to Vernon Maximum Security Unit 25 TAC sec.sec.402.71-402.86 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the repeal of sec.sec.402.71-402.86, relating to Transfer to Vernon Maximum Security Unit, without changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5997). The repeal of the sections is adopted contemporaneously with the adoption of the new sections that would replace them, sec.sec.402.71-402.83, relating to Determination of Manifest Dangerousness. The new sections update procedures to be followed in conducting hearings to determine whether or not an individual is manifestly dangerous. The new sections reflect enhanced emphasis on continuity of care for the individual found to be manifestly dangerous, providing for identifying factors which cause an individual to act in a dangerous way, focusing treatment on those factors, and ensuring that treatment is continued upon the individual's transfer to a less secure facility. The new sections update membership requirements for both the TDMHMR Review Board and the facility review boards. In addition, the new sections include a number of new provisions ensuring due process for the individual being reviewed. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Department of Mental Health and Mental Retardation with broad rulemaking powers. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515600 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: January 15, 1996 Proposal publication date: August 8, 1995 For further information, please call: (512) 206-4516 25 TAC sec.sec.402.71-402.83 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.402.71-402.83, concerning determination of manifest dangerousness. Sections 402.73, 402.74, 402.76, 402.77, and 402.81 are adopted with changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5998). Sections 402.71, 402.72, 402.75, 402.78-402.80, 402.82, and 402.83 are adopted without changes and will not be republished. The new sections are adopted contemporaneously with the adoption of the repeal of the sections that they replace, sec.sec.402.71-402.86, concerning Transfer to Vernon Maximum Security Unit. The new sections update procedures to be followed in conducting hearings to determine whether or not an individual is manifestly dangerous. The new sections reflect enhanced emphasis on continuity of care for the individual found to be manifestly dangerous, providing for identifying factors which cause an individual to act in a dangerous way, focusing treatment on those factors, and ensuring that treatment is continued upon the individual's transfer to a less secure facility. The new sections update membership requirements for both the TDMHMR Review Board and the facility review boards. In addition, the new sections include a number of new provisions ensuring due process for the individual being reviewed. The definition of independent evaluator is revised in sec.402.73 to address situations in which an individual is unable to obtain an independent evaluation at his or her expense. The definition of manifestly dangerous is also revised to reflect the need for appropriate treatment targeted to the individual's dangerousness. Section 402.74(a)(1)(iii) is revised to delete a requirement that a representative of the single portal authority to which the individual being reviewed has been committed be included on the facility review board. Section 402.74(a)(2) is revised to clarify that the facility CEO must appoint at least two alternates to the facility review board. Section 402.76(a) is revised to note that, whenever possible, the facility CEO or designee should consult with staff at Vernon State Hospital to discuss issues concerning the appropriateness of transfer to Vernon State Hospital. Section 402.76(b) is revised to require notice of a manifest dangerousness review hearing at least two working days before the hearing and to clarify the parties to whom such notice is sent. Section 402.76(c) is revised to require that background information must be provided to the individual's representative. Section 402.76(c)(1) is revised to clarify that the incident described should be limited to recent incidents. Section 402.76(d) is revised to reflect the correct title of the referenced section. Section 402.76(d)(2) is revised to require that the chair of the review board be responsible for ensuring adequate staff are present to maintain a safe environment during the review board hearing. New language is added to sec.402.76(h) to require that a copy of the facility review board's written report of the determination be sent to the individual and his or her guardian and/or representative. Section 402.76(j) is revised to clarify that proceedings should be recorded or otherwise transcribed. Section 402.77(d) is revised to clarify parties to whom notice of a TDMHMR Dangerousness Review Board hearing is sent. Section 402.77(h)(2) is revised to clarify that a copy of the dissent is also sent to the commissioner. Section 402.77(j) is revised to outline procedures for transferring an individual to a less secure mental health facility. Section 402.77(k) is revised to clarify that proceedings should be recorded or otherwise transcribed. Section 402.79(c) is revised to clarify that the review board will swear or affirm any witnesses it calls. Section 402.81 is revised to refer to review board members and alternates. Section 402.82 is revised to add community mental health and mental retardation centers (in their role as single portal authorities) to the subchapter's distribution. Advocacy, Inc., submitted public comment with concurrence from the Texas Mental Health Consumers. All commenters offered recommendations for changes. The commenters stated that the TDMHMR system focused on containment rather than treatment. The commenters recommended that the system be structured in such a way that it proactively involves forensics experts to assist in identifying individuals who may become manifestly dangerous and to provide each facility with training on the interventions that assist the individual in achieving and maintaining internal control rather than being subjected to external controls. The department responds that the revised subchapter represents a significant step toward the goals identified by the commenter. Concerning sec.402.73, the commenters recommended that the definition of manifestly dangerous be revised to reflect the same language found in sec.402. 76(f)(1). The department agrees, and the language has been revised. With regard to sec.402.74(a), the commenters suggested that the staff of TDMHMR facilities should routinely consult with clinical staff at Vernon (or experts outside the state). The commenters suggested that staff of Vernon should be involved in the determination made by the facility review board. The department responds that consultation with staff at Vernon is not precluded. Concerning sec.402.74(a)(1)(A), the commenters recommended adding an individual who has received services in an inpatient setting to the facility review board's membership, at least in a non-voting capacity. The commenter suggested that the additional slot would provide an educational element on issues concerning environmental factors and interactions between staff and clients that create an atmosphere where individuals are incited or provoked into behaving inappropriately. The department responds that such an educational element is more appropriate to training and orientation than the objective review of facts that the review board hearing represents. To this end, the department would welcome recommendations and assistance from consumers and advocates interested in helping to develop a training curricula that addresses this issue. With regard to sec.402.74(a)(6), the commenters noted that although there is a requirement that each board member be evaluated annually, no criteria is cited. The department agrees that there are no specific criteria outlined and concedes the difficulty of developing criteria. The department would welcome commenters' suggestions. Concerning sec.402.74(c), the commenters highlighted the need for training for staff members and members of the review boards to assist them in determining which individuals truly meet the definition of manifest dangerousness. The commenters expressed concern that some facilities will continue to have a knee- jerk response to unacceptable behaviors and use Vernon as a dumping ground for undesirable individuals who otherwise might be treated in the facility closest to their community and natural support systems. The department responds that the process of improving staff training is always ongoing and will continue to be reviewed to enhance and refine the quality of staff and the treatment provided by staff. The new subchapter represents a significant step toward improving the process related to making determinations of manifest dangerousness. In addition, the added emphasis on due process for the individual being reviewed indicates the department's interest in ensuring that determinations of manifest dangerousness are made in an appropriate manner. Regarding sec.402.74(c)(2), the commenters suggested that training on how to perform risk factor assessments was not enough; the commenters suggested training should also focus on what programs and techniques are utilized at maximum security facilities to modify behaviors. The department responds that an orientation to treatment provided at Vernon State Hospitals is a part of the training process. The commenters also recommended that the facility review board should be empowered to make treatment recommendations. The department responds that the facility review boards are modeled on the TDMHMR Dangerousness Review Board, which is expressly prohibited from making treatment recommendations by Article 46.02, Section 8, Texas Code of Criminal Procedure. With regard to sec.402.76(b), the commenters recommended that the language be revised to allow at least two working days notice. The department agrees, and the language has been revised. The commenters also suggested that the individual be able to request and access an extension to facilitate the involvement of a chosen representative if one is available but unable to meet within the two day working day timeframe. The department responds that safety interests preclude such an extension. If an individual is unable to obtain outside representation, the department will provide a representative for assistance during the hearing. Concerning sec.402.76(d)(1), the commenters noted that the rule and process should differentiate between the assessment needed to make appropriate treatment recommendations and the assessment for the determination of manifest dangerousness in order to determine the least restrictive environment in which treatment should occur. The department responds that the review board does not make treatment recommendations; rather, it considers the appropriateness of the treatment currently being provided and makes a determination whether the individual meets the definition of manifestly dangerous despite the appropriate treatment. The commenters suggested that although the rules mandate consideration of precipitating factors, insufficient weight is given to the behaviors of staff which incite or provoke individuals. The commenters further suggested that in the event an incident is determined to have occurred as a result of mishandling or provocation by staff, then a transfer should be considered punitive and inappropriate. The department agrees that mishandling or provocation of a situation by staff should not result in a determination of manifest dangerousness. As previously noted, articulating this information and helping review board members to understand these issues is part of the training and orientation that each review board member is required to complete. Also concerning sec.402.76(d)(1), the commenters suggested that attachment 3, "Directions for Compiling a Comprehensive Individual Assessment of Risk for the Occurrence of Manifestly Dangerous Behaviors" be used for both review hearings. The department responds that Attachment 3 includes information specific to the needs of the TDMHMR Dangerousness Review Board which is not appropriate to the function of the facility review board (e.g., a section related to transfer of an individual to a less restrictive setting). Instead, facility review boards use an abbreviated version of these directions as outlined in sec.402.76(d)(1)(B). With regard to sec.402.76(g), the commenters recommended that a copy of the review board's written determination should be sent to the individual and any other parties who originally received notice of the hearing. The commenters noted that this information would be useful in the individual's decision about an appeal. The department agrees that a copy of the report should be provided, but disagrees with providing it to everyone who received notice of the hearing. Instead, the department limits its distribution to the individual and his or her legal guardian and/or representative, since these are the individuals who would have attended the hearing. Concerning sec.402.77(j), the commenters wondered what recourse would be provided to an individual whose transfer did not occur within 30 days. The department responds that failure to transfer within 30 days would be a violation of a department rule, which could be reported to the facility superintendent and Central Office in the same manner a violation of any other department rule would be reported. Regarding sec.402.77(j)(2), the commenters wondered about the criteria used to determine that upon release from Vernon, the original facility is unsuitable for the person's continued treatment needs. The department responds that the issue is county of residence. In some situations, an individual who was committed to Vernon under the Code of Criminal Procedure might face harassment or even hostility from the community for acts which resulted in the commitment, despite having received appropriate treatment. In such a situation, it would be more appropriate therapeutically to move the individual to another county of residence. Concerning the same section, the commenters noted that it is not clear that the individual ultimately retains the right to choose their county of residence and suggested that it is questionable that the individual could exercise this choice. The commenters noted that although the language of the rule indicates that the decision must be made in agreement with the person served, the environment in which such discussion occurs is coercive. The commenters further noted that the individual will perceive that he/she has no choice but to accept the recommendation if he/she wants to be released, and suggested that some assurances should be in place to protect the individual's right to choose. The department agrees that a choice of agreeing to a new county of residence or remaining at Vernon State Hospital (although no longer determined to be manifestly dangerous) could potentially lead to a coercive situation. However, this was not the department's intent in this section. If the individual does not agree to a new county of residence, the individual would simply be transferred back to the facility (or community placement) in the individual's existing county of residence. Remaining at Vernon State Hospital is not the outcome of a decision to refuse a new county of residence. Language has been revised to clarify this point. With regard to sec.402.78(a)(1)(B), the commenters recommended clarifying whose responsibility it is to initiate contact concerning the characteristics and treatment needs of the individual. The department responds that each facility works with staff at Vernon State Hospital to determine the most effective, efficient means of arranging this important information exchange. Since the arrangements vary from facility to facility, the department elects to refrain from prescribing a particular method. Concerning sec.402.79(a), the commenters recommended that the client rights officer should routinely inform the individual of his/her rights with regard to the hearings and offer to act as representative if no one is available. The department responds that the individual's rights relating to the hearing are outlined in the notice that is provided to the individual and several other parties at least two working days before the hearing. The section already provides for representation if the individual does not have a representative. The individual providing the representation will usually be the rights officer, but the department will not prescribe this so that facilities can designate the representative best able to represent the individual's interest. Regarding sec.402.80(a), the commenters objected to the language, "may have affected the outcome of the hearing." The commenters noted that it is arguable that any procedural hearing may have affected the outcome of the hearing. The commenters note that in a court of law, a decision regarding the impact of a procedural error is made by an impartial judge and is appealable, but notes that this is not the case in this system. The department responds that since the superintendent was not a part of the review board, he or she is able to make an impartial decision concerning whether or not the error may have affected the outcome of the hearing. If the individual is still not satisfied and believes the decision may have affected the substance of the review, then an appeal to the TDMHMR Dangerousness Review Board is permitted. Concerning the same section, the commenters also noted that it is not clear from this section under what circumstances the facility review board is reconvened to hold a new hearing as opposed to using the TDMHMR Dangerousness Review Board. The commenters further note that in the case of a rehearing, it should routinely be held before a new review board. The department responds that the facility review board is reconvened when a procedural error has been found; the TDMHMR Dangerousness Review Board reviews substantive issues. If the issue is procedural, the department believes it is appropriate that the same review board consider the issue. If the individual and/or representative are dissatisfied with the hearing and have a substantive issue, however, the department has addressed the need for a new review board by allowing the appeal to be considered by the TDMHMR Dangerousness Review Board. No change to this section is necessary. With regard to sec.402.80(b)(3), the commenters noted that since many individuals are unable to afford the use of an independent evaluator, a more acceptable option would be an appeal by the individual to the clinical director at Vernon. The department responds that the former rule did not include the option of an independent evaluator. The addition of this section was in accordance with the new subchapter's general theme to take steps to ensure that due process be afforded all individuals receiving TDMHMR services. The use of an independent evaluator is in accordance with department procedure as outlined in sec.404.154(11) of Chapter 404, Subchapter E (relating to Rights of Persons Receiving Mental Health Services). In response to the commenters concern about individuals being unable to afford an independent evaluator, the department has revised the definition of independent evaluator in this subchapter to include the director, TDMHMR State Operations in the event the individual is not able to obtain an independent evaluation at his/her expense. The director, TDMHMR State Operations will obtain clinical consultation before rendering a decision. The new sections are adopted under the Texas Health and Safety Code, sec.532. 015, which provides the Texas Department of Mental Health and Mental Retardation with broad rulemaking powers. sec.402.73. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Commissioner-The commissioner of the Texas Department of Mental Health and Mental Retardation, or his or her designee. Department-The Texas Department of Mental Health and Mental Retardation. Facility chief executive officer (CEO)-The superintendent or director of a state hospital or state center or his or her designee. Facility review board-A group of mental health professionals at each facility with responsibility for reviewing individuals believed to be manifestly dangerous for possible transfer to Vernon State Hospital. Independent evaluator -An independent physician who conducts an evaluation or examination of an individual at the individual's own expense. If the individual is unable to obtain an independent evaluation at his or her own expense, the individual may request that the director, TDMHMR State Operations serve as the independent evaluator. The individual's request must be in writing to the director, TDMHMR State Operations and must include the individual's name and the reason for the request. The director, TDMHMR State Operations will obtain clinical consultation when conducting an evaluation. Individual-A person involuntarily committed to a mental health facility who is being reviewed, scheduled to be reviewed, or has been reviewed for manifest dangerousness. Manifestly dangerous -The term used to describe an individual who despite having appropriate treatment, including treatment targeted to the individual's dangerousness, remains likely to endanger others and requires a maximum security environment in order to continue treatment and protect public safety. Mental health facility-State hospitals and state centers providing mental health services under the jurisdiction of the Texas Department of Mental Health and Mental Retardation, with the exception of Waco Center for Youth. Mental health professional-Professional staff attending to the needs of persons receiving mental health services who have provided direct contact services to individuals within the last five years and who have at least one year experience in mental health. Categories of mental health professionals include: (A) licensed physicians; (B) licensed psychologists and licensed psychological associates; (C) licensed master social workers with orders of recognition as advanced clinical practitioners; and (D) master's level registered nurses. Psychiatrist -A physician licensed to practice medicine in Texas who has successfully completed an approved psychiatric residency. Representative-A lawyer or another person representing the individual at his or her request. TDMHMR Dangerousness Review Board-The board established to review individuals served at Vernon State Hospital to determine whether they are manifestly dangerous or can be transferred to a less secure mental health facility. sec.402.74. Review Boards. (a) Facility review board. A facility review board will be appointed at each mental health facility to review individuals believed to be manifestly dangerous for possible transfer to Vernon State Hospital. (1) Membership. Members of facility review boards will be appointed by the commissioner, who will announce appointments for each facility in the form of a letter to the person appointed, the facility CEO, and the respective facility review board chair. (A) Each board will include five mental health professionals, with the following requirements: (i) at least one member must be a psychiatrist, preferably with expertise in forensic psychiatry; and (ii) at least two members must be currently engaged in direct care of persons with mental illness. (B) The commissioner will designate one member to serve as chair. (i) If the chair is unable to serve on the facility review board for any reason, he or she will designate another member of the board to act as chair. (ii) If the chair is unable to make such will make the appointment. (2) Alternates. The commissioner will appoint at least two mental health professionals at each facility as alternates, who will serve at the request of the facility review board chair if a facility review board member is not able to attend a meeting. To ensure that a psychiatrist is always part of the facility review board, at least one of the alternates must be a psychiatrist. (3) Terms. Members and alternates are appointed for a two-year term and may be reappointed. If a vacancy occurs, the commissioner will appoint another mental health professional to serve the remainder of the vacating member's term. (4) Conflict-of-interest. A member of the facility review board is disqualified from participating in a determination if the member has provided mental health services to the individual within one year of the review, has personal or professional involvement with the behavior or incident which precipitated the review, or has been a member of the individual's treatment team within the current admission. The chair must appoint an alternate to serve during that hearing. (5) Quorum. Facility review board members may occasionally need to remove themselves from a hearing in the event of an emergency or if a member determines that a conflict-of-interest exists after a hearing has begun. In no case may action be taken or a determination made by a facility review board unless at least four members are participating and voting. (6) Evaluation of members. The commissioner will evaluate each facility review board member's performance on an annual basis. (7) Legal assistance. The attorney assigned to the facility from the department's Legal Services Division will provide legal assistance to the review board as needed. (b) TDMHMR Dangerousness Review Board. The TDMHMR Dangerousness Review Board reviews individuals served at Vernon State Hospital to determine whether or not they are manifestly dangerous or must be transferred to a less secure mental health facility. Reviews are conducted in accordance with a statutorily mandated schedule. (1) Membership. The TDMHMR Dangerousness Review Board membership consists of five mental health professionals. (A) At least one member must be a psychiatrist with experience in forensic psychiatry. (B) At least two members must be currently engaged in direct care of persons with mental illness. (C) At least one member must have experience evaluating and treating persons with mental retardation. (2) Member appointments or contracts. The commissioner will appoint or contract with a sufficient number of individuals to comprise a board which is able to meet the statutorily mandated review schedules. Contracts must include provisions which: (A) ensure that reviews are conducted in accordance with this subchapter; (B) allow sufficient time to meet the review schedules; and (C) specify a mechanism for evaluating each board member's performance on an annual basis. (3) Terms. Board member appointments or contracts will be for two-year terms. If vacancies occur, the commissioner will replace members as needed to maintain a sufficient number of qualified members necessary to accommodate the statutorily mandated review schedule. (4) Chair. The commissioner will designate the chair of the board, who is responsible for ensuring that appropriate members and alternates to meet membership requirements outlined in paragraph (1) of this subsection are participating in each meeting. (A) If the chair is unable to serve on the TDMHMR Dangerousness Review Board for any reason, he or she will designate another member of the board to act as chair. (B) If the chair is unable to make such an appointment, then the commissioner will make the appointment. (5) Conflict-of-interest. A member of the TDMHMR Dangerousness Review Board is disqualified from participating in a determination if the board member has provided mental health services to the individual being reviewed, has personal or professional involvement with the behavior or incident which precipitated the transfer of the individual to the Maximum Security Unit at Vernon State Hospital, or has been a member of the individual's treatment team within the current admission. (6) Quorum. TDMHMR Dangerousness Review Board members may occasionally need to remove themselves from a hearing in the event of an emergency or if a member determines that a conflict-of-interest exists after a hearing has begun. In no case may action be taken or a determination made by the Review Board unless at least four members are participating and voting. (7) Legal assistance. An attorney assigned from the department's Legal Services Division will provide legal assistance to the board as needed. (c) Orientation and training. The department will provide a uniform orientation for new members and alternates of all review boards and annual relevant training for all members and alternates. (1) Training will utilize current professional literature and knowledge and the current Clinical Guidelines for Assessing Individual Risk Factors (Attachment 1), which is maintained by the CEO and clinical director of Vernon State Hospital and periodically updated with relevant clinical information for risk assessment. (2) Completion of the orientation and annual training is required for continued membership. sec.402.76. Procedures for the Determination of Manifest Dangerousness by Facility Review Boards. (a) If the facility CEO has reason to believe that an individual is manifestly dangerous and in need of transfer to Vernon State Hospital, the facility CEO may request that the facility review board convene to consider the question. The facility CEO or designee will, whenever possible, consult with staff at Vernon State Hospital to consider issues related to the appropriateness of transfer, including treatment attempted at the facility and treatment available at Vernon State Hospital. If consultation is not possible staff will document the reasons why in the individual's record. (b) At least two working days before the facility review board meets, the chair must provide notice of a manifest dangerousness review hearing using the "Facility Review Board Notice of Hearing" form (Attachment 2), which is herein adopted by reference, copies of which are available from the Texas Department of Mental Health and Mental Retardation, P.O. Box 12668, Austin, Texas 78711-2668. A copy of the form must be filed in the permanent clinical record of the individual. Notice must be sent to: (1) the individual and/or legal guardian, if any; (2) the individual's representative, if any; and (3) with the consent of the individual or his or her legal guardian, the individual's parents, spouse, or other appropriate person. (c) At least one day before the facility review board meets, board members and the individual's representative must receive any background information pertinent to the case to be reviewed, including: (1) a full description of the recent alleged incident or incidents believed to indicate manifest dangerousness, including police and/or witness reports, as appropriate and available; (2) a statement from the individual and his or her representative concerning the alleged incident or incidents believed to indicate manifest dangerousness, unless the individual or his or her representative does not wish to submit a statement; and (3) information relating to the individual's treatment. (d) During the hearing, the facility review board must: (1) consider all pertinent and relevant information regarding the individual, including: (A) the information outlined in subsection (c) of this section; and (B) a complete clinical history and assessments which: (i) identify factors that precipitate or contribute to dangerousness utilizing the current Clinical Guidelines for Assessing Individual Risk Factors, as described in sec.402.74 of this title (relating to Review Boards); (ii) review past and current treatment efforts, including all relevant social and legal history, and treatment plan changes that targeted the dangerousness; and (iii) evaluate the individual's response to treatment efforts to determine whether the individual is currently manifestly dangerous; and (2) conduct a personal interview of the individual, unless he or she refuses to be interviewed. The chair of the review board will ensure that adequate staff are present to maintain a safe environment. (e) Only facility review board members and the individual and his or her guardian and/or representative may participate in the hearing or interview, except that at the facility review board's request and with the consent of the individual or his or her legal guardian, professional trainees may attend the hearing or interview as part of their educational training. This does not preclude the review board from requesting that persons attend part of the proceedings to provide testimony or technical assistance. (f) Only facility review board members may participate in its final deliberations. (1) If during deliberations the review board determines that it requires additional information, it may cease deliberating and reopen the hearing. (2) The individual and his or her guardian and/or representative must be allowed to attend and participate in the reopened hearing. (g) An individual may only be transferred to the Maximum Security Unit of Vernon State Hospital if the facility review board makes a determination that the individual's current behavior is manifestly dangerous. Such a determination may only be made if the evidence indicates that: (1) the individual is receiving appropriate treatment, including treatment targeted to addressing the individual's dangerousness; and (2) the individual requires a maximum security environment to continue treatment and ensure public safety. (h) The facility review board's written report of the determination will be submitted to the facility CEO and a copy filed in the permanent clinical record of the individual. A copy will also be sent to the individual and his/her guardian and/or representative. (1) A determination that an individual is manifestly dangerous requires a unanimous vote. (2) If a decision of the facility review board is not unanimous, any member of the facility review board may prepare a written dissent, stating the reason for such dissent. Dissents will be filed in the permanent clinical record of the individual, and a copy will be provided to the facility CEO, the facility review board chair, and the commissioner. (i) If, while awaiting transfer, it becomes apparent that the individual is no longer manifestly dangerous, the facility review board must be reconvened in accordance with the procedures in this section. (j) Facility review board hearings, with the exception of final deliberations, must be tape-recorded or otherwise transcribed, with the recording or transcription made a part of the individual's medical record. sec.402.77. Procedures for the Determination of Manifest Dangerousness by the TDMHMR Dangerousness Review Board. (a) The TDMHMR Dangerousness Review Board must meet at least once each month to conduct reviews as mandated by the Texas Code of Criminal Procedure, Article 46.02, sec.8(a) and Article 46.03, sec.4(b). Additional meetings may be requested by the facility CEO. (1) Within 60 days of admission or transfer to the Maximum Security Unit of Vernon State Hospital, each individual must be reviewed by the Review Board for the determination of manifest dangerousness as required by the Texas Code of Criminal Procedure, Article 46.02, sec.8(a), and Article 46.03, sec.4(b). (2) Each individual must be reviewed at least every six months thereafter. (3) An individual may be referred for review earlier than that by showing good cause, if approved by the CEO of Vernon State Hospital. For the purposes of this subsection, good cause is defined as sufficient change in condition to be deemed as not manifestly dangerous by the individual's physician and treatment team or by an independent evaluator. (b) At least fourteen days before a scheduled monthly meeting, the CEO of Vernon State Hospital must provide the chair of the TDMHMR Dangerousness Review Board with: (1) a list of individuals to be reviewed by the board; and (2) pertinent clinical, social, and legal data of each individual on the list. (c) At least seven days before a scheduled monthly meeting, the appropriate physician and treatment team or independent evaluator shall provide to the TDMHMR Dangerousness Review Board for each individual being reviewed a comprehensive individual assessment of risk for the occurrence of manifestly dangerous behaviors utilizing the Directions for Compiling a Comprehensive Individual Assessment of Risk for the Occurrence of Manifestly Dangerous Behaviors (Attachment 3), and other materials as appropriate. (1) If the physician and treatment team of an individual or an independent evaluator recommend transfer from Vernon State Hospital to a less secure mental health facility because the individual's dangerousness is sufficiently in remission, then the physician and treatment team, independent evaluator, must also provide an assessment and attestation of the availability of effective treatment in a less secured setting. (2) The assessment must include an analysis of the level of external controls needed to ensure the continuity of safe and effective treatment and the type of mental health commitment needed to support these. (d) At least seven days before a hearing is held, the TDMHMR Dangerousness Review Board chair must provide notice of a manifest dangerousness review hearing using the "TDMHMR Dangerousness Review Board Notice of Hearing" form (Attachment 4), which is herein adopted by reference, copies of which are available from the Texas Department of Mental Health and Mental Retardation, P.O. Box 12668, Austin, Texas 78711-2668. A copy of the form must be filed in the permanent clinical record of the individual. Notice must be sent to: (1) the individual and/or legal guardian, if any; (2) the individual's representative, if any; and (3) with the consent of the individual or his or her legal guardian, the individual's parents, spouse, or other appropriate person. (e) During the hearing, the TDMHMR Dangerousness Review Board must: (1) review all pertinent and relevant information provided about the individual; and (2) conduct a personal interview of the individual, unless the individual refuses to be interviewed. (f) Only TDMHMR Dangerousness Review Board members and the individual and his or her guardian and/or representative may participate in the hearing or interview. This does not preclude the Review Board from requesting that persons attend part of the proceedings to provide testimony or technical assistance. (g) Only TDMHMR Dangerousness Review Board members participate in its final deliberations. (1) If during deliberations the Review Board determines that it requires additional information, it may cease deliberating and reopen the hearing. (2) The individual and his or her guardian and/or representative must be allowed to attend and participate in the reopened hearing. (h) Based upon the information gathered from subsection (e) of this section, the TDMHMR Dangerousness Review Board will determine whether or not each individual reviewed is manifestly dangerous. A written report of each determination, including reasons for the determination, must be submitted to the CEO of Vernon State Hospital and the commissioner and a copy filed in the permanent clinical record of the individual. (1) A determination that an individual is not manifestly dangerous requires a unanimous vote. (2) If a decision of the board is not unanimous, any member may prepare a written dissent, stating the reason for such dissent. The dissent must be filed in the permanent clinical record of the individual and a copy provided to the CEO of Vernon State Hospital and the Review Board chair. (i) If the Review Board determines that an individual is manifestly dangerous, then the individual must remain at the Maximum Security Unit at Vernon State Hospital for continued treatment. (j) If the Review Board determines that an individual is not manifestly dangerous, then the individual must, within 30 days of the determination, be transferred to a less secure mental health facility recommended by the CEO of Vernon State Hospital in accordance with procedures outlined in sec.402.78(b). If the less secure mental health facility serving the individual's county of resident is not suitable for the individual's continued treatment needs, the treatment team, with agreement from the individual or and family or legal guardian, may consider transfer to another less restrictive facility. If the individual agrees and the receiving facility CEO agrees, transfer will be arranged. The MHA in the original county of residence will be notified of the transfer. Transfer of responsibility from one MHA to another will occur in accordance with sec.402.62 (concerning Development of an Interim Plan for Services for Individuals Who Change MHAs) of Chapter 402, Subchapter B (concerning Continuity of Services -Mental Health). (k) TDMHMR Review Board hearings, with the exception of final deliberations, must be tape-recorded or otherwise transcribed, with the recording or transcription made a part of the individual's medical record. sec.402.81. Research Concerning Standards for Manifest Dangerousness. (a) As a service to review board members and alternates, the CEO of Vernon State Hospital will provide review board members and alternates with a non- inclusive compilation of current clinical or scientific literature that contain information useful to their deliberations. (b) Review board members and alternates are expected to be informed of modern clinical and scientific information relevant to prediction of violence and determination of manifest dangerousness. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515599 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: January 15, 1996 Proposal publication date: August 8, 1995 For further information, please call: (512) 206-4516 Chapter 407. Internal Facilities Management Lease of TDMHMR Surplus Property 25 TAC sec.407.120 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts an amendment to sec.407.120, governing lease of TDMHMR property of Chapter 407, concerning internal facilities management, with changes to the proposed text as published in the October 27, 1995, issue of the Texas Register (20 TexReg 8893). The amendment implements provisions of House Bill 2377 of the 74th Legislature which created new sec.533.087 of the Texas Health and Safety Code. The statute authorizes the department to lease real property not designated as "surplus" property; additionally it permits the department to lease real property to certain government agencies, not-for-profit organizations, and entities related to the department by a service contract at less than the prevailing market rate without advertising or competitive bidding if sufficient public benefit is derived. A hearing was held Thursday, November 16, 1995, to accept public testimony; no testimony was offered. Written comments were received from the parent of a state school resident. The commenter asked what were the "other factors" described in subsection (d) that could be considered by the board in reviewing bids. The department responds that "other factors" would be anything specific to the particular lease situation that would impact on the department and the people it serves. The amendment is adopted under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and with sec.533.084 and sec.533.087, which requires the board to adopt rules relating to the lease of real property. sec.407.120. Lease of TDMHMR Property. (a) Leases may only be executed for department property that the Texas Mental Health and Mental Retardation Board has declared to be: (1) surplus property in accordance with Texas Health and Safety Code, sec.533.084; or (2) suitable for lease in accordance with Texas Health and Safety Code, sec.533. 087. (b) Proposals to lease surplus property shall be made to the board by the department or by the General Land Office. Except as provided by subsection (c) of this section, all lease proposals shall be advertised at least once a week for four consecutive weeks in at least two newspapers, one of which shall be published in the city where the property is located, or the nearest daily paper thereto, and the other in a paper with statewide circulation. The advertisement shall summarize the lease proposal, provide the name and address of a person to whom interested parties may submit bids for consideration by the department, and state where a copy of the proposal and the board's criteria for awarding the lease can be obtained. (c) The department may lease real property or an improvement for less than the prevailing market rate, without advertisement or without competitive bidding, if: (1) the board determines that sufficient public benefit will be derived from the lease; and (2) the property is leased to: (A) a federal or state agency; (B) a unit of local government; (C) a not-for-profit organization; or (D) an entity related to the department by a service contract. (d) The department shall review any bids received based upon the adopted criteria, and may conduct a review of other factors which it deems to be appropriate on any or all bids. (e) Prior to the award of any lease that will have a term exceeding five years, the board shall be apprised of all bids received. (f) The department may reject any and all bids. (g) Proceeds from a lease shall be used and held in accordance with Texas Health and Safety Code, sec.533. 084(b). This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515597 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: December 25, 1995 Proposal publication date: October 27, 1995 For further information, please call: (512) 206-4516 Chapter 408. Standards and Quality Assurance Subchapter C. Quality Assurance and Improvement System (QAIS) for Mental Retardation Services and Supports 25 TAC sec.sec.408.51-408.63 The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts new sec.sec.408.51-408.63, concerning quality assurance and improvement system (QAIS) for mental retardation services and supports. Section 408.51 and sec.sec.408.53-408.59 are adopted with changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8302). Section 408.52 and sec. sec.408.60-408.63 are adopted without changes and will not be republished. QAIS will become the vehicle by which local mental retardation authorities and designated providers assess their performance. QAIS is an outcomes-oriented system which concentrates on measuring desired results as well as the processes by which those results are achieved. An essential feature of this system is a focus on outcomes as defined by the individuals receiving services and supports. Language is added in sec.408.51 clarifying that this rule in conjunction with other department rules referenced in the department's performance contracts with authorities implement the board's statutory authority to set standards for community-based mental retardation services. Language added to the definition of Outcome-based Performance Measures in sec.408.53 clarifying that the system examines outcome measures for the organization in addition to the outcome measures for people. A provision is added in sec.408.54 which exempts services for infants and toddlers provided by a local authority under the purview of the Texas Interagency Council on Early Childhood Intervention from compliance with this rule as they have been exempted from compliance with the 1988 TDMHMR Community Standards for Individuals with Mental Retardation. In the same section, language has been added which clarifies that this subchapter does not diminish or negate a local authority's responsibility through its contract with the department to comply with other applicable department rules. Throughout the sections, mandatory language has replaced descriptive language to highlight those provisions for which failure by the local authority or designated provider to comply would constitute a breach of its contract with the department. Such language appears in sec.sec.408.55(a) and (e), 408.56(b) and (g), 408.57(b), 408.58(a) and (c), and 408.59(c), (e)-(g), and (i). To improve the readability of sec.408.55, language describing the aspects of quality which are to be measured by QAIS was moved from subsection (e) to subsection (a). Language has been added to subsection (e) which emphasizes the local authority's responsibility through its contract with the department to comply with other applicable department rules. Detailed language in sec.408.56(a) which described the selection of the random sample of consumers for the self-assessment survey has been deleted. The description was deemed insufficient to capture the many variables between local authorities, including size of the consumer population. Exhibit B provides a clearer description of how to develop a stratified, random sample; in addition, technical assistance will be provided to local authorities through the department's Central Office upon request. Language adopting the exhibit has been moved from subsection (a) to new subsection (c) and subsequent subsections have been re-lettered. In addition, mandatory language has replaced the permissive language in Exhibit B. A grammatical revision in sec.408.57(c) changes the singular "area" to the plural "areas." Language has been added in sec.408.58(a) clarifying that the local authority is to implement changes described in its plan of improvement. Other language is added in subsections (c) and (d) to improve readability. Language has been revised in sec.408.59(a) and (c) to improve readability. Clarifying references to other provisions of the rule and to various exhibits have been added in subsections (b), (e), (f), and (g). The exit conference described in paragraph (b)(3) has been designated as optional at the discretion of the organization's chief executive officer. Confusing language in subsection (g) has been revised to read more clearly. New subsection (h) has been added to clarify that the 18 outcomes for organizations are intended to assess whether the organization has the necessary and appropriate processes in place to support the 30 outcomes for people but are not directly related to the organization's QAIS score. Language added to subsection (j) clarifies that the department, not the Accreditation Council, grants deemed status, and that accreditation by other associations will be considered for deemed status if they meet the QAIS criteria. Language has been added in sec.408.61 which clarifies that the members of the external validation teams also will be trained in the application of the Accreditation Council's Outcome Based Performance Measures. A hearing to accept public testimony regarding the proposal was held on Thursday, October 26, 1995, in Austin, Texas; no testimony was offered. Written comments were received from the parent of a state school resident; Andrews Center, Tyler; Center for Health Care Services, San Antonio; Sabine Valley Center, Longview; and the Texas Interagency Council on Early Childhood Intervention (ECI), Austin. A commenter stated that the proposed rule represented a significant improvement over the current system and represented a move in a positive direction with a proper focus on outcomes. The department acknowledges the comment. A commenter recommended that the current agreement with TDMHMR which places responsibility for quality assurance for infant and toddler services with ECI remain in effect and that ECI programs be exempted from these proposed rules. The department agrees QAIS would duplicate the quality standards and compliance processes and procedures that ECI has in place for local programs specific to infant and toddler services. The department has revised language in sec.408.54 to exempt ECI programs operated by local authorities or designated providers from the provisions of this subchapter. A commenter suggested that instead of requiring 25% of the self-assessment team members to be replaced each year, as is described in sec.408.55(b)(3), that one team member should be replaced every two years. The commenter said this would improve continuity and be considerate of the limited resources at smaller centers. The department declines to make the changes, responding that the self- assessment team must maintain a continuously fresh perspective and that if membership does not change annually the team may develop a "team view" that could undermine credibility. The department further noted that only two of the required four team members are staff members of the organization; therefore, it is not expected that this requirement will impose a hardship on small organizations. A commenter requested that in sec.408.55(b)(2)(A), the word "or" be deleted, leaving the requirement for the self-assessment team to include both a consumer and a family member. The department responds that the self-assessment team should be both small and well-balanced, and the composition as proposed meets these criteria. Therefore, the department declines to make the change, but notes that the local authority or designated provider can add additional team members at it's own discretion. A commenter observed that the requirements in sec.408.56(a) concerning the survey sample are confusing. The department agrees and has clarified the language in the section. A commenter questioned the language in sec.408.56(d) which references the "other significant people in the consumer's life," and stated that top priority should always be given to the legal representative or family members. In addition, the commenter noted that the final report of the QAIS project team stated "an outcome can also be met if it is absent but the consumer has determined that it is unimportant to him or her" and recommended that this language be included in sec.408.56(d) with the addition of "or legal representative" after the term "consumer." The department concurs with the suggestion and has modified the language as requested. A commenter suggested that the composition of the external validation team as described in sec.408.59(d) should include no more than two persons from the department's Central Office plus one person from the community center and one person from the Texas Council of Community MHMR Centers. The department responds that external validation is a state authority (i.e., department) function and that the team composition described in the rule appropriately reflects that responsibility; therefore, the department declines to revise the requirement as suggested. A commenter stated that deemed status as described in sec.408.59(i) should not be limited only to accreditation by the Accreditation Council and recommended that a menu of additional national accreditations be included. The department responds that only the Accreditation Council's Outcome Based Performance Measures meet the criteria required by the QAIS project team. All existing certification processes currently in use were researched. However, if other processes become available which meet the criteria, they would be considered. Therefore, the rule language has been modified to reflect this possibility. Another commenter questioned what purpose was served by having an external validation function if deemed status is granted by the Accreditation Council. The department responds that deemed status is granted by the department, not by the Accreditation Council; those organizations which will be granted deemed status by the department are those which currently are accredited or which become accredited by the council. The external validation process will be waived for those organizations granted deemed status. The language has been revised to clarify that it is the department and not the Accreditation Council which grants deemed status. A commenter stated that specifics on training, including costs and dates and locations, are not addressed in sec.408.61. The department responds that the times, dates, and locations of training will be provided as training sessions are scheduled. The fiscal note in the proposal preamble noted that training costs will be borne by the department. Also regarding training, a commenter commended the department for including consumers, family members, and advocates in the list of persons for which start-up training will be provided, and urged that the training be offered to all family members. The department acknowledges the commendation and notes that the section specifies that training is to be made available to all stakeholders, which includes all family members. A third commenter questioned who would be providing the start-up and continuous training for the self-assessment teams, and stated that the training should be uniform, consistent, as well as curriculum-based. The commenter further suggested that the Accreditation Council provide training for the external validation team and for stakeholders. The department responds that consultants who meet the Accreditation Council's criteria for training on the council's copyrighted materials will train both the external validation team and each local authority's staff through the initial self-assessment. Regarding outcome measure #12 in Exhibit A (the Accreditation Council's Outcome Based Performance Measures), a commenter stated that organizations must give top priority to assisting consumers in remaining connected to their natural support networks, and noted that transportation necessary to accomplish this often is not available. The department acknowledges the comment and notes that this outcome is intended to uncover such problems where they exist and that resolution of the issue would be one aspect of the plan of improvement. The same commenter recommended that language be changed throughout the document to reflect that when appropriate, the legal representative speaks for the consumer. The department responds that the document is copyrighted material owned by the Accreditation Council and cannot be changed. However, clarifying language has been added in sec.408.56 which stresses the involvement of the legally authorized representative where one exists. The commenter noted a typographical error on page 143 of Exhibit A, including a letter from the Accreditation Council acknowledging the error. The department expresses its gratitude to the commenter for bringing the error to its attention and will notify all local authorities of the correction in the cover memo of the final rule upon distribution. A commenter noted that outcome measure #48, which was added to the list of organizational outcome measures for use in QAIS with the approval of the Accreditation Council, does not acknowledge that the department's priority population is to be served first. The commenter recommended that the outcome measure be revised to define this priority population and to specify that the most intense needs of those consumers are to be served first. The commenter also noted that Exhibits C-E also did not acknowledge the priority population. The department responds that local authorities are required by their performance contracts with the department (performance memorandum where the local authority is the community-based service division of a facility) to serve the priority population. To include the requested language here would be redundant and would serve no purpose. The new sections are proposed under the Texas Health and Safety Code, sec.532.015, which provides the Texas Mental Health and Mental Retardation Board with broad rulemaking authority, and sec.534.052, which gives the board rulemaking authority for community-based mental health and mental retardation services provided by community centers and other contract providers. sec.408.51. Purpose. This subchapter describes the quality assurance and improvement system (QAIS) for community-based mental retardation services and supports funded by the Texas Department of Mental Health and Mental Retardation. In addition to applicable department rules as referenced in the organization's contract with the department, QAIS implements the Texas Health and Safety Code, sec.534.052, concerning standards for community-based mental health and mental retardation services provided through a local mental health or mental retardation authority. sec.408.53. Definitions. The following words and terms, when used in this subchapter, have the following meanings, unless the context clearly indicates otherwise. CARE-The department's Client Assignment and Registration System, an on-line data entry system developed to provide demographic and other data about individuals served by the department. Department-The Texas Department of Mental Health and Mental Retardation. Designated provider -As defined in the Texas Health and Safety Code, sec.534.054, a service provider with whom the department contracts for the delivery of a specific community-based mental health or mental retardation service in a specified local service area of the state. The term does not include a local authority. Local authority -As defined in the Texas Health and Safety Code, sec.531.002, an entity to which the Texas Mental Health and Mental Retardation Board delegates its authority and responsibility within a specified region for planning, policy development, coordination, and resource development and allocation and for supervising and ensuring the provision of mental retardation services to individuals with mental retardation in one or more local service areas. Outcome Based Performance Measures-The Accreditation Council's copyrighted system of quality improvement and measurement that emphasizes responsiveness on the part of service organizations to the individual needs of that organization's consumers rather than traditional compliance with established standards. The system: (A) focuses on outcomes for consumers rather than the organizational processes that contribute to those outcomes but also looks at outcome measures for organizations; (B) is concise, focusing on those priority outcomes that people with disabilities indicate are most important to them; and (C) can be used with all services and programs-residential, vocational, social, or residential-and for consumers with different disabilities. Provider- (A) Any organization or entity, associated by a contract in a working alliance with a local authority or the department to provide community-based services and supports, including its employees or agents; or (B) that part of a local authority directly providing services and supports to individuals with mental retardation, including employees or agents. The Accreditation Council-A national quality enhancement organization representing national consumer and professional organizations and service providers dedicated to providing leadership and improving the quality of services for people with disabilities through the establishment of standards; provision of education, consultation, and training; dissemination of publications, accreditation of organizations and the recognition of excellence. Quality Assurance and Improvement System (QAIS) -The framework by which local authorities and designated providers measure the quality, efficiency, and effectiveness of their organizations and the services and supports they provide to consumers either directly or by contracting with providers. It is an outcome- oriented system that concentrates on measuring desired results and the processes used to obtain those results, as defined by the consumer. The system is based on The Accreditation Council's Outcome Based Performance Measures and involves three stages: (A) self-assessment; (B) plan of improvement; and (C) external validation. sec.408.54. Responsibilities of Local Authorities and Designated Providers. (a) Through its contract with the department, the local authority or designated provider shall assure its compliance with the provisions of this subchapter. (b) Through its contract with other providers, the local authority shall require compliance with the provisions of this subchapter as it applies to services and supports provided by the provider which are funded through the department. (c) Programs under the purview of the Texas Interagency Council on Early Childhood Intervention are not required to be surveyed as a part of QAIS. (d) Nothing in this subchapter is intended to diminish or negate any contractual requirement on the organization, including a contractual requirement to comply with applicable department rules. sec.408.55. Self-assessment by Local Authorities and Designated Providers. (a) Self-assessment and the subsequent development of a plan of improvement as described in sec.408.58 of this title (relating to Plan of Improvement) will occur annually beginning with state fiscal year 1996 and is completed before the end of the final quarter of every fiscal year. The self-assessment is based on The Accreditation Council's Outcome Based Performance Measures which are adopted by reference as Exhibit A in sec.408.60 of this title (relating to Exhibits) and is designed to evaluate two aspects of quality, which are: (1) outcomes of services that contribute to the quality of life (outcome measures for people); and (2) the organizational structure and processes that support quality services and supports (outcome measures for organizations). (b) The self-assessment is conducted by a team comprising at least four people, including the team coordinator. (1) The chief executive officer (CEO) or designee of the local authority or designated provider names a staff member as team coordinator. (2) The team coordinator selects other members of the team with consideration given to both the communication needs and the diverse cultural, ethnic, and religious backgrounds of the consumers who receive services and supports from that local authority or designated provider. Recommended team members include: (A) at least one consumer and/or family member; (B) one direct care staff person; (C) one person from the local community who has no affiliation with the organization; and (D) one administrative staff person. (3) No team member may serve more than three consecutive years on the team, with at least 25% of the team members being replaced each year. (c) The local authority or designated provider also may choose to include on the team persons from other local authorities or designated providers of similar size. Having a team member from outside the organization may prove beneficial when reviewing the outcome measures for organizations. (d) Team members will receive training in the self-assessment process in addition to an orientation which includes an overview of the consumers being reviewed, the importance of confidentiality, scheduling, and team assignments. (1) The training is based on model curriculum provided by the department, as described in sec.408.61 of this title (relating to Training.) (2) Each team member will sign a statement agreeing to respect the confidential nature of the information concerning the consumers being reviewed. (e) The self assessment will be performed using guidelines provided by the department, applicable department rules, and the organization's contract with the department. (f) The self-assessment process should take no longer than 15 working days with a formal feedback session immediately following the completion of the self- assessment. This timeframe permits the organization to gain a "snapshot" of itself and maintain the continuity and validity of the self-assessment. The self-assessment is divided into the following key components: (1) visits to settings where services and supports are provided for: (A) discussion and interaction with consumers, staff, service coordinators, and other significant people; (B) observation of the environment; and (C) review of documentation, when necessary; (2) the completion of all individual consumer reports; (3) the team synthesis and consensus process including; (A) compilation of interview or rating sheets; and (B) a consensus to generate a summary report of findings; and (4) feedback session for the CEO and invited staff. sec.408.56. Outcome Measures for People. (a) The outcome measures for people survey is designed to measure the impact of services and supports on the lives of consumers. (b) The sample will include: (1) at least one consumer for each type of service recipient (e.g., consumers with challenging behaviors or intensive health care needs); (2) at least one consumer from each service category including contracted services (e.g. residential, vocational); and (3) additional stratifications to enhance random sample selection (e.g., funding sources, service sites, and demographics). (c) Technical assistance regarding the development of a stratified, random sample is provided in Sample Selection and Stratification which is adopted by reference as Exhibit B in sec.408.60 of this title (relating to Exhibits). (d) The program coordinator/case manager for each consumer included in the survey will be contacted by the team coordinator or another team member to explain the assessment process and to obtain the written consent of the consumer or the consumer's legally authorized representative as described in Chapter 403, Subchapter K of this title (relating to Client-Identifying Information). (e) The presence of each outcome is determined by the consumer or the consumer's legally authorized representative. It is evidenced through the interview process with the consumer and, when appropriate, with the consumer's legally authorized representative and the other significant people in the consumer's life. An outcome also can be met if it is absent but the consumer or legal representative has determined that it is unimportant to the consumer. There should be evidence that the consumer or legally authorized representative has an experiential context for making such a choice. (f) The interview is supplemented by observations of the consumer's environment and, when necessary, by reviewing documentation to resolve perceived conflicts in information. (g) Each outcome measure will be addressed with every consumer chosen for the interview process. (h) The Outcome Measures for People Results Worksheet is adopted by reference as Exhibit C and the Outcomes for People Scoring Grid is adopted by reference as Exhibit D in sec.408.60 of this title (relating to Exhibits). sec.408.57. Outcome Measures for Organizations. (a) The outcome measures for the organization support the findings of the outcome measures for people. The issues of health, safety, and rights are reviewed through assessment of the supports and services provided by the organization. (b) The organization's written documentation, together with interviews of designated staff and other stakeholders and the observations of team members, form the basis for reviewing the outcomes for organizations. Documentation of a utilization management process, policies and procedures, and strategic planning will be in evidence. (c) An organization profile will be generated by the team which identifies the extent to which processes contribute to outcomes, strengths in meeting outcomes, and areas needing improvement. (d) The Outcomes for Organizations Results Worksheet is adopted by reference as Exhibit E in sec.408.60 of this title (relating to Exhibits). sec.408.58. Plan of Improvement. (a) The plan of improvement is intended to be a dynamic document that guides the organization in assuring that improvements are made which support consumers in realizing their desired outcomes. Consistent with the plan of improvement, the organization will implement changes which facilitate its achievement of the 18 outcomes for organizations described in Exhibit A. (b) A team selected by the organization's CEO to coordinate the plan of improvement activities should include a representative from the self-assessment team to ensure the continuity of the process. (c) The plan of improvement is developed within 30 calendar days of the feedback session described in sec.408.55(f)(4) of this title (relating to Self- assessment by Local Authorities and Designated Providers) and will be reviewed, amended, and acted upon as determined necessary by a quarterly sampling of the relevant outcomes. (d) In developing the plan of improvement, the team analyzes the self- assessment data and other relevant information such as the organization's strategic plan or reports of other regulatory entities, develops a concise profile of the strengths and weaknesses evident in critical areas, determines areas for improvement, and arranges these in priorities based upon the organization's mission and its contract with the department. (1) As part of the analysis, strategies that address high priority issues and barriers to opportunities for improvement are identified and described. (2) Ultimately, the team consolidates the results of these efforts into a written plan of improvement consistent with any additional strategy or planning done by the organization. (e) The following should be reflected in the plan of improvement: (1) the organization's mission statement; (2) goals essential for the fulfillment of the mission; (3) action steps which will lead to the accomplishment of goals and which are specific enough to articulate responsibilities across the organization; (4) a quarterly evaluation process which will document progress towards goals, illuminate areas for further quality enhancement endeavors, and include a sampling of relevant outcomes; and (5) an evaluation process which describes and assesses leadership and its involvement in setting direction, and developing and maintaining a leadership system that supports the mission. sec.408.59. External Validation. (a) The local authority or designated provider will submit its annual self- assessment results and plan of improvement along with the quarterly updates to the department's Managed Care Administration for the external validation portion of the QAIS. The external validation is intended to: (1) reassure the public that public funds are being expended prudently for the purpose intended; and (2) affirm to the administrators of the local authority or designated provider and to the trustees of the local authority that QAIS is being implemented as intended and that data are representative of the organization's performance. (b) The external validation process consists of three phases: (1) pre-visit activities including: (A) desk review of requested documentation; (B) determination of external validation team composition; (C) selection of an independent, stratified/random sample of individuals from the CARE system, separate from the sample used by the organization in the self- assessment as described in sec.408.56 of this title (relating to Outcome Measures for People); (D) scheduling of on-site external validation process activities: and (E) coordination of external validation process with organization; (2) on-site activities intended to confirm the findings and products of the organization's self-assessment and plan of improvement are: (A) examination of the products of the internal self-assessment through validation of the organization's implementation of the self-assessment instrument and plan of improvement; and (B) feedback regarding the consumers' responses concerning all outcomes and confirmation of the findings on the health, safety, and rights outcome measures through interviews with the consumers selected in the random sample described in paragraph (1)(C) of this subsection; and (3) followup reporting activities including: (A) an optional closed exit conference with key staff, at the discretion of the organization chief executive officer; (B) an open exit conference for staff, consumers, advocates, parents, and other interested parties; and (C) provision of information to the department's Managed Care Administration. (c) The external validation team leader will: (1) provide information to the department's Managed Care Administration regarding the organization's performance as reflected in the self assessment and the status of the plan of improvement; and (2) notify the organization's CEO and department's Managed Care Administration of problems in the outcome areas of health, safety, and rights which require immediate action. (d) The external validation team consists of no more than four people, including a: (1) team leader from Central Office who has at least five years experience in direct management of or direct delivery of services and supports to individuals with mental retardation; (2) second person from Central Office with same qualification as the team leader; (3) peer reviewer from another local authority organization or designated provider; and (4) representative from the local authority's managed services organization or another person from Central Office with same qualifications as the team leader. (e) During Fiscal Year 1996, each local authority and designated provider will perform a self-assessment and develop a plan of improvement as described in sec.408.58 of this title (relating to Plan of Improvement), but the external validation component of QAIS will not be implemented. (f) The external validation component will be conducted for the Fiscal Year 1997 self-assessment and plan of improvement of each local authority and designated provider. A representative from The Accreditation Council will be present during approximately 25% of the on-site visits to ensure reliability in the application of the Outcome Based Performance Measures described in Exhibit A. (g) During every fiscal year after Fiscal Year 1997, each local authority and designated provider will conduct a self-assessment and develop a plan of improvement. A desk review will be conducted by the department's Managed Care Administration of the annual self-assessment and plan of improvement submitted by each local authority and designated provider. The frequency of the on-site visit portion of the external validation component, however, will depend upon how many of the 30 outcomes for people described in Exhibit A are confirmed to be present during the previous on-site visit as follows: (1) up to 19 outcomes present, one year cycle; (2) 20-23 outcomes present, two year cycle; and (3) 24 or more outcomes present, three year cycle. (h) The 18 outcomes for organizations described in Exhibit A assess whether an organization has the necessary and appropriate processes in place to support the 30 outcomes for people; they are not directly related to the organization's score on QAIS. (i) Information obtained during the review of every organization's self- assessment and plan of improvement will be used by the department's Managed Care Administration for contract enforcement and negotiations and in compiling statewide data related to outcomes for people and organizations. (j) Deemed status will be granted by the department to those organizations accredited by The Accreditation Council based on evidence presented to the department's Managed Care Administration of continuing accreditation. These organizations will be exempt from the on-site external validation process, but will be required to submit an annual self-assessment and plan of improvement to Central Office for data compilation and further contract negotiation. Deemed status for accreditation by other nationally recognized accreditation associations which meet the requirements of QAIS will be considered by the department's Managed Care Administration upon request by a local authority or designated provider. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515598 Ann Utley Chair, Texas MHMR Board Texas Department of Mental Health and Mental Retardation Effective date: January 1, 1996 Proposal publication date: October 10, 1995 For further information, please call: (512) 206-4516 Part XI. Texas Cancer Council Chapter 701. Policies and Procedures 25 TAC sec.701.9 The Texas Cancer Council adopts a new section of sec.701.9, concerning policies and procedures, without changes to the proposed text as published in the October 31, 1995 issue of the Texas Register (20 TexReg 8964). The new section is being proposed to add a definition regarding employee training. This rule defines employee training guidelines. No comments were received regarding the adoption of the proposed rule. The new section is proposed under the Health and Safety Code, Chapters 102. 002 and 102.009 which provide the Texas Cancer Council with the authority to develop and implement the Texas Cancer Plan, and Texas Civil Statutes, Article 6252-13a sec.4, which provide the Texas Cancer Council with the authority to adopt rules governing council practice and procedures. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515842 Emily F. Untermeyer Executive Director Texas Cancer Council Effective date: December 26, 1995 Proposal publication date: October 31, 1995 For further information, please call: (512) 463-3190 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part II. Texas Parks and Wildlife Department Chapter 59. Parks Park Entrance and Park User Fees 31 TAC sec.59.2, sec.59.3 The Texas Parks and Wildlife Commission in a regularly scheduled public hearing, November 3, 1994, adopted amendments to sec.59.2 and sec.59.3, concerning Park Entrance and Use Fees. Section 59.2 was adopted with changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 Tex Reg 7955). Section 59.3 was adopted without change and will not be republished. The amendment to sec.59.2 sets the fee for an annual park entrance permit at $50 instead of the $25-$75 range as proposed. The amendments provide consistency and simplification of regulations concerning fees and increase revenue to continue department public lands programs. The amendments set fees for public lands activities administered by the department. The department received approximately 100 comments concerning the proposed fee increases and these respondents were generally opposed to the proposed increases in park fees. There were no groups or organizations speaking in opposition or in support of the proposed amendments. The department disagrees with comments in opposition to the proposed park fee increases. The increases in park fees are associated with increased costs of state park operations, maintenance and repair, and equipment and capital improvement backlogs. The increases represent additional funding which is necessary to maintain the current level of park services. No changes were made as a result of the comments. The amendments are adopted under the 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 $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. (c) Annual entrance 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 at parks with a per vehicle entrance fee and at parks with a historic site tour fee. It is nontransferable and nonrefundable. No more than 50 persons, including adult supervisors will be admitted with each permit. The number of vehicles or the number of individual persons per historic site tour may be limited by the park manager. 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 of $.50-$5.00 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 also 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 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-$1.00 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 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. (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) When an annual or seasonal permit is offered for entrance in lieu of a daily fee, the executive director is authorized to establish a fee for a replacement and/or a duplicate permit. (v) 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. (w) 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 the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 4, 1995. TRD-9515812 Bill Harvey Regulatory Coordinator Texas Parks and Wildlife Department Effective date: December 26, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 389-4642 or 1-800-792-1112, Ext. 4642 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part III. Texas Youth Commission Chapter 81. Administrative Provisions 37 TAC sec.81.17 The Texas Youth Commission (TYC) adopts an amendment to sec.81.17, concerning research projects, without changes to the proposed text as published in the November 3, 1995, issue of the Texas Register (20 TexReg 9150). The justification for amending the section is the provision of specific guidelines for TYC staff and research consultants. The amendment clarifies the approval process for proposals to conduct research involving TYC staff and/or youth and adds that a copy of the final report will be furnished to TYC. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.041, which provides the Texas Youth Commission with the authority to conduct continuing inquiry into the effectiveness of the treatment methods it employs in the reformation of children. The proposed amendment implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515879 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: November 3, 1995 For further information, please call: (512) 483-5244 Chapter 85. Admission and Placement Commitment and Reception 37 TAC sec.85.7 The Texas Youth Commission (TYC) adopts the repeal of sec.85.7, concerning mentally retarded youth, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8992). The justification for the repeal of the section is elimination of a rule no longer in effect. The repeal will eliminate procedures for returning mentally retarded youth to the courts when committed to TYC. The 74th Legislature established new law allowing for mentally retarded youth to be committed to TYC for delinquent acts, thus procedures herein are no longer in effect. No comments were received regarding adoption of the repeal. The repeal is adopted under the Human Resources Code, sec.61.077, which provides the Texas Youth Commission with the authority to accept a child who is mentally retarded. The proposed repeal implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515698 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 483-5244 Chapter 87. Treatment Basic Care Services 37 TAC sec.87.73 The Texas Youth Commission (TYC) adopts an amendment to sec.87.73, concerning clothing for TYC youth, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8992). The justification for amending the section will be more efficient use of State resources and increase safety in facility operation. The amendment provides that uniform type clothing is required for delinquent youth residing in TYC facilities. It eliminates the list of minimum clothing provided by the youth's parent and by TYC since it will no longer be needed. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed rule implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515752 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 483-5244 Chapter 91. Discipline and Control Due Process Hearings Procedures 37 TAC sec.91.31 The Texas Youth Commission (TYC) adopts an amendment to sec.91.31, concerning level I hearing procedure, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8993). The justification for amending the section is for more efficient use of resources and staff assigned as hearings examiners. The amendment eliminates requirements that the hearings examiner conducting the level I hearing to find facts regarding alleged major rule violations be an examiner who has not previously participated in a hearing for the youth. The requirement is that the hearings examiner shall be impartial. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed rule implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515753 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 483-5244 Control 37 TAC sec.91.69 The Texas Youth Commission (TYC) adopts an amendment to sec.91.69, concerning detention, without changes to the proposed text as published in the November 3, 1995, issue of the Texas Register (20 TexReg 9151). The justification for amending the section is to ensure protection of the public safety. The amendment provides that youth committed to TYC who are age 18 or older and have escaped from a TYC placement or violated a condition of parole may be referred to detention in an adult jail. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.075, which provides the Texas Youth Commission with the authority to order the child's confinement under conditions it believes best designed for the child's welfare and the interests of the public. The proposed amendment implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515878 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: November 3, 1995 For further information, please call: (512) 483-5244 Chapter 93. General Provisions Youth Property 37 TAC sec.93.21 The Texas Youth Commission (TYC) adopts an amendment to sec.93.21, concerning youth personal property, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8993). The justification for amending the section is more efficient operation and use of State facilities. The amendment will eliminate allowing youth to have a liberal amount of their personal property in their living space while in residence at a TYC operated facility. The change will facilitate a more efficient use of resources and eliminate a source of much contention, thus allowing a more controlled setting. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed rule implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515751 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 483-5244 Records, Reports and Forms 37 TAC sec.93.57 The Texas Youth Commission (TYC) adopts an amendment to sec.93.57, concerning access to youth records, without changes to the proposed text as published in the October 31, 1995, issue of the Texas Register (20 TexReg 8995). The justification for amending the section is compliance with laws providing sharing of youth files in limited cases. The amendment provides that files are open to government agencies if the disclosure is required or authorized by law and to whom a child is referred for treatment or services if a written confidentiality agreement has been signed. This amendment complies with changes made by the 74th Legislature. No comments were received regarding adoption of the amendment. The amendment is adopted under the Human Resources Code, sec.61.034, which provides the Texas Youth Commission with the authority to make rules appropriate to the proper accomplishment of its functions. The proposed rule implements the Human Resource Code, sec.61.034. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515754 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 31, 1995 For further information, please call: (512) 483-5244 Part IX. Commission on Jail Standards Chapter 261. Existing Construction Rules The Commission on Jail Standards adopts amendments sec. sec.261.121, 261.221, and 261.316, concerning Existing Construction Rules, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8318). The rules function to delete the requirement for providing seating for inmates and the public at visitation areas for jails built prior to 1977. No comments were received regarding adoption of the amendments. Existing Jail Design, Construction and Furnishing Requirements 37 TAC sec.261.121 The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules, and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515866 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Existing Lockup Design, Construction and Furnishing Requirements 37 TAC sec.261.221 The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules, and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515867 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Existing Low-Risk Design, Construction and Furnishing Requirements 37 TAC sec.261.316 The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules, and procedures establishing minimum standards for the construction, equipment, maintenance and operation of county jails. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515868 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Chapter 269. Records and Procedures 37 TAC sec.269.2 The Commission on Jail Standards adopts an amendment to sec.269.2, concerning Records and Procedures, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8318). Adoption of this rule will make administrative rules consistent with statute. The rule functions to require annual financial audits of the general operations of county jails be submitted to the commission. No comments were received regarding adoption of the amendment. The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515869 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Chapter 271. Classification and Segregation of Inmates 37 TAC sec.271.1 The Commission on Jail Standards adopts the repeal of sec.271.1, concerning Classification and Segregation of Inmates, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8319). Adoption of this repeal will facilitate adoption of new classification rules as allowed by statute. The repeal functions to delete established classification and segregation rules so that an objective classification plan can be adopted. No comments were received regarding adoption of the repeal. The repeal is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515870 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 37 TAC sec.sec.271.1-271.6 The Commission on Jail Standards adopts new sec.sec.271.1-271.6, concerning Classification and Segregation of Inmates, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8319). Adoption of the new rules provides new classification guidelines as allowed by statute. The new rules function to establish objective means of inmate classification and segregation. No comments were received regarding adoption of the new sections. The new sections are adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515871 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Chapter 273. Health Services 37 TAC sec.273.6 The Commission on Jail Standards adopts an amendment to sec.273.6, concerning Health Services, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8320). Adoption of the amendment will make rules regarding Tuberculosis Screening Plan current. The amendment functions to require jail staff to implement tuberculosis screening plans. No comments were received regarding adoption of the amendment. The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care and treatment of prisoners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515872 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 Chapter 281. Food Service 37 TAC sec.281.5 The Commission on Jail Standards adopts an amendment to sec.281.5, concerning Food Service, without changes to the proposed text as published in the October 10, 1995, issue of the Texas Register (20 TexReg 8321). Adoption of this rule will make standards consistent with the Texas Department of Health rules. The rule functions to delete the recommendation that inmates who handle food obtain a Doctor's Certificate. No comments were received regarding adoption of the amendment. The amendment is adopted under the Government Code, Chapter 511, which provides the Texas Commission on Jail Standards with the authority to adopt reasonable rules and procedures establishing minimum standards for the custody, care, and treatment of prisoners. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515873 Jack E. Crump Executive Director Commission on Jail Standards Effective date: December 27, 1995 Proposal publication date: October 10, 1995 For further information, please call: (512) 463-5505 TITLE 40. SOCIAL SERVICES AND ASSISTANCE Part I. Texas Department of Human Services Chapter 12. Special Nutrition Programs Child and Adult Care Food Program 40 TAC sec.12.3, sec.12.25 The Texas Department of Human Services (DHS) adopts amendments to sec.12.3 and sec.12.25, without changes to the proposed text published in the November 3, 1995, issue of the Texas Register (20 TexReg 9152). The justification for the amendments is to require sponsoring organizations who are applying for program participation to have signed agreements with a minimum of 50 licensed or registered day care home providers who are providing care to nonresidential children, unless the applicant is approved to sponsor fewer than 50 day care homes. Also, once a sponsor is approved for participation, his CACFP contract will be terminated if the sponsor submits claims for reimbursement for fewer than 50 day care homes for three consecutive months. The amendments will function by increasing efficiency in the operation and administration of the program. No comments were received regarding adoption of the amendments. The amendments are adopted under the Human Resources Code, Title 2, Chapters 22 and 33, which provides the department with the authority to administer public and nutritional assistance programs. The amendments implement the Human Resources Code, sec. sec.22.001-22.024 and sec.sec.33.001-33.024. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515894 Nancy Murphy Section Manager, Media and Policy Services Texas Department of Human Services Effective date: December 27, 1995 Proposal publication date: November 3, 1995 For further information, please call: (512) 438-3765 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 1. Management Contested Case Procedure 43 TAC sec.sec.1.21-1.63 The Texas Department of Transportation adopts the repeal of existing sec.sec.1.21-1.63, concerning contested case procedure, and adopts new sec.sec.1.21-1. 61, concerning contested case procedure with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7040). New sec.sec.1.32-1.33 and sec.1.38 are adopted with changes and sec.sec.1. 21-1.31, sec.sec.1.34-1.37, and sec.sec.1.39-1.61 are adopted without changes and will not be republished. The repeal and new sections are necessary to: update the applicable rules in accordance with revisions to Government Code, Chapter 2001, the Administrative Procedure Act (APA), and procedures established by the State Office of Administrative Hearings (SOAH); make the contested case procedure clearer and more concise; and provide an efficient process for default judgments that will expedite the resolution of a contested case against a respondent who fails to appear at an administrative hearing. Existing sec.sec.1.21-1.63 described the department's procedures for contested cases. New sec.sec.1.21-1.61 provide updated procedures for contested cases in accordance with recent revisions to the Government Code, Chapter 2001 and the procedures established by SOAH. On September 8, 1995, the department conducted a public hearing on the proposed new sections and no oral or written comments were received. In order to provide an effective and efficient process the department has revised: sec.1.32 to require that a pleading be sent only to the attorney for a party instead of to the party and the party's attorney; sec.1.33 to allow a filing to be deemed filed when the pleading is received by SOAH or the executive director instead of upon receipt by the hearing officer or the executive director in accordance with SOAH's internal procedures; and sec.1.38 to remove the requirement for an affidavit in motions for postponement, continuance, withdrawal, or dismissal. The repeal is adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Government Code, Chapter 2001, the Administrative Procedure Act, which provides a minimum standard of uniform practice and procedure for state agencies. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515797 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 43 TAC sec.sec.1.21-1.61 The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation and Government Code, Chapter 2001, the Administrative Procedure Act, which provides a minimum standard of uniform practice and procedure for state agencies. sec.1.32. Service. (a) A copy of all pleadings in any proceeding shall be sent by mail or otherwise delivered by the party filing the same to every other party of record, except that notice of a hearing will be made by hand delivery, via facsimile, or by certified mail, return receipt requested. If any party has appeared in the proceeding by attorney or other representative authorized under these sections to make appearances, service shall be made on such attorney or other representative. (b) A certificate signed by the person filing the pleading, showing the manner of service, stating that it has been served on the other parties, and identifying those parties shall be contained in or attached to all pleadings. The certificate is prima facie evidence of such service. (c) If a filing does not conform to the requirements of this section, the hearing officer may: (1) return the pleading to the filing party; (2) send a notice to all parties stating that the pleading will not be considered unless and until the office is notified that all parties have been served with the pleading; or (3) send a copy of the pleading to all parties. sec.1.33. Filing. All pleadings, affidavits, or other filings relating to any proceeding pending or to be instituted before the department shall be filed with the State Office of Administrative Hearings or the executive director. Filings shall be deemed filed only when actually received by the State Office of Administrative Hearings or the executive director, accompanied by the fee or deposit, if any, required by statute or department rules. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515796 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 Chapter 15. Transportation Planning and Programming International Bridges 43 TAC sec.sec.15.70-15.76 The Texas Department of Transportation adopts new sec. sec.15.70-15.76 concerning international bridges without changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7047). Texas Civil Statutes, Article 6674v-8, provide that a political subdivision or private entity authorized to construct or finance the construction of a bridge over the Rio Grande must obtain approval of the Texas Transportation Commission for the construction of the bridge before requesting approval from the federal government under Subchapter IV, Chapter 11, Title 33, United States Code. New sec.15.70 explains that the purpose of the rules is to describe the procedures and conditions by which a political subdivision or private entity may obtain the approval of the commission to provide an international bridge. New sec.15.71 defines words and terms. New sec.15.72 requires that in order to obtain approval to construct or finance the construction of a bridge the applicant must submit an application and comply with the requirements of this undesignated head. New sec.15.73 explains design, financial feasibility, and the social and environmental impact studies which must be conducted prior to submittal of the application. New sec.15.74 describes the documents that accompany an application. New sec.15.75 establishes the procedure for coordination with other governmental entities, processing and analyzing the application, a public hearing, and describes the requirements of the report to be submitted to the commission. New sec.15.76 describes the commission's analysis of the project including consideration of comments of other entities, project requirements, and financial requirements, and provides that the approval or disapproval of the project shall be by written order of the commission. On September 29, 1995, the department conducted a public hearing on the proposed new sections to receive data, comments, views, and testimony. The department received written comments from the El Paso Metropolitan Planning Organization. The El Paso MPO asked which study or studies are included in the Texas Mexico Toll Bridge Study, Research Report Number 1976, which is referenced in the definitions of "study sector" and "Texas-Mexico Toll Bridge Study" of sec.15.71, Definitions. The Texas Mexico Toll Bridge Study consists of six volumes with the Summary Report completed in April 1994. Two related comments were made concerning funding in sec.15.73, Preliminary Studies. The first comment asked if the department felt that the preliminary studies required by this section qualified for Federal Highway Administration (FHWA) funding, and stated that with denial of FHWA funding the cost to local governments would not be insignificant. The department believes that the proposed section implements the approval process in the manner least burdensome to the applicant while, at the same time, meeting all state statutory requirements. Most of the information required by these sections is the same information necessary to satisfy the federal requirements. The cost of providing the additional information required is insignificant. The proposed section does not prescribe specific forms for applicants to use in order to maximize the possibility that the same information will suffice for both state and federal requirements. The department normally coordinates activities closely with both FHWA and MPO's and will continue to do so to minimize this section's impact on applicants. The department requested an opinion from FHWA concerning the eligibility of the preliminary study activities for FHWA funding. The FHWA response indicated that the costs of preparing the preliminary studies can be eligible for federal participation funds. Concerning sec.15.76, Commission Action, the El Paso MPO asked why the intention to use the Texas Mexico Toll Bridge Study as the basis for evaluating international bridge projects was not more clearly articulated when the study or series of studies was initially issued. The El Paso MPO further stated that it is imperative that the Texas Mexico Toll Bridge Study be updated periodically and suggested every two years or so. Volume 1 of the research report states, "The final objective is to provide an estimate of the potential demand and revenue at any new toll site along the Texas-New Mexico border. This estimate can be used as a guideline for the potential demand for, and the feasibility of, any new proposed toll sites along the Texas-Mexico border (and thus represents, in effect, a prefeasibility analysis for new sites along the border)." The analysis was intended to be a resource reference which entities, such as proposed bridge sponsors, the Texas Turnpike Authority, and the department, could use for decision making. Although the study is dated, it provides logical parameters to guide decision making. The department is not currently planning to update the study, however as the need arises in response to the impact of North American Free Trade Agreement (NAFTA) on the transportation infrastructure the department will consider an update. The El Paso MPO asked which "state transportation plan" the language referred to in sec.15.76, Commission Action? The "state transportation plan" is the Texas Transportation Plan. The department intends to update the plan annually, particularly in the border areas as the impact on transportation and commerce by NAFTA is more clearly defined. The El Paso MPO suggested that a working group of border transportation planners, composed of specific border districts and MPO's, be formed to provide input to the department as it develops evaluation tools for international bridge proposals. Although forming a working group to provide input to the department may be a good idea, the working group outlined in this recommendation does not represent all the border stakeholders. A more comprehensive representation is already found in the Texas Border Transportation State Technical Advisory Committee (BTSTAC), which was formed to support the Joint Working Committee binational border study. If approved, the BTSTAC can better serve the function suggested by the MPO. The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6674v-8, which provides that a political subdivision or private entity authorized to construct or finance the construction of a bridge over the Rio Grande must obtain approval of the commission for the construction of the bridge before requesting approval from the federal government under Subchapter IV, Chapter 11, Title 33, United States Code. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515799 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 Chapter 18. Motor Carriers Subchapter A. General Provisions 43 TAC sec.18.1, sec.18.2 The Texas Department of Transportation adopts new sec. sec.18.1-18.2, concerning purpose and definitions. Section 18.2 is adopted with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7056). Section 18.1 is adopted without changes and will not be republished. New sec.sec.18.1-18.2, and subchapters B-F, Chapter 18, Motor Carriers, which are being simultaneously adopted, supersede all Railroad Commission rules adopted under a law repealed by Senate Bill 3, sec.31, 74th Legislature, 1995, and Texas Civil Statutes, Article, 6687-9a. Senate Bill 3, 74th Legislature, 1995, added Texas Civil Statutes, Articles 6675c and 6675c-1, which transferred the regulatory authority of the motor carrier industry from the Railroad Commission to the department and provided the department with the authority to register motor carriers, regulate the transportation of household goods, and administer the single state registration system, and added Article 911m, requiring a motor transportation broker to provide a bond to the Texas Department of Transportation. Senate Bill 3 also amended Texas Civil Statutes, Article 6687-9a, which transferred the licensing authority for vehicle storage facilities from the Railroad Commission to the Texas Department of Transportation. New sec.18.1 and sec.18.2 provide for the definitions for rules concerning the regulation of motor carriers, transportation brokers, and vehicle storage facilities. On September 22, 1995, the department conducted a public hearing to seek comments concerning the proposed adoption of new Subchapter A-General Provisions, sec.18.1 and sec.18.2, relating to purpose and definitions. Numerous written comments were received. Southwest Movers Association, Inc. submitted written comments requesting revisions to certain provisions. Three commenters suggested the definition of "advertisement" be clarified to include telephone directories for listings exceeding a single line. However, they suggested the words "interstate" and "foreign" be excluded from the definition of "advertisement," citing the department's lack of jurisdiction. The department concurs with this comment. The definition is amended to read, "any communication to the public in connection with an offer or sale of intrastate transportation service, except for a single-line listing of a carrier name, address, and telephone number in a directory or similar classification." The department has added the definition of "certificate of public convenience and necessity" to clarify the term as used in Subchapter B with respect to worker's compensation insurance or accidental insurance. The definition shall read, "Certificate of public convenience and necessity-A certificate issued by the Railroad Commission of Texas under Chapter 270, Acts of the 40th Legislature, Regular Session, 1927, or Chapter 314, Acts of the 41st Legislature, Regular Session, 1929, granting the right to operate in the carriage of persons or goods for hire in intrastate traffic." Although no comments were received in regards to the definition of collect-on- delivery (COD), the department has determined that the definition must be deleted in order to avoid confusion when used in connection with household goods carriers. The current definition refers to COD as payment for an item at the time of its delivery. However, the term COD is used differently in the household goods industry. COD is used in the household goods industry to refer to the collection of freight charges on delivery rather than the collection of payment for an item on delivery. Since the definition is not appropriate, it is deleted in its entirety. Numerous commenters recommended the definition of commercial motor vehicle be amended to exclude vehicles transporting school children to and from school in the city of Houston. Commenters indicated this will cause extreme hardship to not only the school bus operators, but also to the parents who cannot afford any increase in price for the service. Commenters indicate this service is provided only because the Houston Independent School District cannot pick up school children if they live within a two mile radius of the school. Commenters also indicated that their vehicles are subject to registration and safety requirements from the city of Houston. Two commenters requested the department amend the definition of commercial motor vehicle to exclude long term care facilities from commercial motor vehicle and insurance registration requirements. They are concerned with the high insurance requirements and suggest there is an exemption under federal statutes. The department concurs with the commenters and shall address their concerns by amending the definitions of commercial motor vehicles. The definitions of "motor carrier" and "commercial motor vehicle" in Senate Bill 3 appear to have broadened the reach of state regulation to include such vehicles as those operated by governmental entities, vans operated by nursing homes, and buses operated by noncommercial entities-all vehicles not previously regulated by the Railroad Commission of Texas (RRC). Senator Teel Bivins and Representative Curtis L. Seidlets, Jr., sponsors of Senate Bill 3, and Senator Ken Armbrister and Representative Clyde Alexander, chairmen of the legislative committees responsible for Senate Bill 3, submitted letters to the department stating that it was not their intent to extend state regulation to vehicles not previously regulated by the RRC under Texas Civil Statutes, Articles 911a and 911b, unless such regulation was specifically provided for in the legislation. The department has examined the legislative history of Senate Bill 3, and has determined that the intent of the legislation was to: deregulate the trucking industry in accordance with federal law; consolidate the registration of tow trucks, motor buses, and trucks; and transfer the registration of these vehicles to the department. The department, therefore, determines that the extension of state regulation to vehicles not previously regulated by the RRC would be inconsistent with the general purpose of Senate Bill 3. The definition of "commercial motor vehicle" in sec.18.2 is revised to only include vehicles previously regulated by the RRC, except for vehicles specifically identified in Senate Bill 3. Two commenters recommended the definition of commercial motor vehicle be amended to clarify the description of a vehicle registered with the Railroad Commission of Texas to transport Lp-gas. The department concurs with this comment. The subsection has been amended to read, "a vehicle registered with the Railroad Commission pursuant to Texas Natural Resource Code, sec.113.131 and sec.116.072." One commenter suggested the definition of "farm vehicle" be amended to avoid confusion with the definition used by the Department of Public Safety. The Department of Public Safety defines farm vehicle in Title 37, Texas Administrative Code, sec.3.62 (relating to Regulations Governing Transportation Safety). The department concurs with the commenter's suggestion, and the definition has been revised to read, "Farm vehicle-Any vehicle or combination of vehicles controlled and/or operated by a farmer or rancher being used to transport agriculture products, farm machinery, and farm supplies to or from a farm or ranch." Two commenters recommended the definition for "gross weight rating" be redefined. The commenters suggested that the gross weight rating should be the greater of: the manufacturer's specified rating; the actual weight of the equipment and lading; or the maximum lawful weight of the equipment and lading. The department does not concur. This change would have little meaning since the definition for a commercial motor vehicle includes, "a combination of vehicles with a gross weight, registered weight, or gross weight rating in excess of 26,000 lbs.," which encompasses each of the proposed changes. Thus, the definition is not revised. Two commenters recommended the definition of "multiple user" be revised to clarify which shipper's are required to be notified of meetings conducted under the carrier's collective bargaining agreements. The first commenter recommended that the definition be amended to classify shippers that have a contract with a carrier and use its services no less than twice per month during the preceding 12 months. The second commenter recommends that the definition be amended to classify shippers that have a contract with a carrier and use its services more than 10 times a year. The department does agree that the definition should be clarified, but does not agree with the first commenter because its definition is too restrictive. Rather, the department agrees with the second commenter's definition with some modifications. The definition is amended to read, "Multiple user-An individual or business who has a contract with a household goods carrier and uses the carrier's services more than 10 times within the preceding 12 months." Three commenters recommended the definition of "reasonable dispatch" be amended to mirror the federal provisions that include the defense of "force majeure," in that the carriers should not be held responsible for things beyond their control, such as "Acts of God." They cite that the exclusion of this provision is a legal technicality but should be added to the definition. The department concurs and finds that acts of God or war should not come under reasonable dispatch. Additionally, the amended portion of the definition reiterates limitations already found in Subchapter E, sec.18.54(d)(1)(A)(ii). The definition is amended to read "Reasonable dispatch-The performance of transportation, excluding transportation provided under tariff provision requiring guaranteed service dates, on the date or during the period of time agreed upon by the carrier and the shipper and shown on the shipment documentation; provided, however, that the defenses of force majeure as construed by the courts shall not be denied the carrier." Two commenters recommended the definition of a "shipper" be amended because the definition does not differentiate between an individual shipper and a commercial shipper. The department does not concur with this comment. The proposed regulations do not have a separate applicability for individuals and businesses. Thus, to distinguish between the two types of shippers would serve no purpose. The definition is not revised. The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6675c, which authorizes the department to adopt rules to administer the regulation of motor carriers, and Texas Civil Statues, Article 6675c-1, which authorizes the department to administer the single state registration system. sec.18.2. Definitions. The following words and terms, when used in this chapter shall have the following meanings, unless the context clearly indicates otherwise. Advertisement-Any communication to the public in connection with an offer or sale of intrastate transportation service, except for a single-line listing of a carrier name, address, and telephone number in a directory or similar classification. Approved association -A group of household goods carriers, or its agents, or both, which has an approved collective ratemaking agreement on file with the department pursuant to sec.18.52 of this title (relating to Rates). Arbitration-A forum in which each party and counsel for that party present their position before an impartial third party, who renders a specific award. The award is not binding on either party and serves only as a basis for the parties' further settlement negotiations. Audit-A review of records and source documents of a registrant to determine its compliance with the requirements of subchapter E of this chapter (relating to Enforcement). Certificate of convenience and necessity-A certificate issued by the Railroad Commission of Texas under Chapter 270, Acts of the 40th Legislature, Regular Session, 1927, or Chapter 314, Acts of the 41st Legislature, Regular Session, 1929, granting the right to operate in the carriage of persons or goods for hire in intrastate traffic. Certificate of insurance-A certificate prescribed by and filed with the department, in which an insurance carrier or surety company warrants that a motor carrier for whom the certificate is filed has the minimum coverage as required by sec.18.16 of this title (relating to Insurance Requirements). Certificate of registration-A certificate issued by the department to a motor carrier, containing a unique number. Certified scale -Any scale designed for weighing motor vehicles, including trailers or semitrailers not attached to a tractor, and certified by an authorized scale inspection and licensing authority; a certified scale may also be a platform or warehouse type scale properly inspected and certified. Commercial motor vehicle- (A) Includes: (i) any motor vehicle or combination of vehicles with a gross weight, registered weight, or gross weight rating in excess of 26,000 pounds, which is designed or used for the transportation of cargo in furtherance of any commercial enterprise; (ii) all tow trucks, as that term is defined in this section, regardless of the gross weight rating of the tow truck; (iii) any vehicle, including buses, designed to transport more than 15 passengers, including the driver, operating for compensation or hire, beyond any incorporated town or city and its suburbs; and (iv) any vehicle used in the transportation of hazardous materials in a quantity requiring placarding under the regulations issued under the federal Hazardous Materials Transportation Act (Title 49, United States Code, App. sec.sec.1801-1813). (B) Does not include: (i) a farm vehicle, as defined in this section, with a gross weight, registered weight, or gross weight rating of less than 48,000 pounds; (ii) cotton vehicles registered in accordance with Transportation Code, sec.502.277; and (iii) a vehicle registered with the Railroad Commission pursuant to Texas Natural Resources Code, sec.113.131 and sec.116.072. Commission-The Texas Transportation Commission. Department-Texas Department of Transportation. Director-The director of the Motor Carrier Division, Texas Department of Transportation. Division-The Motor Carrier Division. Farmer-A person who operates a farm or is directly involved in the cultivation of land, crops, or livestock which are owned by that person or are under the direct control of that person. Farm vehicle-Any vehicle or combination of vehicles controlled and/or operated by a farmer or rancher being used to transport agriculture products, farm machinery, and farm supplies to or from a farm or ranch. Gross weight rating-The maximum loaded weight of any combination of truck, tractor, and trailer equipment, as specified by the manufacturer of the equipment. If the manufacturer's rating is unknown, the gross weight rating is the greater of: (A) the actual weight of the equipment and its lading; or (B) the maximum lawful weight of the equipment and its lading. Household goods - (A) personal effects and property used or to be used in a dwelling when a part of the equipment or supply of such dwelling and similar property as the Interstate Commerce Commission (ICC) may provide by regulation, not including property moving from a factory or store, except property the householder has purchased with the intent to use in his or her dwelling and which is transported at the request of, and the transportation charges paid to the carrier by, the householder; (B) furniture, fixtures, equipment, and the property of stores, offices, museums, institutions, hospitals, or other establishments when a part of the stock, equipment, or supply of such stores, offices, museums, institutions, hospitals, or other establishments and similar property as the ICC may provide by regulation, not including the stock-in-trade of any establishment, whether consignor or consignee, other than used furniture and used fixtures, except when transported as incidental to moving the establishment, or a portion of it, from one location to another; and (C) articles, including objects of art, displays, and exhibits, which because of their unusual nature or value require the specialized handling and equipment usually employed in moving household goods and similar articles as the ICC may provide by regulation, not including any article, whether crated or uncrated, which does not, because of its unusual nature or value, require the specialized handling and equipment usually employed in moving household goods. Household goods carrier-A motor carrier required to register with the department under subchapter B of this chapter (relating to Motor Carrier Registration) who transports household goods. Independent-An individual who is not an employee of a household goods carrier or a shipper and who is not related by blood or marriage to the household goods carrier or the shipper. Interstate Commerce Commission (ICC)-A federal agency which regulates interstate commerce. Insurer-A person, including a surety, authorized in this state to write lines of insurance coverage required by subchapter B of this chapter (relating to Motor Carrier Registration). Manager-The manager of the department's Motor Carrier Division, Compliance and Enforcement Section. Mediation-A forum in which an impartial person, the mediator, facilitates communication between two parties to promote reconciliation, settlement, or understanding among the participants. Motor Carrier-An individual, association, corporation, or other legal entity that controls, operates, or directs the operation of one or more vehicles which transport persons or cargo over a road or highway in this state. Motor transportation broker-A person who sells, offers for sale, or negotiates for the transportation of cargo by a motor carrier operated by another person; or a person who aids and abets a person in performing an activity described in this definition. Multiple user-An individual or business who has a contract with a household goods carrier and who uses the carrier's services more than 10 times within the preceding 12 months. Principal place of business-A single location that serves as the motor carrier's headquarters and where it maintains or can make available its operational records. Public highway -Any publicly owned and maintained street, road, or highway in this state. Reasonable dispatch -The performance of transportation, excluding transportation provided under tariff provisions requiring guaranteed service dates, on the date or during the period of time agreed upon by the carrier and the shipper and shown on the shipment documentation; provided, however, that the defenses of force majeure as construed by the courts shall not be denied the carrier. Registration receipt -A receipt issued to the registrant by its registration state after the requirements of 49, Code of Federal Regulation (CFR), Part 1023 have been met. Registration state -A state where the registrant maintains a valid single state registration as defined in 49 CFR Part 1023. Revocation-The withdrawal of registration and privileges by the department or a registration state. Shipper-A person who is the consignor or consignee of a household goods shipment and is identified as such in the bill of lading contract and owns the goods being transported. Single state registration system-The program established by 49 United States Code sec.11506. SOAH-The State Office of Administrative Hearings. State(s) of travel-The state or states in which a motor carrier or carrier operates motor vehicles subject to the single state registration system. Suspension-Temporary removal of privileges granted to the registrant by the department or registration state. Tow truck-A motor vehicle equipped with, or used in combination with, a mechanical device, mini-wrecker, or auto-trailer, and which is adapted or used to tow, winch, or otherwise move another vehicle. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515795 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 Subchapter B. Motor Carrier Registration 43 TAC sec.sec.18.10-18.18 The Texas Department of Transportation adopts new sec. sec.18.10-18.18, concerning procedures by which a motor carrier may obtain a certificate of registration, and comply with the minimum insurance requirements, minimum workers' compensation or accident insurance requirements and procedures for registering as a motor carrier under the single state registration system. Sections 18.13, 18.16, and 18.18 are adopted with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7056). Sections 18.10-18.12, 18.14, 18.15, and 18.17 are adopted without changes and will not be republished. New sec.sec.18.10-18.18, and subchapters A and C-G, Chapter 18, Motor Carriers, which are being simultaneously adopted, supersede all Railroad Commission rules adopted under a law repealed by Senate Bill 3, sec.31, 74th Legislature, 1995. Senate Bill 3, 74th Legislature, 1995, added Texas Civil Statutes, Articles 6675c and 6675c-1, which transferred the regulatory authority of the motor carrier industry from the Railroad Commission to the department and provided the department with the authority to register motor carriers, regulate the transportation of goods, and administer the single state registration system. New sec.sec.18.10-18.18 provide for efficient and effective procedures by which a motor carrier may obtain a certificate of registration, comply with the minimum insurance requirements, minimum workers' compensation or accident insurance requirements and procedures for registering as a motor carrier under the single state registration system. On September 22, 1995, the department conducted a public hearing to seek comments concerning the adoption of new Subchapter B -Motor Carrier Registration, sec.sec.18.10-18.18, relating to registration and insurance requirements for motor carriers. Eighteen commenters offered oral testimony at the hearing. Numerous written comments were received by mail. Some comments were submitted by members of the state legislature and various associations. The Texas Motor Transportation Association opposed sec.18.16, concerning minimum liability insurance requirements and workers' compensation or accidental insurance coverage. The following associations opposed sec.18.18, concerning the cessation of temporary registration: McAllen Economic Development Corporation, Mexico-Texas Bridge Owners Association, McAllen Produce Terminal Market, Middle Rio Grande Development Council, and the City Council of Del Rio. Section 18.11, Motor Carrier Registration. Numerous commenters, including Senator Teel Bivins, author of Senate Bill 3, and other legislators requested a revision to the section to allow businesses that were not required to register as private motor carriers prior to August 31, 1995, be allowed to have until September 1, 1997 to comply with the registration and insurance requirements. The department does not concur with this request on the basis that the department does not have the legal authority to suspend state law. Therefore, the commenters' request is not adopted. Three commenters suggested that the section be revised to clarify the language in the section which could be misconstrued to include trailers. The department does not concur with the suggestion. A similar regulation was in effect prior to September 1, 1995, and there was little or no confusion as to whether or not trailers are required to register. Therefore, the commenters' suggestion is not adopted. Section 18.13, Application for Motor Carrier Registration, Subsection (c) Disposition of Application, paragraph (1) Approval, subparagraph (B) Registration listing, (i)-(ii). Three commenters suggested a revision to the subsection to clarify the references to highlighted "registration listings" to be maintained in each vehicle, as well as to clarify that only the pertinent page is needed, not the entire listing. The department concurs with the suggestion. The paragraphs have been changed to read, " (i) A copy of the page of the registration listing on which the power unit is shown shall be maintained in each power unit registered, with the appropriate information concerning that vehicle to be highlighted. The registration listing shall serve as proof of insurance as long as such insurance is in effect and such vehicle is registered with the department. (ii) The highlighted page of the registration listing maintained in the power unit shall, upon demand, be presented by the driver to a department certified inspector or any other authorized government personnel for inspection in accordance with sec.18.31 of this title (relating to Investigation and Examination of Records)." Section 18.14, Expiration and Renewal of Commercial Motor Vehicle Registration, Subsection (b) Registration Renewal. One commenter suggested that the subsection be revised to clarify whether the $10 fee per vehicle covers intrastate or interstate registration. The $10 fee covers the registration of a vehicle operating both interstate or intrastate. A vehicle meeting the definition of a commercial motor vehicle in sec.18.2 of subchapter A and operated by an interstate motor carrier exempt from regulation by the Interstate Commerce Commission should be registered under this section. However, it does not cover a vehicle that should be registered under the single state registration system in sec.18.17. Credit will be given to a motor carrier registering vehicles under sec.18.13 that is already registered under sec.18.17 if the carrier provides the department with a copy of the single state registration receipt. The commenter's suggestion is not adopted. Section 18.16, Insurance Requirements, Subsection (a) Minimum requirements. The Texas Motor Transportation Association, Inc., (TMTA) suggested amending the minimum liability insurance limits on motor carriers with a gross vehicle weight in excess of 26,000 lbs., including tow trucks, to conform with existing federal regulations, applicable on all commercial vehicles engaged in transporting goods for hire. The department does not concur with the suggestion. The federal limit on for-hire carriers is $750,000. The proposed requirement of $500,000 is sufficient to protect the interest of public safety for intrastate transportation. Therefore, the commenter's suggestion is not adopted. Three commenters requested that the subsection be revised to exclude or exempt non-profit private motor carriers and buses from carrying the minimum liability insurance limits. One commenter suggested a revision of this subsection which requires all motor bus carriers to comply with the minimum liability insurance levels, with no exemptions for non-profit private motor carriers as set forth by the Federal Motor Carrier Safety Regulations. The department does not have the authority to exempt non-profit organizations. A revision concerning the non-profit organizations shall be addressed in sec.18.2 of subchapter A. Several state legislators requested a clarification of the subsection concerning the substantial increase in the minimum insurance requirements for buses designed to transport 26 passengers or more. They question the basis for the increase in liability insurance of ten times the amount of coverage previously required, citing a concern for small businesses and their ability to survive. The department does not concur. The subsection does not make any significant changes to the minimum liability insurance levels previously adopted by the Railroad Commission. Therefore, the legislators' request is not adopted. The department has revised this subsection to clarify the coverage required and to delineate the type of liability coverage required by the subsection. The department has revised the paragraph to read, " (a) Minimum requirements. A motor carrier registered under this subchapter shall carry at least the minimum amount of liability insurance and file proof of insurance with the department for each vehicle registered under this subchapter. Such insurance must be sufficient to pay not more than the amount of the insurance for each final judgment against the carrier (combined single limit) for bodily injury to or death of an individual per occurrence, and loss or damage to property (excluding cargo) per occurrence, or both. Minimum insurance levels shall be maintained in at least the amounts indicated in the following table." Section 18.16, Subsection (a), paragraph (2), (3), (5), (6), and (7). The department has revised paragraphs (2), (3), (5), (6), and (7) of this table for clarification purposes. Paragraph (2) has been revised to read, "2. Buses designed to transport more than 15 passengers (including the driver), but less than 26 passengers (not including the driver)." Paragraph (3) has been revised to read, "3. Buses designed to transport 26 passengers or more (not including the driver). Paragraph (5) has been revised to read, "5. Commercial motor vehicles (gross vehicle weight in excess of 26,000 lbs.), including tow trucks." In paragraphs (6) and (7), the term "Motor vehicle carriers" has been changed to "Commercial motor vehicles." One commenter suggested that the subsection be revised to clarify filing requirements for workers' compensation or accidental insurance coverage. The commenter does not feel the rules are clear whether or not a filing is required on workers' compensation and cargo insurance. The department does not concur with the commenter. This section sets forth the requirements for filing proof of insurance with the department. For the exception of household goods carriers, who are required to file proof of cargo insurance, motor carriers are only required to file proof of liability insurance. Therefore, the commenter's suggestion is not adopted. Section 18.16, Subsection (b) Cargo insurance. One commenter suggested that the subsection be revised to include a deductible cargo insurance. The department does not concur with the suggestion. Deductibles are not authorized by Texas Civil Statutes, Article 6675c. Therefore, the commenter's suggestion is not adopted. Two commenters suggested that the subsection be revised to include a mandatory filing of cargo insurance for tow trucks. The commenter feels that the public needs to be protected from damages to vehicles caused by negligent tow truck operators. The department does not concur. Texas Civil Statutes, Article 6675c requires only liability insurance and workers' compensation or accidental insurance on commercial motor vehicles, which would include tow trucks. Therefore, the commenters' suggestion is not adopted. Section 18.16, Subsection (c) Worker's compensation or accidental insurance coverage. One commenter suggested that the department consider and clarify whether it will approve reimbursement or indemnity policies to meet accidental insurance requirements. The commenter cites these policies as the only ones which provide legal liability indemnity for the registered motor carrier in the event of workplace injury negligence claims. The department does not concur with this suggestion. Senate Bill 3 added the workers' compensation and accidental insurance provisions to protect employees. The intent does not appear to include the protection or indemnification of the employer. Therefore, the commenter's suggestion is not adopted. Numerous commenters, including TMTA and Representative Curtis L. Seidlits, Jr., house sponsor of Senate Bill 3, among other legislators, state that the language of this provision of the bill was intended to address a 1993 Attorney General's opinion that voided a law which sought to allow a motor carrier working on a government project to have the option of providing either worker's compensation or occupational accidental insurance. Additionally, they suggested a revision to eliminate the provision requiring motor carriers that use independent contractors to provide insurance coverage for the employees of the independent contractors. Furthermore, suggestions were made to revise this subsection to clarify the minimum amounts of coverage to apply only to accidental insurance, since the minimum amounts of coverage do not relate to workers' compensation insurance promulgated in a policy form by the Texas Department of Insurance. Numerous commenters, including Senator Teel Bivins and other state legislators, requested that the subsection be revised to clarify the term "employees," in respect to the required coverage. They suggested that changes be made to require the coverage on motor vehicle operators only. Some suggested that the term "employees" be substituted with the term "motor vehicle operators." The basis for their request is to avert financial hardships and employment cutbacks if all employees are required to be covered. Many commenters, including TMTA and Representative Curtis L. Seidlits, Jr., requested a revision of this requirement to exclude private carriers altogether, such as grocery supply companies with trucking divisions, nursing homes, and hotels. Among these commenters, a number of legislators requested a revision of this subsection to exempt retirement centers that operate buses. The commenters' concern is the added cost and expense that will be passed down to the consumers. The department concurs in part with these suggestions. The department has determined that it would be inconsistent with the general purpose of Senate Bill 3 to require entities which are not for-hire motor carriers to purchase workers' compensation insurance or accident insurance for all their employees, whether or not the employees' duties relate to transportation, and therefore, the department, consistent with the legislative purposes of Senate Bill 3, determines it necessary to revise sec.18.16 to require motor carriers who were required to obtain certificates of public convenience and necessity prior to September 1, 1995, to protect all their employees with workers' compensation insurance or accident insurance and all other motor carriers to protect their transportation related employees with workers' compensation insurance or accident insurance. One commenter suggested that the statute is not clear as to what kind of accidental coverage could be personal injury protection under a vehicle policy and suggests using personal injury protection since its cost would be minimal. The department does not concur in that the statute specifically requires either workers' compensation or accidental insurance. Therefore, the commenter's suggestion is not adopted. Section 18.16, Subsection (d) Qualification of carrier as self-insurer. One commenter suggests that the subsection be revised to clarify that self insurance provisions do not apply to workers' compensation. The department does not concur with this suggestion. Paragraph (1) of this subsection specifies the applicability of this subsection to subsection (a) and (b) of this section concerning minimum liability and cargo insurance requirements. Therefore, the commenter's suggestion is not adopted. Section 18.16, Subsection (d), paragraph (1) General qualifications. Numerous commenters, including Senator Teel Bivins and Representative Curtis L. Seidlits, Jr., among other legislators, requested that the paragraph be revised to provide for or exempt certain disability plans such as, responsible non- subscribers to workers compensation, businesses with plans approved by the federal Employee Retirement Income Security Act (ERISA), and existing self- insurance plans. The department does not concur with this suggestion. Senate Bill 3 does not allow for self-insurance or responsible non-subscribers to be applicable on workers' compensation or accidental insurance. Further, ERISA plans may be self-funded, insurance-funded, or funded by a risk retention group. Senate Bill 3 requires accidental insurance coverage to be acquired "from a reliable insurance company or companies authorized to write such policies in this state." Therefore, the commenters' suggestion is not adopted. One commenter suggested that the subsection be revised to clarify the insurance levels for liability and deductibles for liability and cargo insurance. The department does not concur with the suggestion. Motor carriers that are required to register with the department are required to maintain minimum levels of liability insurance. Deductibles are not authorized under Texas Civil Statutes, Article 6675c. Therefore, the commenter's suggestion is not adopted. Section 18.16, Subsection (d), paragraph (8) Governmental entities. The department has revised this subsection by removing paragraph (8). This revision is due to the exclusion of governmental entities to the definition of commercial motor vehicle. A revision concerning non-profit organizations shall be addressed in sec.18.2 of subchapter A. Section 18.16, Subsection (e) Proof of insurance. Numerous commenters requested a revision of this subsection to allow Texas Workers Compensation Commission certified self-insurers to provide proof of compliance with insurance requirements on coverage for their employees. The department concurs with this suggestion, but it is not necessary to change the subsection. Senate Bill 3 specifically provides that motor carriers shall protect its employees by obtaining workers' compensation insurance coverage as defined under the Texas Workers' Compensation Act, Title (Labor Code, Title 5, Subtitle A). If the coverage being provided complies with law as enforced by the Texas Workers Compensation Commission then the coverage is sufficient. Section 18.16, Subsection (e), paragraph (2) Filing proof of insurance, subparagraph (A). One commenter suggested that the subsection be revised to eliminate the requirement for proof of insurance at initial registration of a vehicle. The department does not concur with the suggestion. Texas Civil Statutes, Article 6675c requires that a motor carrier maintain evidence of insurance on file with the department before a registration listing can be issued. If the motor carrier has an insurance filing covering its fleet on file with the department, the proof of insurance requirement will be met. Therefore, the commenter's suggestion is not adopted. Section 18.16, Subsection (e), paragraph (4) Other bonds, policies or certificates. One commenter suggested that the subsection be revised due to a contradiction in the first two sentences. The first sentence states that a certificate of insurance will be accepted if it is issued by an insurance company licensed and authorized to do business in the state of Texas. A surplus lines insurer is authorized to do business in Texas but not licensed in Texas. The second sentence says that the department will accept a certificate of insurance issued by a surplus insurer meeting the requirements of Article 1.12-2 of the Code if accompanied by proof of inability to obtain insurance from an authorized insurance company. The department should clarify the rules that it will accept accidental insurance coverage by authorized insurance companies in Texas, which includes licensed insurers and eligible (unlicensed) surplus lines insurers. The department concurs with the suggestion and will omit the portion of the last sentence that reads, "if accompanied by proof of inability to obtain insurance from an insurance company authorized to do business in the State of Texas made by affidavit in the form required under 28 Texas Administrative Code sec.15.13 (relating to Surplus Lines Insurance Affidavit)." Section 18.16, Subsection (f) Termination of insurance coverage. One commenter suggested that the subsection be revised to clarify which 30 days notice is required, the specific types of insurance coverage requiring cancellation notice, and whether the notice of cancellation requirements applies to all, or specific insurance coverages. The department does not concur with the suggestion. The filing of insurance, and 30 days notice of cancellation applies only to liability and cargo insurance. Therefore, the commenter's suggestion is not adopted. Section 18.18, Temporary Registration of International Motor Carriers, subsection (d) Cessation of temporary registration. Eighteen commenters, including the McAllen Economic Development Corporation, Mexico-Texas Bridge Owners Association, McAllen Produce Terminal Market, Middle Rio Grande Development Council and the City Council of Del Rio requested that the subsection be amended to continue the temporary registration of international commercial motor carriers entering from Mexico. They believe that the cost of having to provide annual insurance would be excessive considering that most international carriers operate in Texas for less than a day. The department concurs with these suggestions. The subsection is revised to delete paragraphs (d) and (e). This change will allow the international stamp program to continue beyond December 17, 1995. Two commenters requested that temporary registration of Mexican commercial motor carriers be made available at port of entries via U.S. customs house brokers in order to facilitate the movement of cross border commerce. This subchapter stipulates that only insurance agents who are duly licensed by the Texas Department of Insurance and who maintain evidence of master insurance policies on file with the department may obtain and sell international registration stamps. The rationale behind this requirement is to control the issuance of temporary registration stamps through agents' insurance policies. However, custom brokers that meet the requirements of sec.18.18(c), concerning insurance agents may provide temporary registration to international carriers. General Comments. One commenter suggested that the proposed rules be revised to include a requirement for tow trucks to have tow lights and safety chains. The department does not concur with the suggestion. There is no authorization in Senate Bill 3 for the department to administer these requirements. Therefore, the commenter's suggestion is not adopted. One commenter suggested that the proposed rules be revised to bring back regulation of the tow truck industry. The department does not concur with this suggestion. Since Senate Bill 3 repealed the Tow Truck Act, the department has no statutory authority to continue regulation. Therefore, the commenter's suggestion is not adopted. One commenter suggested that the department consider Section 28 of Senate Bill 3 concerning indemnification. The commenter states that the intent of the provision was to prohibit a shipper from requiring a trucking company to hold the shipper harmless from negligent acts of those other than the trucking company or its employees. The department does not concur with this suggestion. Section 28 of Senate Bill 3 amended Texas Civil Statutes, Article 6701d-11, and is not part of this rulemaking. Therefore, the commenter's suggestion is not adopted. One commenter suggested that the department promptly appoint an advisory committee with respect to the trucking industry and the department that the Commission voted to establish a year ago in March. The issue is not part of this rulemaking. Therefore, the commenter's suggestion is not adopted. One commenter suggested that the department study how disputed claims will be addressed under the accidental insurance requirements, including a study to determine if there are accidental coverages available. The department does not concur with this suggestion. Senate Bill 3 does not have provisions for the department to be involved in the actual claims process, but only to require insurance filing of companies who are registered. Therefore, the commenter's suggestion is not adopted. One commenter suggested the department produce a listing of reliable insurance companies that are not authorized to write policies in this state. The department does not disagree with this suggestion, but the comment is not part of the proposed rulemaking. The suggestion may merit further consideration in a subsequent rulemaking. Therefore, the commenter's suggestion is not adopted. One commenter suggested the department study and consider similar laws in other states for any duplicity of coverage by any federal legislation. The department does not concur with this suggestion. The Texas Legislature has chosen to address the regulation of transportation by enacting Senate Bill 3. Therefore, the commenter's suggestion is not adopted. The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Article 6675c and 6675c-1, which authorizes the department to adopt rules to administer the regulation of motor carriers. sec.18.13. Application for Motor Carrier Registration. (a) Form of application. The application for motor carrier registration shall be in the form prescribed by the director and shall contain, at a minimum, the following information. (1) Business or trade name. The applicant shall designate the business or trade name of the motor carrier. (2) Owner name. If the motor carrier is a sole proprietorship, the owner shall indicate the name and social security number of the owner. A partnership shall indicate the partners' names, and a corporation shall indicate principal officers and titles. (3) Principal place of business. A motor carrier shall designate on the application the motor carrier's principal business address. If the mailing address is different than the principal business address, the mailing address shall also be designated on the application. (4) Legal Agent. A Texas domiciled motor carrier will be the agent for service of process unless otherwise designated by the motor carrier. (A) The Texas domiciled motor carrier shall provide the name and address of a legal agent for service of process, if different than the motor carrier. (B) A motor carrier domiciled outside of Texas shall provide the name and Texas address of the legal agent for service of process. (C) A legal agent of process shall be a Texas resident, a domestic corporation, or a foreign corporation authorized to transact business in Texas with a Texas address for service of process. (5) Description of vehicles. All applications shall include a motor carrier equipment report identifying each commercial motor vehicle requiring registration that the carrier proposes to operate. Each commercial motor vehicle shall be identified by its motor vehicle identification number, make, model year, license plate number and state of issuance, type of cargo, and the unit number assigned to the commercial motor vehicle by the motor carrier. Any subsequent registration of vehicles shall be made in accordance with subsection (d) of this section. (6) Description of cargo. An applicant shall also: (A) state as to whether or not the carrier proposes to transport passengers, household goods, or hazardous materials; (B) state whether or not the applicant is a tow truck operator; and (C) specify the amount of insurance coverage. (7) Safety Affidavit. Each motor carrier shall complete, as part of the application, an affidavit stating that the motor carrier has knowledge of, and will conduct operations in accordance with, all federal and state safety regulations. (8) Workers' compensation or accidental insurance. An applicant shall indicate on the application the type of coverage provided for employees. (9) Accompaniments to application. The following fees and information shall be included with all applications: (A) an application fee of $100, plus a fee to equal $10 for each vehicle requiring registration that the motor carrier proposes to operate; (B) proof of insurance or financial responsibility and insurance filing fee as required by sec.18.16 of this title (relating to Insurance Requirements); and (C) any other information as required by law. (10) Payment of fees. Fees paid under paragraph (9)(A) of this subsection are non-refundable and will not be prorated. Credit will be given to fees paid under sec.18.17 of this title (relating to Single State Registration System), if the carrier provides a copy of the single state registration receipt; (11) Place of application. All applications for motor carrier registration shall be filed with the department's Motor Carrier Division. (b) Incomplete applications. Any application for registration that is incomplete, but that is accompanied by all fees and proof of insurance or financial responsibility, may be conditionally accepted by the director. Conditional acceptance shall in no way constitute approval of the application. The director will notify the applicant of the additional information necessary to complete the application. If the applicant does not supply all necessary information within 45 days from notification by the director, the application will be considered withdrawn and all fees will be retained. (c) Disposition of application. (1) Approval. An applicant meeting the requirements of this section and whose registration is approved shall be issued the following information. (A) Certificate of registration. A certificate of registration will contain the name and address of the motor carrier and a single registration number, regardless of the number of vehicles the carrier operates which require registration. (B) Registration listing. An original registration listing will be issued by the department and shall be continuously maintained at the registrant's principal place of business. Such listing will contain information regarding each vehicle registered by the motor carrier. (i) A copy of the page of the registration listing on which the power unit is shown shall be maintained in each power unit registered, with the appropriate information concerning that vehicle to be highlighted. The registration listing shall serve as proof of insurance as long as such insurance is in effect and such vehicle is registered with the department. (ii) The highlighted page of the registration listing maintained in the power unit shall, upon demand, be presented by the driver to a department certified inspector or any other authorized government personnel for inspection in accordance with sec.18.31 of this title (relating to Investigation and Examination of Records). (iii) Before the expiration of its registration listing, the commercial carrier shall notify the department in writing when it discontinues use of a registered commercial motor vehicle. (iv) Any erasure, alteration, or unauthorized use of a registration listing shall render it void. (v) If an original registration listing is lost, stolen, destroyed, mutilated, becomes illegible, or otherwise requires replacement, a new registration listing will be issued by the department upon written request by the motor carrier. (2) Denial. The department may deny a registration if the applicant has a registration revoked under sec.18.72 of this title (relating to Suspension and Revocation). (d) Supplement to original application. A motor carrier required to register under this section shall submit a supplemental application under the conditions described in this subsection. (1) Additional vehicles. (A) A motor carrier may not operate an additional vehicle requiring registration unless the carrier pays a $10 registration fee for each additional vehicle the motor carrier proposes to operate, except as provided in subparagraphs (B) and (C) of this paragraph, and must have evidence of continuing insurance or financial responsibility in the amounts set forth in sec.18.16 of this title (relating to Insurance Requirements). (B) A motor carrier is not required to pay the $10 registration fee for a substitute vehicle that is a replacement for a vehicle for which the fee was previously paid, provided that the motor carrier notifies the department of the vehicle being taken out of service and identifies the replacement vehicle on a form prescribed by the department, before the replacement vehicle is put into operation. (C) Credit will be given to fees paid for vehicles registered in accordance with sec.18.17 of this title (relating to Single State Registration System), if the carrier provides the department with a copy of the single state registration receipt. (2) Change of cargo. A registered motor carrier may not begin transporting household goods or hazardous materials unless the carrier presents a supplemental application which shows the department evidence of insurance or financial responsibility in the amounts specified by sec.18.16 of this title (relating to Insurance Requirements). (3) Change of name. A motor carrier that changes its name (other than by transferring ownership) shall file a supplemental application for registration in compliance with this section no later than the effective date of the change. The motor carrier shall include evidence of insurance or financial responsibility in the new name, and in the amounts specified by sec.18.16 of this title (relating to Insurance Requirements). (4) Change of address or legal agent for service of process. A motor carrier shall notify the director, in writing, of any change of address or legal agent for service of process no later than the effective date of the change. The address most recently filed shall be presumed conclusively to be the current address. (5) Change of ownership. (A) A change of ownership of a sole proprietorship or partnership, and the merger, sale, or transfer of a corporation will require the new owner to file a new application for registration in accordance with the provisions of this section. (B) A motor carrier that is a corporation shall notify the director, in writing, of any change in the principal officers and titles no later than the effective date of the change. sec.18.16. Insurance Requirements. (a) Minimum requirements. A motor carrier registered under this subchapter shall carry at least the minimum amount of liability insurance and file proof of insurance with the department for each vehicle registered under this subchapter. Such insurance must be sufficient to pay, not more than the amount of the insurance, for each final judgment against the carrier (combined single limit) for bodily injury to or death of an individual per occurrence, and loss or damage to property (excluding cargo) per occurrence, or both. Minimum insurance levels shall be maintained in at least the amounts indicated in the following table. Figure 2: 43 TAC sec.18.16(a) (b) Cargo insurance. A for-hire motor carrier of household goods shall carry cargo insurance in the same amount required by 49 U.S.C. sec.10102. The minimum limits of financial responsibility for household goods carriers for hire are as follows: (1) loss or damage to total cargo shipped-$5, 000; (2) loss of or damage to total cargo carried on any one motor vehicle-$5,000; and (3) aggregate loss or damage to cargo at one time-$10,000. (c) Workers' compensation or accidental insurance coverage. (1) Motor carriers required to register under this subchapter with present operations that would have required certificates of public convenience and necessity for operations conducted prior to September 1, 1995, shall provide for all its employees workers' compensation, or accidental insurance coverage in the amounts prescribed in paragraph (2) of this subsection. (2) Accidental insurance coverage required by paragraph (1) of this subsection shall be at least in the following amounts: (A) $300,000 for medical expenses and coverage for at least 104 weeks, (B) $100,000 for accidental death and dismemberment, 70% of employee's pre- injury income for not less than 104 weeks when compensating for loss of income; and (C) $500 for the maximum weekly benefit. (d) Qualification of carrier as self-insurer. (1) General qualifications. A motor carrier may meet the insurance requirements of subsections (a) and (b) of this section by filing an application, in the form prescribed by the department, to qualify as a self- insurer. The application shall include a true and accurate statement of the motor carrier's financial condition and other evidence that establishes its ability to satisfy obligations for bodily injury and property damage liability, without affecting the stability or permanency of its business. In lieu of other proof, the department may accept Interstate Commerce Commission evidence of the motor carrier's qualifications as a self-insurer. (2) Adopted final orders. The department will adopt all RRC final orders concerning self-insurance active on August 31, 1995, and will continue such final orders as authorized by the RRC until further amended or changed by order of the department. (3) Applicant guidelines. In addition to filing an application as prescribed by the department, an applicant for self-insurer status shall submit materials that will allow the department to determine the following information. (A) Applicant's net worth. An applicant's net worth shall be adequate in relationship to the size of its operations and the extent of its request for self-insurance authority. The applicant shall demonstrate that it can and will maintain such a net worth. (B) Self-insurance program. An applicant shall demonstrate that it has established, and will maintain, a sound insurance program that will protect the public against all claims involving motor vehicles to the same extent as the minimum security limits applicable under this section. In determining whether an applicant is maintaining a sound insurance program, the department will consider: (i) reserves; (ii) sinking funds; (iii) third-party financial guarantees; (iv) parent company or affiliate sureties; (v) excess insurance coverage; and (vi) other appropriate aspects of the applicant's program. (C) Safety program. An applicant shall submit evidence of substantial compliance with the Federal Motor Carrier Safety Regulations as adopted by the Texas Department of Public Safety, and with Texas Civil Statutes, Article 6675d. (4) Other securities or agreements. The department may consider applications for approval of securities or agreements and may approve any such application if satisfied that the security or agreement offered will afford adequate protection of the public. (5) Periodic reports. An applicant shall file annual statements, semi-annual and quarterly reports, and any other reports required by the department reflecting the applicant's financial condition and status of its self-insurance program during the period of the motor carrier's self-insurer status. (6) Duration of self-insurer status. The department may approve an applicant as a self-insurer for any specific time period, or for an indefinite period until revoked under the provisions of paragraph (7) of this subsection. (7) Revocation of self-insurer status. Upon evidence that a self-insured motor carrier's financial condition has changed, safety program or record is inadequate, or is otherwise not in compliance with this subchapter, the department may at any time, with 10 days notice to the self-insurer, require the self-insurer to appear and demonstrate that it continues to have adequate financial resources to pay all claims involving motor vehicles for bodily injury and property damage liability; and that it remains in compliance with the requirements of this section and any active self-insurance orders issued or adopted by the department. If an applicant fails to so demonstrate, its self- insurer status may be revoked. (8) Appeal. An applicant may appeal a denial of self-insurance status or revocation of such status by filing a petition for an administrative hearing in accordance with sec.sec.1.21 et seq of this title (relating to Contested Case Procedure). (e) Proof of insurance. (1) Proof of insurance. A motor carrier shall maintain proof of insurance in their vehicles at all times. This proof shall be in the form prescribed by the department and the Texas Department of Insurance (DOI) in coordination with the Texas Department of Public Safety. (2) Filing proof of insurance. A motor carrier's insurance or surety company shall file and maintain proof of insurance on the appropriate form: (A) at initial registration of a vehicle; (B) when the insurance carrier changes; (C) when the ownership of the certificate changes; (D) when the motor carrier changes its name under sec.18.13(d)(3) of this title (relating to Application for Motor Carrier Registration); and (E) when the motor carrier, under subsection (a) of this section, changes the classification of the cargo being transported. (3) Filing fee. Each certificate of insurance filed with the department for the coverage required under this section shall be accompanied by a nonrefundable filing fee of $100. (4) Other bonds, policies or certificates. No surety bond, insurance policy, or certificate of insurance will be accepted by the department unless issued by an insurance or surety company licensed and authorized to do business in the State of Texas, in the form prescribed or approved by the DOI, and signed or countersigned by an authorized agent of the insurance or surety company. The department will accept a certificate of insurance issued by a surplus lines insurer that meets the requirements of Insurance Code, Article 1. 14-2, and rules adopted by the DOI under that article. (f) Termination of insurance coverage. Except when replaced by another acceptable form of insurance coverage approved by the department, no insurance coverage or surety bond shall be canceled or withdrawn until after 30 days notice has been given to the department by the insurance or surety company, in the form prescribed by the department and the DOI. (1) Insolvency of insurance carrier. If the insurer or surety of a motor carrier becomes insolvent or becomes involved in a receivership or other insolvency proceeding, the motor carrier may apply for approval of a surety bond or insurance policy issued by another surety or insurer, upon filing an affidavit with the department. Such affidavit shall be executed by an owner, partner, or officer of the motor carrier, and show that: (A) no accidents or claims have occurred or arisen during the insolvency of the insurance carrier or surety; or (B) that all damages and claims have been satisfied. (2) Notifications. The department shall notify the Texas Department of Public Safety of each notice received by the department under this subsection. sec.18.18. Temporary Registration of International Motor Carriers. (a) Registration. In lieu of registering under sec.18.13 of this title (relating to Application for Motor Carrier Registration), an international motor carrier may apply for temporary registration in accordance with the provisions of this section. (b) Application and issuance of registration stamp. (1) Place of application. An international motor carrier may apply to an insurance agent for international temporary registration. (2) Issuance. The insurance agent shall issue temporary registration upon the international motor carrier: (A) providing proof of insurance at or above the levels required by sec.18.16(a) and (b) of this title (relating to Insurance Requirements); and (B) paying a fee of $10 for each commercial motor vehicle or tow truck to be operated in this state. (3) Registration stamp. Upon compliance with paragraph (1) of this subsection, the insurance agent will issue the carrier an international registration stamp which will be valid for one trip of no more than seven days in duration. (4) Use of stamp. The international registration stamp shall be affixed to the temporary insurance policy, and shall be carried in the vehicle at all times. (c) Insurance agents. (1) Purchase of stamps. An insurance agent may obtain international registration stamps from the department upon filing, in a form prescribed by the director, evidence of a master liability policy. The department will assign an identification number to the policy and to all stamps issued under the policy. Stamps may be obtained, in lots of five stamps per lot, either: (A) by purchase, at a cost of $10 per stamp; or (B) by consignment, with monies collected upon the sale of the stamps to be remitted to the department as provided in paragraph (4)(B) of this subsection. (2) Consignment. (A) Qualifications. Only insurance agents who are duly licensed by the Texas Department of Insurance and who maintain evidence of master insurance policies on file with the department may obtain and sell international registration stamps on consignment from the department. (B) Surety bond. An insurance agent selling international registration stamps on consignment shall file a surety bond, in a form approved by the department, issued by a corporate surety authorized to do business in this state. The bond shall ensure the return of all unused stamps, and shall ensure full timely remittance of monies collected on the sale of stamps. The amount of the bond shall be at least two times the total value of stamps held on consignment at any given time. Written notice of renewal of a bond shall be given to the department before international registration stamps may be taken on consignment from the department. (3) Recordkeeping. (A) For each international registration stamp sold by an insurance agent, the agent shall record, on a form approved by the director: (i) the name of the motor carrier to whom the stamp is issued; (ii) the vehicle identification number, and the year, make, and license number of the vehicle for which the stamp is issued; (iii) the date of sale; (iv) the port of entry; (v) the trip policy number; and (vi) the effective period of the temporary insurance policy. (B) Within 30 days of the sale of a stamp to a carrier, the agent shall submit to the department evidence of the sale, including the information required by subparagraph (A) of this paragraph. (4) Fees. (A) Charge. An insurance agent may not charge an international motor carrier more than $10 for each international registration stamp. (B) Sale on consignment. An insurance agent selling international registration stamps on consignment shall remit to the department the fee collected from the sale of a stamp no later than 30 days from the date the stamp is sold. If an insurance agent fails to remit monies to the department by the due date, the department shall discontinue issuing stamps to the agent on consignment, and may seek to enforce payment of the surety bond. No stamp shall be held on consignment for a period exceeding one year from the date of consignment by the department. (5) Design change. In the event of a design change on international stamps, the department shall redeem all unused stamps sold by the department, and shall exchange for new stamps all unused stamps consigned by the department. If a design change occurs, agents holding unused stamps shall send the stamps to the department for refund or exchange within 60 days after the effective date of the design change. Stamps not returned within the 60-day period are void. (d) Enforcement of surety bond. The department will seek to enforce payment of the surety bond for failure to return all unused stamps and for failure to pay for all stamps issued on consignment. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515794 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 Subchapter C. Records and Inspections 43 TAC sec.sec.18.30-18.33 The Texas Department of Transportation adopts new sec. sec.18.30-18.33, concerning procedures for maintenance and examination of information and records, and inspection of premises of motor carriers registered under subchapter B of this chapter. Section 18.32 is adopted with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7056). Sections 18.30, 18.31, and 18.33 are adopted without changes and will not be republished. New sec.18.32, and subchapters A, B, and D-F, Chapter 18, Motor Carriers, which are being simultaneously adopted, supersede all Railroad Commission rules adopted under a law repealed by Senate Bill 3, sec.31, 74th Legislature, 1995. Senate Bill 3, 74th Legislature, 1995, added Texas Civil Statutes, Articles 6675c and 6675c-1, which transferred the regulatory authority of the motor carrier industry from the Railroad Commission to the department and provided the department with the authority to register motor carriers, regulate the transportation of goods, and administer the single state registration system. New sec.sec.18.30-18.33 provide for an efficient and effective system of record maintenance and examination procedures for motor carriers by setting out the information and records they are required to maintain, where the records must be maintained, and department procedures for examining records and inspecting a motor carrier's premises. On September 22, 1995, the department conducted a public hearing on the proposed new sections. One commenter gave oral testimony at the hearing, and four written comments were received. Concerning sec.18.32, Subsection (a)(2), three commenters suggested that the subsection be revised to eliminate the requirement that both household goods carriers and their local agents retain all information and documents described in this paragraph and subsection (b)(4). The commenters recommended that either the carrier or its agent make available all information and documents instead of two separate sets of records. The department concurs with the recommendation and has revised the paragraph to read, "Household goods carriers or their local agents shall retain all information and documents described in this paragraph, as well as those documents described in subsection (b)(4) of this section." Concerning sec.18.32, Subsection (b)(1), one commenter suggested that the department should focus its enforcement efforts of this subchapter on non- registered carriers by stopping carriers operating on the highways of this state, rather than requiring motor carriers to maintain specific records. The department does not concur with the commenter's suggestion. The department believes that the available resources for verification of compliance are best utilized in audit situations rather than roadside compliance reviews. Concerning sec.18.32, Subsection (b)(4), three commenters recommended a revision of this subsection on the basis that the contents, concerning the maintenance of accurate records with acceptable accounting guidelines, are inconsistent with deregulation of transportation. Additionally, the commenters indicate that these requirements are extremely burdensome on carriers, especially when performing local moves or services not governed by a tariff. In the alternative, they recommended the department adopt a system that would require a carrier to maintain an acceptable accounting system and some mandatory documents. The department concurs with the recommendation and has amended the paragraph to limit the applicability of this section to documents that relate directly to the services provided by the carrier and those related to consumer protection. Additionally, the amended paragraph shall replace the current inflexible financial accounting requirements with general and widely accepted accounting principles. The revised paragraph will require either every household goods carrier or their household goods agent to make available to the department the general records and specific documents with reasonable accounting procedures of all services performed on intrastate commerce. Concerning sec.18.32, Subsection (d), three commenters suggested a revision to the subsection concerning the three year retention period of all books and records generated by a motor carrier. They suggested that driver's logs be maintained six months and all other records be maintained two years. The department concurs with the recommendation and has revised the subsection to read, "All books and records generated by a motor carrier, except driver's time cards and logs, must be maintained for not less than two years at the motor carrier's principal business address. A motor carrier must maintain driver's time cards and logs for not less than six months at the carrier's principal business address." The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Articles 6675c and 6675c-1, which authorizes the department to adopt rules to administer the regulation of motor carriers. sec.18.32. Records. (a) General records to be maintained. (1) All carriers. Every motor carrier shall prepare and maintain: (A) operational logs and insurance certificates and documents to verify the carrier's operations; and (B) complete and accurate records of services performed. (2) Household goods carriers. Household goods carriers or their local agents shall retain all information and documents described in this paragraph, as well as those documents described in subsection (b)(4) of this section. (b) Specific records and documents to be inspected. (1) Operation documents. To verify compliance with subchapters B and E of this chapter (relating to Motor Carrier Registration and Consumer Protection), every motor carrier shall make available to the department on request all certificate of title documents, weight tickets, permits for oversize or overweight vehicles and loads, dispatch records, tow tickets, insurance certificates and policies, or any other document which would verify the operations of the vehicle to determine the actual weight, insurance coverage, size, and/or capacity of the vehicle. (2) Registration listing. Each motor carrier shall make available to a certified inspector or any law enforcement officer a copy of the current registration listing issued by the department or a current cab card issued by the Railroad Commission or the National Association of Regulatory Commissioners. (3) Insurance forms. Every motor carrier shall maintain in the cab of each registered vehicle proof of insurance, in a form approved by the department. (4) Records and documents of household goods carriers. To verify compliance with subchapter E of this chapter (relating to Consumer Protection), every household goods carrier or their household goods agent thereof shall make available to the department on request complete and accurate records maintained in accordance with reasonable accounting procedures of all services performed in intrastate commerce with complete information for each shipment as to shipper, consignee, origin, destination, description of commodities transported, services performed, equipment used and date of shipment for services performed. Such records shall also contain all information supporting all billing charges and the receipt and disposition of all claims. The following documents are required: (A) bills of lading or receipts and freight bills; (B) time cards, trip sheets or driver's logs; (C) claim records; (D) ledgers and journals; (E) canceled checks; (F) bank statements and deposit slips; (G) invoices, vouchers or statements supporting disbursements, and (H) dispatch records. (5) Records and documents of interstate carriers. An interstate carrier registered under sec.18.17 of this title (relating to Single State Registration) shall maintain for a period of at least three years records and documents supporting fee payments and the original registration receipts issued by the department. (c) Location of files. (1) Texas firms. Every motor carrier domiciled within the state shall maintain at a principal office in Texas all information required by the department. Maintenance of records at an alternate location must be approved by the manager. The request shall be submitted on a form approved by the manager. (2) Out-of-state firms. Every motor carrier whose principal business address is located outside the state of Texas shall maintain records required under this section at a designated place in Texas; provided, however, that a motor carrier may maintain such records at an out-of-state facility if the carrier reimburses the department for its necessary travel expenses and per diem for any inspections conducted in accordance with sec.18.31 of this title (relating to Investigation and Examination of Records). (d) Preservation and destruction of records. All books and records generated by a motor carrier, except driver's time cards and logs, must be maintained for not less than two years at the motor carrier's principal business address. A motor carrier must maintain driver's time cards and logs for not less than six months at the carrier's principal business address. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515793 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 Subchapter D. Motor Transportation 43 TAC sec.sec.18.40-18.42 The Texas Department of Transportation adopts new sec. sec.18.40-18.42, concerning motor transportation brokers without changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7054). New sec.sec.18.40-18.42 and Subchapters A-C and E-F, Chapter 18, Motor Carriers, which are being simultaneously adopted, supersede all Railroad Commission rules adopted under a law repealed by Senate Bill 3, sec.31, 74th Legislature, 1995. Senate Bill 3, 74th Legislature, 1995, created Texas Civil Statutes, Article 911m, which transferred the authority to require bonds for motor transportation brokers from the Texas Railroad Commission to the Texas Department of Transportation. New sec.sec.18.40-18.43 describe exemptions to this subchapter, state that a motor transportation broker shall file a bond with the department before acting as a motor transportation broker, and require that upon submission of a bond to the department, a motor transportation broker shall include a bond review fee of $5.00. On September 22, 1995, the department conducted a public hearing on the proposed new sections and no oral or written comments were received. The new sections are adopted under Transportation Code, sec.201.101, which provides the Texas Transportation Commission with the authority to establish rules for the conduct of the work of the Texas Department of Transportation, and more specifically Texas Civil Statutes, Articles 911m, which authorizes the department to require a motor transportation broker to provide a bond. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 5, 1995. TRD-9515792 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 26, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 463-8630 43 TAC sec.sec.18.50-18.61 The Texas Department of Transportation adopts new sec. sec.18.50-18.61, concerning the protection of consumers who use the services of household goods carriers. Sections 18.51-18.55 and sec.sec.18.57-18.61 are adopted with changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7056). Section 18.50, and sec.18.56 are adopted without changes and will not be republished. New sec.sec.18.50-18.61, and subchapters A-D and F-G, Chapter 18, Motor Carrier, which are being simultaneously adopted, supersede all Railroad Commission rules adopted under a law repealed by Senate Bill 3, sec.31, 74th Legislature, 1995, and Texas Civil Statutes, Article, 6687-9a. Senate Bill 3, 74th Legislature, 1995, added Texas Civil Statutes, Articles 6675c and 6675c-1, which transferred the regulatory authority of the motor carrier industry from the Railroad Commission to the department and provided the department with the authority to register motor carriers, regulate the transportation of household goods, and administer the single state registration system. New sec.sec.18.50-18.61 provide an effective system to protect shippers of household goods against deceptive or unfair practices and unreasonably hazardous activities on the part of a household goods carrier. On September 22, 1995, the department conducted a public hearing to seek comments concerning the adoption of new Subchapter E-Consumer Protection, sec.sec.18.50-18.61, concerning consumer protection requirement for the household goods carrier industry. Four commenters gave oral testimony at the hearing. Six written comments were received by mail. Southwest Movers Association, Inc. and Consumers Union submitted some comments in favor and some comments against provisions in this subchapter. Section sec.18.51, Local Agents. One commenter suggested the department discontinue the use of the term "local" in connection with agents. The commenter suggested the department use the term "agent." The department concurs with the commenter, but shall refer to the agent as a "household goods agent" rather than agent. Section 18.51, Local Agents, subsection (b). Four commenters suggested the department amend this subsection to clarify that a household goods carrier shall be responsible for the acts of its local agents when such agents are acting on behalf of the household goods carrier. The subsection currently states simply that a household goods carrier shall be responsible for the acts of its agent. The commenters are concerned that the language of the subsection could be interpreted broadly and cause a household goods carrier to assume liability for the acts of its agent even when the agent is operating on its own behalf or on behalf of another motor carrier. One of these commenters went further by suggesting the department allow indemnification provisions to be included in local agents' agency agreements. Another of the commenters remarked that, while the department should ensure that a household goods carrier be held accountable only for the act of its local agents while the agent is acting on the carrier's behalf, the department should be careful not to weaken the subsection so that no household goods carrier is held accountable. The department agrees with the commenters that only the household goods carrier on whose behalf the local agent is operating, if any, should be held accountable for the local agent's acts. However, the department does not agree that the subsection should specifically allow for indemnification provisions because such provisions do nothing to promote the department's consumer protection goals. The subsection is amended to read, "A household goods carrier shall be responsible for the acts, delinquencies, omissions, and conduct of its household goods agent while acting on behalf of the household goods carrier." Section 18.51, Local Agents, subsection (d). Three commenters suggested the department amend this subsection to require a local agent to identify to the consumer the name of the household goods carrier it is representing rather than to require the agent to operate under the name of the represented carrier. The commenters consider this an important point because a local agent can represent several household goods carriers at different times. Currently, the subsection would require the local agent to use the trade name of all the household goods carriers it represents at all times. The department concurs with the commenters and the subsection is revised to read "On every shipment handled or negotiated by a household goods agent, the agent shall: (1) operate under the trade name of the represented household goods carrier, as shown on the certificate of registration issued by the department; and (2) prominently display the name of the represented household goods carrier in all communications with the public." Section 18.51, Local Agents, subsection (f). Three commenters suggested the department amend this subsection to reduce the retention period for business records from three years to two years for business records, and six months for driver's logs. The department agrees partially with the commenters. Since the household goods carrier is ultimately responsible for maintaining specific records on each shipment transported on its behalf, the household goods agent will be required to retain a record of each shipment it transports rather than requiring the household goods agent to maintain specific documents such as driver's logs. The subsection is amended to read, "A household goods agent shall keep a record of every shipment it negotiates or handles for at least two years after the date of the shipment." Section 18.51, Local Agents, subsection (g). Two commenters suggested the department reduce the retention period of terminated agency agreements to two years. One of the commenters went further by recommending that the department exempt short-term leases from the requirements of this subsection. Currently, the subsection requires a household goods carrier to retain all agency agreements for three years. The department agrees with the commenters about the two years retention period, but disagrees with the commenter about the exemption of short-term leases. Because a household goods agent can represent various household goods carriers at one time, it is very important to maintain each lease in writing so that the appropriate household goods carrier can be held accountable for the acts of the household goods agent. The subsection is amended to read, "An agreement between a household goods carrier and its household goods agent shall be in writing and signed by the principal and the household goods agent, and copies of any agreement must be kept in the files of the household goods carrier for a period of not less than two years following the date of each agreement." Section 18.51, Local Agents. One commenter suggested the department add a new subsection to this section that would restrict a local agent from representing more than one household goods carrier. The commenter believes that allowing local agents to represent more than one household goods carrier cannot enhance the department's consumer protection goal. The department does not necessarily disagree with the commenter, but cannot add such a subsection without denying local agents their registration rights as provided in Texas Civil Statutes, Article 6675c. Section sec.18.53, Tariff Registration, subsection (a)(1)(B). One commenter was concerned that the consumer would be unable to accurately calculate freight charges based on weight or value because of lack of expertise at estimating weight or volume. The current subparagraph requires the household goods carrier's tariff to contain a requirement that final charges be based on the actual weight, volume, or time required to transport a shipment. The commenter suggested the department advise the consumer in the department's pamphlet of the different pricing options available to the consumer. The department does not disagree with the commenters point about the average consumer's ability to estimate the weight of its shipment. However, the department disagrees with the commenter's recommendation for two reasons. First, the household goods carrier might only have one pricing option available to the consumer for any particular type of shipment. For example, the carrier might only allow in its tariff for a weight based rate, for shipments being transported between two or more incorporated cities. By stating in the department's pamphlet that another pricing option is available to the shipper, the department might only be confusing the consumer. The second reason the department disagrees with the commenter is that on a shipment transported between two incorporated cities, weight based rates are typically more economical for the consumer. By encouraging the consumer to pursue another pricing option in the department's pamphlet, the department might actually be recommending the consumer transport its shipment at a higher rate. Therefore, the department is not adopting the commenter's suggestion. Section 18.54, Mandatory Transportation Standards. Two commenters suggested that the term "Mandatory" be deleted from the heading of this section. The first commenter remarked that the term "mandatory" places a burden that restricts household goods carriers from modifying their operations under unique situations. The second commenter remarked that the term mandatory "...connotes an absoluteness which is unnecessary and which could be construed in the case of inadvertent or nominal non-compliance as negligence per se." Although the department does not agree with the commenters, the term mandatory is deleted from the title of this section because the department recognizes the provisions of this section as implicitly mandatory and use of the term is redundant. Section 18.54, Mandatory Transportation Standards, subsection (a)(1). Two commenters submitted comments on this paragraph. The paragraph allows household goods carriers to provide for the furnishing of binding estimates in the carrier's tariff and requires the carrier to follow procedures outlined in the subsequent subparagraphs. The first commenter suggested the department ensure that the provisions of this paragraph apply only to binding estimates. The second commenter was concerned that the provisions of this paragraph would discourage consumers from obtaining binding estimates. The department agrees with the first commenter about clarifying the paragraph. The department does not agree with the second commenter because a similar federal regulation governs shipments transported on an interstate basis and no ill affects have resulted. Therefore, the department amends the paragraph to read, "A household goods carrier may provide in its tariff for the preparation and furnishing to shippers binding estimates of the costs which the shippers will be required to pay. Household goods carriers must comply with the following conditions if it proposes and furnishes a binding estimate to a shipper." Section 18.54, Mandatory Transportation Standards, subsection (a)(1)(A). Two commenters submitted comments on this subparagraph which requires a household goods carrier to furnish a binding estimate in writing and to retain it as an addendum to the bill of lading. The first commenter suggested the department clarify that this subparagraph apply only on shipments that were actually transported by the household goods carrier. A broad interpretation of the subparagraph could be construed as to require a household goods carrier to retain a binding estimate on a shipment that it did not transport. The other commenter expressed support for the subparagraph because of its provisions for written information. The department agrees that the subparagraph should be amended to clarify that the provisions of this subparagraph apply only on shipments that were actually transported by the household goods carrier. Clarification of the subparagraph will not affect the provisions that the second commenter supports. The subparagraph is revised to read, "Any binding estimate must be furnished, in writing, to the shipper or other person responsible for payment of the freight charges, and if the estimate is accepted by the shipper and the carrier transports the shipment a copy of each estimate must be retained by the household goods carrier as an addendum to the bill of lading or receipt." Section 18.54, Mandatory Transportation Standards, subsection (a)(1)(B). Four commenters submitted comments on this subparagraph which requires a household goods carrier to set out the charges on a binding estimate and disclose that the estimate is a binding estimate by printing in large red letters. Three commenters are opposed to the subparagraph and suggest that the department allow household goods carriers to utilize their existing interstate estimate forms to comply with this subparagraph. The commenters go further to state that the use of uniform interstate and intrastate forms is necessary to improve the efficiency of household goods carriers. The fourth commenter expressed its support for this subparagraph because of the information it would require. The department does not agree that existing interstate forms utilized by household goods carriers should be allowed to be used on intrastate shipments. The department is concerned that many of the existing interstate forms utilized by household goods carriers do not adequately convey all the information required by sec.18.54(a)(1). Specifically, the department is concerned that many of the existing interstate forms do not prominently state that the estimate is binding. However, the department does recognize the need for uniform forms and that the existing regulation is too restrictive to allow for the harmonizing of interstate and intrastate forms. With respect to the fourth commenter, the department agrees that the provisions they support are important and should be retained. In order to reconcile and respond to the comments, the subparagraph is amended to read, "All charges to be assessed for services under a binding estimate shall be identified clearly in the estimate. The estimate shall conspicuously set forth that the estimate is binding and that the prices for the listed services are guaranteed." Section 18.54, Mandatory Transportation Standards, subsection (a)(2). One commenter suggested the department ensure that the provisions of this paragraph apply only to a non-binding estimate. Currently, the paragraph requires household goods carriers to provide a non-binding estimate when requested by a consumer and requires the carrier to follow procedures outlined in the subsequent subparagraphs. The department agrees with the commenter and shall revise the paragraph to read, "If requested by a shipper, a household goods carrier shall provide estimates of the total costs of the proposed services or estimated total weight of a shipment of household goods. A household goods carrier must comply with the following conditions if it prepares a non- binding estimate to a shipper." Section 18.54, Mandatory Transportation Standards, subsection (a)(2)(B). One commenter expressed concern over the effectiveness of this subparagraph. Currently, the subparagraph states that a non-binding estimate is not binding on the carrier and the charges shall be no more than those appearing in the carrier's tariff. The commenter states that the language used in the subparagraph would seem to imply that the final charges could be based on the rates contained in the carrier's tariff rather than the rates quoted on the non- binding estimate. While the department acknowledges that this scenario could happen, it does not agree that the subparagraph should be revised because the entire nature of a non-binding estimate is based on uncertainty. If the consumer is truly interested in an accurate estimate of cost, the consumer should obtain a binding estimate rather than a non-binding estimate. Thus, this subparagraph is not amended. Section sec.18.54, Mandatory Transportation Standards, subsection (a)(2)(D). Three commenters submitted comments in opposition to this subparagraph which requires a household goods carrier to print on non-binding estimates in large red letters that the estimate is non-binding. The first commenter suggested the department amend the subparagraph to allow the household goods carrier to utilize non-binding estimate forms that are reasonably formatted. The other two commenters recommended the department amend the subparagraph to conform with the requirements imposed on household goods carriers by the Interstate Commerce Commission. While the department acknowledges that the proposed subparagraph might be considered over burdensome, it does not agree with the first commenter's suggestion. Rather, the department, taking the suggestions of the other two commenters into account, is amending the subparagraph to require household goods carriers to conspicuously set forth that the estimate is non- binding. While not expressly linking the forms to those prescribed in the code of federal regulations, this amendment would allow household goods carriers to create a uniform estimate form for interstate and intrastate shipments. Thus, the subparagraph is amended to read, "The non-binding estimate shall conspicuously set forth that the estimate is non-binding and not guaranteed, and that the actual costs for the services to be provided shall be determined after all services have been completed." Section 18.54, Mandatory Transportation Standards, subsection (a)(2)(E). Three commenters submitted comments in opposition to this subparagraph which requires household goods carriers to state the "maximum" charges that a shipper will be required to pay on a non-binding estimate. The commenters state that the maximum charges the consumer would be required to pay on a non-binding estimate cannot be entered onto the estimate because the actual costs are based on services rendered. Thus, the transportation and accessorial services rendered would have to be accomplished before the household goods carrier can calculate the maximum charges that the consumer would be required to pay. The commenters suggest that this subparagraph be deleted. The department agrees with the commenters about the impracticality of the subparagraph, but does not agree with the commenters' suggestion. The intent of the subparagraph was to require household goods carriers to itemize the charges the consumer would be required to pay for the listed services. Therefore, the department is revising the subparagraph to require household goods carriers to itemize all the charges that a consumer would be required to pay when a consumer requests a non-binding estimate. Thus, the subparagraph is amended to read, "A non-binding estimate shall include the charges for each service listed." Section 18.54, Mandatory Transportation Standards, subsection (a)(2)(G). Two commenters suggested that the department amend this subparagraph and clarify that only shipments that were actually transported by a household goods carrier are subject to the provisions contained in the proposed subparagraph. Currently, the subparagraph requires a household goods carrier to maintain copies of non-binding estimates regardless of whether or not the carrier actually transported the shipment. The department agrees with commenters that the retention of a non-binding estimate of shipment that a household goods carrier did not transport serves no purpose. Therefore, the subparagraph is revised to read, "A copy of a non-binding estimate relating to a shipment transported by a household goods carrier shall be retained by the carrier as an addendum to the bill of lading or receipt, and the original shall be delivered to the shipper." Section 18.54, Mandatory Transportation Standards, subsection (a)(2)(H). Three commenters suggested that the department delete this subparagraph which requires a household goods carrier to enter a statement on an order for service when a non-binding estimate is not requested. The commenters do not believe the statement should be entered on an order for service because an order for service is an obsolete form. The department does agree that the statement should not be included on an order for service, but should be included on a bill of lading or receipt. Therefore, the subparagraph is revised to read, "A statement shall be made on the bill of lading or receipt when a non-binding estimate was not requested or furnished to the shipper or authorized representative." Section 18.54, Mandatory Transportation Standards, subsection (a)(2)(J). Three commenters suggested that the department amend this subparagraph which requires a household goods carrier to enter the estimated charges on an order for service. The commenters consider an order for service an antiquated form and do not recommend having the estimated charges entered on an order for service. The department agrees with the commenters and the subparagraph is revised to read, "The estimated charges shall be entered on the bill of lading or receipt." Section 18.54, Mandatory Transportation Standards, subsection (a). Three commenters suggested the department adopt a new paragraph that would explicitly allow household goods carriers to use their interstate estimate forms on intrastate shipments. The commenters state that the utilization of uniform estimate forms will benefit both consumers and carriers. The department does agree that uniform forms would be beneficial to both consumers and carriers, but does not agree that a specific paragraph authorizing the use of interstate estimate forms is necessary or desirable. The amended paragraphs and subparagraphs relating to estimate of charges do not conflict with the existing federal regulations and should not hinder household goods carriers from developing uniform forms. Further, by expressly allowing household goods carriers to use interstate forms, the department would deny itself the opportunity to require any specific information the department deems necessary on an estimate form. Therefore the commenters' suggestions are not adopted. Section 18.54, Mandatory Transportation Standards, subsection (c). Three commenters suggested that the department delete this entire subsection which requires household goods carriers to issue an order for service on each shipment it transports. The commenters remarked that an order for service is an antiquated form and is no longer used by household goods carriers. Further, all of the information required on an order for service can be found on various shipping documents. The department agrees with the commenters and the subsection is deleted it in its entirety. Section 18.54, Mandatory Transportation Standards, subsection (d)(1). Two commenters submitted comments on this paragraph which requires a household goods carrier to issue a bill of lading on each shipment it transports. The first commenter suggested that the department restrict the applicability of this paragraph to shipments being transported between two or more incorporated cities. This commenter stated that the prohibitive cost of producing and maintaining a bill of lading for "local" shipments would essentially eliminate registered household goods carriers from the "local" shipment market. The second commenter was concerned that the importance of a bill of lading is understated. The commenter states that the average consumer is not aware that a bill of lading is a contract and that the technical language used in the terms and conditions is very difficult to understand. This commenter goes further and suggests that the department should require the term "contract" be prominently printed on the bill of lading and the terms and conditions fully explained in the department's pamphlet. The department recognizes the validity of the first commenter's comments and will address its concerns in sec.18.54(d)(4). The department also recognizes the validity of the second commenter's comments, but does not agree with both of the commenter's proposed solutions. The department does not agree that the term "contract" should be added to the bill of lading. The content and format of a bill of lading have long been established, and the department does not believe changing this format is advisable. However, the department does concur with the second commenter's second proposal. The department believes that the required pamphlet is an appropriate venue to explain the importance of a bill of lading and discussing the provisions contained in its terms and condition. Therefore, the paragraph is not revised. sec.18.54, Mandatory Transportation Standards, subsection (d)(2)(K). No comments were received on this subparagraph which requires the agreed dates and times for pickup and delivery to be entered on a bill of lading or receipt to be the same as those on an order for service. The subparagraph is amended because the subsection which contained the provisions for orders for service has been deleted. Thus, the subparagraph is revised to read, " the agreed date or period of time for pickup of the shipment and the agreed date or period of time for the delivery of the shipment". Section 18.54, Mandatory Transportation Standards, subsection (d)(2)(S). One commenter submitted a comment in opposition to this subparagraph which would require a household goods carrier to place a statement on a bill of lading that advised the consumer of the availability of the carrier's mediation program for disputes. The commenter remarked that the subsection would require household goods carrier's to reprint all their bills of lading because their existing bills of lading do not contain this statement. Thus, the commenter recommends that the department delete the subparagraph. While the department does not concur with the commenter's conclusion, it will delete the subparagraph. The department already requires household goods carriers to advise the consumer of the mediation program in the required pamphlet and does not see any reason to repeat this information on various forms and documents. Therefore, the subparagraph is deleted in its entirety. Section 18.54, Mandatory Transportation Standards, subsection (d)(4). One commenter suggested the department adopt a new paragraph that would exempt "local" moves from the requirement of the issuance of bills of lading. As discussed earlier, the cost of producing and maintaining bills of lading for "local" movements could result in registered household goods carriers being placed at a competitive disadvantage in the "local" shipment market. The department agrees with the commenter. Therefore, a new paragraph is added to sec.18.54(d) to read, "