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 1. ADMINISTRATION Part VII. State Office of Administrative Hearings Chapter 163. Arbitration Procedures for Certain Enforcement Actions of the Department of Human Resources 1 TAC sec.sec.163.1, 163.3, 163.5, 163.7, 163.9, 163.11, 163.13, 163.15, 163.17, 163.19, 163.21, 163.23, 163.25, 163.27, 163.29, 163.31, 163.33, 163.35, 163.37, 163.39, 163.41, 163.43, 163.45, 163.47, 163.49 163.51, 163.53, 163.55, 163.57, 163.59, 163.61, 163.63, 163.65, 163.67 The State Office of Administrative Hearings (SOAH) adopts new sec.sec.163.1, 163.3, 163.5, 163.7, 163.9, 163.11, 163.13, 163.15, 163.17, 163.19, 163.21, 163.23, 163.25, 163.27, 163.29, 163.31, 163.33, 163.35, 163.37, 163.39, 163.41, 163.43, 163.45, 163.47, 163.49, 163.51, 163.53, 163.55, 163.57, 163.59, 163. 61, 163.63, 163.65, and 163.67, concerning the election of arbitration, the appointment of an arbitrator, and the procedures for arbitration for certain enforcement cases under Texas Health and Safety Code, Chapter 242, and Texas Human Resources Code, Chapter 32. Sections 163.3, 163.11, 163.13, 163.15, 163. 19, 163.21, 163.29, 163.41, 163.47, and 163.49 are adopted with changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8381). Sections 163.1, 163.5, 163.7, 163.9, 163.17, 163. 23, 163.25, 163.27, 163.31, 163.33, 163.35, 163.37, 163.39, 163.43, 163.45, 163.51, 163.53, 163.55, 163.57, 163.59, 163.61, 163.63, 163.65, and 163.67 are adopted without changes and will not be republished. SOAH is adopting these rules to implement House Bill 2644 amending Texas Health and Safety Code, Chapter 242, and Texas Human Resources Code, Chapter 32. These rules provide for an alternative way to efficiently and economically resolve certain enforcement actions. They also establish minimum qualifications for people who may be appointed as arbitrators under these rules. Following is a summary of the comments made concerning the proposed rules, SOAH's responses to those comments, and a description of the changes made to the proposed rules. A commenter suggested substituting the word "concerning" for the words "relating to" in sec.163.3(3) to clarify that the arbitration is limited to the disputes listed in sec.163.3(1). SOAH responds that the language "relating to" was used in the statute in the same way that it is used in this section. No change was made to the section. A commenter pointed out that there was an apparent clerical error in sec.163. 3(4) which referred back to the wrong section. This correction was made. In response to a comment relating to the selection of potential arbitrators, a sentence was added to sec.163.3(6) to authorize parties to submit any special information that should be considered in compiling a panel of potential arbitrators in the notice of election or answering statement. A suggestion was made that language be added to sec.136.3(7) to make it clear that parties could settle disputes after arbitration was elected. Such a change was made. Several comments were received relating to the process of selecting an arbitrator under sec.163.11. It was suggested that parties should be encouraged to agree upon an arbitrator with the process for sending out a list of potential arbitrators being used if the parties do not agree. It was suggested that it would facilitate this process if the rule stated that the list is available to the public. These changes were made. The sections were also re-ordered to place the statement that parties could agree to an arbitrator in a more prominent position. One commenter also suggested that the number of potential arbitrators sent to parties be increased from three to five and the number of strikes per party be increased from one to two each. These changes were made, and a requirement was added for the parties to number the remaining names in order of preference, if any. In addition, the provision that another name would be added to the list if a name was removed for cause was deleted. The unlikely situation where one name has been removed for cause and all other names have been struck will be handled on a case-by-case basis. Another commenter pointed out that there seemed to be two different requirements for disclosure statements: one incorporated into the resume and one as a separate document. Changes have been made to clarify that only one disclosure statement under sec.163.15 is required. A change was made so that disclosure statements will not routinely be sent to parties, but will be used by SOAH to determine whether or not an arbitrator is potentially qualified to serve in a particular case. SOAH will not place names on a list if there appears to be any conflict. A commenter pointed out that House Bill 2644 requires SOAH to consult with the department before contracting with a national association to conduct arbitrations and suggested that sec.163.11(g) should include an analogous requirement. Such a change was made. A comment was made that the requirement in sec.163.15(b) for the disclosure of any circumstance which might "reasonably raise" a question about an arbitrator's impartiality was overly broad and vague and could lead to challenges solely for the purpose of delay. That section has been modified to state more specifically what must be disclosed in each particular case. The contents of the resume required under sec.163.19(2) were more clearly articulated, and an addition to sec.163.19(3) specifies that letters of reference for potential arbitrators should be sent directly to the chief judge of SOAH by the person giving the reference. Staff noticed that there was a clerical error in sec.163.21 and the correction was made. A commenter suggested that sec.163.29(4) be modified to include a requirement that orders rendered be consistent with the Human Resources Code, sec.32.021(k), where a party involved in cases brought pursuant to that statute has elected arbitration. This commenter also suggested that there might be other applicable state and federal laws and regulations which arbitrators would have to apply in rendering an order and that this section should so indicate. Changes in this section were made to address these concerns. As a clarification, staff changed sec.163.41 to specify that the parties must exchange lists of witnesses that each side expects to call during the hearing. To facilitate the efficiency of the arbitration process, an addition was made to sec.163.47 requiring each party to produce any witnesses under its control without the necessity of a subpoena. A change was made in sec.163.49 to require all witnesses to testify under oath to protect the integrity of the arbitration process. Comments suggesting changes in the rules were received from the following groups and/or associations: Texas Department of Human Services and the Center for Public Policy Dispute Resolution. There were no comments submitted against the adoption of the rules. A public hearing on the proposal was held on November 16, 1995, at 10:00 a. m. in Room 410A of the William B. Clements State Office Building, 300 West 15th, Austin, Texas. The training course described in sec.163.19(4) of this title (relating to Qualifications of Arbitrators) will be held January 9-11, 1996, at the Department of Human Services, 701 West 51st Street, Austin, Texas. Persons who want to participate need to submit their names and resumes by January 1, 1996, to Nancy N. Lynch, Administrative Law Judge, State Office of Administrative Hearings, P.O. Box 13025, Austin, Texas 78711-3025, (512) 475-4993. The number of persons who can attend the training may be limited due to space. Persons accepted for the training will be notified by SOAH. A small charge will be made to defray the costs of materials for the training. sec.163.3. Election of Arbitration. The department or any affected facility may elect binding arbitration as an alternative in any of the following disputes unless the United States Health Care Financing Administration requires that such dispute be resolved by the federal government. (1) Disputes for which arbitration may be elected include: (A) renewal of a license under Health and Safety Code, sec.242.033; (B) suspension or revocation of a license under Health and Safety Code, sec.242.061; (C) assessment of a civil penalty under Health and Safety Code, sec.242.065; (D) assessment of a monetary penalty under Health and Safety Code, sec.242.066; or (E) assessment of a penalty as described by Human Resources Code, sec.32.021(k). (2) Arbitration cannot be elected in situations where the department is seeking an emergency suspension or a closing order issued under Health and Safety Code, sec.242.062. (3) An affected facility may elect arbitration by filing a notice of election to arbitrate with the director of hearings no later than the tenth day after a notice of an administrative or judicial hearing relating to any of the above- listed disputes is received by the facility. A copy of this election shall be sent to the department's representative of record in the relevant action. (4) The department may elect arbitration under this subchapter by filing the election with the director of hearings no later than the date that the facility may elect arbitration under paragraph (3) of this section. A copy of this election shall be sent to the facility's representative of record in the relevant action or to the owner or chief operating officer of the facility if no representative has made an appearance in the action. (5) The date of receipt shall be the date affixed upon a notice of election by a date-stamp utilized by the hearings department of the department. (6) The notice of election shall include a written statement that contains: (A) the nature of the action that is being submitted to arbitration, as listed in paragraph (1) of this section; (B) a brief description of the factual and/or legal controversy, including the amount in controversy, if any; (C) an estimate of the length of the hearing and the extensiveness of the record necessary to determine the matter; (D) the remedy sought; (E) any special information that should be considered in compiling a panel of potential arbitrators; and (F) the hearing locale requested, along with a explanation for that locale. If no request is made, the arbitrator may choose the locale in compliance with this chapter. (7) An election to engage in arbitration under this subchapter is irrevocable and binding on the facility and the department. However, such an election does not preclude the parties from reaching an agreed resolution of a dispute that has been submitted for arbitration at any time during the arbitration process before the final order has been issued by the arbitrator. sec.163.11. Selection of Arbitrator. (a) A master list of potential arbitrators will be maintained by SOAH and updated at least once a year. The master list will be made up of individuals who have been determined by the chief judge to be qualified under sec.163.19 of this title (relating to Qualifications of Arbitrators). This list will be available to the public upon request to SOAH. (b) The parties may agree upon an arbitrator qualified under this chapter and submit that individual's name with their initial statements. (c) If the parties do not agree on an arbitrator that is willing and available to serve, SOAH will provide a list of potential arbitrators. The list of potential arbitrators in each case will be created by selecting individuals from the master list. In selecting these individuals, due regard will be given to the complexity of the dispute, the expertise needed to understand the dispute, the experience and training of the proposed arbitrators, and the requests of the parties concerning the location of the hearing. SOAH will also consider any potential conflicts revealed in disclosure statements on file with SOAH. (d) SOAH shall send each party an identical list of five persons qualified to serve as an arbitrator in the dispute within ten days after receipt of the answering statement by SOAH, or in any event no later than 15 days after the initial claim is received by SOAH. (e) Any objections for cause pertaining to any name on the list shall be made in writing directed to the chief judge at SOAH within three days, with a copy served on all other parties. Such objections will be reviewed by the chief judge or his designee and acted upon within five days after the objection is received. (f) Each party shall have ten days from the transmittal date to strike two names. The remaining names should be numbered in order of preference, if such preference exists. If a party does not return the list within the time specified, all persons named therein shall be deemed acceptable. It is not necessary for the parties to exchange the name of the candidate that they are striking, nor will those names be disclosed to the candidates. (g) SOAH will notify the parties of the selected arbitrator. (h) SOAH may contract with a nationally recognized association that performs arbitrations to conduct arbitrations under this chapter, after consultation with the department. sec.163.13. Notice to and Acceptance by Arbitrator of Appointment. (a) Notice of the appointment of the arbitrator shall be sent to the arbitrator by SOAH, together with a copy of this chapter and an acceptance form for the arbitrator to sign and return. The signed acceptance of the arbitrator shall be filed with SOAH prior to the first pre-hearing conference or other meeting of the parties to the arbitration. (b) The acceptance of the arbitrator shall state that she/he is qualified and willing to serve as arbitrator in accord with this chapter, and with the Code of Ethics for Arbitrators in Commercial Disputes issued by the American Bar Association and the American Arbitration Association in 1977. It shall also state that the arbitrator foresees no difficulty in completing the arbitration according to the schedule set out in this chapter. sec.163.15. Disclosure Requirements and Challenge Procedure. (a) Any person appointed to the master list of potential arbitrators shall file a disclosure statement with SOAH describing any circumstances likely to affect impartiality, including any bias or any financial or personal interest in or representation of health care facilities or the department, or any past (within the last three years) or present relationship with a facility or with the department or its employees. This disclosure statement must be updated as circumstances change, and in any event at least once annually in order to maintain eligibility for appointment as an arbitrator under this chapter. (b) In any particular matter, a potential arbitrator must not enter or continue in any dispute if she/he believes or perceives that participation as an arbitrator would be a conflict of interest or create the impression of a conflict. A potential arbitrator must disclose any personal interest she/he may have in the result of the particular arbitration as well as any past or present relationship with the parties, their principals, or their representatives when approached by SOAH, or parties in a dispute that could be submitted to arbitration under these rules, about being an arbitrator under these rules. (c) The duty to disclose is a continuing obligation throughout the arbitration process. (d) Upon receipt of such information from the arbitrator or another source, SOAH shall communicate the information to the parties and, if appropriate, to the arbitrator and others. Upon objection of a party to the continued service of an arbitrator, the chief judge shall determine whether the arbitrator should be disqualified and shall inform the parties of his/her decision, which shall be conclusive. sec.163.19. Qualifications of Arbitrators. The chief judge shall designate persons qualified to serve as an arbitrator under this chapter and that designation shall be conclusive. Potential arbitrators shall meet the following minimum standards. (1) Have at least five years of experience in health care and/or the legal profession and/or alternative dispute resolution with recognized expertise in his/her profession(s). (2) Have a current resume on file with SOAH that shows the nature of his/her law practice or other business, experience, and education, professional licenses and certifications, professional associations, publications, and other special qualifications such as other languages spoken. A separate disclosure statement containing information as described in sec.163. 15(a) of this title (relating to Disclosure Requirements and Challenge Procedure) must also be on file with SOAH. (3) Have the attributes necessary to be a successful arbitrator, including expertise, honesty, integrity, impartiality, and the ability to manage the artibration process. These attributes must be reflected by at least three letters of recommendation submitted to the chief judge of SOAH from persons who have attained a recognized position of respect in their professional community. The author should assess the candidate's general expertise, honesty, integrity, impartiality, and ability to manage the arbitration process. These letters should describe the author's standing and experience in the community as well as the applicant's, and should describe the nature of the relationship between the author and the applicant. These letters should be sent directly to the chief judge of SOAH by the person giving the reference. (4) Completion of a training course offered under the joint auspices of the department, SOAH, and representatives of the facilities. (A) The course must address: (i) the state and federal statutes, rules and regulations under which these enforcement actions are brought; and (ii) geriatric issues with emphasis on the aging process, end of life, and emotional and psychosocial concerns. (B) The course must: (i) be offered at least once a year; and (ii) be initially offered in January 1996. (5) The chief judge can remove persons from the master list if he determines that they no longer meet the qualifications listed in this section. The determination of the chief judge in this matter is conclusive. sec.163.21. Costs of Arbitration. (a) An arbitrator's fees and expenses shall not exceed $500 per day for case preparation, pre-hearing conferences, hearings, preparation of the award, and any other required post-hearing work. Rates charged for less than one day must bear a reasonable relationship to the daily maximum. (b) There may also be incidental expenses connected with an arbitration proceeding which may be charged in addition to the arbitrator's fees and expenses upon agreement by the parties. Examples of such expenses include renting a room for the hearing. sec.163.29. Duties of the Arbitrator. The arbitrator shall: (1) secure appropriate facilities for the hearing, giving preference to using state facilities; (2) protect the interests of the department and the facility; (3) ensure that all relevant evidence has been disclosed to the arbitrator, department, and facility, and (4) render an order consistent with applicable state and federal law, including the Health and Safety Code, Chapter 242; the Human Resources Code, Chapter 32; and this chapter. sec.163.41. Exchange and Filing of Information. (a) By the 30th day after the date SOAH mailed notice to the parties of the name of the appointed arbitrator, the parties shall have exchanged the following information. (1) List of witnesses that a party expects to call with a short summary of their expected testimony. (2) Any and all documents or other tangible things that contain information relevant to the subject matter, including any documents that will be testified about at the hearing or that witnesses have reviewed in preparing for their testimony. (3) Not later than the seventh day before the first day of the arbitration hearing, and sooner if so directed by the arbitrator, the department and the facility shall exchange and file with the arbitrator: (A) all documentary evidence not previously exchanged and filed that is relevant to the dispute, with the relevant portions clearly indicated; and (B) information relating to a proposed resolution of the dispute. sec.163.47. Evidence. (a) The parties may offer evidence as they desire and shall produce additional evidence that the arbitrator considers necessary to understand and resolve the dispute. However, any documentary evidence not properly exchanged between the parties before the hearing will be excluded from consideration unless good cause is shown. (b) The arbitrator is the judge of the relevance and materiality of the evidence offered. Strict conformity to the rules of judicial proceedings is not required. The Texas Rules of Civil Evidence are not binding on the arbitrator but may be used as a guideline. (c) Each party shall produce any witnesses under its control without the necessity of a subpoena. Individuals may be compelled by the arbitrator, as provided under the Texas General Arbitration Act, Texas Civil Practice and Remedy Code Annotated, sec.171.007, to attend and give testimony or to produce documents at the arbitration proceeding or at a deposition allowed under sec.163.43 of this title (relating to Discovery). sec.163.49. Witnesses. Witnesses shall testify under oath. Testimony may be presented in a narrative, without strict adherence to a "question and answer" format. 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 8, 1995. TRD-9516127 Shelia Bailey Taylor Deputy Chief Administrative Law Judge State Office of Administrative Hearings Effective date: January 1, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 475-4993 TITLE 4. AGRICULTURE Part I. Texas Department of Agriculture Chapter 13. Apiary Equipment Brands 4 TAC sec.sec.13.1-13.9 The Texas Department of Agriculture (the department) adopts the repeal of sec.sec.13.1-13.9, concerning issuance of apiary equipment brands, affixation to equipment, height and location, transference, bill of sale, sale of separate branded equipment, placement of brand number, tampering and stolen equipment, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5455). These sections are being repealed because the department no longer has the necessary legislative authority to adopt or implement these sections. That authority has been transferred to the Texas Agricultural Experiment Station. Repeal of these sections will delete unnecessary rule language and reduce state regulations. The repeal eliminates existing regulations for apiary equipment brands No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Agriculture Code, sec.12.016, which provides the Texas Department of Agriculture with the authority to administer the provisions of the Texas Agriculture Code, Chapter 12. 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 8, 1995. TRD-9516043 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 Chapter 15. Consumer Services Division Texas Weights and Measures 4 TAC sec.15.7 The Texas Department of Agriculture (the department) adopts the repeal of sec.15.7, concerning standards for the sale of butter, or renovated or processed butter, or oleomargarine, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5455). This section is being repealed in order to allow for changes in consumer preferences; permit changes in industry standards, and avoid interference with interstate commerce. Repeal of this section will delete unnecessary rule language and allow greater flexibility that manufacturers will have to respond to consumer preferences and the changing demographics of the marketplace. The repeal eliminates existing size standards for the sale of butter, renovated or processed butter or oleomargarine. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Agriculture Code, sec.13.002, which provides the Texas Department of Agriculture with the authority to enforce the provisions of the Texas Agriculture Code, Chapter 13, concerning the sale and use of weights and measures and authorizing the department to supervise all weights and measures sold in this state. 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 8, 1995. TRD-9516044 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 4 TAC sec.15.10 The Texas Department of Agriculture (the department) adopts the repeal of sec.15.10, concerning standards for whole or unground grains or seed sold as poultry or livestock feed, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5456). This section is being repealed in order to allow for changes in consumer preferences; permit changes in industry standards, and avoid interference with interstate commerce. The repeal of this section will delete unnecessary rule language and allow greater flexibility that manufacturers will have to respond to consumer preferences and the changing demographics of the marketplace. The repeal eliminates existing size standards for whole or unground grains or seeds sold as poultry or livestock feed. No comments were received regarding adoption of the repeal. The repeal is adopted under the Texas Agriculture Code, sec.13.002, which provides the Texas Department of Agriculture with the authority to enforce the provisions of the Texas Agriculture Code, Chapter 13, concerning the sale and use of weights and measures and authorizing the department to supervise all weights and measures sold in this state. 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 8, 1995. TRD-9516045 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 4 TAC sec.15.13 The Texas Department of Agriculture (the department) adopts the repeal of sec.15.13, concerning the requirements for the inspection of the net contents of random weight and standard weight packages, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5456). This section is being repealed in order to allow for the adoption of new sec.15.13, which will adopt by reference the current published edition of the National Institute of Standards and Technology (NIST) Handbook 133, Checking the Net Contents of Packaged Goods. Repeal of this section will delete unnecessary rule language and allow greater standardization of TDA's package inspection program. The repeal eliminates existing requirements for the inspection of net contents of random weight and standard weight packages. No comments were received regarding adopion of the repeal. The repeal is adopted under the Texas Agriculture Code, sec.13.002, which provides the Texas Department of Agriculture with the authority to enforce the provisions of the Texas Agriculture Code, Chapter 13, concerning the sale and use of weights and measures and authorizing the department to supervise all weights and measures sold in this state. 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 8, 1995. TRD-9516046 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 The Texas Department of Agriculture (the department) adopts new sec.15.13, concerning requirements for the inspection of the net contents of random weight and standard weight packages, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5456). This new section is being adopted in order to allow TDA to adopt by reference the current published edition of the National Institute of Standards and Technology (NIST) Handbook 133, Checking the Net Contents of Packaged Goods. This will eliminate the need to modify this section each time the national standards are changed. The adoption of this section will allow greater standardization of TDA's package inspection program. The new section adopts by reference NIST standards for inspection of net contents of random weight and standard weight packages. No comments were received regarding adoption of the new section. The new section is adopted under the Texas Agriculture Code, sec.13.002, which provides the Texas Department of Agriculture with the authority to adopt rules for the inspection of the net contents of random weight and standard weight packages. 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 8, 1995. TRD-9516047 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 Milk Volumetrics 4 TAC sec.sec.15.31-15.34 The Texas Department of Agriculture (the department) adopts the repeal of sec.sec.15.31-15.34, concerning installation and adjustment of bulk farm milk tanks and approval of milk testing apparatus to determine butterfat and other component parts of milk, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5457). These sections are being repealed in order to comply with statutory changes made by the 74th Legislature, Regular Session, 1995, in accordance with Senate Bill 372. The underlying statutory authority for the department's adoption and implementation of these sections has been repealed. Repeal of these sections will delete unnecessary rule language and reduce cost for consumers and producers. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Agriculture Code, sec.12.016, which provides the Texas Department of Agriculture with the authority to adopt rules for administration of the Texas Agriculture 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 8, 1995. TRD-9516048 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 Alcohol Fuels and Fuel Alcohol Equipment 4 TAC sec.15.121, sec.15.122 The Texas Department of Agriculture (the department) adopts the repeal of sec.15.121 and sec.15.122, concerning definitions and registration of fuel alcohol equipment, without changes to the proposed text as published in the July 25, 1995, issue of the Texas Register (20 TexReg 5458). These sections are being repealed because the enabling legislation adequately describes the requirement for this program and additional rules are unnecessary. Repeal of these sections will delete unnecessary rule language and reduce state regulations. No comments were received regarding adoption the repeals. The repeals are adopted under the Texas Agriculture Code, sec.17.003, which provides the Texas Department of Agriculture with the authority to enforce the provisions of the Texas Agriculture Code, Chapter 17, concerning the regulations of the alcohol fuels and fuel alcohol equipment in the state of Texas. 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 8, 1995. TRD-9516049 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: July 25, 1995 For further information, please call: (512) 463-7583 Chapter 27. Aquaculture Regulations 4 TAC sec.sec.27.2, 27.3, 27.6, 27.21, 27.23-27.25, 27.50, 27.102 The Texas Department of Agriculture (the department) adopts the repeal of sec.sec.27.2, 27.3, 27.6, 27.21, 27.23-27.25, 27.50, and 27.102, concerning aquaculture license required, fish farm vehicle license required, records, bill of lading required, invoices for shipments of dead redfish or dead speckled sea trout, transported dead redfish and dead speckled sea trout, labeling of redfish and dead speckled sea trout package, packaging requirements for importation of dead redfish and dead speckled sea trout and inspection, without changes to the proposed text as published in the September 22, 1995, issue of the Texas Register (20 TexReg 7569). These sections are being repealed because they restate statutory authority or have been determined by the department to place an unnecessary burden on the aquaculture industry. Repeal of these sections will delete unnecessary rule language and reduce state regulation. The repeal eliminates licensing and bill of lading requirements already stated in the statute and eliminates the use of invoices, labeling and packaging requirements. No comments were received regarding adoption of the repeals. The repeals are adopted under the Texas Agriculture Code, sec.134.005, which provides the Texas Department of Agriculture with the authority to enforce the provisions of Texas Agriculture Code, Chapter 134, concerning the regulations of the Aquaculture industry in the state of Texas. 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 8, 1995. TRD-9516050 Dolores Alvarado Hibbs Chief Administrative Law Judge Texas Department of Agriculture Effective date: December 29, 1995 Proposal publication date: September 22, 1995 For further information, please call: (512) 463-7583 TITLE 7. BANKING AND SECURITIES Part II. Banking Department of Texas Chapter 25. Prepaid Funeral Contracts Subchapter C. Investment of Trust Funds 7 TAC sec.sec.25.51-25.59 The Texas Department of Banking (the Department) adopts new sec.sec.25.51-25. 59, concerning guidelines for investment of prepaid funeral benefits trust funds pursuant to Texas Civil Statutes, Article 548b (the Act), sec.1(h) and sec.5A, with changes to the proposed text as published in the August 8, 1995, issue of the Texas Register (20 TexReg 5976). The Act, sec.5A, as added in 1993, generally provides requirements and limitations with respect to the types of investments and percentage of trust funds that may be invested in certain types of investments by trustees of prepaid funeral benefits trust funds. In addition, sec.5A grants a grace period until September 1, 1996, for trustees to dispose of all investments made before the effective date of sec.5A that are not in compliance with sec.5A with respect to the type of investment or the percentage of trust funds that may be invested in certain types of investments. The department has adopted new Subchapter C to clarify specific applications of the Act, sec.5A, eliminate certain ambiguities which have the potential to frustrate the intent of the Legislature, and authorize certain investments not specifically mentioned in sec.5A. Further, the title of new Subchapter C is being changed from the title as proposed because of an error in the proposed title. While the Act, sec.5A, specifies percentage limitations applicable to trust account investments, further detail is required to provide for investment situations or decisions within the intent of the statute but not specifically addressed and to provide for an effective and orderly transition to conforming investments. The sections as adopted clearly set out permitted and prohibited investments and authorized percentages in various types of investments, and clarify the application of the "prudent person rule" in the context of statutory percentage caps. As adopted, sec.25.58 details the type of investment-related information which must be filed with a permit holder's annual report and made available during examinations. With respect to investment in mutual funds, sec.25.55, as adopted, specifies that no limits apply if the portfolio of the mutual fund contains only investments that the trust fund could directly make without limits. If any investment in the mutual fund portfolio is subject to limits under the Act, two alternate methods are available for measuring investment limits. First, the trust fund can limit its investment in the mutual fund to 20% of the trust fund. This method is easy to apply and does not require the trustee to maintain extensive documentation. Second, the trustee can keep adequate records of the mutual fund portfolio, updated quarterly, and combine those holdings with other trust fund holdings for purposes of applying the percentage investment limits. Finally, sec.25.59 as adopted contains time periods for complying with the investment guidelines and specifically prohibits any non-conforming investment prior to expiration of the statutory grace period on September 1, 1996. Five speakers commented on various provisions of the proposed sections at a public hearing held on September 8, 1995. In addition, the department received five sets of written comments. Numerous suggestions were made or received requesting changes to the proposed sections. However, only one comment stated that the author was against the rule as a whole. The following comments resulted in changes to the adopted sections: 1. The Texas Funeral Directors Association (TFDA) objected to the language in sec.25.54(b) which imposed a 10% limitation on any combination of real estate, oil and gas interests, limited partnerships, foreign securities and "any other investment not specifically authorized by the Act or by this subchapter." TFDA noted that the Act allows up to 10% of trust funds to be invested in any combination of real estate, oil and gas interests, limited partnerships, foreign securities and any other investments "not otherwise permitted by the Act." TFDA requested that the language as proposed in sec.25. 54(b) be changed for greater clarity and consistency. After the department reviewed this comment carefully, the adopted sec.25.54(b) has been changed in part to reflect a 10% limitation on the listed investments in 5A(d)(9) of an Act and "any other investments not otherwise permitted by this Act or this subchapter." 2. At the request of TFDA and another commenter, proposed sec.25.59(c) was revised to include language to reflect grandfathered plan investments under Section 4 of the 1993 amendatory provisions to the Act. As requested, the phrase "unless such investment is exempted by some other provision of the Act" was added to the end of adopted rule sec.25.59(c). 3. Additionally, TFDA and another commenter both argued that the appraisal requirements in sec.25.53(e) as proposed would create a hardship for trustees if a certified appraisal were required for investments secured by first lien real estate. The department revised this section to increase the interval between appraisals to six years, with interim valuations by internal appraisals or broker's opinions of value. The proposed sections also received certain comments which, after thorough examination, the department rejected without making the requested changes to the adopted sections, for the reasons stated. 1. TFDA, the Trust Financial Services Division/Texas Bankers Association (TBA), and other commenters requested that sec.25.52, relating to the prudent person rule, be deleted in its entirety. The commenters argued that the proposed section as drafted is an amplification and alteration of the prudent person rule as it is set forth in the Act and exceeds the authority of the department. The department disagrees and rejects this argument. The purpose of the department's rule making authority is to implement and clarify the Act. The prudent person rule as adopted by the department clarifies the Act by detailing the types of general standards which have been used by courts in determining whether a trustee has met the prudent person standard in investment decisions. This clarification does not, in the view of the department, diminish the trustee's discretion as set by the Legislature in the Act. 2. A commenter requested that escrow-to-maturity prefunded municipal bonds (municipal bonds that have escrow funds consisting of U.S. government securities set aside to provide for their payment upon maturity but which are not rated) be considered a permitted investment under sec.25.53. No provision in the Act authorizes this type of investment other than sec.5A(f) which authorizes a trustee to invest up to 10% of the prepaid funeral trusts funds related to a single permit holder to any other investments not covered by the Act, sec.5A(d). Therefore, under the Act and the adopted sections, up to 10% of a trust may be invested in any combination of real estate, oil and gas interests, limited partnerships, foreign securities and any other investments not otherwise permitted by the Act or the adopted sections, including escrow to maturity prefunded municipal bonds. 3. A commenter also requested that the reference to governmental securities in sec.25.53(b) of the proposed rule be clarified to show that this definition also encompasses governmental agency issues. The department reviewed this suggestion and is of the opinion that sec.25.53(b) as adopted is clear. Reference is made to sec.25.51 as adopted which defines a governmental security to include investments under the Act, sec.5A(d)(3) which include "bonds, evidences of indebtedness or obligations of agencies and instrumentalities of the government of the United States." 4. TFDA and another commenter requested that language be added to the proposed sections allowing investment of an entire fund in "dollar for dollar" mutual funds. The department rejects this suggestion. Section 25.55 as adopted provides the investment in trust funds in mutual funds are considered transparent. Thus, the underlying assets of the mutual must meet the limitations of the Act and the adopted sections. Dollar for dollar mutual funds are allowable only to the extent that they comply with the Act and with adopted sections, especially sec.25.55. 5. TFDA and another commenter also objected to the department's interpretation of the Act, sec.5A(e), as incorporated into adopted sec.25.54(a). The department's interpretation of the provisions is that a trustee may invest up to a total of 70% of trust funds in bonds, notes, and common and preferred stock as defined in the Act, sec.5A(5), (6), (7), and (8). The comment argued that sec.5A(e) creates an investment limit of up to 70% for bonds and notes and up to 70% for common and preferred stock. The department disagrees and notes that this and related issues are presently in litigation. 6. A commenter also requested that sec.25.53(b) as proposed be changed to reflect that a trustee could invest without limit in a mutual fund consisting "primarily" of investments in insured deposits and/or government securities. The department reviewed this matter and is of the opinion that the language as adopted allowing a trustee to invest without limit in mutual fund consisting "wholly" of the indicated investment is consistent with the statutory scheme set by the Legislature. 7. Finally, a commenter argued that the trust instruments and the common law interpretation of the prudent man rule should provide sufficient guidelines to manage their client's trust monies. The Department respectfully disagrees. The purpose of the Act is to protect and safeguard the prepaid funds of the holders of the contracts, not the sellers. The Legislature set up the framework to protect these funds by limiting both the seller and trustee to a statutory list of proper investments coupled with an obligation to comply with the prudent person standard under the Act, sec.5A(c). The purpose of these adopted sections is to clarify and implement the Act. The new sections are adopted pursuant to the department's rulemaking authority under Texas Civil Statutes, Article 548b, sec.2, which authorizes the department to write rules concerning "matters incidental to the enforcement and orderly administration" of Texas Civil Statutes, Article 548b. sec.25.51. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Act-Texas Civil Statutes, Article 548b. Affiliate-A person or entity directly or indirectly controlling, controlled by, or under common control with a permit holder or the funeral provider. Commissioner-The Banking Commissioner of Texas. Department-The Texas Department of Banking. Foreign security -A bond, evidence of indebtedness or obligation that would meet the requirements of the Act, sec.5A(d)(5), but for the fact that it is issued by a foreign country or a corporation organized under the laws of a foreign country, or a common or preferred stock that is publicly trading on a stock exchange located within the United States and would be described by the Act, sec.5A(d)(7) or sec.5A(d)(8), but for the fact that it is issued by a corporation organized under the laws of a foreign country. Funeral provider -The funeral home designated in a prepaid funeral benefits contract that has agreed and obligated itself to provide the specified prepaid funeral benefits. Government security -A security that is a permissible investment under the Act, sec.5A(d)(2) or sec.5A(d)(3), but not including a municipal security under the Act, sec.5A(d)(4). Insured deposit -An investment authorized under the Act, sec.5A(d)(1). Mutual fund-A mutual fund, collective investment fund, or similar participative investment fund. Permit holder-A person having a valid permit to sell prepaid funeral benefits. Trustee-The person or entity named as trustee in the instruments creating or amending a prepaid funeral trust, including a trust department in a state or national bank in this state or a trust company authorized to do business in this state, with which prepaid funeral benefits funds have been placed under the Act, sec.5(a)(2). Trust fund or trust funds-The total prepaid funeral benefit funds related to a single permit holder. sec.25.52. Prudent Person Rule. Notwithstanding any investment authorization contained in the Act or this section, the "prudent person rule" of the Act, sec.5A(c), requires the trustee of a prepaid funeral benefits trust to exercise the judgment and care under the circumstances then prevailing that a person of ordinary prudence, discretion, and intelligence would exercise in the management of that person's own affairs, not in regard to speculation but in regard to the permanent disposition of that person's funds, by: (1) considering the probable income from as well as the probable increase in value and safety of the trust funds as a whole; (2) diversifying the investment of all the assets of the trust so as to minimize the risk of material losses, unless under the circumstances it is clearly prudent not to do so; (3) providing for liquidity to adequately fund funeral costs as may be needed from time to time as prepaid funeral benefit contracts mature, except that this provision may not be construed to require a trustee to employ the services of an actuary; and (4) complying with the documents and instruments governing the trust insofar as the documents and instruments are consistent with the Act and regulations related to the Act. sec.25.53. Permitted Investments. (a) A trustee shall invest trust funds only in the types of investments permitted under the Act, sec.5A(d), in rules adopted by the department, or as otherwise permitted under sec.25.57 of this title (relating to Other Investments). (b) Subject to sec.25.52 of this title (relating to Prudent Person Rule), a trustee may invest trust funds without limit in insured deposits, government securities, and/or a mutual fund the portfolio of which consists wholly of investments in insured deposits and/or government securities. (c) As provided by the Act, sec.5A(d)(4), a trustee may invest in debt instruments of any state or local government that have been given federal income tax exempt status only if the debt instruments are rated "Aa" or better by Moody's bond rating service or "AA" or better by Standard and Poor's bond rating service. These debt instruments are not government securities as that term is used in the Act, sec.5A(g). (d) As provided by the Act, sec.5A(d)(5), a trustee may invest in bonds, evidences of indebtedness, or obligations of corporations organized under the laws of the United States or of a state, only if the corporate bonds, evidences of indebtedness, or obligations are rated "A" or better by Moody's bond rating service or by Standard and Poor's bond rating service. (e) As provided by the Act, sec.5A(d)(6), a trustee may invest in notes, evidences of indebtedness, or participations in notes or evidences of indebtedness, secured by a valid first lien on real property located in the United States, the amount of which obligations may not exceed 90% of the value of the respective parcels of real property securing them. The value of the collateral underlying permissible first lien mortgages must be determined by independent appraisal at initial funding or purchase of the mortgage and also independently reappraised at least once every six years to determine continuing compliance with the Act, sec.5A(d)(6). In the interim years between independent appraisals, the collateral must be valued at least annually by an internal appraisal or by a broker's opinion of value. (f) As provided by the Act, sec.5A(d) (7), a trustee may invest in common stock of a corporation organized under the laws of the United States or of a state only if the corporation has and maintains at least $1 million of net worth or will have at least $1 million of net worth after completion of a securities offering to which the trust is subscribing. However, a trustee that invests trust funds in common stock of a corporation that is not publicly traded on a national securities exchange or through a national automated quotation system must maintain adequate, written documentation to justify the prudence of the investment under sec.25.52 of this title. (g) As provided by the Act, sec.5A(d)(8), a trustee may invest in preferred stock of a corporation organized under the laws of the United States or of a state only if the stock is rated "BAA" or better by Moody's bond rating service or "BBB" or better by Standard and Poor's bond rating service. sec.25.54. Investment Limitations. (a) Subject to sec.25. 52 of this title (relating to the Prudent Person Rule), no more than 70% of trust funds may be invested in any combination of the following: (1) bonds, evidences of indebtedness, or obligations of corporations organized under the laws of the United States or of a state; (2) notes, evidences of indebtedness, or participations in notes or evidences of indebtedness, secured by a valid first lien on real property located in the United States; (3) common stock of a corporation organized under the laws of the United States or of a state; and/or (4) preferred stock of a corporation organized under the laws of the United States or of a state. (b) No more than 10% of total trust funds may be invested in any combination of real estate, oil and gas interests, limited partnerships, foreign securities, and any other investments not specifically authorized by the Act or this subchapter. (c) Except as provided in sec.25.53 and sec.25.55 of this title (relating to Permitted Investments and Mutual Funds, respectively), no more than 20% of trust funds may be invested in a single issue of any investment. sec.25.55. Mutual Funds. (a) For purposes of applying the investment limitations of the Act and this subchapter, the investment of trust funds in a mutual fund is generally considered to be transparent, i.e., an investment in the underlying assets of the mutual fund. Subsection (b) of this section governs investment in mutual funds that hold only securities for which the Act imposes no limit. (b) A trustee may measure permissible investments under either paragraph (1) or (2) of this subsection. However, a trustee is required to use paragraph (2) of this subsection for all mutual funds if more than 10% of the investments in the portfolio of any mutual fund is comprised of real estate, oil and gas interests, limited partnerships, foreign securities, or any other investments not specifically authorized by the Act or this subchapter. (1) If the portfolio of a mutual fund contains any investment that is subject to limits under the Act or this subchapter, no more than 20% of trust funds may be invested in the mutual fund unless the trustee evaluates the investment in the mutual fund under paragraph (2) of this subsection. In evaluating investment limits under this paragraph, a trustee is not required to treat the mutual fund as transparent except for the limited purpose of identifying whether the portion of portfolio of the mutual fund in real estate, oil and gas interests, limited partnerships, foreign securities, or any other investments not specifically authorized by the Act or this subchapter exceeds 10% of the total portfolio. (2) At the election of the trustee or if required in lieu of the method permitted by paragraph (1) of this subsection, a trustee shall determine at least quarterly that the trust fund's pro rata share of any type of investment or a particular issue of an investment in the portfolio of the mutual fund is not in excess of applicable investment limits by reason of being combined with the trust fund's pro rata share of that type of investment or particular issue of an investment held by all other mutual funds in which the trust funds are invested and with the trust fund's own direct investment holdings. The trustee must maintain written documentation adequate to demonstrate compliance with this subsection. sec.25.56. Repurchase Agreements. For the purposes of applying the investment limitations of the Act and this subchapter, the investment of trust funds in a repurchase agreement is considered to be an investment in the underlying security collateralizing the repurchase agreement. Any securities held by the trust fund that are subject to repurchase by another party must have a fair market value that equals or exceeds 102% of the repurchase price, and the ratio of market value to repurchase price must be evaluated no less often than quarterly. sec.25.57. Other Investments Permitted by the Department. Pursuant to the Act, sec.5A(d)(11), the department may in the exercise of discretion approve an investment for trust funds other than as provided in the Act or this subchapter. An application for approval of an investment under this section must: (1) be in writing; (2) describe the investment in detail, which may be by reference to an offering circular or prospectus attached as an exhibit; and (3) evaluate the investment in comparison with the standards set forth in sec.25.52 of this title (relating to the Prudent Person Rule). sec.25.58. Reporting Requirements. (a) A permit holder must provide the department with the following as a part of the permit holder's annual report: (1) a written investment plan as required by the Act, sec.5A(a)(1); and (2) a written statement from the trustee detailing all investments not in compliance with this section. (b) A permit holder must notify the commissioner in writing of all prohibited investments of trust funds under the Act, sec.1(h), within 60 days of the effective date of this section. The notification must include a plan for removing prohibited investments within 60 days of the date of notification to the commissioner. sec.25.59. Transition Provisions. (a) A permit holder or trustee may not make an investment after the effective date of this subchapter that is not in compliance with the Act, sec.5A, or this subchapter or that would cause a trust fund investment portfolio currently not in compliance with the Act, sec.5A, or this subchapter to become further out of compliance. (b) Subject to subsection (c) of this section, a trustee shall dispose of all investments made before September 1, 1993, that are not in compliance with this subchapter by September 1, 1996, unless the commissioner grants an extension in writing with respect to a particular investment as permitted by the Act, sec.5A(h). Extensions of time for disposition of a non-conforming investment (other than a prohibited investment under subsection (c) of this section) may be granted for periods of one year or more. A request for extension must be in writing and must set out the reasons for the extension. The commissioner may grant an extension, in the exercise of discretion, if the commissioner finds that the trustee has made a good faith effort to dispose of the non-conforming investment or finds that disposal of the non-conforming investment would be materially detrimental to the best interest of the purchasers of prepaid funeral benefits contracts. (c) An investment prohibited under the Act, sec.1(h), may not be made or retained and is not subject to any grace period or extension of time for disposing of the investment, unless such investment is exempted by another provision of the Act. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 6, 1995. TRD-9515918 Everette D. Jobe General Counsel Texas Department of Banking Effective date: December 27, 1995 Proposal publication date: August 8, 1995 For further information, please call: (512) 475-1300 TITLE 16. ECONOMIC REGULATION Part II. Public Utility Commission of Texas Chapter 22. Practice and Procedure Subchapter E. Pleadings 16 TAC sec.22.71 The Public Utility Commission of Texas adopts an amendment to Procedural Rule sec.22.71, concerning Filing of Pleadings and Other Materials, with changes to the proposed text as published in the October 6, 1995, issue of the Texas Register (20 TexReg 8111). This section is being amended to facilitate the commission's ability to provide an efficient review of regulatory matters that come before it. Commission staff will not be required to make additional copies and then route them separately, which is a resource-intensive effort. The following parties filed comments in response to the October 6, 1995 Texas Register publication of the proposed rule: El Paso Electric Company (EPEC); Central Power and Light Company (CPL); Southwestern Electric Power Company (SWEPCO); and West Texas Utilities Company (WTU), the operating companies of Central and South West Corporation (CSW Companies); and Texas Utilities Electric Company (TU Electric). EPEC generally supports the amendments to the rule as proposed. The CSW Companies believe the proposed rule provides an economic method to meet the commission's need for documents, and generally support its adoption. TU Electric recognizes that recent amendments to the Public Utility Regulatory Act (PURA) and reorganization of the commission provide an appropriate time to review the filing requirements of documents and other materials filed with the commission. Both CSW Companies and TU Electric request that the commission provide clarification of sec.22.71(b)(5) as to the filing requirements for the fuel factor and fuel reconciliation filing packages. The commission supports this request for clarification of sec.22.71(b)(5) and modifies this paragraph to include such filing packages. CSW Companies suggest that the commission reconcile Procedural Rule sec.22.71(b)(2) with Substantive Rule sec.23.24(b)(1) as to the number of copies required in a tariff filing. The commission recognizes the inconsistency between the two rules and modifies sec.22.71(b)(2) to require the filing of five copies of tariffs. TU Electric notes that currently, the commissionss procedural and substantive rules do not address applications for either certificate of convenience and necessity exemptions or service area exceptions, and requests that sec.22.71(b)(6) be modified to include such applications. The ommission supports this suggestion and modifies sec.22.71(b)(6) to include such applications. Finally, TU Electric proposes that a new subparagraph (9), dealing with rulemaking petitions and comments, be added to sec.22.71(b). TU Electric notes that under the proposed rule, a petition for rulemaking presumably would be within the scope of petitions for which proposed sec.22. 71(b)(1) will require 13 copies while comments to rulemaking petitions presumably would be within the scope of other pleadings and documents for which proposed sec.22.71(b)(8) will require ten copies. The commission disagrees with the proposal to add a new paragraph (9) to the proposed rule because rulemaking petitions will fall within the scope of sec.22.71(b)(1) while the number of copies of comments to proposed rules will be designated in the rule as noticed, as the number of such copies required is rule specific and not generic. The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.101, which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. sec.22.71. Filing of Pleadings and Other Materials. (a) (No change.) (b) Number of Documents to Be Filed. Unless otherwise provided by this chapter or ordered by the presiding officer, the number of copies to be filed, including the original, are as follows: (1) applications, petitions, and complaints: 13 copies; (2) tariffs for review under sec.22.33 of this title: five copies; (3) exceptions, replies, interim appeals, requests for oral argument, and other documents addressed to the commissioners: 22 copies (4) testimony and briefs: 11 copies, except that in contested cases transferred to the State Office of Administrative Hearings, parties must file 13 copies of testimony and briefs; (5) rate, fuel factor, and fuel reconciliation filing packages: 16 copies; (6) applications for certificates of convenience and necessity for transmission lines or boundary changes, certificate of convenience and necessity exemptions, and service area exceptions: six copies; (7) discovery requests and responses: seven copies; and (8) other pleadings and documents: ten copies, except that in contested cases transferred to the State Office of Administrative Hearings, parties must file 12 copies of other pleadings and documents. (c)-(h) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 8, 1995. TRD-9516059 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: December 29, 1995 Proposal publication date: October 6, 1995 For further information, please call: (512) 458-0100 Subchapter G. Prehearing Proceedings 16 TAC sec.22.123 The Public Utility Commission of Texas adopts an amendment to sec.22.123, concerning appeal of an interim order, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8555). The amendment removes the time limitation for ruling on appeals to allow the commission more flexibility in managing its meeting agenda, and establishes a procedure for determining when as appeal will be placed on an open meeting agenda. No comments were received regarding the adoption of the amendment. The amendment is adopted under the Public Utility Regulatory Act of 1995, sec.1.01, which provides the Public Utility Commission of Texas with the authority to make and enforce rules reasonably required in the exercise of its powers and jurisdiction. 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 8, 1995. TRD-9516060 Paula Mueller Secretary of the Commission Public Utility Commission of Texas Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 458-0100 TITLE 22. EXAMINING BOARDS Part XIV. Texas Optometry Board Chapter 271. Examinations 22 TAC sec.271.6 The Texas Optometry Board adopts an amendment to sec.271.6, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8387). Rule 271.6 is required in order to clarify the terminology of the parts of the National Board of Examiners in Optometry (NBEO) examination, and to establish a mechanism whereby the Jurisprudence Examination can be administered on a quarterly basis rather than semi-annually. No comments were received regarding adoption of the amendment. The amendment is adopted under the provisions of Texas Civil Statutes, Article 4552, sec.3.05 and sec.3.06. Section 2.14 provides the Texas Optometry Board with the authority to promulgate procedural and substantive rules. The Board interprets sec.3.05 and sec.3.06 as authorizing it to utilize the National Board Examination for testing applicants for licensure. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's authority. Issued in Austin, Texas, on October 6, 1995. TRD-9515951 Lois Ewald Executive Director Texas Optometry Board Effective date: December 28, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 305-8500 Part XXX. Texas State Board of Examiners of Professional Counselors Chapter 681. Professional Counselors The Texas State Board of Examiners of Professional Counselors (the board) adopts amendments to sec.sec.681.2, 681.15, 681.17, 681.26, 681.32-681.35, 681. 39-681.41, 681.52, 681.61, 681.63, 681.64, 681.83, 681.84, 681.112, 681.121, 681.123, 681.125, 681.126, 681.171, 681.173, 681.174, 681.192, 681.193, and 681.195 and new section 681.114 and sec.681.128 concerning the licensure of professional counselors. Sections 681.32, 681.40, 681.52, 681.112, and 681.114 are adopted with changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8388). Sections 681.2, 681. 15, 681.17, 681.26, 681.33-681.35, 681.39, 681.41, 681.61, 681.63, 681.64, 681. 83, 381.84, 681.121, 681.123, 681.125, 681.126, 681.128, 681.171, 681.173, 681. 174, 681.192, 681.193 and 681.195 are adopted without changes and will therefore not be republished. Specifically, the amendments cover definitions, license certificates, fees, required application materials, academic requirements, endorsement, license renewal, purpose and hour requirements for continuing education, violations by non-licensed persons and complaint procedures. The amendments define terms relating to art therapy; establish fee for art therapy specialty designation; and add language throughout rules to include an art therapy specialty designation. New sec.681.114 and sec.681.128 are necessary to implement legislation passed by the 74th Legislature, 1995. Section 681.114 establishes the academic and supervision requirements for an art therapy specialty designation. Section 681.128 establishes the procedures to suspend and reinstate a license for failure to pay child support. The sections insure the regulation of professional counselors continues to identify competent practitioners and implements the legislation passed by the 74th Legislature, 1995. The following comments were received concerning the proposal. The board's responses follow each comment. Comment: Concerning sec.681.32(q)(4), a commenter suggested clarifying the language to except unkept appointments from the rule which relates to billing for services not provided. Response: The board agrees and has added language for clarification. Comment: A commenter recommended adding a rule that makes it a violation for an applicant to participate in any way in the subversion of licensing materials. Response: The board agrees and has added sec.681.32(w). Comment: Concerning sec.681.52(a)(1), a commenter suggested deleting language that requires information on the general application form that is also required on separate and additional documentation forms. Response: The board agrees and made the change. Comment: Concerning sec.681.112(e), a commenter indicated that the word "therapy" was omitted. Response: The board agrees and has made the correction. Comment: Concerning sec.681.114(b), a commenter suggested changing "accredited by" to "approved by." Response: The board disagrees because "accredited by" is the statutory language and can not be changed. Comment: One commenter recommended changing "Art Therapy Credentialing Board, Inc." in sec.681.114(c)(4) to "Art Therapy Credentials Board" because the name of that organization has changed since the legislative amendments were passed. Response: The board agrees and has made the change. Comment: One commenter suggested that if the national art therapy certification examination is not considered to be sufficiently equivalent to the Texas licensed professional counselor examination, the board might develop exam questions for the national art therapy certification examination so that examination could be sold to other states. Response: The board disagrees and has requested its ad hoc testing committee to compare the two examinations for future discussions. An editorial change was made for clarification purposes. The commenters were all individuals who neither expressed general support for or opposition to the proposed amendments and new sections. Subchapter A. The Board 22 TAC sec.sec.681.2, 681.15, 681.17 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516084 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter B. Authorized Counseling Methods and Practices 22 TAC sec.681.26 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516085 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter C. Code of Ethics 22 TAC sec.sec.681.32-681.35, 681.39-681.41 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. sec.681.32. General Ethical Requirements. (a)-(d) (No change.) (e) A licensee shall inform an individual before or at the time of the individual's initial professional counseling session with the licensee of the following: (1)-(4) (No change.) (5) any intent of the licensee to use another individual to provide counseling treatment intervention to the client; and (6) (No change.) (f) (No change.) (g) A licensee shall provide counseling treatment intervention only in the context of a professional relationship, and shall not provide counseling treatment intervention by means of newspaper or magazine articles, radio or television programs, mail or means of a similar nature, electronic media, or telephonic media when that is the primary vehicle for maintaining the professional counseling relationship. (h)-(j) (No change.) (k) A licensee shall not provide counseling treatment intervention to the licensee's current or previous family members, personal friends, or business associates. (l) A licensee shall not knowingly offer or provide counseling treatment intervention to an individual concurrently receiving counseling treatment intervention from another mental health services provider except with that provider's knowledge. If a licensee learns of such concurrent therapy, the licensee shall take immediate and reasonable action to inform the other mental health services provider. (m) (No change.) (n) A licensee to whom a school district refers a student for counseling treatment intervention shall comply with the rules adopted by the Texas Education Agency relating to the relationship between the district and the licensee. This requirement only applies to an outside counselor, not a licensee who is a school district employee. (o) (No change.) (p) For each client, a licensee shall keep accurate records of the dates of counseling treatment intervention, types of counseling treatment intervention, progress or case notes, and billing information. Records held by a licensee shall be kept for seven years for adult clients and seven years beyond the age of 18 for minor clients. Records held or owned by governmental agencies or educational institutions are not subject to this requirement. (q) A licensee shall bill clients or third parties for only those services actually rendered or as agreed to by mutual understanding at the beginning of services or as later modified by mutual agreement. (1) (No change.) (2) On the written request of a client, a client's guardian, or a client's parent (managing or possessory conservator) if the client is a minor, a licensee shall provide, in plain language, a written explanation of the charges for counseling treatment intervention previously made on a bill or statement for the client. This requirement applies even if the charges are to be paid by a third party. (3) (No change.) (4) A licensee may not submit to a client or a third payor a bill for counseling treatment intervention that the licensee knows were not provided or knows were improper, unreasonable, or medically or clinically unnecessary, with the exception of an unkept appointment. (r) A licensee shall terminate a professional counseling relationship when it is reasonably clear that the client is not benefiting from the relationship. When professional counseling is still indicated, the licensee shall take reasonable steps to facilitate the transfer to an appropriate referral or source. (s)-(u) (No change.) (v) A licensee shall not aid and abet the unlicensed practice of professional counseling by a person required to be licensed under the Act. (w) An applicant for licensure shall not participate in anyway in the subversion of licensing materials. sec.681.40. Advertising and Announcements. (a)-(c) (No change.) (d) The highest academic degree earned from an accredited college or university and relevant to the profession of counseling or a counseling-related field may be used when advertising or announcing counseling treatment intervention to the public or in counseling-related professional representations. A degree received at a foreign university may be used if the degree could be accepted as a transfer degree by accredited universities as reported by the American Association of Collegiate Registrars and Admissions Officers. A licensee may advertise or announce his or her other degrees from accredited colleges or universities if the subject of the degree is specified. (e) (No change.) (f) All advertisements or announcements of counseling treatment intervention including telephone directory listings by a person licensed by the board may clearly state the licensee's licensure status by the use of a title such as "Licensed Counselor, " or "Licensed Professional Counselor," "Licensed Professional Counselor-Art Therapist," "Art Therapist," "L.P.C.," "L.P.C.-A.T.," "A.T." or a statement such as "licensed by the Texas State Board of Examiners of Professional Counselors." 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 8, 1995. TRD-9516086 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter D. Application Procedures 22 TAC sec.681.52 The amendment is adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. sec.681.52. Required Application Materials. (a) General application form. An application form shall contain: (1) specific information regarding personal date, employment and type of practice, other state licenses and certifications held, felony or misdemeanor convictions, educational background, and references; (2) -(7) (No change.) (b) Practicum documentation form if applying for a temporary, regular license or regular license with art therapy specialty designation. The practicum documentation form shall contain: (1)-(7) (No change.) (c) Supervised experience documentation form if applying for a regular license or a regular license with art therapy specialty designation. The supervised experience documentation form must be completed by the applicant's supervisor and contain: (1)-(9) (No change.) (10) a statement that the supervised experience complies with the rules set out in Subchapter F of this chapter (relating to Experience Requirements for Examination and Licensure) and sec.681.114 of this title (relating to Art Therapy Specialty Designation). (d)-(e) (No change.) (f) References. (1) An applicant for a regular license or a regular license with art therapy specialty designation must have board reference forms submitted by three persons who can attest to the applicant's character, counseling skills and professional standards of practice, including at least one licensed professional counselor. The remaining two references must be from persons licensed or certified in the counseling profession or a mental health related profession. (2)-(3) (No change.) (g) Provisional license based on endorsement. Applicants for a provisional license based on endorsement must submit: (1)-(2) (No change.) (3) official documentation that the applicant has passed a national examination relating to counseling or art therapy or an exam offered by another state or territory for licensure as a counselor or art therapist; and (4) a letter of sponsorship from a person who holds a regular license in Texas to practice counseling. (h) Art therapy specialty designation. (1) An applicant for a temporary or regular license with an art therapy specialty designation must submit evidence of the successful completion of the Certification Examination in Art Therapy of the Art Therapy Credentials Board. (2) An applicant for a temporary license with an art therapy specialty designation must submit: (A) proof of current registration with the American Art Therapy Association; and (B) proof that the applicant limits his or her scope of practice to art therapy at the time of application. 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 8, 1995. TRD-9516087 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter E. Academic Requirements for Examination and Licensure 22 TAC sec.sec.681.61, 681.63, 681.64 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516088 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter F. Experience Requirements for Examination and Licensure 22 TAC sec.681.83, sec.681.84 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516089 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter H. Licensing 22 TAC sec.681.112, sec.681.114 The amendment and new section are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. sec.681.112. Endorsement. (a) The Texas State Board of Examiners of Professional Counselors (board) may grant a provisional license to a person who holds, at the time of application, a license as a counselor or art therapist issued by another state or territory that is acceptable to the board. An applicant for a provisional license must: (1) (No change.) (2) be licensed in good standing as a counselor or art therapist in another state or territory that has licensing requirements that are substantially equivalent to the regular licensing requirements of the Licensed Professional Counselor Act (Act); (3) have passed a national examination relating to counseling or art therapy or an exam offered by another state or territory for licensure as a counselor or art therapist; and (4) (No change.) (b)-(d) (No change.) (e) The board shall issue a regular license or a regular license with art therapy specialty designation to the holder of a provisional license if the board verifies that the provisional licensee has the academic and experience requirements for a regular license or a regular license with art therapy specialty designation. (f) (No change.) sec.681.114. Application for Art Therapy Specialty Designation. (a) A person applying for examination and licensure with an art therapy specialty designation must: (1) meet the requirements for a regular license set out in Subchapter E of this chapter (relating to Academic Requirements for Examination and Licensure) and Subchapter F of this chapter (relating to Experience Requirements for Examination and Licensure); (2) hold either: (A) a master's or doctoral degree in art therapy that includes 600 hours of supervised practicum from an accredited institution except that on or after September 1, 1996, applicants must have 700 hours of supervised practicum from an accredited institution; or (B) have all of the following: (i) a master's degree in a counseling-related field; (ii) a minimum of 21 semester hours or the equivalent of sequential course work in the history, theory, and practice of art therapy; and (iii) 600 hours of supervised practicum from an accredited institution except that on or after September 1, 1996, an applicant must have completed 700 hours of supervised practicum from an accredited institution; (3) have the experience requirements set out in subsection (d) of this section; and (4) have successfully completed the Certification Examination in Art Therapy of the Art Therapy Credentials Board. (b) The Texas State Board of Examiners of Professional Counselors (board) shall accept an individual course from an art therapy program accredited through the American Art Therapy Association as satisfying the education requirements set out in sec.681.63 of this title (relating to Academic Requirements) if not less than 75% of the course content is substantially equivalent to the content of a course required in sec.681.64 of this title (relating to Academic Course Content). (c) A temporary license with an art therapy specialty designation may be issued to a person who holds a master's degree in counseling or a counseling related field and: (1) has completed not less than 42 graduate semester hours of the education requirements under the Act, sec.10(a)(4) in an art therapy program accredited by the American Art Therapy Association. The requirements are described in sec.681.63(b) of this title. These semester hours may be included in the master's degree; (2) has completed the supervised work experience required under the Act, sec.10A(a)(3) and subsection (d) of this section; (3) has passed the examination required under the Act, sec.10A(a)(4) and subsection (a)(4) of this section; (4) is a registered art therapist with the Art Therapy Credentials Board and may use the title "A.T.R. " in the practice of art therapy; (5) represents himself or herself to the public as an "art therapist"; (6) limits the scope of practice to art therapy; (7) files a plan acceptable to the board on board forms detailing a course of study to complete the additional graduate semester hours necessary to satisfy the education requirements under the Act, sec.10(a) (4); and (8) applies prior to September 1, 1996. (d) As part of the supervised experience requirements for art therapy specialty designation required under the Act, sec.10(a)(5) and sec.sec.681.82- 681.84 of this title (relating to Experience Requirements for Examination and Licensure), an applicant must have the following hours. (1) For a person applying before September 1, 1996, supervised experience hours must include 1, 000 client contact hours under supervision of a nationally registered art therapist or other supervisor acceptable to the board as set out in sec.681.83 of this title (relating to Supervisor Requirements). (2) For a person applying on or after September 1, 1996, supervised experience hours must include: (A) 1,000 client contact hours under supervision of a licensed professional counselor with an art therapy specialty designation, if the applicant holds a master's or doctoral degree in art therapy that includes 700 hours of practicum; or (B) 2,000 client contact hours under supervision of a nationally registered art therapist or other supervisor acceptable to the board as set out in sec.681.83 of this title if the applicant holds a master's degree in a counseling related field and has a minimum of 21 semester hours or the equivalent of sequential course work in the history, theory, and practice of art therapy with 700 hours of practicum. (3) For a person applying on or after September 1, 1998, supervised experience hours must include: (A) 1,000 client contact hours under supervision of a licensed professional counselor with an art therapy specialty designation, if the applicant holds a master's or doctoral degree in art therapy that includes 700 hours of practicum; or (B) 2,000 client contact hours under supervision of a licensed professional counselor with an art therapy specialty designation, if the applicant holds a master's degree in a counseling related field and has a minimum of 21 semester hours or the equivalent of sequential course work in the history, theory, and practice of art therapy with 700 hours practicum. (e) An LPC intern with art therapy specialty designation must comply with the requirements set out in: (1) sec.681.81(c)-(g) of this title (relating to Temporary License); (2) sec.681.82(a)-(b) and (e)-(g) of this title (relating to Experience Requirements (Internship)); (3) sec.681.83(c) of this title; and (4) sec.681.84(a) and (c)-(n) of this title (relating to Other Conditions for Supervised Experience). (f) An applicant for a regular license with art therapy specialty designation must pass the licensed professional counselor examination administered by the board. 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 8, 1995. TRD-9516090 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter I. Regular License Renewal and Inactive and Retirement Status 22 TAC sec.sec.681.121, 681.123, 681.125, 681.126, 681.128 The amendments and new section are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516091 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter K. Continuing Education Requirements 22 TAC sec.sec.681.171, 681.173, 681.174 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516092 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 Subchapter L. Complaints and Violations 22 TAC sec.sec.681.192, 681.193, 681.195 The amendments are adopted under the Licensed Professional Counselor Act, Texas Civil Statutes, Article 4512g, sec.6, which provide the Texas State Board of Examiners of Professional Counselors with the authority to adopt and revise rules that are necessary to administer the Licensed Professional Counselor Act; sec.14(p) relating to rules concerning temporary licenses; and sec.19(b) relating to rules on fees. 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 8, 1995. TRD-9516093 James O. Mathis, Ed.D. Chair Texas State Board of Examiners of Professional Counselors Effective date: December 29, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 834-6658 TITLE 25. HEALTH SERVICES Part I. Texas Department of Health Chapter 1. Texas Board of Health Failure to Pay Child Support 25 TAC sec.1.301 The Texas Department of Health (department) adopts new sec.1.301, concerning the suspension of a license for failure to pay child support, without changes to the proposed text as published in the September 26, 1995, issue of the Texas Register (20 TexReg 7789). The section implements the provisions of the Family Code, Chapter 232 as added by Acts 1995, 74th Legislature, Chapter 751, sec.85 (HB 433). The law allows a court or Title IV-D agency (the Attorney General's Office) to issue an order suspending a license of a person who has failed to pay child support. The appropriate licensure program within the department will receive a copy of such final orders, record the suspension, and report the suspension as appropriate. The law became effective on September 1, 1995. No comments were received regarding the proposed new section. The new section is adopted under the Health and Safety Code, sec.12.001, which provides the Board of Health with authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, the Texas Department of Health, and the Commissioner of Health; and the Family Code, Chapter 232 relating to the suspension of a license for failure to pay child support. 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-9516094 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 26, 1995 For further information, please call: (512) 458-7236 Chapter 37. Maternal and Child Health Services Reporting of Elevated Levels of Childhood Lead 25 TAC sec.sec.37.331-37.336 The Texas Department of Health (department) adopts new sec.sec.37.331-37.336, concerning the reporting of childhood lead poisoning. Section 37.331 and sec.37. 336 are adopted with changes to the proposed text as published in the September 26, 1995, issue of the Texas Register (20 TexReg 7790). Sections 37.332-37.335 are adopted without changes to the proposed text and therefore will not be republished. The new sections cover the purpose; definitions; confidentiality of information provided to the department; reportable health conditions; and reporting procedures. The new sections implement the Health and Safety Code, Chapter 88 (Chapter 965, 74th Legislature, 1995), Reports of Childhood Lead Poisoning, which requires reporting of elevated blood lead levels in children; and allows the department to establish a registry of children with lead poisoning and blood lead levels of concern. The sections will result in an improved knowledge of the prevalence of childhood lead poisoning. The sections provide the department with a means for identifying common causes for childhood lead poisoning in Texas and for creating a registry of children with elevated blood lead levels. The following comments were received concerning the proposed sections. Following each comment is the department's response and any resulting change(s) . Comment: Two commenters stated that these rules would have significant fiscal implications for local health departments because of the need of data verification, confirmation of capillary blood lead levels, and other follow up activities. Response: The department disagrees with the commenters. The intent of the legislation and sections are restricted to the reporting of childhood blood lead levels of concern. There are no requirements in the legislation or the sections for local health departments to perform follow up activities. Under sec.37.336, the sections also allow for the reporting entity to transmit reports directly to the department. Should the handling of these reports become burdensome to the local health authority, they can request that the reports be sent directly to the department. Comment: Concerning sec.37.331, one commenter requested clarification on how the Texas Board of Health plans to control elevated blood lead levels in children. Response: The department agrees that a clarification is needed in reference to the scope of these sections and has added language to clarify how these sections relate to the control of elevated blood lead levels in children. Comment: Concerning sec.37.332, one commenter stated that the definition of lead poisoning as 20 micrograms per deciliter or greater was contradictory to the Centers for Disease Control and Prevention's definition of lead poisoning. Response: The department disagrees because the legislation defines lead poisoning as the range specified for medical evaluation and possible pharmacologic treatment in the most recent criteria issued by the Centers for Disease Control and Prevention, and this level is 20 micrograms per deciliter or greater. Comment: Concerning sec.37.334, two commenters questioned the rationale for including children in the age range of 6-14 in the reporting of blood lead levels of concern as defined by the sections. Response: The department feels that blood lead levels of concern as defined by the sections should include blood lead levels from children in this age range. Elevated blood lead levels for individuals 15 years and older have been reportable since 1985 in accordance with Chapter 99 of this title (relating to Occupational Diseases). The age range of 14 years or younger was chosen to cover the rest of the population and avoid overlapping with the existing reporting law for older individuals. One reporting level was chosen for the younger age group to minimize confusion, facilitate reporting, and keep the reporting level consistent with the definition of blood lead level of concern in the legislation. Comment: Concerning sec.37.334, one commenter requested that all reportable blood lead levels be dependent on the venous puncture technique. Response: The department disagrees with restricting the reportable blood lead levels to venous samples only since a large number of results from capillary samples in the ten to 14 micrograms per deciliter range would then not be reported. The sections do specify that the method of sampling be reported. The reporting of both capillary and venous samples will also allow for investigation into factors related to false positive results. Comment: Concerning sec.37.333 and sec.37.335, one commenter stated that inclusion of suspected cases might introduce problems to the integrity of the registry data and liability issues. Response: The department disagrees that reporting suspected cases will introduce these problems. Only blood lead levels of ten micrograms per deciliter or greater are reportable, and the sections specify that the method of sampling (capillary or venous) be reported. Confidentiality of information provided to the department or the local health authority is assured under sec.37.333. Comment: Concerning sec.37.335, one commenter requested that the sections require any laboratory conducting blood lead level concentration testing to report results in conjunction with information provided by the clinician or health facility administrator submitting the blood sample for assessment. Response: The department agrees that coordination between laboratories and clinicians in submitting reports would be highly desirable. The department disagrees with requiring laboratories to coordinate reporting with clinicians. This requirement would be too cumbersome for some laboratories and might hamper timely reporting of blood lead levels of concern. Comment: One commenter noted that there was no time frame in which blood lead levels of ten micrograms per deciliter or greater must be reported. Response: The department agrees that a time frame should be included and has added the time frame to sec.37.336(a). The language "immediately after gaining knowledge of the blood lead level of concern" has been added to be consistent with the legislation. Comment: One commenter requested that the child's date of birth, and the parent or legal guardian's name and telephone number be included in the report to the local health authority or department. Response: The department agrees in part with the commenter and has added "date of birth" to sec.37.336(d)(1). The department disagrees with adding the child's parent or legal guardian's name and telephone number as information required to be reported because this information will often not be readily available to laboratories and might cause a delay in submission of reports. Comment: After discussing the issue with the department, one commenter concurred that the one working day telephone reporting requirement should apply only for those children who had blood lead level concentrations tested at 45 micrograms per deciliter or greater. Response: The department agrees with this modification and has changed sec.37.336(d) to blood lead levels of 45 micrograms per deciliter or greater as reportable by telephone within one working day. Comment: Concerning sec.37.336(d), one commenter requested that the name of the testing laboratory be added to the information required to be reported. Another commenter requested that the method of analysis used by the laboratory should be reported. Response: The department agrees with the commenter's request to include the name of the testing laboratory and has added language to include this name and telephone number to sec.37.336(d)(2). The department disagrees that method of analysis should be required to be reported. This type of information can be obtained if needed for follow up, however, if the name and telephone number of the testing laboratory are reported. Comment: One commenter requested that standardized reporting forms be required by all laboratories and any clinicians who submit reports of blood lead levels of concern. Response: The department disagrees with the commenter that blood lead levels should be required to be reported on standardized reporting forms. Although the department will develop and make available a reporting form, all reports that contain the information as described in sec.37.336(d), will be received. Comment: One commenter requested that all reports be transmitted directly to the department instead of giving the option of reporting either to the local health department or the Texas Department of Health. Response: The department agrees that reports may be directly transmitted to the department. However, the department disagrees with excluding the local health authority as one of the recipients of these reports because other reportable conditions are reported to the local health authority such as communicable diseases and occupational conditions. Comment: One commenter noted that the sections did not specify if repeat blood lead screens on the same child have to be reported. Response: The department disagrees in having the sections specify whether repeat screens on the same child need to be reported. Any blood lead level ten micrograms per deciliter or greater is reportable. This would include all blood leads that met this criterion, whether initial or repeat screens. Comment: Several commenters had questions about programmatic issues including the handling of duplicate reports on the same child; whether the data system will record serial results; procedures for follow up of reports; the handling of data requests; and the collection of denominator data. Response: The department agrees that these issues are all important in the setting up and maintenance of a registry and will respond directly to the commenters concerning these issues. Comments were received from the City of Houston Health and Human Services Department, the Harris County Health Department, and Texas Department of Health staff. One local health authority expressed their support of the concept of reporting elevated blood lead levels in children. The other local health department did not indicate whether they were in favor of or opposed to the sections. Both local health departments had questions and comments about specific sections. The new sections are adopted under the Health and Safety Code, Chapter 88 (Chapter 965, 74th Legislature, 1995), which requires the department to establish rules to designate lead levels to be reported and establish a registry; and sec.12.001, which provides the Texas Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Texas Board of Health, the Texas Department of Health, and the Commissioner of Health. sec.37.331. Purpose. This purpose of these sections is to implement the provisions of Acts 1995, 74th Legislature, Chapter 965, adding Chapter 88 to the Health and Safety Code which provides the Texas Board of Health with the authority to adopt rules relating to the reporting of childhood lead levels of concern and control of elevated blood lead levels in children through an understanding of the prevalence and nature of the problem of childhood lead poisoning in Texas. sec.37.336. Reporting Procedures. (a) The reporting physician, laboratory director, or alternate person as set forth in sec.37.335(b) of this title (relating to Persons Required to Report) shall make the report of the childhood blood lead level of concern in writing to the local health authority or the Texas Department of Health (department) immediately after gaining knowledge of the blood lead level of concern. A local health authority or the department may authorize one or more employees under his or her supervision to receive the report from the physician, laboratory director, or alternate person by telephone. The local health authority or the department shall implement a method for verifying the identity of the telephone caller when that person is unfamiliar to the employee. (b) The local health authority shall collect the reports and transmit the information at weekly intervals to the Texas Department of Health, Bureau of Epidemiology. Transmission may be made by mail, courier, or electronic transfer. (1) If by mail or courier, the reports shall be placed in a sealed envelope addressed to the attention of the Texas Department of Health, Bureau of Epidemiology, and marked "confidential medical records." (2) If by electronic transmission, including facsimile transmission by telephone, it shall be in a manner and form authorized by the commissioner or his or her designee in each instance. Any electronic transmission of the reports must provide at least the same degree of protection against unauthorized disclosure as those of mail or courier transmission. (c) When a child with a blood lead level of concern resides outside the local health jurisdiction that received the report, the local health authority shall notify the appropriate local health authority where the child or children reside. The department shall assist the local health authority in providing such notifications if requested. (d) Blood lead levels of 45 micrograms per deciliter or greater shall be reported within one working day by telephone to the local health authority or the department. The following information shall be reported on a child with a blood lead level of concern or lead poisoning: (1) the child's name, address, date of birth or age, sex and race; (2) the child's blood lead level concentration, test date, and name and telephone number of the testing laboratory; (3) whether the sample is capillary or venous blood; and (4) the name and city of the attending physician. 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-9515947 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 27, 1995 Proposal publication date: September 26, 1995 For further information, please call: (512) 458-7236 Chapter 157. Emergency Medical Care The Texas Department of Health (department) adopts amendments to sec.sec.157. 2, 157.11, 157.17, 157.18, 157.22, 157.33, 157.38, 157.41, 157.44, 157.46, 157. 51, and 157.61; the repeal of sec.157.15; and new sec.157.23 and sec.157.24, concerning emergency medical care. Sections 157.2, 157.11, 157.23, 157.24, 157. 33, and 157.41 are adopted with changes to the proposed text as published in the September 29, 1995, issue of the Texas Register (20 TexReg 7922) and the October 3, 1995, issue of the Texas Register (20 TexReg 8060). Sections 157.17, 157.18, 157.22, 157.38, 157.44, 157.46, 157.51, and 157.61 and the repeal of sec.157.15 are adopted without changes and will not be republished. Specifically sec.157.2 adds two new definitions and amends seven others to clarify the intent of the rules. Section 157.11 increases provider fees; adjusts staffing requirements to include provisional certificants; and restricts firearms on ambulances. Section 157.17 and sec.157.18 add fees consistent with provider licensure. Section 157.22 revises a reference in accordance with rule changes. Section 157.33 provides for the roll-out of the new EMS curriculum which will be mandatory in 1996. Section 157.38 broadens the reporting categories for continuing education and removes redundant language. Section 157.41 adds skill requirements for EMTs which will be mandatory by 1996; allows for the acceptance of the national registry examination in lieu of the state examination for initial applicants; removes the requirement for a passing grade on each critical subscale in favor of an overall passing grade on the examination; describes requirements for provisional certification and outlines process for surrendering a certification. Section 157.44 deletes a reference to a repealed rule. Section 157.46 removes the requirement for a passing grade on each critical subscale in favor of an overall passing grade on the examination. Section 157.51 adds provisional certificants and includes loss of certification for failure to pay child support. Section 157.61 provides for an increase in Coordinator certification fee. Section 157.23 and sec.157.24 are new sections which revise the requirements for air ambulance providers. The amendments, repeal, and new sections cover requirements for EMS provider licenses; EMS training and course approval; EMS personnel certification; and EMS course coordinator certification. The sections are needed to clarify existing certification and licensing requirements and to address current educational standards. The sections will increase educational standards for EMTs. The following comments were received concerning the proposed amendments and new sections. COMMENT: Concerning sec.157.2, two persons commented that the addition of interfacility care to the list of definitions is positive since it is consistent with actual practice. RESPONSE: The department agrees. COMMENT: Concerning sec.157.2, one commenter pointed out that in the definition for an "air ambulance provider", an individual could use or maintain an aircraft without being an EMS provider. RESPONSE: The department agrees and has changed the language in this definition. COMMENT: Concerning sec.157.11(c), four commenters said that they oppose the increase in provider licensure fees, with one commenting that a fee increase is justified for the inspection of ambulances. RESPONSE: The department disagrees. The inspection of vehicles is only a small part of provider licensure and provider fees will not cover the cost of the program even with the increase. COMMENT: Concerning sec.157.11(d)(4), a commenter is opposed to allowing provisional certification. RESPONSE: The department disagrees. The EMS community has been asking for this privilege for the last several years. COMMENT: Concerning sec.157.11(m)(18), several commenters suggested that policies regarding carrying firearms on ambulances would be better left to local providers. RESPONSE: The department agrees and has removed this sentence. COMMENT: Concerning sec.157.18(f), one commenter stated that since there will be an increase in provider fees, there should be no reinspection fee assessed. RESPONSE: The department disagrees. There is no reinspection fee during the provider licensure process. The reinspection fee is only in connection with extensive problems that are found during an unannounced inspection. COMMENT: Concerning sec.157.23(f)(2) and sec.157.24(h), one commenter stated that there should always be a paramedic on board the aircraft even in the case of interfacility transfers. RESPONSE: The department disagrees in that the section defines staffing in terms of patient care needs. COMMENT: Concerning sec.157.23(h), one commenter stated that the section should be more specific. RESPONSE: The department agrees and has added new paragraph (4) to subsection (h) of that section and renumbered the paragraphs accordingly. Language was also added to the new paragraph (5) of that subsection. COMMENT: Concerning sec.157.24(c)(2), one commenter stated that the section should specify that all fixed-wing aircraft should be pressurized. RESPONSE: The department disagrees and believes that the section as worded protects the patient. COMMENT: Concerning sec.157.24(c)(3), one commenter suggested that the words "kept current" be added. RESPONSE: The department agrees and has added these words to the sentence. COMMENT: Concerning sec.157.24(c)(12), a commenter stated that there should only be a requirement for one fire extinguisher since that is what the Federal Aviation Administration requires. RESPONSE: The department disagrees in that it is a requirement for patient and crew safety. COMMENT: Concerning sec.157.24(f)(1), a commenter stated that the section should specify that the physician is currently practicing medicine. RESPONSE: The department agrees and that change is reflected in the rule. COMMENT: Concerning sec.157.24(i)(1)(A), one commenter asked that the department consider the neonatal stretchers which are fitted for isolettes, since the wording in the section precludes their use. RESPONSE: The department agrees and has included new wording in this sentence. COMMENT: Concerning sec.157.24(i)(2)(C), a commenter stated that the oxygen needed should be specified by destination plus 1,000 liters. RESPONSE: The department disagrees and believes the present wording addresses this concern. COMMENT: Concerning sec.157.24(i)(2)(E)(i), one commenter suggested that the oxygen should be measured in liters rather than cubic feet. RESPONSE: The department agrees and has made that change. COMMENT: Concerning sec.157.24(l), one commenter felt that the department should not require a copy of the self study when a provider is accredited, since it would then become open record and the self study contains proprietary information. The commenter feels the certificate should be sufficient. RESPONSE: The department disagrees since the same requirement exists in the provider licensure section. COMMENT: Concerning sec.157.33(a)(1), one commenter pointed out that the standard national curriculum would be modified somewhat by the department in terms of the administration of medications. RESPONSE: The department agrees and has made the addition. COMMENT: Concerning sec.157.33(a)(2), a commenter stated that the last sentence should be deleted to be consistent with new curriculum. RESPONSE: The department agrees and the sentence has been deleted in subsection (a)(2) and also in subsection (e)(3) of that section. COMMENT: Concerning sec.157.33(a)(3), a commenter asked that an amendment be added to allow Mobile Intensive Care Unit providers to train EMT-basics in the use of manual monitor/defibrillators on order of the medical director. RESPONSE: The department disagrees. This option is always available to medical directors through their medical practice act. COMMENT: Concerning sec.157.33(a)(4), one commenter objected to the increase of training hours which the new curriculum requires. RESPONSE: The department disagrees since it will take at the least a minimum 120 didactic hours to complete an EMT course. COMMENT: Concerning sec.157.33(1), a commenter objected to the inclusion of the new curriculum for EMTs believing it to be detrimental to EMTs. RESPONSE: The department disagrees since it is now a national standard. COMMENT: Concerning sec.157.38(c), 207 persons and organizations registered their agreement with the broadening of the content areas in continuing education indicating that it would allow them more flexibility in determining needs and maximizing resources. RESPONSE: The department agrees. COMMENT: Concerning sec.157.38, one commenter stated that a person should not be able to gain CE credit for content areas that are not applicable to their level of certification. RESPONSE: The department disagrees. To deny access to this training would discount the point of continuing education. COMMENT: Concerning sec.157.41(a)(5)(B)(v), two commenters pointed out that although the administration of these drugs is in the curriculum; there is no practical way to determine proficiency verification as with the other skills. RESPONSE: The department agrees and has deleted this requirement. COMMENT: Concerning sec.157.41(a)(6), one person opposed the deletion of the requirement regarding passing critical subscales on the certification examination. RESPONSE: The department disagrees. Current thinking among psychometricians and educators suggests that placing more emphasis on critical practice areas by increasing the number of questions within the exam is more reliable than easing pass/fail on subscale scores. COMMENT: Concerning sec.157.61(b)(3)(A), a commenter objected to the increase in course coordinator's certification fee. RESPONSE: The department disagrees. The change is made based on legislative mandate. Editorial changes were made throughout for clarification purposes. The following organizations or groups commented on the sections: Panhandle EMS System; Tarrant County Coordinators Association; and Tri-county EMS Training. The organizations were generally in favor of the sections; however, they raised questions and concerns on the changes. Emergency Medical Services-Part A 25 TAC sec.157.2 The amendment is adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. sec.157.2. Definitions. The following words and terms, when used in these sections, shall have the following meanings, unless the context clearly indicates otherwise. Air ambulance provider-A person who operates/leases a fixed-wing or rotor- wing air ambulance aircraft, equipped and staffed to provide a medical care environment on-board appropriate to the patient's needs. The term air ambulance provider is not synonymous with and does not refer to the Federal Aviation Administration (FAA) air carrier certificate holder unless they also maintain and control the medical aspects that are consistent with EMS provider licensure. Advanced life support (ALS)-Emergency prehospital or interfacility care that uses invasive medical acts. The provision of advanced life support shall be under the medical supervision and control of a licensed physician. Basic life support (BLS)-Emergency prehospital or interfacility care that uses noninvasive medical acts. The provision of basic life support may be under the medical supervision and control of a licensed physician. Emergency medical services volunteer-Emergency medical services personnel who provide emergency prehospital or interfacility care without remuneration, except for reimbursement for expenses. Emergency medical technician (EMT)-An individual who is certified by the department as minimally proficient to perform emergency prehospital or interfacility care that is necessary for basic life support and that includes the control of hemorrhaging and cardiopulmonary resuscitation. Emergency medical technician-intermediate (EMT-I)-An individual who is certified by the department as minimally proficient in performing skills required to provide emergency prehospital or interfacility care by initiating under medical supervision certain procedures, including intravenous therapy and endotracheal or esophageal intubation or both. Emergency medical technician-paramedic (EMT-P)-An individual who is certified by the department as minimally proficient to provide emergency prehospital or interfacility care by providing advanced life support that includes initiation under medical supervision of certain procedures, including intravenous therapy, endotracheal or esophageal intubation or both, electrical cardiac defibrillation or cardioversion, and drug therapy. Interfacility care -Care provided while transporting a patient between medical facilities. Mobile intensive care unit (MICU)-A vehicle that is designed for transporting the sick or injured and that meets the requirements of the advanced life support vehicle and has sufficient equipment and supplies to provide cardiac monitoring, defibrillation, cardioversion, drug therapy, and two-way radio or cellular phone communication. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 7, 1995. TRD-9516117 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 458-7236 Emergency Medical Services Provider Licenses 25 TAC sec.sec.157.11, 157.17, 157.18, 157.22-157.24 The amendments and new sections are adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. sec.157.11. Requirements for An EMS Provider License. (a) (No change.) (b) License renewal process. The renewal process shall be complete prior to the expiration of the current license. (1)-(2) (No change.) (3) Vehicle inspections for renewal of a license as described in subsection (e) of this section may be waived if the renewal applicant: (A) (No change.) (B) has not been found in violation of requirements of this section or sec.157.12 of this title (relating to Basic Life Support Level Requirements), sec.157.13 of this title (relating to Advanced Life Support Level Requirements), sec.157.14 of this title (relating to Mobile Intensive Care Level Requirements) , sec.157.23 of this title (relating to Rotor-wing Air Ambulance Provider Licensure); or sec.157.24 of this title (relating to Fixed-wing Air Ambulance Provider Licensure) during scheduled or unscheduled spot inspections conducted by the department during the previous license period; or (C) (No change.) (c) License fees. (1) Nonrefundable fees shall be $150 for each EMS patient transport vehicle, not including reserve vehicles; unless: (A)-(B) (No change.) (2) If a license is issued for less than a two-year period under subsection (h) of this section, the following nonrefundable fees per vehicle shall apply: (A) $150 if the license is valid for 13-24 months; or (B) $75 if the license is valid for less than 13 months. (3) A provider who has a check returned to the department for "insufficient funds" shall be subject to revocation of the EMS provider license and this may be used as grounds for nonrenewal of the EMS provider license. (d) Provider license requirements. (1)-(3) (No change.) (4) Personnel provisional certification. If a provider chooses to recognize provisional certification as described in sec.157.41(m) of this title (relating to Certification), the individual may staff a vehicle within the parameters of provisional certification. If the provider has a medical director, the medical director's concurrence is also required. (e) Vehicle inspection. (1) Before the issuance of a license to an initial applicant, the applicant's vehicle(s) shall be inspected by the department. Each vehicle shall have: (A)-(C) (No change.) (D) a current motor vehicle certificate of inspection prior to the department's inspection. (2) The inspection shall include: (A) visual and physical inspection of each vehicle and of the equipment on each vehicle for the purpose of determining compliance with the vehicle and equipment specifications as described in this section, sec.157.12 of this title, sec.157.13 of this title, sec.157.14 of this title, sec.157.23 of this title or sec.157.24 of this title; and (B) (No change.) (f) (No change.) (g) Provisional license. (1) If any part of the provider licensure process is incomplete, a provider may apply for a provisional license by signing a provisional licensure form and submitting a nonrefundable fee of $25. This fee is in addition to the fee in subsection (c) of this section. A 60-day provisional license will be issued if the department finds: (A) that the public interest and the community needs would be served; (B)-(E) (No change.) (2) A second 60-day provisional license may be issued if: (A)-(B) (No change.) (C) a provisional licensure form is signed and submitted with a $25 nonrefundable fee. (h)-(l) (No change.) (m) Responsibilities of the EMS provider. During the license period the provider's responsibility shall include: (1) notification of the department if a vehicle is added with submission of the nonrefundable prorated license fee, if applicable. The added vehicle shall be in compliance with sec.157.12 of this title, sec.157.13 of this title, sec.157.14 of this title, sec.157.23 of this title or sec.157.24 of this title; (2)-(15) (No change.) (16) maintaining compliance with all state motor vehicle laws and regulations; and (17) written notification of the department within 30 days of change in official business address. sec.157.23. Rotor-wing Air Ambulance Provider Licensure. (a) Licensure as a helicopter air ambulance provider shall be at the mobile intensive care level and only be granted to a person or entity that directs and controls the integrated activities of both the medical and aviation components. Although the aircraft operator is directly responsible to the Federal Aviation Administration (FAA) for the operation of the aircraft, typically the organization in charge of the medical functions directs the combined efforts of the aviation and medical components during patient transport operations. (b) When being used as an ambulance, the helicopter shall: (1) be configured so that the medical personnel have adequate access to the patient in order to begin and maintain basic and advanced life support treatment; (2) have an entry that allows loading and unloading of a patient without excessive maneuvering (no more than 45 degrees about the lateral axis and 30 degrees about the longitudinal axis); and does not compromise functioning of monitoring systems, intravenous lines, or manual or mechanical ventilation; (3) have a supplemental lighting system in the event standard lighting is insufficient for patient care that includes: (A) a self-contained lighting system powered by a battery pack or a portable light with a battery source; and (B) a means to protect the pilot's night adaptation vision. (Use of red lighting or low intensity lighting in the patient care area is acceptable if not able to isolate the patient care area); (4) have an electric power outlet with an inverter or appropriate power source of sufficient output to meet the requirements of the complete specialized equipment package without compromising the operation of any electrical aircraft equipment; (5) have protection of the pilot's flight controls, throttles and radios from any intended or accidental interference by the patient, air medical personnel or equipment and supplies; and (6) have an internal medical configuration located so that air medical personnel can provide patient care consistent with the scope of care of the air medical service, to include: (A) the space necessary to ensure the patient's airway is maintained and to provide adequate ventilatory support from the secured, seat-belted position of the air medical personnel; (B) those aircraft with gaseous oxygen systems have equipment installed so that medical personnel can determine if oxygen is on by in-line pressure gauges mounted in the patient care area. Aircraft using liquid or gaseous oxygen should have equipment installed: (i) with each gas outlet clearly marked for identification; (ii) with oxygen flow capable of being stopped at or near the oxygen source from inside the aircraft; and (iii) so that the measurement of the liter flow and quantity of oxygen remaining is accessible to air medical personnel while in flight. All flow meters and outlets must be padded, flush mounted, or so located as to prevent injury to air medical personnel; or there shall be an operational policy stating that attendants wear helmets; (C) hangers/hooks available to secure IV solutions in place or a mechanism to provide high flow fluids if needed: (i) all IV hooks shall be padded, flush mounted, or so located as to prevent head trauma to the air medical personnel in the event of a hard landing or emergency with the aircraft; or an operational policy stating that attendants wear helmets; and (ii) glass containers shall not be used unless required by medication specifications and properly vented; (D) provision for medication which allows for protection from extreme temperatures if it becomes environmentally necessary; and (E) secure positioning of cardiac monitors, defibrillators, and external pacers so that displays are visible to medical personnel. (c) An air ambulance provider shall meet the requirements of emergency medical service (EMS) providers as in sec.157.11(a)(1)(A)-(E) of this title (Relating to Requirements for An EMS Provider License) and in addition shall: (1) submit proof that the rotor-wing aircraft operator carries bodily injury and property damage insurance with a company licensed to do business in Texas, to secure payment for any loss or damage resulting from any occurrence arising out of or caused by the operation or use of any of the certificate holder's aircraft. Coverage amounts shall insure that: (A) each aircraft shall be insured for the minimum amount of $1 million for injuries to, or death of, any one person arising out of any one incident or accident; (B) the minimum amount of $3 million for injuries to, or death of, more than one person in any one accident; and (C) the minimum amount of $500,000 for damage to property arising from any one accident; (2) submit proof that they carry professional liability coverage in the minimum amount of $500,000 per occurrence, with a company licensed to do business in Texas, to secure payment for any loss or damage resulting from any occurrence arising out of or caused by the care or lack of care of a patient; (3) submit a list of all aircraft with the registration number or "N" number for the helicopters in the possession of the provider. The license fee as required in sec.157.11(b) of this title shall be based on the number of helicopter aircraft; (4) submit a letter of agreement that all helicopters shall meet the specifications of subsection (b) of this section, if the aircraft is leased from a pool. The license fee shall be based on each complete set of equipment; and (5) allow visual and physical inspection of each aircraft and of the equipment to be used on each vehicle for the purpose of determining compliance with the vehicle and equipment specifications within this section. (d) The air ambulance provider shall designate or employ a medical director who shall meet the following qualifications: (1) be a physician currently licensed in the State of Texas and in practice. A waiver to this requirement may be granted to providers based in New Mexico, Oklahoma, Arkansas, and Louisiana who respond in Texas and whose medical director is licensed in his/her respective state; (2) have knowledge and experience consistent with the transport of patients by air; (3) be knowledgeable in aeromedical physiology, stresses of flight, aircraft safety, patient care, and resource limitations of the aircraft, medical staff and equipment; and (4) have access to consult with medical specialists for patient(s) whose illness and care needs are outside his/her area of practice. (e) The physician shall fulfill the following responsibilities: (1) ensure that there is a comprehensive plan/policy to address selection of appropriate aircraft, staffing and equipment; (2) be involved in the selection, hiring, training and continuing education of all medical personnel; (3) be responsible for overseeing the development and maintenance of a continuous quality improvement program; (4) ensure that there is a plan to provide direction of patient care to the air medical personnel during transport. The system shall include on-line (radio/telephone) medical control, and/or an appropriate system for off-line medical control such as written guidelines, protocols, procedures, patient specific written orders or standing orders; (5) participate in any administrative decision making processes that affects patient care; (6) ensure that there is an adequate method for on-line medical control, and that there is a well defined plan or procedure and resources in place to allow off-line medical control; and (7) oversee the review, revision and validation of written medical policies and protocols annually. (f) There shall be two Texas licensed/certified personnel on board the helicopter when in service. A waiver to the Texas license/certification may be granted for personnel employed by providers in New Mexico, Oklahoma, Arkansas, and Louisiana who respond in Texas and are licensed in their respective state. Staffing of vehicles shall be as follows: (1) when responding to an emergency scene, at least one of the personnel shall be a paramedic; (2) when responding for an inter-facility transfer, at least one of the personnel performing patient care duties shall be a certified paramedic, registered nurse or physician. The qualifications and numbers of air medical personnel shall be appropriate to patient care needs; (3) when responding as in paragraphs (1) and (2) of this subsection, the second person may be a paramedic, registered nurse, or a physician; and (4) air medical personnel shall not be assigned or assume the cockpit duties of the flight crew members concurrent with patient care duties and responsibilities. (g) Documentation of successful completion of training specific to the helicopter transport environment in general and the licensee's operation specifically shall be required. The curriculum shall be consistent with the Department of Transportation (DOT) Air Medical Crew-National Standard Curriculum or equivalent program and each attendant's qualifications shall be documented. (h) Medical supplies and equipment shall be consistent with the service's scope of care as defined in the protocols/standing orders. Medical equipment shall be functional without interfering with the avionics nor should avionics interfere with the function of the medical equipment. Additionally, the following equipment, clean and in working order, must be on the aircraft or immediately available for all providers: (1) one or more stretchers being secured in the aircraft which: (A) can accommodate an adult, six feet tall, weighing 212 pounds. There shall be restraining devices or additional appliances available to provide adequate restraint of all patients including those under 60 pounds or 36 inches in height; (B) shall have the head of the primary stretcher capable of being elevated up to 30 degrees. The elevating section shall not interfere with or require that the patient or stretcher securing straps and hardware be removed or loosened; (C) shall be sturdy and rigid enough that it can support cardiopulmonary resuscitation. If a backboard or equivalent device is required to achieve this, such device will be readily available; (D) shall have a pad or mattress impervious to moisture and easily cleaned and disinfected according to Occupational Safety and Health Administration (OSHA) bloodborne pathogen requirements; and (E) shall have a supply of linen for each patient; (2) adequate amounts of oxygen (for anticipated liter flow and length of flight with an emergency reserve) available for every mission; (3) one portable oxygen tank; (4) hand operated bag-valve mask ventilators of adult, pediatric, and infant sizes with clear masks in adult, pediatric and infant sizes. It shall be capable of use with a supplemental oxygen supply and have an oxygen reservoir; (5) a back-up source of oxygen (of sufficient quantity to get safely to a facility for replacements). Back-up source may be the required portable tank if the tank is accessible in the patient care area during flight and there shall be one adult, one pediatric size non-rebreathing mask, one adult size nasal cannula and necessary connective tubings and appliances; (6) airway adjuncts as follows: (A) oropharyngeal airways in at least five assorted sizes, including adult, child, and infant; and (B) nasopharyngeal airways in at least three sizes with water soluble lubricant; (7) at least one suction unit which is portable (bulb syringes or foot pump not acceptable); (8) the following items in amounts and sizes as specified on a list signed by the medical director: (A) intravenous solutions; (B) intravenous catheters; (C) endotracheal tubes; (D) medications; (E) any specialized equipment required in medical treatment protocols/standing orders; (F) pressure bag; (G) tourniquets, tape, dressings; and (H) container appropriate to contain used sharp devices (needles, scalpels) which meets OSHA requirements; (9) assessment equipment as follows: (A) equipment suitable to determine blood pressure of the adult, pediatric and infant patient(s) during flight; (B) stethoscope; (C) penlight/flashlight; (D) heavy duty bandage scissors; (E) pulse oximeter; (F) external cardiac pacing device; and (G) IV infusion pump capable of strict mechanical control of an IV infusion drip rate. Passive devices such as dial-a-flow are not acceptable; (10) bandages and dressings as follows: (A) sterile dressings such as 4x4's, ABD pads; (B) bandages such as Kerlix, Kling; and (C) tape in various sizes; (11) container(s) and methods to collect, contain, and dispose of body fluids such as emesis, oral secretions, and blood consistent with OSHA bloodborne pathogen requirements; (12) infection control equipment. The licensee shall have a sufficient quantity of the following supplies for all air medical personnel, and each flight crew member, and all ground personnel with incidental exposure risks according to OSHA requirements which includes but is not limited to: (A) protective gloves; (B) protective gowns; (C) protective eyewear; (D) protective face masks; (E) an approved bio-hazardous waste plastic bag or impervious container to receive and dispose of used supplies; and (F) handwashing capabilities or antiviral towelettes; (13) an adequate trash disposal system exclusive of bio-hazardous waste control provisions; (14) security of medications, fluids, and controlled substances shall be maintained by each air ambulance licensee in compliance with local, state, and federal drug laws; (15) cardiac monitor defibrillator-DC battery powered portable monitor/defibrillator with paper printout, accessories and supplies, with sufficient power supply to meet demands of the mission; and (16) quantity and type of drugs and specialized equipment as specified on the medical director's list. (i) The air ambulance provider who receives and maintains certification from a national accrediting organization approved by the department and who adheres to Texas staffing requirements shall be considered to have met the requirements of this section. They shall submit to the department a copy of the self study for accreditation and a copy of the formal accreditation approval. Copies of any updates submitted to the accrediting organization as well as any correspondence from the organization affecting the provider's accreditation should also be submitted to the department. (j) An air ambulance provider who meets the requirements of this section shall be issued a license valid for a period of two years; except that the department may issue an initial license for less than two years in order to conform expiration dates to existing schedules for a locality. An initial license shall be valid upon the date of issuance. A renewed license shall be valid on the day after the expiration of the previous license. A license is not transferable from one EMS provider to another. (k) A provider from New Mexico, Oklahoma, Arkansas, or Louisiana may apply for reciprocal issuance of a provider license. An administrative fee of $250 shall accompany the application in addition to the licensing fee in sec.157.11(c) of this title. (1) The department shall notify the EMS provider 180 days before the expiration date of the provider license. If a provider does not receive notice of expiration from the department, it is the responsibility of the provider to notify the department and request a license renewal application. Failure to apply for renewal shall result in expiration of the license. Continuing to operate without a license may result in administrative penalties. A completed application shall be submitted at least 60 days before the expiration date of the current license. (2) The license renewal applicant shall submit: (A) the completed application and the nonrefundable fee as provided in sec.157.11(b) of this title; (B) evidence of compliance with requirements for a provider license as delineated in sec.157.11(a)(1)(A)-(E) of this title, or evidence of accreditation as in subsection (h) of this section; and (C) vehicle inspections for renewal of a license may be waived if the renewal applicant: (i) provides evidence of compliance with requirements of this section; (ii) has not been found in violation of requirements of this section during scheduled or unscheduled spot inspections conducted by the department during the previous license period; or (iii) has not been found in violation of the Health and Safety Code, Chapter 773, during the previous license period. (3) The air ambulance provider shall meet the responsibilities required in sec.157.11(m) of this title. (l) An air ambulance provider who has a check returned to the department for insufficient funds shall be subject to revocation of the provider license and this may be used as grounds for nonrenewal of the EMS provider license. sec.157.24. Fixed-wing Air Ambulance Provider Licensure. (a) If an air ambulance provider advertises in Texas and operates an air ambulance service, the provider shall be required to have a Texas license. (b) Licensure as a fixed-wing air ambulance provider shall be at the mobile intensive care level and shall only be granted to a person or entity that directs and controls the integrated activities of both the medical and aviation components. Although the aircraft operator is directly responsible to the Federal Aviation Administration (FAA) for the operation of the aircraft, one organization, typically the one in charge of the medical functions, directs the combined efforts of the aviation and medical components during patient transport operations. (c) When being used as an ambulance, a fixed wing aircraft shall: (1) be multi-engine; (2) maintain a cabin altitude consistent with patient diagnosis, condition, and destination; (3) be equipped and kept current for instrument flight rules (IFR) flight; (4) have a door large enough to allow a patient on a stretcher to be enplaned without excessive maneuvering or tipping of the patient which compromises the function of monitoring devices, intravenous (IV) lines or ventilation equipment; (5) be designed or modified to accommodate at least one stretcher patient; (6) have a lighting system which can provide adequate intensity to illuminate the patient care area and an adequate method (curtain, distance) to limit the cabin light from entering the cockpit and impeding cockpit crew vision during night operations; (7) have an environmental system (heating and cooling) capable of maintaining a comfortable temperature at all times; (8) have an interior cabin configuration large enough to accommodate the number of air medical personnel needed to provide care to the patient, as well as an adult stretcher in the cabin area with access to the patient. The configuration shall not impede the normal or emergency evacuation routes; (9) have an electrical system capable of servicing the power needs of electrically powered on-board patient care equipment; (10) have all installed and carry-on equipment secured using FAA-approved devices and methods; (11) have sufficient space in the cabin area where the patient stretcher is installed so that equipment can be stored and secured with FAA-approved devices in such a manner that it is accessible to the air medical personnel; and (12) have two fire extinguishers approved for aircraft use. Each shall be fully charged with valid inspection certification and capable of extinguishing type A, B, or C fires. One extinguisher shall be accessible to the cockpit crew and one shall be in the cabin area accessible to the medical crew member. (d) An operator of aircraft in an air ambulance program shall be FAA certified as an air taxi and commercial operator (ACTO) with operation specifications allowing air ambulance operations. (e) The fixed-wing air ambulance provider shall meet the requirements of emergency medical service (EMS) providers as in sec.157.11(a)(1)(A)-(E) of this title (relating to Requirements for an EMS Provider License) and shall also: (1) submit proof that the fixed-wing aircraft operator carries bodily injury and property damage insurance with a company licensed to do business in the State of Texas, to secure payment for any loss or damage resulting from any occurrence arising out of or caused by the operation or use of any of the certificate holder's aircraft. Coverage amounts shall insure that: (A) each aircraft shall be insured for the minimum amount of $1 million for injuries to, or death of, any one person arising out of any one incident or accident; (B) there is a minimum amount of $3 million for injuries to, or death of, more than one person in any one accident; and (C) there is a minimum amount of $500,000 for damage to property arising from any one accident; (2) submit proof that the provider carries professional liability coverage in the minimum amount of $500,000 per occurrence, with a company licensed to do business in Texas, in order to secure payment for any loss or damage resulting from any occurrence arising out of or caused by the care or lack of care of a patient; (3) submit a list of all aircraft with the registration number or "N" number for the fixed-wing aircraft in the possession of the provider. The license fee as required in sec.157.11(b) of this title shall be based on the number of fixed-wing aircraft; (4) submit a letter of agreement that all fixed-wing aircraft shall meet the specifications of subsection (b) of this section, if the aircraft is leased from a pool. The license fee as required in sec.157.11(b) of this title shall be based on each complete set of equipment; and (5) allow visual and physical inspection of each aircraft and of the equipment on each vehicle for the purpose of determining compliance with the vehicle and equipment specifications within this section. (f) The air ambulance provider shall designate or employ a medical director who shall meet the following qualifications: (1) be a physician currently licensed in the State of Texas and in practice. Physicians employed by providers who are based in another state, do not need Texas licensure but shall be licensed in their respective state; (2) have knowledge and experience consistent with the transport of patients by air; (3) be knowledgeable in aeromedical physiology, stresses of flight, aircraft safety, patient care, and resource limitations of the aircraft, medical staff and equipment; and (4) have access to consult with medical specialists for patient(s) whose illness and care needs are outside his/her area of practice. (g) The physician shall fulfill the following responsibilities: (1) ensure that there is a comprehensive plan/policy to address selection of appropriate aircraft, staffing and equipment; (2) be involved in the selection, hiring, training and continuing education of all medical personnel; (3) be responsible for overseeing the development and maintenance of a continuous quality improvement program; (4) ensure that there is a plan to provide direction of patient care to the air medical personnel during transport. The system shall include on-line (radio/telephone) medical control, and/or an appropriate system for off-line medical control such as written guidelines, protocols, procedures, patient specific written orders or standing orders; (5) participate in decision making processes that affect patient care; (6) ensure that there is an adequate method for on-line medical control, and that there is a well defined plan or procedure and resources in place to allow off-line medical control; and (7) oversee the review, revision and validation of written policies and protocols annually to include a policy defining the specific instances in which a patient could be accompanied by only one attendant. (h) There shall be at least one licensed/certified paramedic, registered nurse, or physician on board an air ambulance to perform patient care duties on that air ambulance. The qualifications and numbers of air medical personnel shall be appropriate to patient care needs. Personnel employed by providers who are based in another state, do not need Texas certification/licensure but shall be certified/licensed in their respective state. (1) Documentation of successful completion of training specific to the fixed- wing transport environment in general and the licensee's operation specifically shall be required. The curriculum shall be consistent with the Department of Transportation (DOT) Air Medical Crew-National Standard Curriculum, or equivalent program. (2) Each attendant's qualifications shall be documented. (3) Air medical personnel shall not be assigned or assume the cockpit duties of the flight crew members concurrent with patient care duties and responsibilities. (4) The aircraft shall be operated by a pilot or pilots certified in accordance with applicable FARs. (i) Each fixed-wing air ambulance shall carry the following equipment: (1) one or more stretchers installed in the aircraft cabin which: (A) can accommodate an adult, six feet tall, weighing 212 pounds, except for approved apparatus used to transport neonates. There shall be restraining devices or additional appliances available to provide adequate restraint of all patients including those under 60 pounds or 36 inches in height; (B) the head of each stretcher is capable of being elevated up to 45 degrees. The elevating section must hinge at or near the patient's hips and shall not interfere with or require that the patient or stretcher securing straps and hardware be removed or loosened; (C) shall be positioned in the cabin to allow the air medical personnel clear view of the patient and shall ensure that medical personnel always have access to the patient's head and upper body for airway control procedures as well as sufficient space over the area where the patients chest is to adequately perform closed chest compression or abdominal thrusts on the patient; (D) has a pad or mattress that is impervious to moisture and easily cleaned and disinfected according to Occupation Safety and Health Administration (OSHA) bloodborne pathogen requirements; (E) has a device to make the stretcher surface rigid enough if the surface of the stretcher under the patient's torso is not firm enough to support adequate chest compressions; and (F) has a supply of linen for each patient; (2) an adequate and manually-controlled supply of gaseous or liquid medical oxygen, attachments for humidification, and a variable flow regulator for each patient: (A) a humidifier, if used, shall be a sterile, disposable, one-time usage item; (B) the method used to calculate the volume of oxygen required to provide sufficient oxygen for the patients needs for the duration of the transport shall be available and demonstrated by the licensee; (C) a plan to provide the calculated volume of oxygen plus a reserve equal 1,000 liters or the volume required to reach an appropriate airport, whichever is longer shall be available; (D) all necessary regulators, gauges and accessories shall be present and in good working order; (E) the oxygen system shall be securely fastened to the airframe using FAA- approved restraining devices and in addition there shall be: (i) a separate emergency backup supply of oxygen of not less than 57 liters with regulator and flow meter; and (ii) one adult, one pediatric size non-rebreathing mask, one adult size nasal cannula and necessary connective tubings and appliances. (3) an electrically-powered suction apparatus with wide bore tubing, a large reservoir and various sizes suction catheters. The suction system may be built into the aircraft or provided with a portable unit. Backup suction is required and can be a manually operated device. (Bulb syringe not acceptable); (4) hand operated bag-valve-mask ventilators of adult, pediatric and infant sizes with clear masks in adult, pediatric and infant sizes. It shall be capable of use with a supplemental oxygen supply and have an oxygen reservoir; (5) airway adjuncts as follows: (A) oropharyngeal airways in at least five assorted sizes, including adult, child and infant; and (B) nasopharyngeal airways in at least three sizes with water soluble lubricant; (6) assessment equipment as follows: (A) equipment suitable to determine blood pressure of the adult, pediatric and infant patient(s) during flight; (B) stethoscope; (C) penlight/flashlight; (D) heavy duty bandage scissors; and (E) pulse oximeter; (7) bandages and dressings as follows: (A) sterile dressings such as 4x4's, ABD pads; (B) bandages such as Kerlix, Kling; and (C) tape in various sizes; (8) container(s) and methods to collect, contain, and dispose of body fluids such as emesis, oral secretions, and blood consistent with OSHA bloodborne pathogen requirements; (9) urinal and bedpan with toilet tissue; (10) infection control equipment. The licensee shall have a sufficient quantity of the following supplies for all air medical personnel, each flight crew member, and all ground personnel with incidental exposure risks according to OSHA requirements which includes but is not limited to: (A) protective gloves; (B) protective gowns; (C) protective eyewear; (D) protective face masks; (E) an approved bio-hazardous waste plastic bag or impervious container to receive and dispose of used supplies; and (F) handwashing capabilities or antiviral towelettes. (11) an adequate trash disposal system exclusive of bio-hazardous waste control provisions; (12) the following additional equipment in amounts and sizes specified by the medical director is required for an air ambulance provider to function at the advanced level: (A) advanced airway management equipment appropriate to the patient's needs; (B) sterile crystalloid solutions in plastic containers, IV catheters, and administration tubing sets; (C) hanger for IV solutions; (D) pressure bag; (E) tourniquets, tape, dressings; (F) container appropriate to contain used sharp devices, needles, scalpels which meets OSHA requirements; (G) a list signed by medical director defining quantities and types of drugs to be carried; and (H) any specialized equipment required in medical treatment protocols/standing orders. (13) cardiac monitor defibrillator-DC battery powered portable monitor/defibrillator with paper printout, accessories and supplies, with sufficient power supply to meet demands of the mission; and (14) survival kit which shall include, but not be limited to, the following items which are appropriate to the terrain and environments the provider operates over: (A) instruction manual; (B) water; (C) shelter-space blanket; (D) knife; (E) signaling devices; (F) compass; and (G) fire starting items. (j) A system for security of medications, fluids, and controlled substances shall be maintained by each air ambulance licensee in compliance with local, state, and federal drug laws. (k) The air ambulance provider shall own the following equipment or shall have a written lease agreement explaining the availability of the equipment for use when the patient's condition indicates the need: (1) external cardiac pacing device; (2) IV infusion pump capable of strict mechanical control of an IV infusion drip rate. Passive devices such as dial-a-flow are not acceptable; and (3) a mechanical ventilator that can deliver up to 100% oxygen concentration at pressures, rates and volumes appropriate for the size of the patient. (l) The air ambulance provider who receives and maintains certification from a national accrediting organization approved by the department and who adheres to Texas staffing requirements shall be considered to have met the requirements of this section. They shall submit to the department a copy of the self study for accreditation and a copy of the formal accreditation approval. Copies of any updates submitted to the accrediting organization as well as any correspondence from the organization affecting the provider's accreditation shall also be submitted to the department. (m) An air ambulance provider who meets the requirements of this section shall be issued a license valid for a period of two years; except that the department may issue an initial license for less than two years in order to conform expiration dates to existing schedules for a locality. An initial license shall be valid upon the date of issuance. A renewed license shall be valid on the day after the expiration of the previous license. A license is not transferable from one EMS provider to another. (n) The license renewal process shall be complete prior to the expiration of the current license. (1) The department shall notify the EMS provider 180 days before the expiration date of the provider license. If a provider does not receive notice of expiration from the department, it is the responsibility of the provider to notify the department and request a license renewal application. Failure to apply for renewal shall result in expiration of the license. A completed application shall be submitted at least 60 days before the expiration date of the current license. (2) The license renewal applicant shall submit: (A) the completed application and the nonrefundable fee as provided in sec.157.11(b) of this title; (B) evidence of compliance with requirements for a provider license as delineated in sec.157.11(a)(1)(A)-(E) of this title, or evidence of accreditation as in subsection (i) of this section; and (C) vehicle inspections for renewal of a license which may be waived if the renewal applicant: (i) provides evidence of compliance with requirements in this section; and (ii) has not been found in violation of requirements of this section during scheduled or unscheduled spot inspections conducted by the department during the previous license period; and/or (iii) has not been found in violation of the Health and Safety Code, Chapter 773 of during the previous license period. (3) The air ambulance provider shall meet the responsibilities required in sec.157.11(m) of this title. (o) An air ambulance provider who has a check returned to the department for insufficient funds shall be subject to revocation of the provider license and this may be used as grounds for nonrenewal of the EMS provider license. 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 7, 1995. TRD-9516118 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 458-7236 25 TAC sec.157.15 The repeal is adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. 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 7, 1995. TRD-9516119 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 458-7236 EMS Training and Course Approval 25 TAC sec.157.33, sec.157.38 The amendments are adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. sec.157.33. Emergency Medical Technician Training. (a) Course curricula. (1) The minimum curricula for the Emergency Medical Technician (EMT) training course shall be the 1984 Department of Transportation (DOT) Basic Training program for EMT-Ambulance, except that for courses starting after September 1, 1996, the minimum curricula shall be the 1994 Department of Transportation (DOT) EMT-Basic National Standard Curriculum as modified by the Texas Department of Health (department) to include the administration of limited medication including aspirin, and the current Federal Emergency Management Agency document titled "Recognizing and Identifying Hazardous Materials" (HazMat), 1993 which are adopted by reference. (A)-(B) (No change.) (2) Objectives pertaining to the use of the pneumatic antishock garment (PASG) shall be optional until September 1, 1996, when they will become part of the mandatory curriculum for courses starting after that date. (3) The automated external defibrillator (AED) curriculum as adopted by reference in sec.157.31 of this title (relating to Automated External Defibrillator Training Course) is optional until September 1, 1996, when it shall become a mandatory part of the EMT curriculum for courses starting after that date, and shall be taught only with the approval of an emergency medical services (EMS) medical director or course medical director and shall be in addition to the didactic hours of instruction in paragraph (4) of this subsection and in addition to the clinical and field internship requirements in paragraphs (5) and (6) of this subsection. (4) The course shall include a minimum of 100 hours of didactic instruction on the approved curricula. For courses starting after September 1, 1996, the hours will increase to 120. (5) In addition to the hours of didactic instruction in paragraph (4) of this subsection, the student shall be required to complete a minimum of 20 hours of clinical, in-hospital training. A minimum of eight hours are required in the emergency department. The remaining hours may be completed in other clinical areas of the hospital. (6)-(8) (No change.) (b) (No change.) (c) Course approval criteria. (1) (No change.) (2) Approval of an EMT training course application shall be dependent upon: (A)-(D) (No change.) (E) having a medical director for all courses starting after September 1, 1996. (d) (No change.) (e) EMT completion course. (1) (No change.) (2) The minimum curriculum for the EMT Completion Training Course shall be the Texas Department of Health EMT Completion Training Course, 1991, until September 1, 1996, when it shall be the 1994 version which are adopted by reference. Copies of this curriculum may be reviewed during normal working hours in the library of the Texas Department of Health, 1100 West 49th Street, Austin, Texas 78756. (3) Objectives pertaining to the use of the PASG shall be optional except in courses starting after September 1, 1996, when they will become part of the mandatory curriculum. (4) The AED curriculum as adopted by reference in sec.157.31 of this title is optional except in courses starting after September 1, 1996, when they will become a mandatory part of the EMT curriculum, and shall be taught only with the approval of an EMS medical director or course medical director and shall be in addition to the 60 hours of instruction in paragraph (5) of this subsection and in addition to the clinical and field internship requirements in paragraphs (6) and (7) of this subsection. (5) The course shall include a minimum of 60 hours of didactic instruction on the approved curriculum except for courses starting after September 1, 1996, when the hours will increase to 80. (6) In addition to the hours of didactic instruction in paragraph (5) of this subsection, the student shall be required to complete a minimum of 20 hours of clinical, in-hospital training. A minimum of eight hours are required in the emergency department. The remaining hours may be completed in other clinical areas of the hospital. (7)-(13) (No change.) This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on December 7, 1995. TRD-9516120 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: October 3, 1995 For further information, please call: (512) 458-7236 EMS Personnel Certification 25 TAC sec.sec.157.41, 157.44, 157.46, 157.51 The amendments are adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. sec.157.41. Certification. (a) A candidate for certification shall: (1)-(2) (No change.) (3) complete the application for certification; (4) (No change.) (5) have documented evidence from a state certified skills examiner using state skills criteria of skills proficiency as follows. (A) The ECA skills proficiency verification shall consist of: (i)-(vi) (No change.) (B) The EMT skills proficiency verification shall consist of the skills verification requirements for the ECA in subparagraph (A) of this paragraph. In addition, after September 1, 1996, the student shall demonstrate proficiency in the following skills: (i) automated external defibrillation; (ii) pneumatic antishock garment; (iii) epinephrine auto-injector; and (iv) inhaler bronchodilators. (C) The EMT-I skills proficiency verification shall consist of the skills verification requirements for ECA and EMT in subparagraph (A) of this paragraph. In addition, the student shall demonstrate proficiency in the following skills: (i) peripheral venipuncture for fluid administration; (ii) utilization of the pneumatic antishock garment; and (iii) utilization of an endotracheal tube (infant and adult) and an esophageal intubation device for airway control. (D) The EMT-P skills proficiency verification shall consist of the skills verification requirements for an ECA, EMT, and EMT-I in subparagraphs (A) and (B) of this paragraph. In addition, the student shall demonstrate proficiency in the following skills: (i) emergency drug administration; (ii) defibrillation and cardioversion; and (iii) megacode (possession of a valid Advanced Cardiac Life Support (ACLS) card issued within the inclusive dates of the paramedic or paramedic completion course or documentation issued by the course medical director based upon scenarios submitted with the course approval documents shall fulfill megacode proficiency requirements); (6) achieve a passing grade of 70 on the department's certification examination or the National Registry examination. (b)-(e) (No change.) (f) A candidate shall be eligible to reapply for certification for up to one year following the course completion date, if: (1)-(3) (No change.) (g) A candidate who does not meet the requirements for certification within the one-year period following the course completion date shall be required to complete an entire EMS training course as described in sec.sec.157. 33-157.35 of this title (relating to EMS Training Program and Course Approval) to be eligible to apply for certification. (h)-(i) (No change.) (j) The completion of a course at a higher level of certification shall satisfy the course requirement for a lower level of certification, and the individual may apply for certification by: (1) submitting an application and applicable fee, if any, as required in subsection (a)(3) and (4) of this section; and (2) meeting the skills proficiency verification and examination requirements of this section within 180 days of the course completion date; or (3) meeting the requirements of subsection (e) of this section. (k) An individual who successfully completes certification requirements for a higher level is deemed to be certified only at that level. (l) An individual who is certified as an EMT-I or EMT-P may voluntarily be certified at a lower level of certification by: (1) submitting an application for certification and the applicable fee, if any, as required in subsection (a)(3) and (4) of this section; (2) completing the requirements of sec.157.38 of this title (relating to Continuing Education) for the level of certification requested according to the two-year reporting cycle which is applicable; (3) completing skills proficiency verification as required in subsection (a)(5) of this section; (4) achieving a passing grade on the department's written examinations as required in subsection (a)(6) of this section; and (5) returning the wallet-size certificate for the EMT-I or EMT-P level of certification to the department. (m) An individual who has successfully completed an EMS course as in sec.sec.157.32-157.35 of this title, may have provisional certification for 180 days or until permanent certification status is achieved, whichever comes sooner, if the individual is employed by or volunteers for an EMS provider. The EMS provider is not required to recognize provisional certification. While on provisional status: (1) an individual may serve as the second staff person on the ambulance as long as there is a person with full status certification of equal or higher level working with the individual; and (2) if the individual fails an examination, the individual will automatically lose provisional certification status until such time as the individual successfully passes the examination and receive full status certification. (n) An individual who wishes to surrender his or her certification prior to the expiration of the certificate may do so by: (1) completing a Surrender of Certificate statement; (2) acknowledging that the surrender is a "no contest" plea, in the event that a disciplinary action is pending or reasonably imminent; and (3) identifying the reason for the surrender. When the reason is an inability to perform the functions of the applicable certificate level, the certificant shall identify the reason for the inability. (o) To regain certification following the surrender of a certificate, the individual shall: (1) petition the department in writing for approval to reapply for certification and provide evidence of present fitness; and (2) meet the maximum re-entry requirements as in sec.157.45(f) of this title (relating to Recertification), if within two years of surrender; or (3) meet initial certification requirements as in this section, if two or more years after surrender. 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 7, 1995. TRD-9516121 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 458-7236 Emergency Medical Services Course Coordinator, Program Instructor and Examiner Certification 25 TAC sec.157.61 The amendment is adopted under the Health and Safety Code, Chapter 773, which provides the Board of Health with the authority to adopt rules to implement the Emergency Medical Services Act; and sec.12.001, which provides the Board of Health with the authority to adopt rules for the performance of every duty imposed by law on the Board of Health, the Department of Health, and the Commissioner of Health. 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 7, 1995. TRD-9516122 Susan K. Steeg General Counsel Texas Department of Health Effective date: December 29, 1995 Proposal publication date: September 29, 1995 For further information, please call: (512) 458-7236 TITLE 28. INSURANCE Part I. Texas Department of Insurance Chapter 1. General Administration Subchapter C. Maintenance Taxes and Fees 28 TAC sec.1.414 The Texas Department of Insurance adopts an amendment to sec.1.414, concerning assessment of maintenance taxes and fees for payment in 1996, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9252). The amendment is necessary to adjust the rates of assessment for maintenance taxes and fees for 1996 which will provide the revenue necessary to fund appropriations made by the Legislature. Section 1.414 applies the rates to the gross premium receipts for the calendar year 1995, or some other basis designated by statute, to life, accident, and health insurance; motor vehicle insurance; casualty insurance, and fidelity, guaranty and surety bonds; fire insurance and allied lines, including inland marine; workers' compensation insurance; title insurance; health maintenance organizations; third party administrators; and corporations issuing prepaid legal services contracts. The department anticipates the adopted rates will produce revenue of $39,032,630 to the state's general revenue fund. One commenter inquired as to why the rate of assessment decreased on some lines of insurance, but had remained the same for life, health and accident insurance companies. The Texas Legal Reserve Officials Association commented on the proposed amendment. The department did not propose a reduction to the assessment rate for life, health, and accident insurance in sec.1.414(b) since the expenses of the department associated with this line of insurance are anticipated to exceed the revenue anticipated as a result of the adopted rate, which is the maximum permitted under Texas Insurance Code, Article 4.17. The amendment is adopted under the Insurance Code, Articles 4.17, 5.12, 5. 24, 5.49, 5.68, 9.46, 20A.33, 21.07-6, sec. sec.21, 23.08A, and 1.03A, which provides authorization for the Texas Department of Insurance to assess maintenance taxes and fees for the lines of insurance and related activities specified in amended sec.1.414. Article 4.17 establishes a maintenance tax based on insurance premiums for life, accident, and health coverage and the gross considerations for annuity and endowment contracts. Article 5.12 establishes a maintenance tax based on insurance premiums for motor vehicle coverage. Article 5.24 establishes a maintenance tax based on insurance premiums for casualty insurance and fidelity, guaranty and surety bonds coverage. Article 5.49 establishes a maintenance tax based on insurance premiums for fire and allied lines coverage, including inland marine. Article 5.68 establishes a maintenance tax based on insurance premiums for workers' compensation coverage. Article 9.46 establishes a maintenance fee based on insurance premiums for title coverage. Article 21.07-6, sec.21 establishes a maintenance tax based on the gross amount of administrative or service fees for third party administrators. Article 23.08A establishes a maintenance tax based on gross revenue of corporations issuing prepaid legal service contracts. Article 20A.33 (The Texas Health Maintenance Organization Act, sec.33), establishes an annual tax based on the gross amounts of revenues collected for the issuance of health maintenance certificates or contracts. Article 1.03A authorizes the commissioner of insurance to adopt rules and regulations for the conduct and execution of the duties and functions of the department as authorized by statute. The following articles of the Insurance Code are affected by this rule: Articles 4.17, 5.12, 5.24, 5.49, 5.68, 9.46, 21.07-6, sec.sec.21, 21.46, 21.54, and 23.08A; and the Texas Health Maintenance Organization Act, sec.33, (codified at Article 20A.33). 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 11, 1995. TRD-9516145 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: January 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-6327 Subchapter C. Maintenance Taxes and Fees 28 TAC sec.1.415 The Texas Department of Insurance adopts an amendment to sec.1.415, concerning assessment of a maintenance tax surcharge which will be used to service the bonded indebtedness of the Texas Workers' Compensation Insurance Fund, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9252). The amendment is necessary to adjust the rate of maintenance tax surcharges due in 1996 on the basis of gross premium receipts for calendar year 1995 for workers' compensation insurance companies. The surcharge will be used to service the bonded indebtedness of the Texas Workers' Compensation Insurance Fund. The Texas Workers' Compensation Commission annually establishes and certifies to the comptroller of public accounts the rate of assessment for the maintenance taxes which are authorized to pay the cost of administering the Texas Workers' Compensation Act. The commissioner of insurance may increase the Texas Workers' Compensation Commission tax rate to a rate sufficient to pay all debt service on the bonds issued on behalf of the Texas Workers' Compensation Insurance Fund, subject to the maximum rate established by Texas Civil Statutes, Article 8308- 2.22. The department estimates $17,632,753 will be generated from the maintenance tax surcharge which will be used to pay debt service for $300 million in bonds issued in 1991 by the Texas Public Finance Authority on behalf of the Texas Workers' Compensation Insurance Fund. No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Articles 5.76-3, 5.76-5, 5.68 and 1.03A and Texas Civil Statutes, Articles 8308-2.22, 8308-2.23, and 8308-11.09. The Insurance Code, Article 5.76-3 establishes the Texas Workers' Compensation Insurance Fund. Article 5.76-5 establishes the maintenance tax surcharge. Article 5.68 establishes the maintenance tax based on premiums for workers' compensation coverage. Article 1.03A authorizes the Commissioner of Insurance to adopt rules and regulations for the conduct and execution of the duties and functions of the Department as authorized by statute. Texas Civil Statutes, Articles 8308-2.22, 8308-2.23, and 8308-11.09 establish the maintenance tax for workers' compensation insurance companies. The following articles of the Insurance Code are affected by this rule: Articles 5.12, 5.55C, 5.68, 5.76-3, 5.76-5, 21.46, and 21.54 and Texas Civil Statutes, Articles 8308-2.22, 8308-2.23, and 8308-11.09. 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 11, 1995. TRD-9516144 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: January 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-6327 Chapter 5. Property and Casualty Subchapter N. Residential Property Insurance Market Assistance Program Executive Committee Membership and Operation 28 TAC sec.5.10000 The Texas Department of Insurance adopts new 28 TAC sec.5.10000, concerning the Residential Property Insurance Market Assistance Program Executive Committee, which is appointed pursuant to the Insurance Code, Article 21.49-12, sec.3, to propose a plan of operation for the Residential Property Insurance Market Assistance Program (MAP) and to advise and consult with the Commissioner on the administration of the program. The new section is adopted without changes to the proposed text as published in the August 18, 1995, issue of the Texas Register (20 TexReg 6292). Proposed pursuant to Texas Civil Statutes, Article 6252-33, which governs State Agency Advisory Committees, the new section is necessary to specify the purpose, task, reporting requirements, membership composition, and duration of the MAP Executive Committee. Article 6252-33 requires a state agency that is advised by an advisory committee to adopt rules stating the committee's purpose and tasks, the manner in which the committee will report to the agency, and the duration of the committee. Article 6252-33, sec.1 defines "advisory committee" to mean a committee, council, commission, task force, or other entity in the executive branch of state government that is not a state agency, is created by or under state law, and has as its primary function the advising of a state agency. Article 21.49-12 of the Insurance Code was enacted by the 74th Texas Legislature in House Bill 1367 (Acts 1995, 74th Legislature, Page 3008, Chapter 415, sec.5, effective August 28, 1995) to require the Commissioner to establish a voluntary market assistance program to assist insureds in Texas in obtaining residential property insurance coverage in underserved areas which are to be determined and designated by the Commissioner by rule. Pursuant to sec.2 of Article 21.49-12, an executive committee shall develop and submit the MAP plan of operation to the Commissioner for adoption by rule and shall be available to advise and consult with the Commissioner with regard to the administration of the program. Pursuant to sec.3 of Article 21.49-12, the executive committee shall be composed of 11 members appointed by the Commissioner. Subsection (a) of new sec.5.10000 states the purpose of the rule which is to specify the purpose, task, reporting requirements, membership composition, and duration of the MAP Executive Committee. Subsection (b) specifies the purpose of the Executive Committee which is to assist the Commissioner in the administration of the MAP as authorized by the Insurance Code, Article 21. 49- 12. Subsection (c) outlines the tasks of the Executive Committee which are specified in Article 21.49-12 of the Insurance Code. Subsection (d) specifies the committee's reporting requirements. Subsection (e) addresses the membership composition of the Executive Committee as provided by Article 21. 49-12 of the Insurance Code. Subsection (f) provides for the duration of the Executive Committee which shall be terminated upon termination of the MAP as provided in Article 21.49-12 of the Insurance Code. For: No comments were received during the comment period in support of the proposed section as published. Against: Two commenters, Consumers Union and the Office of Public Insurance Counsel, submitted comments opposing the proposed section as published. COMMENT: Both commenters suggested that the rule provide more specifics to guide the Executive Committee in developing the MAP plan of operation and the process it will utilize to fulfill the intent of the statute. Both commenters proposed that the rule be changed to require the MAP plan of operation to address term limits, removal for cause, public meetings, subcommittee membership, responsibilities of the Texas Department of Insurance to the MAP Executive Committee, eligibility criteria, coverage issues, recruitment of agents and insurers, public input, reporting to the public, and a grievance procedure. The commenters recommended specific amendatory language to address these suggested changes. RESPONSE: The Department disagrees. The sole purpose of this rule is to comply with Article 6252-33, Texas Civil Statutes, which requires a state agency that is advised by an advisory committee to adopt rules stating the committee's purpose and tasks, the manner in which the committee will report to the agency, and the duration of the committee. The purpose of Article 6252-33 is to provide for the centralized monitoring of state agency advisory committees and to provide for and monitor reimbursement costs for members of these advisory committees. The Department does not believe that this rule is the appropriate means for providing additional guidance to the Executive Committee nor does the Department believe that such rules are necessary at this time. In addition, all of the issues in the suggested changes are included in the draft outline of the MAP plan of operation prepared by the Department staff and will be addressed in the plan of operation. COMMENT: One of the commenters believes that subsection (c)(4) is not necessary and should be deleted. Under Article 21.49-12 sec.2(c) any need for a subcommittee is to be addressed in the plan of operation and this subdivision is repetitive to the Executive Committee's task of developing a plan of operation. RESPONSE: The Department disagrees. The purpose of subsection (c) is to specify the tasks of the Executive Committee as required by Article 6252-33. Advising the Commissioner on the need for subcommittees, both in the plan of operation as recommended to the Commissioner as well as after the plan of operation is adopted, is a task of this committee. Several of the tasks listed in subsection (c) are addressed in the plan of operation, but this does not mean that including them in subsection (c) is repetitive, nor does it mean that the task is completed upon the adoption of the plan of operation. Many of these tasks are ongoing in nature and are thus appropriately included in subsection (c). The new section is adopted pursuant to Texas Civil Statutes, Article 6252-33; the Insurance Code, Articles 21.49-12 and 1.03A; and the Government Code, sec.sec.2001.004-2001.038. Texas Civil Statutes, Article 6252-33, sec.5, requires a state agency that is advised by an advisory committee to adopt rules stating the purpose of the committee, the tasks of the committee, and the manner in which the committee will report to the agency. Article 21.49-12, sec.2 and sec.3 of the Insurance Code authorize the Commissioner to appoint an 11-member executive committee to develop and submit a Residential Property Insurance Market Assistance Program plan of operation to the Commissioner for adoption by rule and to advise and consult with the Commissioner with regard to the administration of the program. Article 1.03A of the Insurance Code provides that the Commissioner of Insurance may adopt rules and regulations, which must be for general and uniform application, for the conduct and execution of the duties and functions of the Texas Department of Insurance only as authorized by a statute. The Government Code, sec.sec.2001.004-2001.038 (Administrative Procedure Act) authorize and require each state agency to adopt rules of practice stating the nature and requirements of available formal and informal procedures and prescribe the procedures for adoption of rules by a state agency. The following statutes are affected by this rule: Insurance Code, Article 21.49-12. Texas Civil Statutes, Article 6252-33. 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 8, 1995. TRD-9516113 Bernice Ross General Counsel and Chief Clerk Texas Department of Insurance Effective date: December 29, 1995 Proposal publication date: August 18, 1995 For further information, please call: (512) 463-6327 Chapter 7. Corporate and Financial Regulation Subchapter J. Examination Expenses and Assessments 28 TAC sec.7.1012 The Texas Department of Insurance adopts an amendment to sec.7.1012, concerning assessments to cover the expenses of examining insurance companies, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9253. The section is necessary to provide a rate of assessment for domestic and foreign insurance company examination expenses. Examination assessment rates vary from year to year since the rate is based on the examination costs of the department after taking into account any unexpended funds. Section 7.1012 provides the method and rates of assessment for examination expenses of foreign and domestic insurance companies. Rates of assessment are levied against and collected from each domestic insurance company based on admitted assets and gross premium receipts for the 1995 calendar year, and from each foreign insurance company examined during the 1996 calendar year based on a percentage of the gross salary paid to an examiner for each month or part of a month during which the examination is made. The expenses and charges to be assessed are in addition to, and not in lieu of, any other charge which may be made under the law, including the Insurance Code, Article 1.16. No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Articles 1.16 and 1.03A. The Insurance Code, Article 1.16(a) and (b) authorizes the commissioner of insurance to make assessments necessary to cover the expenses of examining insurance companies and to comply with the provisions of the Insurance Code, Articles 1.16, 1.17, and 1.18, in such amounts as the commissioner certifies to be just and reasonable. In addition, Article 1.16(c) provides that expenses incurred in the examination of foreign insurers by Texas examiners shall be collected by the commissioner by assessment. Article 1.03A authorizes the commissioner of insurance to adopt rules and regulations for the conduct and execution of the duties and functions of the department as authorized by statute. The following articles of the Insurance Code are affected by this rule: Insurance Code, Articles 1.16, 1.17, 1.17A 1.18, 1.19, 1.28, 4.10, and 4.11. 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 11, 1995. TRD-9516143 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: January 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-6327 Chapter 25. Insurance Premium Finance Subchapter E. Examinations and Annual Reports 28 TAC sec.25.88 The Texas Department of Insurance adopts an amendment to sec.25.88, concerning the general administrative expense assessment of insurance premium finance companies for calendar year 1995, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9254). The amendment is necessary to adjust the rate of assessment so that it is sufficient to meet the expenses of performing the department's statutory responsibilities for examination, investigation, and regulation of insurance premium finance companies. The department levies the rate of assessment set in the section to cover the 1996 fiscal year's general administrative expense and will collect from each insurance premium finance company on the basis of a percentage of total loan dollar volume for the 1995 calendar year. The department estimates that $335,172 will be collected for the state's general revenue fund. No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Articles 24.06(c), 24.09, and 1.03A. Article 24.06(c) provides that each insurance premium finance company licensed by the department shall pay an amount assessed by the department to cover the direct and indirect cost of examinations and investigations and a proportionate share of general administrative expense attributable to regulation of insurance premium finance companies. Article 24. 09 authorizes the department to adopt and enforce rules necessary to carry out provisions of the Insurance Code concerning the regulation of insurance premium finance companies. Article 1.03A authorizes the commissioner to adopt rules and regulations for the conduct and execution of the duties and functions of the department. The following articles of the Insurance Code are affected by this section: Articles 24.05, 24.06, 24.08, 24.09, and 24.10. 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 11, 1995. TRD-9516142 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: January 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY Part I. Texas Natural Resource Conservation Commission Chapter 115. Control of Air Pollution From Volatile Organic Compounds Subchapter G. Consumer-Related Sources Consumer Products 30 TAC sec.115.612 The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts an amendment to sec.115.612, concerning Control Requirements of Consumer Products, without changes to the proposed text as published in the September 8, 1995, issue of the Texas Register (20 TexReg 7020). The revision to sec.115.612 deletes the category of "Insect Repellents-Aerosols" from the Table of Standards (Table III). The change is in response to a manufacturer's petition to delete this standard. The modified, compliant insect repellent formulations have not gained widespread consumer acceptance, and mandating their use presents the potential for under-use and the risk of increased insect-borne diseases. The deletion of this category also makes the regulations in Texas more consistent with other states' consumer product standards and the current direction of national rulemaking. The proposed change to sec.115.612 was published in conjunction with a series of proposed revisions to the Consumer Products rule including sec.115. 600, concerning Definitions; sec.115.614, concerning Innovative Products; and sec.115.617, concerning Exemptions. Rulemaking on all Consumer Products rule revisions was initially set to be concluded by December 31, 1995. However, because the compliance date of the Consumer Products rule is January 1, 1996, and because the effective date of any rule revision is 20 days after it is filed with the Texas Register, staff responded to a request from the Chemical Specialities Manufacturers Association (CSMA) to accelerate the repeal of the insect repellent standard to protect manufacturers against technically falling out of compliance between the time the rule revision is adopted and the time it becomes effective. Rulemaking on the remaining revisions to the Consumer Products rule is still expected to be concluded by December 31, 1995. Public hearings were held in Beaumont on September 26, 1995 and in Houston on September 27, 1995. Written comments were accepted through October 8, 1995. SC Johnson Wax and the CSMA submitted testimony in favor of deleting the volatile organic compound standard for aerosol insect repellents. No commenters opposed the revisions. The amendment is adopted under the Texas Health and Safety Code (Vernon 1992), the Texas Clean Air Act (TCAA), sec.382.017, which provides the TNRCC with the authority to adopt rules consistent with the policy and purposes of the TCAA. 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-9515981 Kevin McCalla Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: December 28, 1995 Proposal publication date: September 8, 1995 For further information, please call: (512) 239-1970 Chapter 277. Use Determinations for Tax Exemptions for Pollution Control Property 30 TAC sec.sec.277.10, 277.12, 277.20 The Texas Natural Resource Conservation Commission (TNRCC) adopts amendments to sec.277.10, concerning Application for Use Determination, sec.277. 12, concerning Application Review Schedule, and sec.277.20, concerning Application Fees, with changes to the proposed text as published in the October 6, 1995, issue of the Texas Register (20 TexReg 8181). The adoption of sec.277.10 will extend the application deadline from December 31 of the tax year for which the use determination is being sought to January 31 of the following year. The adoption of sec.277.12 will clarify the requirements for the TNRCC to send a deficiency notice to an applicant. The rule language is being revised to clarify that the administrative and technical deficiencies are two separate determinations made by TNRCC staff. The adoption of sec.277.20 revises the fee structure for all levels of the application fee. The fee for Tier I applications is reduced from $100 to $50 per application. The Tier II fee is raised from $500 to $1,000 and the Tier III fee is raised from $1,000 to $2,500. The new fee structure will generate adequate funding to fully staff the program in order to ensure timely review of use determination applications. Public comments were received from three commenters. The following commenters generally supported the proposed revisions to Chapter 277: Texas Chemical Council (TCC); Southwestern Public Service Company (SPS); and Texas Utilities Electric Company (TU). The SPS and TU did not suggest any changes to the proposed rule language. The TCC suggested changes to the proposed fee structure. The TCC commented that the proposed fee increases for Tier II and Tier III applications may deter businesses that could not recover the fees in tax savings, and that not all Tier II and Tier III applications will require extensive staff review. The staff has analyzed the existing and the proposed fee structure using the cost figures from the applications that were received for tax year 1994. Under the current fee structure, the Tier I applications accounted for almost 45% of the total fees. However, the bulk of the staff review time was occupied on Tier II and Tier III applications. Also, the participation in the program by small businesses was almost absent. The staff decided to transfer the bulk of the fees to the Tier II and Tier III applications both to encourage greater participation by small businesses which should mainly submit Tier I applications, and to have the relative fees for each tier more reflective of actual review time. The staff agrees that the fee for each and every application may not reflect the actual review time, but on an average basis it will be more representative. The purpose of the fees is to generate sufficient funds to operate the TNRCC's Proposition 2 program. The reason for revising the fees is not to increase overall funding, but to transfer the bulk of the funding from Tier I applicants to Tier II and III applicants. Based on the 1994 applications, there were only a few Tier II applications and no Tier III applications that would not show a positive cash benefit when comparing the application fee to the overall tax savings resulting from a positive use determination. The staff plans to revisit the fee structure again at the end of the next tax year to determine if the fees should be revised further. Since the Proposition 2 program has been in effect for only one year, there is not a large historical data base for evaluating the fee structure. The SPS commented that sec.277.20(a)(3) contained an error that was carried over from the original adoption of Chapter 277 consisting of using the character which means "greater than" where it should have used the character meaning "less than." The October 6, 1995, issue of the Texas Register did contain a publication error as described in the preceding paragraph. This error should be corrected in this adopted version of the rule. The TNRCC legal staff proposed a change in the wording of sec.277.12(2) and sec.277.20 by deleting the words "without prejudice" from the last sentence of sec.277.12(2) and from the first sentence of sec.277.20(b). These words are not needed to clarify the rule and may actually cause some confusion. Therefore, this change has been incorporated into the adopted rules. Also, wording was added to sec.277.20(a)(3) to clarify that Tier III applications do not include predetermined equipment. The amendments are adopted under the Texas Health and Safety Code, the Texas Clean Air Act (TCAA), sec.382.017, which provides the TNRCC with the authority to adopt rules consistent with the policy and purposes of the TCAA. sec.277.10. Application for Use Determination. In applying for a use determination under this chapter, a person or political subdivision shall present an official Texas Natural Resource Conservation Commission (TNRCC) application form or a similar reproduction, accompanied by the appropriate fee, pursuant to sec.277.20 of this title (relating to Application Fees) to the executive director of the TNRCC. An application must be submitted for each unit of pollution control property or for each facility consisting of a group of integrated units which have been, or will be, installed for a common purpose. Delivery of the application by the United States Postal Service, Certified Mail Receipt, is acceptable. If the applicant, other than a political subdivision, desires to apply for a use determination for a specific tax year, the application must be postmarked no later than January 31 of the following year. Applications postmarked after this date will not be processed until after review of all applications postmarked by the due date is completed and without regard for any appraisal district deadlines. The application form shall contain at least the following: (1)-(8) (No change.) sec.277.12. Application Review Schedule. Following submission of the information required by sec.277.10 of this title (relating to Application for Use Determination), the executive director of the Texas Natural Resource Conservation Commission (TNRCC) shall determine whether the pollution control property is used wholly or partly as a facility, device, or method for the control of air, water, or land pollution. If the determination is that the property is used partly for pollution control then the executive director shall determine the proportion of the property used for pollution control. (1) (No change.) (2) Unless the application is not timely received as discussed in sec.277.10 of this title, within 30 days of receipt of an application for use determination, the executive director shall mail written notification informing the applicant that the application is administratively complete or that it is deficient. If the application is deficient, the notification shall specify the deficiencies, and allow the applicant 30 days to provide the requested information. If the applicant does not submit an adequate response, then the application will be returned. Additional technical information may be requested within 60 days of issuance of an administrative completeness letter. If the applicant does not provide the requested technical information within 30 days, the application will be returned. The applicant may refile the application. (3) (No change.) sec.277.20. Application Fees. (a) Fees shall be remitted with each application for use determination in an amount based on the following. (1) Tier I-The fee for an application for property that has been granted a predetermination as pollution control, either partial or 100%, and the application seeks no variance from that determination, shall be $50. (2) Tier II-The fee for an application for property that is used wholly (100%) for the control of air, water, and/or land pollution, but not designated as eligible for predetermination, shall be $1,000. (3) Tier III-The fee for an application for property used partially (less than 100%) for the control of air, water, and/or land pollution, but not designated as eligible for predetermination, shall be $2,500. (b) Fees shall be forfeited for applications for use determination which are denied or returned. An applicant who submits an insufficient fee will receive a deficiency notice in accordance with the procedures in sec.277. 12(2) of this title (relating to Application Review Schedule). The fee deficiency must be remitted with the response to the deficiency notice before the application will be deemed complete. (c) All fees shall be remitted in the form of a check or money order made payable to the Texas Natural Resource Conservation Commission (TNRCC) "Proposition 2" and delivered with the application to the TNRCC Proposition 2 Section, at the address listed on the application form. 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-9515998 Kevin McCalla Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: December 28, 1995 Proposal publication date: October 6, 1995 For further information, please call: (512) 239-1966 Chapter 305. Consolidated Permits Subchapter D. Amendments, Renewals, Transfers, Corrections, Revocation, and Suspension of Permits 30 TAC sec.305.70 The Texas Natural Resource Conservation Commission (TNRCC or commission) adopts an amendment to sec.305.70, concerning modifications to Municipal Solid Waste (MSW) permits, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8582). The commission is adding new paragraph (25) to sec.305.70(g) (relating to Municipal Solid Waste Class I Modifications) in order to provide a mechanism for processing changes to municipal solid waste landfill facility (MSWLF) permits to comply with the provisions of sec.330.203 (relating to Special Conditions (Liner Design Constraints)). Under the adopted rule, such changes will be considered permit modifications. The rule affects only those facilities that have received authorization in their permits to construct below the seasonal high water table. The commission accepted public comment on the proposed rule for 30 days following publication. Comments were submitted during the public comment period by the following: Browning-Ferris Industries-Southern Region; Shirley Holland; and Sanifill, Inc. Two commenters expressed support for the adoption of the proposed rule. One commenter opposed the amendment. The commenter stated that changes to a permit to comply with sec.330.203 should not be considered Class 1 modifications and that the rule amendment will not provide for greater environmental protection. The commenter also stated that citizens have a right to a public hearing, and MSWLF owner/operators do not have the right to make significant changes without a public hearing. The commission believes that the modification process is appropriate for changes under sec.330.203 for a facility that is authorized through a permit or permit amendment to extend below the water table. The commission addressed the issue of environmental protection when the amendments to sec.330.203 were adopted in April, 1995. The technical standards in sec.330.203 ensure that methods used to offset hydrostatic forces in MSWLFs below the water table are equally protective regardless of the method employed or, in the case of ballast, the type of material used. This rule amendment creates a process for submitting and approving changes to a permit, rather than establishing technical standards. In general, the commission considers a permit modification process suitable for changes that provide an equivalent level of protection, and does not believe changes must result in greater environmental protection in order to be processed as permit modifications. The commission understands that such changes may increase the amount of capacity available for waste disposal in a landfill, but notes that other operational changes, such as alternative daily cover and greater compaction, can also result in more efficient utilization of landfill space and do not require permit amendments. The commission agrees that significant changes to a permit that could affect human health and safety and environmental protection should be subject to a possible public hearing through the amendment process. For example, a permit amendment may be required if the MSWLF facility permit does not authorize construction below the seasonal high water table, but the owner/operator wishes to increase the depth of excavation below the water table. The commenter was also concerned that financial assurance requirements would not be met when operators modify their permits to change from soil ballast to waste ballast. The commission responds that these rules do not change existing rule provisions that would require an operator to modify the facility permit to account for any change in financial assurance if a modification to a permit results in a change to the anticipated costs of closure and/or corrective action. The determination will be case specific, and should be made in consultation with the TNRCC staff. Finally, the commenter contended that the proposed amendment will not result in more cost-effective regulation of MSWLFs or more efficient utilization of existing capacity. The commission disagrees, and believes the rules will meet these criteria while being protective of health and the environment. The amendment is adopted under the Texas Water Code, sec.5.103, which provides the TNRCC with the authority to adopt any rules necessary to carry out the powers and duties under the provisions of the Texas Water 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 6, 1995. TRD-9515937 Kevin McCalla Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: December 27, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 239-1970 Chapter 336. Radiation Rules 30 TAC sec.336.7 The Texas Natural Resource Conservation Commission (TNRCC) adopts new sec.336.7, concerning adoption by reference of a Memorandum of Understanding (MOU) with the Texas Department of Health (TDH) relating to jurisdiction over radiation control functions, without changes to the proposed text as published in the July 21, 1995, issue of the Texas Register (20 TexReg 5368). The new section implements the Texas Health and Safety Code, sec.401.414, which requires the TNRCC and the TDH to adopt by rule an MOU defining their respective duties in the control of radiation under Chapter 401. The text of the MOU was originally proposed by TDH in the December 16, 1994, issue of the Texas Register (20 TexReg 9953). The MOU was adopted by TDH, without changes, as a final rule under 25 TAC sec.289.131 by the Texas Board of Health in April 1995 and the adoption was published in the May 9, 1995, issue of the Texas Register (20 TexReg 3462). The MOU was signed by both agencies on March 30, 1995. The MOU defines the respective jurisdictions of the agencies and provides for coordination of responsibilities, such as emergency preparedness, review of financial security instruments, relationships with the United States Nuclear Regulatory Commission and the Texas Radiation Advisory Board, implementation of a dosimetry and meter calibration program, and performance of a low-level waste health surveillance survey. Only one comment was received on the proposal. The Texas Low-Level Radioactive Waste Disposal Authority (TLLRWDA) noted that certain policy statements contained in the previous September, 1987 "Memorandum of Understanding between the Texas Department of Health and the Texas Water Commission Regarding the Regulation and Management of Radioactive Mixed Wastes" do not appear in the March 30, 1995 MOU between TDH and TNRCC. Specifically, the TLLRWDA noted that the March 30, 1995 MOU does not state that naturally-occurring or accelerator- produced radioactive material (NARM) will be regulated as any other radioactive material, nor does it state that the disposal of non-hazardous, low-level radioactive waste is subject only to the licensing permitting requirements of the Texas Radiation Control Act, Chapter 401, Texas Health and Safety Code. The TLLRWDA is concerned that the disappearance of these policy statements from the MOU may create confusion as to whether these policies remain in effect. The TNRCC does not agree that the omission of these policy statements from the MOU implies that the policies are no longer in effect. These statements were necessary in the previous MOU to clarify the overlapping jurisdiction of the TWC and TDH. Because sec.401.412, Texas Health and Safety Code (Vernon Supp. 1995) now clearly provides that the TNRCC has exclusive jurisdiction over disposal of radioactive substances, it is no longer necessary to clarify these areas in the MOU between TDH and the TNRCC. The new section is adopted under the Health and Safety Code, sec.401.412(c), which provides the TNRCC with the authority to adopt rules and guidelines reasonably necessary to exercise its authority over the disposal of radioactive substances and source material recovery and processing and sec.401. 414, which requires the TNRCC and the TDH to adopt an MOU by rule defining their respective duties under Chapter 401. 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-9515938 Kevin McCalla Director, Legal Services Division Texas Natural Resource Conservation Commission Effective date: December 27, 1995 Proposal publication date: July 21, 1995 For further information, please call: (512) 239-1970 TITLE 31. NATURAL RESOURCES AND CONSERVATION Part XVI. Coastal Coordination Council Chapter 501. Coastal Management Program The Coastal Coordination Council (council) adopts new sec.501.2 and sec.501. 15, relating to Findings and Policy for Major Actions, respectively, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8592). Section 501.2 is being adopted to identify the council's findings about the use of the coastal zone and states that those uses may adversely affect coastal natural resource areas (CNRAs) and thus the uses require special management. Section 501.15 is being adopted to establish a policy for major actions. Section 501.2 lists the uses of the coast that may adversely affect CNRAs. Section 501.15 defines major action and requires that prior to approving a major action, the agencies and subdivisions must meet and coordinate their policies relating to major actions. The agencies and subdivisions shall, to the greatest extent practicable, consider the cumulative and secondary adverse effects of each major action relating to the activity and shall not take a major action that is inconsistent with the goals and policies of this chapter. The council will implement these sections beginning February 1, 1996, the same date that the other provisions of 31 TAC Chapters 501 and 503, and Chapter 505, Subchapters A and B will be implemented by the council. No comments were received regarding adoption of the new sections. Subchapter A. General Provisions 31 TAC sec.501.2 The new section is adopted pursuant to the Coastal Coordination Act, Texas Natural Resource Code, Chapter 33, Subchapters C and F, and adopted under the council's authority to promulgate rules pursuant to those subchapters. 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 8, 1995. TRD-9516103 Garry Mauro Chairman Coastal Coordination Council Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 305-9129 Subchapter B. Goals and Policies 31 TAC sec.501.15 The new section is adopted pursuant to the Coastal Coordination Act, Texas Natural Resources Code, Chapter 33, Subchapters C and F, and adopted under the council's authority to promulgate rules pursuant to those subchapters. 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 8, 1995. TRD-9516104 Garry Mauro Chairman Coastal Coordination Council Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 305-9129 Chapter 505. Council Procedures for State Consistency with Coastal Management Program Goals and Policies Subchapter B. Council Review and Certification of Agency Rules 31 TAC sec.sec.505.23-505.25 The Coastal Coordination Council (council) adopts new sec. sec.505.23-205.25, relating to Council Certification of Rules and Rule Amendments; Pre- certification Review of Draft Rules or Draft Rule Amendments; and Revocation of Certification, respectively, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8593). Section 505.23 is adopted to conform the Texas Coastal Management Program (CMP) to House Bill 3226, 74th Legislature, 1995. Section 505.24 allows a state agency to conform its rules to the CMP goals and policies at an early stage and is aimed at eliminating the need for repeated rule proposals to achieve consistency with the CMP goals and policies. Section 505.25 is adopted to allow the council to revoke an agency's rule certification. Section 505.23 establishes the procedures for reviewing and certifying new rules and rule amendments as consistent with the CMP goals and policies. Section 505.24 allows agencies to seek council input on new rules and rule amendments by requesting a pre-certification review, prior to publishing the proposed rule or rule amendment in the Texas Register . Section 505.25 establishes the procedures for council revocation of agency rule certifications. The council will implement these sections beginning February 1, 1996, the same date that the other provisions of 31 TAC Chapters 501 and 503, and Chapter 505, Subchapters A and B will be implemented by the council. No comments were received regarding adoption of the new sections. The new sections are adopted pursuant to the Coastal Coordination Act, Texas Natural Resource Code, Chapter 33, Subchapters C and F, and are adopted under the council's authority to promulgate rules pursuant to those subchapters. 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 8, 1995. TRD-9516105 Garry Mauro Chairman Coastal Coordination Council Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 305-9129 Chapter 506. Council Procedures for Federal Consistency with Coastal Management Program Goals and Policies 31 TAC sec.506.50, sec.506.52 The Coastal Coordination Council (council) adopts new sec.506.50 and sec.505.52, relating to Notice to the Council of Application for Federal Assistance and Council Hearing to Review Applications for Federal Assistance, respectively, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8596). Section 506.50 and sec.506.52 are adopted to conform the Texas Coastal Management Program (CMP) to House Bill 3226, 74th Legislature, 1995, and govern council review of federal assistance. Section 506.50 requires the state single point of contact to provide a copy of federal assistance applications to the council secretary. Section 506.52 establishes the procedures the council must follow when reviewing an application for federal assistance. These sections shall be implemented and become enforceable at a date to be established by the council in the future. The council shall publish notice of the implementation date of these sections in the Texas Register at least 30 days prior to such implementation date. Individual applications for federal assistance need not comply with the CMP goals and policies as set forth in Chapter 501 of this title (relating to Coastal Management Program) prior to the implementation of council review of such applications. No comments were received regarding adoption of the new sections. The new sections are adopted pursuant to the Coastal Coordination Act, Texas Natural Resource Code, Chapter 33, Subchapters C and F, and are adopted under the council's authority to promulgate rules pursuant to those subchapters. 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 8, 1995. TRD-9516107 Garry Mauro Chairman Coastal Coordination Council Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 305-9129 31 TAC sec.506.51 The Coastal Coordination Council (council) adopts an amendment to sec.506. 51, relating to Referral of Application for Federal Assistance, without changes to the proposed text as published in the October 20, 1995, issue of the Texas Register (20 TexReg 8596). The rule is amended to reflect statutory changes made by the 74th Legislature, 1995, in House Bill 3226. Section 506.51 states that any three members of the council may refer an application for federal assistance to the council for review. This section shall be implemented and become enforceable at a date to be established by the council in the future. The council shall publish notice of the implementation date of this section in the Texas Register at least 30 days prior to such implementation date. Individual applications for federal assistance need not comply with the Coastal Management Program goals and policies as set forth in Chapter 501 of this title (relating to Coastal Management Program) prior to the implementation of council review of such applications. No comments were received regarding adoption of the amendment. The amendment is adopted pursuant to the Coastal Coordination Act, Texas Natural Resource Code, Chapter 33, Subchapters C and F, and is adopted under the council's authority to promulgate rules pursuant to those subchapters. 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 8, 1995. TRD-9516106 Garry Mauro Chairman Coastal Coordination Council Effective date: December 29, 1995 Proposal publication date: October 20, 1995 For further information, please call: (512) 305-9129 TITLE 37. PUBLIC SAFETY AND CORRECTIONS Part I. Texas Department of Public Safety Chapter 3. Traffic Law Enforcement Traffic Supervision 37 TAC sec.3.62 The Texas Department of Public Safety adopts the repeal of sec.3.62, concerning regulations governing transportation safety, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8417). The rule is being repealed to allow for the adoption of new sec.3.62 which implements the provisions of Senate Bill 3, 74th Legislature, 1995 (Chapter 705, Acts of the 74th Legislature, Regular Session, 1995) effective September 1, 1995, which requires the director to adopt by reference, rules, regulating the safe transportation of hazardous materials and to regulate the operations of commercial motor vehicles in the state. No comments were received regarding adoption of the repeal. The repeal is adopted under Texas Civil Statutes, Article 6675d and Article 6687b-2, which provide the director of the Texas Department of Public Safety with the authority to establish rules for the conduct of the work of the Texas Department of Public Safety, and more specifically which authorizes the director to adopt rules regulating the safe operation of commercial motor vehicles. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 28, 1995. TRD-9515995 James R. Wilson Director Texas Department of Public Safety Effective date: December 28, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 465-2890 Chapter 16. Commercial Driver's License Licensing Requirements, Qualifications, Restrictions, and Endorsements 37 TAC sec.16.9 The Texas Department of Public Safety adopts an amendment to sec.16.9, concerning licensing requirements, qualifications, restrictions, and endorsements, without changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8420). The justification for this section will be waiving of the vision standards for those commercial drivers who operate intrastate commerce. The amendment adds new paragraph (5) which states a driver who operates a commercial motor vehicle in intrastate commerce only may obtain a vision waiver from the department provided the person has 20/40 (Snellen) or better distant binocular acuity with or without corrective lenses. No comments were received regarding adoption of the amendment. The amendment is adopted under Texas Civil Statutes, Article 6687b-2, sec.12B, as passed by the 74th Legislature, 1995, which provide the Texas Department of Public Safety with the authority to adopt rules and regulations necessary to carry out the provisions of the Texas Commercial Driver's License Act and the Federal Commercial Motor Vehicle Safety Act of 1986 and Texas Transportation Code, sec.522.005. This agency hereby certifies that the rule as adopted has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on November 28, 1995. TRD-9515996 James R. Wilson Director Texas Department of Public Safety Effective date: December 28, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 465-2890 Part III. Texas Youth Commission Chapter 83. Contracted Youth Services 37 TAC sec.83.7, sec.83.15 The Texas Youth Commission (TYC) adopts amendments to sec.83.7 and sec.83. 15, concerning contracting for residential services and quality assurance, without changes to the proposed text as published in the November 7, 1995, issue of the Texas Register (20 TexReg 9258). The justification for amending the sections is enhanced quality assurance procedures to ensure best use of State resources. The amendments will provide for enhanced monitoring by TYC staff of TYC contracted programs which provide services to TYC youth. Monitoring will be conducted more frequently and will specifically evaluate compliance with contract requirements for performance and service delivery. Contract development and renewal will be based on assessments and evaluation of each contract program vendor. No comments were received regarding adoption of the amendments. The amendments are 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 8, 1995. TRD-9516031 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: November 7, 1995 For further information, please call: (512) 483-5244 Chapter 85. Admission and Placement Commitment and Reception 37 TAC sec.sec.85.1, 85.3, 85.5 The Texas Youth Commission (TYC) adopts amendments to sec. sec.85.1, 85.3, and 85.5, concerning legal requirements for admission, admission process, and assessment/evaluation, with changes to the proposed text as published in the October 24, 1995, issue of the Texas Register (20 TexReg 8784). The change to sec.85.1 adds the progressive sanctions worksheet to the list of documents required of the committing court upon a youth's admission to TYC. Changes to sec.85.3 provide for taking photographs and fingerprints of youth during admission. Section 85.5 provides for psychiatric evaluations for youth who meet certain criteria rather than routinely for all sentenced and type A violent offenders, The amendments are justified to ensure compliance with sex offender registration of TYC youth as required by law and a more efficient intake process at a new TYC assessment unit. The amendments add sex offender registration documentation required by law and, for some youth, the progressive sanctions worksheet to the list of documents provided by the committing court when a youth is admitted to TYC. The assessment process is being refined to include provisions for photographing and fingerprinting upon admission and psychiatric interviews. Amendments change references to the Statewide Reception Center in Brownwood to the Marlin Assessment and Orientation Unit in Marlin, Texas, to indicate a change of facility performing admission functions. No comments were received regarding adoption of the amendments. The amendments are 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, and sec.61.071, which provides that the commission shall examine and make a study of each child committed to it as soon as possible after commitment. The proposed amendments implement the Human Resource Code, sec.61.034. sec.85.1. Legal Requirements for Admission. Policy. (1) Each youth committed to the Texas Youth Commission (TYC) must be accompanied by legal and supporting documents supplied by the committing court. Upon admission, the following documents are required of the committing court: (A) certified copy of the Order of Commitment; (B) immunization records; (C) Common Application, CCF-002; (D) Detention order(s) (initial and subsequent) for offense(s) which resulted in commitment to TYC; (E) petition which prompted the commitment hearing; (F) the judgment which followed adjudication; (G) Texas Department of Public Safety Sex Offender Registration as required by law; (H) birth certificate for all youth; (I) social history; (J) education records; (K) medical and dental records; (L) any existing psychological and psychiatric reports; and (M) pretrial detention time creditable to the youth's sentence. (N) progressive sanctions deviation worksheet if assigned progressive sanctions level does not equal the progressive sanctions guideline level. (2) The TYC intake staff review the commitment document to determine if, on its face, it meets all requirements of a valid court order before receiving the youth. TYC does not look beyond the document itself for determining its validity. Questions regarding verification of validity should be directed to the legal services department. (3) No youth, under any circumstance, is admitted to TYC without a certified copy of the Order of Commitment, immunization records (except for undocumented aliens), and the Common Application. All other documents may be received subsequent to admission. sec.85.3. Admission Process. (a) Policy. Intake activities, including receipt of the youth from the committing county and orienting the youth to new surroundings, are performed by Texas Youth Commission (TYC) diagnostic intake units, the Marlin Assessment and Orientation Unit at Marlin and the Evins Regional Juvenile Center (ERJC) diagnostic unit at Edinburg. Both units are referred to as assessment units. (b) Rules. (1) The diagnostic intake units serve different youth and counties. (A) The ERJC Diagnostic Unit in Edinburg, Texas receives youth each Tuesday between the hours of 8:00 a.m. and 5:00 p.m. Youth may be received at other times if prior arrangements are made. The unit does not serve females or male youth who are under a determinate sentence or are likely to be classified as type A violent offenders. Such youth are served by the statewide reception center. The ERJC unit serves the following counties: Aransas, Jim Hogg, Nueces, Zapata, Bee, Jim Wells, Refugio, Brooks, Kenedy, San Patricio, Cameron, Kleberg, Starr, Duval, Live Oak, Webb, Hidalgo, McMullen, and Willacy. (B) The Marlin Assessment and Orientation Unit in Marlin, Texas receives youth committed to TYC five days per week, between 8:00 a.m. and 5:00 p.m. Youth may be received after 5:00 p.m. only if prior arrangements are made. The unit serves all counties not served by the ERJC unit, all females, all sentenced offenders, and all youth likely to be classified as type A violent offenders. (2) Youth are not allowed to have personal possessions while at the assessment units. Personal items are inventoried and returned to the county transporter. The transporter is asked to sign a receipt for items returned to his care. Items a youth is allowed to keep are inventoried and a receipt issued to the transporter. (3) Parents are notified of youth's admission and TYC's medical consent authority, and advised of procedures for mail and visits. (4) The Marlin Unit assigns each youth an official TYC registration number. (5) Staff completes personal data and commitment information. (6) A youth is assigned a caseworker. (7) Orientation to the admissions process and the TYC system is provided and documented as required in GOP.53.05, sec.87.55 of this title (relating to Youth Orientation). (8) Routine admission procedures include but are not limited to the following. (A) Each youth and his possessions are searched. (B) Youth property is inventoried. (C) A body identification form is completed, each youth showers, is screened for pediculosis, and receives treatment if indicated. (D) Initial health screening is performed for each youth. (E) Clothing is issued. (F) Personal hygiene articles are made available as needed. (9) Each youth may be photographed and fingerprinted. The photograph and fingerprints are filed in the youth's masterfile. (10) In addition to assessment and placement activities, counseling is provided at both sites. Academic education is provided at the Marlin unit. (11) Intake staff identify the home parole officer according to the agency assignment system based on zipcode area and county. The staff forwards to the home parole officer, within five working days of admission, the following: (A) copy of the court order; (B) copy of the Common Application (CCF-002); (C) county social summary; and (D) immediate notification when a youth is stating that he or she refuses to live at home when residential placement is complete. (12) TYC staff transports youth to their initial placements and notify the families, the region parole officer, committing court, prosecuting attorney, chief probation officer and others as needed of the placement location. sec.85.5. Assessment/Evaluation. (a) Policy. The Texas Youth Commission (TYC) youth assessment process includes summarizing admission information, conducting diagnostic evaluations, identifying classification and developing an initial placement category recommendation by the classification unit. The youth assessment process is completed within two weeks of receipt of the youth at the Marlin Assessment and Orientation Unit or within one week of receipt of youth at Evins Regional Juvenile Center Diagnostic Unit. (b) Rules. Intake staff at the diagnostic units conduct the following routine evaluations: (1) completion of the Common Application (CCF-002); (2) social summary; (3) risk/needs assessment; (4) family involvement assessment; (5) religious preference assessment; (6) recreation interest; (7) psychological evaluation (if one has not been completed within the last year). Residential treatment centers require an updated clinical interview for current status within six months prior to placement; (8) physical and dental examinations; (9) educational assessment; (10) substance abuse screening and assessment; (11) career interests and experience; (12) psychiatric interview of youth currently on psychotropic medication, and/or who have been in a psychiatric placement within the last three years, and/or who carry a current major psychiatric diagnosis such as psychotic or affective, and/or who are referred by professional staff; (13) assessment of behavior while at the facility; and (14) assign a level of care based on the needs of the youth. 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 8, 1995. TRD-9516032 Steve Robinson Executive Director Texas Youth Commission Effective date: January 1, 1996 Proposal publication date: October 24, 1995 For further information, please call: (512) 483-5244 TITLE 43. TRANSPORTATION Part I. Texas Department of Transportation Chapter 17. Vehicle Title and Registration Certificate of Title 43 TAC sec.sec.17.2, 17.3, 17.7, 17.8 The Texas Department of Transportation adopts amendments to sec.17.2, sec.17.3, and sec.17.7, concerning the issuance of original, duplicate, certified, and alias motor vehicle certificates of title, and new sec.17.8, concerning the issuance of motor vehicle certificates of title for salvage and nonrepairable motor vehicles, with changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8423). (Sections 17.2-17.3, and sec.17.8 are adopted with changes, and sec.17.7 is adopted without changes and will not be republished). House Bill 2151, 74th Legislature, 1995, amended Texas Civil Statutes, Article 6687-1, to authorize the department to issue motor vehicle certificates of title for salvage and nonrepairable motor vehicles. Amended sec.17.2 adds certain words and terms applicable to these sections and changes citations to statutory authority to the Transportation Code in accordance with Senate Bill 971, 74th Legislature, 1995, which re-codified the statutes relating to transportation. Amended sec.17.3 clarifies existing procedures for obtaining a certificate of title for a house trailer and removes all reference to a certificate of title for equipment. These amendments also change citations to statutory authority to the Transportation Code. Amended sec.17.7 removes definitions which are being deleted or incorporated into amended sec.17.2 and clarifies existing procedures for obtaining alias certificates of title. New sec.17.8 describes the place of application, who must apply, information to be included on application, and accompanying documentation for salvage vehicle certificates of title. The section describes issuance of certificates of title for salvage vehicles, explains the process for recording a lien on a salvage certificate of title, describes how an owner or lienholder may obtain a replacement for lost or destroyed certificates of title, describes to whom and how ownership of a salvage vehicle may be transferred, describes the process of obtaining a certificate of title for a rebuilt salvage motor vehicle, states the procedure by which insurance companies shall notify the department regarding payment of a total loss claim on a new or late model salvage or nonrepairable motor vehicle, and describes how a salvage vehicle dealer may acquire salvaged vehicles for the purpose of dismantling, scrapping, or destruction. On October 27, 1995, a public hearing was held to receive comments, views, or testimony concerning the proposed amendments to sec.sec.17.2-17.3 and sec.17.7, and new sec.17.8. Two oral comments were received at the hearing. Texas Auto Dealers, Recyclers, and Dealers Association indicated that it was in favor of the proposed amendments and new section. Auto Net, Inc., COPART, and one individual indicated that they were against the proposed amendments and new section. The Texas Independent Auto Resellers Association commented on the proposed sections at the hearing and indicated that it was in favor of some provisions and against some provisions. Insurance Auto Auction, Inc., the Texas Automotive Dismantlers and Recyclers Association, Capital Consultants, the Texas Automobile Dealers Association, State Farm Insurance Companies, and Farmers Insurance Group of Companies submitted written comments. State Farm Insurance Companies expressed that it was in full support of the comments submitted by Insurance Auto Auctions, Inc. Regarding sec.sec.17.2-17.3, sec.17.7, and new sec.17.8 in general, Auto Net, Inc. , stated that the proposed sections were a burden to all tax payers, and questioned the reasoning behind changing a "working system." Additionally, Capital Consultants requested that implementation of House Bill 2151 be postponed. In response, the proposed sections are being adopted to comply with House Bill 2151, 74th Legislature, 1995, which established Texas Civil Statutes, Article 6687-1, which authorizes the department to issue motor vehicle certificates of title for salvage and nonrepairable motor vehicles. The department is responsible for implementing this legislative mandate, and it may not ignore or postpone implementation of a state law. Regarding sec.17.2, Definitions, Insurance Auto Auction, Inc. suggested that the definition for "flood damage" should make some reference to damage by flood. In response, the department agrees and the definition has been revised to state that the damage to the vehicle was caused exclusively by flood in the remarks section of the certificate of title. Also regarding sec.17.2, Definitions, the Texas Automobile Dealers Association requested that when a certificate of title bears a notation such as "Flood Damage" or "Rebuilt Salvage," it should be highlighted in a way which allows the notation to be readily noticed. In response, the department has determined that the current remarks reflected on certificates of title are sufficient notice. Also regarding sec.17.2, Definitions, Insurance Auto Auction commented that the list for out-of-state license holders indicated in the definition for "out-of- state buyer" was not included. Additionally, representatives of the Texas Independent Auto Resellers Association, Auto Net, Inc., Capital Consultants, State Farm Insurance Companies, and Farmers Insurance Group of Companies also commented with regard to this definition, and expressed concern regarding the fact that the out-of-state motor vehicle authority must have substantially similar licensing requirements, and must permit salvage dealers licensed in Texas to purchase salvage motor vehicles or nonrepairable motor vehicles in that state. Capital Consultants suggested revisions to the definition of "out-of- state" buyer which would state that the department would make available a current listing of qualified out-of-state buyers. Texas Independent Auto Resellers Association also advised that it was unclear whether the department would provide an updated list of buyers to all licensed salvage dealers in Texas or if the responsibility of determining qualified out-of-state buyers would be a requirement of Texas salvage dealers. This commenter also raised the issue of this definition's possible conflict with the Interstate Commerce Act, Title 15, the Clayton Act, and the North American Free Trade Agreement (NAFTA), and said the Free Trade Association revealed that they had great concerns about this, also. In response, the department would not generally adopt such lists as rules. At this time, the department is not aware of any other states that require substantially similar licensing requirements for salvage vehicle dealers. However, the department intends to notify known motor vehicle administrators regarding the provisions of House Bill 2151, 74th Legislature, 1995, and House Bill 2599, 74th Legislature, 1995, in order to ascertain whether or not substantially similar licensing requirements are in effect in other jurisdictions. Depending upon the responses received, any list generated by the department will be available the early part of 1996 upon submission of a written request to the Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas 78779-0001. Additionally, this list will be updated as the department is notified of the enactment of out-of-state statutes that have substantially similar licensing requirements. It is the department's opinion that the proposed sections do not conflict with the Clayton Act or NAFTA. Regarding sec.17.3(b)(1), Motor Vehicle Certificates of Title, Initial application for certificate of title-Place of application, Insurance Auto Auction requested that a more specific reference to exempt dealers from the requirement of certificate of title application be shown. In response, the department has reviewed the reference and agrees that it is incorrect. The outdated reference to sec.17.74(c) has been deleted and replaced with Title 16, TAC sec.111.15(c) (relating to Record of Sales and Inventory), and sec.17.8(a)(1) (relating to Certificates of Title for Salvage Vehicles) for clarity. Regarding sec.17.3(c)(1)(A)(ii), the Texas Automobile Dealers Association requested that the department review its requirement regarding the manufacturer's rated carrying capacity in tons to be shown on a manufacturer's certificate of origin/manufacturer's statement of origin. In response, the requirement regarding the manufacturer's rated carrying capacity in tons is mandated by Texas Civil Statutes, Article 6675a, and a change to this requirement would require legislative action. Regarding sec.17.8, Certificates of Title for Salvage Vehicles, Capital Consultants, a representative of the Texas Independent Auto Resellers Association requested that the department continue the current salvage certificate of title system for vehicles that incur severe damage for which total losses are paid when the estimated cost of repair, including parts and labor, is less than 75% of the actual cash value of the vehicle's predamaged condition. Continuation of this system was requested until such time that further legislation could be enacted. In response, it is outside of the department's authority to continue this system. House Bill 2151 amends the Certificate of Title Act (Texas Civil Statutes, Article 6687-1) by adding Section 37A and repealing Section 37, which required the owners of such vehicles to surrender the negotiable title documents to the department for cancellation purposes. Additionally, regarding sec.17.8, Certificates of Title for Salvage Vehicles, State Farm Insurance Companies commented that the department should consider regulations in situations concerning certain "total loss" vehicles which are merely undamaged recovered stolen vehicles. State Farm urged that the insurers be permitted some flexibility in titling the vehicle appropriately depending upon whether or not it was actually damaged. In response, the insurer will have that flexibility, since the cost of repairs which includes parts and labor is the factor utilized to ascertain the percentage of the actual cash value of the vehicle in its predamaged condition. This percentage then determines whether it will be necessary for the insurer to apply for a salvage or nonrepairable certificate of title. Regarding sec.17.8(a)(1)(A), Certificates of Title for Salvage Vehicles, Certificate of title applications for salvage vehicles -Place of application, concerning the place of application for transfer of a salvage motor vehicle , Insurance Auto Auction suggested adding "a nonrepairable motor vehicle which has not been issued a salvage motor vehicle certificate, a nonrepairable motor vehicle certificate of title or a comparable ownership document issued by another state or jurisdiction" to this subparagraph. In response, the department agrees and has also determined that application for a salvage or nonrepairable motor vehicle certificate of title is not required if the vehicle will be dismantled, scrapped, or destroyed. Therefore, the department has incorporated the suggested wording and has revised this subparagraph to state that a salvage or nonrepairable motor vehicle certificate of title is not required if the vehicle will be dismantled, scrapped, or destroyed. Regarding sec.17.8(a)(2)(A), Certificate of title applications for salvage vehicle-Information to be included on application, Insurance Auto Auctions commented that the application for a salvage motor vehicle certificate of title or nonrepairable motor vehicle certificate of title was not included in the proposed sections, suggested that the words "if available" be inserted after the words "empty weight" in clause (ii), requested clarification of "the estimated costs of repairs" in clause (iv), and requested clarification regarding why the recording of a lien is limited to a salvage motor vehicle certificate of title in clause (viii). In response to comments and questions regarding sec.17.8(a)(2)(A), the department does not generally publish required forms in rules. However, upon final adoption of these sections, this form will be finalized, approved, printed, and available the early part of 1996. Requests for this form may be submitted to the Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas 78779-0001. In response to Insurance Auto Auctions regarding clause (ii), the empty weight of a vehicle will be required on all certificate of title applications for salvage vehicles and, therefore, the suggested revision to add the words "if available" would not be appropriate. In response to Insurance Auto Auctions regarding using adjusted estimated costs of repairs, the department has renumbered the paragraphs under subsection (a)(2) of this section and added information to clarify how the estimated cost of repairs is to be determined. Insurance Auto Auctions asked why lienholder information was only applicable to salvage title issuance. To clarify provisions regarding the recording of a lien, the provisions of House Bill 2151 restrict the recording of a lien to a person who holds a salvage motor vehicle certificate of title. Therefore, a lien may not be recorded on a nonrepairable motor vehicle certificate of title. Regarding sec.17.8(a)(2)(B)(v), Certificate of title applications for salvage vehicles-Information to be included on application, Insurance Auto Auctions questioned the need to include the "license plate number" on such applications. In response, the "license plate number" in subsection (a)(2)(B) (v) refers to the new license plate number issued for display on the vehicle at the time the title applicant files the rebuilt salvage title transaction with the county tax collector's office and pays the applicable fees. The department agrees that this reference is confusing and has revised subsection (a)(2) to clarify. Regarding sec.17.8(a), Certificate of title applications for salvage vehicles, a representative of the Texas Independent Auto Resellers Association indicated that the inspection process performed by the Texas Department of Public Safety was more for the purpose of identifying stolen parts, rather than being designed for the elimination of safety hazards for the consumer. The commenter, as well as Capital Consultants, referred to the failure of the California inspection system and, along with the Texas Automotive Dismantlers & Recyclers Association and State Farm Insurance Companies, requested that a time limit for performing the inspection process be included in the proposed sections. In response, the department cannot address this request in its rules, as responsibility for administering the vehicle inspection program falls under the purview of the Texas Department of Public Safety. Regarding sec.17.8(c), Certificate of title issuance for salvage vehicles, Insurance Auto Auctions commented that the nonrepairable certificate of title form, the application for a rebuilt salvage title, and the application for retitling a nonrepairable vehicle are not included in the proposed rules. In response, the department does not generally publish forms in rules. The application for a rebuilt salvage title and the application for retitling a nonrepairable vehicle will be the current Application for Texas Certificate of Title, Form 130-U. The nonrepairable certificate of title form will be finalized upon adoption of these rules. Also with regards to sec.17.8(c), Insurance Auto Auctions also commented that the fee for a rebuilt salvage transaction was not addressed. In response, the fee referred to by House Bill 2151 is the regular certificate of title fee, which is currently $13. Regarding sec.17.8(c)(1), Certificate of title issuance for salvage vehicles, Insurance Auto Auctions commented that the fee for application for salvage or nonrepairable motor vehicle certificate of title was not addressed, and also questioned whether there would be different certificates for vehicles which are voluntarily deemed salvage or nonrepairable. In response, the approximate fee of $3.00 per application was included in the fiscal note part of the proposed preamble to these sections as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8423). To alleviate confusion, the department has revised sec.17.8(c)(1) by adding that the prescribed fee will be $3.00. In addition, the department has revised paragraph (1) of this subsection to indicate that the required documentation shall accompany the appropriate fee. In response to the questions regarding different certificates for vehicles which are voluntarily deemed salvage or nonrepairable, the issuance of salvage motor vehicle certificates of title and nonrepairable motor vehicle certificates of title for a motor vehicle will be dependent upon the estimated cost of repair, including parts and labor. If the estimated cost of repair indicated on the application is equal to 75% to 94% of the actual cash value of the vehicle in its predamaged condition, a salvage motor vehicle certificate of title will be issued. If the estimated cost of repair indicated on the application is equal to 95% or more of the actual cash value of the vehicle in its predamaged condition, a nonrepairable motor vehicle certificate of title will be issued. Regarding sec.17.8(c)(2), Certificate of title issuance for salvage vehicles, Insurance Auto Auctions suggested that the words "or nonrepairable motor vehicle" be inserted in the second sentence after the word "vehicle" in its first use in the sentence. In response, the provisions of House Bill 2151 only address the rebuilding of a late model salvage motor vehicle for which the department has issued a salvage certificate of title or the assembling of a late model salvage motor vehicle from component parts. Additionally, the definition of "late model salvage motor vehicle" does not include a nonrepairable vehicle. The department is not obligated by House Bill 2151 to disclose a vehicle's former condition to a potential purchaser when a new or late model salvage motor vehicle for which the department has issued a salvage certificate of title is rebuilt, or when a new or late model salvage motor vehicle is assembled from component parts. When a nonrepairable motor vehicle has been rebuilt or assembled from component parts, there are no provisions that allow the department to preclude disclosure of the vehicle's former condition to a potential purchaser. Also regarding subsection (c)(2), the department has included revisions to state that required documentation shall be submitted with the required fees for clarity. Regarding sec.17.8(d), Replacement of certificates of title for salvage vehicles, Insurance Auto Auctions questioned how to apply for a duplicate nonrepairable motor vehicle certificate of title. In response, the provisions of new sec.17.8 apply to both salvage and nonrepairable motor vehicles. Consequently, subsection (d), Replacement of certificates of title for salvage vehicles, includes both salvage and nonrepairable motor vehicles. For clarity, the term "salvage vehicles" has been added to sec.17.2 and is defined as both salvage and nonrepairable vehicles. Regarding sec.17.8(e), Insurance Auto Auctions commented that the availability of dealer reassignments should not be disrupted. House Bill 2151 clearly limits the transfer of a new or late model salvage motor vehicle by assignment of certificate of title. Additionally, Texas Civil Statutes, Article 6687-1a, sec.3.01(a), clearly indicates that licensed salvage vehicle dealers acquiring ownership of late model salvage vehicles are required to submit a salvage or nonrepairable motor vehicle certificate of title application to the department along with the applicable fee within ten days of receiving an assigned certificate of title, unless the vehicle will be dismantled, scrapped, or destroyed. Therefore, further reassignment of a certificate of title on a late model salvage vehicle by licensed salvage vehicle dealers is not available. New Subparagraph (A) has been added to subsection (e) in order to clarify this provision. Regarding sec.17.8(e)(1)(A) and (B), Transfer of ownership, Insurance Auto Auctions requests that flood vehicles be excluded from these subparagraphs, and requested that the vehicle's former owner and a governmental entity be included as permissible purchasers in subparagraph (B). In response, the department has reviewed House Bill 2151 and concurs that flood damaged vehicles are excluded from the transfer restrictions and that the requested vehicle transfers are permissible. Therefore, the department has added language to exclude flood damaged vehicles from transfer restrictions and to allow purchases by a vehicle's former owner and governmental entities. Regarding sec.17.8(e)(2)(B), Transfer of ownership, Insurance Auto Auctions suggested that it would be helpful to state that the restrictions on sales set forth in (1)(A) and (B) do not apply to vehicles for which a salvage motor vehicle certificate of title or a nonrepairable motor vehicle certificate of title have been voluntarily obtained. In response, this situation is addressed in subsection (e)(2), relating to Transfer of ownership. Regarding sec.17.8(f), Notification required of an insurance company, Insurance Auto Auctions commented that the form was not included in the proposed section. In response, the department does not generally publish required forms in the rules. However, upon final adoption of these sections, this form will be finalized, approved, printed, and available the early part of 1996. Requests for this form may be submitted to the Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas 78779-0001, or may be requested by phone by contacting the Special Services Branch at (512) 467-3998. Additionally, language to further clarify the types of vehicles for which such notifications are required has been added to sec.17.8(f)(1) and (2). Additionally, the Texas Automobile Dealers Association made comments regarding the manufacturer's rated carrying capacity in tons being required on the manufacturer's certificate of origin (MCO), when the MCO is invoiced to a Texas dealer, and the definition of "dealer" as defined in Texas Civil Statutes, Article 4413(36), sec.1.03(4) and 16 TAC, sec.111.2 (relating to Definitions). The department is only responding to comments which pertain to the rules addressed in these proposed sections. Therefore, these comments will not be addressed. The amendments and new section 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 6687-1, sec.37A, which authorizes the department to adopt rules to administer the issuance of salvage and nonrepairable sec.17.2. Definitions. The following words and terms, when used in this subchapter, shall have the following meanings, unless the context clearly indicates otherwise. Actual cash value-The market value of a motor vehicle as determined: (A) from publications commonly used by the automotive and insurance industries to establish the value of motor vehicles; or (B) if the entity determining the value is an insurance company, by any other procedure recognized by the insurance industry, including market surveys, that is applied by the company in a uniform manner. Automobile recycler -A person in the business of dealing in salvage motor vehicles for the purpose of dismantling the vehicles to sell used parts, or a person otherwise engaged in the business of acquiring, selling, or dealing in salvage parts for reuse or resale as parts. The term includes a dealer in used motor vehicle parts. Alias-The name of a vehicle owner reflected on the certificate of title, different than the name of the legal owner of the vehicle. Alias certificate of title-A title document issued by the department for a vehicle that is used by an exempt law enforcement agency in covert criminal investigations. Bond release letter-Written notification from the United States Department of Transportation authorizing United States Customs to release the bond posted for an imported motor vehicle to ensure compliance with federal motor vehicle safety standards. Casual sale-The sale at auction of not more than one nonrepairable motor vehicle or new or late model salvage motor vehicle to the same person during a calendar year. Certificate of title-A written instrument which may be issued solely by and under the authority of the department, which reflects the purchase, sale, vehicle, license plate and lien information disclosed on the certificate of title application as specified in this subchapter or as may be required by the department. Certificate of title application-A form prescribed by the division director that reflects the information required by the department to create a motor vehicle title record. Date of sale -The date of the transfer of possession of a specific vehicle from a seller to a purchaser. Department-The Texas Department of Transportation. Distributor-A person engaged in the business of selling to a dealer motor vehicles bought from a manufacturer. Division director -The director of the department's Vehicle Titles and Registration Division. Executive administrator -The director of a federal agency, the director of a Texas state agency, the sheriff of a Texas county, or the chief of police of a Texas city who by law possesses the authority to conduct covert criminal investigations. Exempt agency-A governmental body exempt by law from paying registration fees for motor vehicles. Federal motor vehicle safety standards-Motor vehicle safety requirements promulgated by the United States Department of Transportation, National Highway Traffic Safety Administration, set forth in Title 19, Code of Federal Regulations. First sale-A bargain, sale, transfer, or delivery with intent to pass an interest therein, other than a lien, and accompanied by registration, of a motor vehicle which has not been previously registered in this state or elsewhere. Flood damage-A remark initially indicated on a salvage or nonrepairable motor vehicle certificate of title to denote that the damage to the vehicle was caused exclusively by flood, which is carried forward upon subsequent title issuance. House moving dolly-An apparatus consisting of metal beams and axles used to move houses. House moving dollies, by nature of their construction and use, actually form a large semi-trailer. House trailer-A vehicle without automotive power designed for human habitation and for carrying persons and property upon its own structure and for being drawn by a motor vehicle, not to include manufactured housing. Identification certificate -A form issued by an inspector of an authorized safety inspection station on a vehicle previously registered or titled in another state or country in accordance with Transportation Code, sec.548.256. Implements of husbandry-Farm implements, machinery and tools used in tilling the soil, including self-propelled machinery specifically designed or especially adapted for applying plant food materials or agricultural chemicals. This term does not include implements that are not designed or adapted for the sole purpose of transporting the farm materials or chemicals, or any passenger car or truck. Importer-A person, except a manufacturer, who brings any used motor vehicle into this state for the purpose of sale within this state. Insurance company -A person authorized to write automobile insurance in Texas or an out-of-state insurance company that pays a loss claim for a motor vehicle in Texas. Late model motor vehicle-A motor vehicle with a model year equal to the then current calendar year or one of the five preceding calendar years. Late model salvage motor vehicle-A late model motor vehicle, other than a late model vehicle that is a nonrepairable motor vehicle, that is damaged to the extent that the total estimated cost of repairs, other than repairs related to hail damage but including parts and labor, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition. Lien-A security interest, as defined in Business and Commerce Code, sec.1.201(37), of whatsoever kind or character whereby an interest, other than an absolute title, is sought to be held or given in a motor vehicle, and a lien created or given by constitution or statute in a motor vehicle. Major component part-One of the following parts of a motor vehicle: (A) the engine; (B) the transmission; (C) the frame; (D) the right or left front fender; (E) the hood; (F) a door allowing entrance to or egress from the passenger compartment of the vehicle; (G) the front or rear bumper; (H) the right or left quarter panel; (I) the deck lid, tailgate, or hatchback; (J) the cargo box of a pickup truck; (K) the cab of a truck; or (L) the body of a passenger vehicle. Manufacturer-A person regularly engaged in the business of manufacturing or assembling new motor vehicles, either within this state or elsewhere. Manufacturer's certificate of origin-A form prescribed by the department showing the original transfer of a new motor vehicle from the manufacturer to the original purchaser, whether importer, distributor, dealer, or owner, and when presented with an application for certificate of title show thereon, on appropriate forms to be prescribed by the department, each subsequent transfer between distributor and dealer, dealer and dealer, and dealer and owner. Moped-A motor driven cycle whose attainable speed is not more than 30 miles per hour and that is equipped with a motor that produces not more than two-brake horsepower. If an internal combustion engine is used, the piston displacement may not exceed 50 cubic centimeters and the power drive system may not require the operator to shift gears. Motor vehicle-Every kind of motor driven or propelled vehicle required to be registered under the laws of the state, including trailers, house trailers, and semitrailers, and shall also include motorcycles, motor-driven cycles, mopeds, and four-wheel all-terrain vehicles designed by the manufacturer for off-highway use, whether or not the vehicle is required to be registered under Transportation Code, Chapter 501. The term motor vehicle does not include manufactured housing, motorcycles, motor-driven cycles, and mopeds, designed for and used exclusively on golf courses. Motor vehicle importation form-An importer's declaration form prescribed by the United States Department of Transportation and certified by United States Customs that relates to an imported motor vehicle's compliance with federal motor vehicle safety standards. Negotiable title -A title that may be used to transfer an interest or ownership in a motor vehicle, or to establish a new lien. New model motor vehicle-A motor vehicle with a year model that is newer than the current calendar year. New model salvage motor vehicle-A new model motor vehicle, other than a new model vehicle that is a nonrepairable motor vehicle, that is damaged to the extent that the total estimated cost of repairs, other than repairs related to hail damage but including parts and labor, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition. New motor vehicle -A motor vehicle which has never been the subject of a first sale either within this state or elsewhere. Non-negotiable title -A title that may be used only as evidence of title and may not be used to transfer any interest or ownership in a motor vehicle, or to establish a new lien. Nonrepairable motor vehicle-A new or late model motor vehicle that is damaged or missing a major component part to the extent that the total estimated cost of repairs to rebuild or reconstruct the vehicle, including parts and labor other than the costs of materials and labor for repainting the vehicle and excluding sales taxes on the total cost of the repairs, and excluding the cost of repairs to repair hail damage, is equal to or greater than an amount equal to 95% of the actual cash value of the vehicle in its predamaged condition. Nonrepairable motor vehicle certificate of title -A document issued by the department that evidences ownership of a nonrepairable motor vehicle. Non United States standard motor vehicle-A motor vehicle not manufactured in compliance with federal motor vehicle safety standards. Older model motor vehicle-A motor vehicle that was manufactured in a model year before the sixth preceding model year, including the current model year. Other negotiable evidence of ownership-A document, other than a Texas certificate of title or a salvage certificate of title, that relates to a motor vehicle which the department considers sufficient to support issuance of a Texas certificate of title for the vehicle. Out-of-state buyer -A person licensed by another state or jurisdiction in an automotive business if the department has listed the holders of such license as permitted purchasers of salvage motor vehicles or nonrepairable motor vehicles based on substantially similar licensing requirements and on whether salvage vehicle dealers licensed in Texas are permitted to purchase salvage motor vehicles or nonrepairable motor vehicles in the other state or jurisdiction. Owner-A person, firm, association, or corporation other than a manufacturer, importer, distributor, or dealer claiming title to, or having a right to operate pursuant to a lien on a motor vehicle after the first sale, except the Federal Government and its agencies, and the State of Texas and a governmental subdivision or agency thereof not required by law to register motor vehicles owned or used thereby in this State. Person-An individual, firm, corporation, company, partnership, or other entity. Rebuilder-A person that acquires and repairs, for operation on public highways, five or more new or late model salvage motor vehicles in any 12-month period. Rebuilt salvage -A remark indicated on the face of a certificate of title issued by the department that evidences ownership of a rebuilt salvage motor vehicle. Safety certification label-A label placed on a motor vehicle by a manufacturer certifying that the motor vehicle complies with all federal motor vehicle safety standards. Salvage motor vehicle-A new or late model motor vehicle, other than a new or late model vehicle that is a nonrepairable motor vehicle, that is damaged to the extent that the total estimated cost of repairs, other than repairs related to hail damage but including parts and labor, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition. Salvage motor vehicle certificate of title -A document issued by the department that evidences ownership of a salvage motor vehicle. Salvage vehicle -A term which refers to both salvage and nonrepairable vehicles. Salvage vehicle dealer-A person who is engaged in this state in the business of acquiring, selling, or otherwise dealing in salvage vehicles or vehicle parts of a type required to be covered by a salvage vehicle certificate of title or nonrepairable vehicle certificate of title under a license issued by the department that allows the holder of the license to acquire, sell, dismantle, repair, or otherwise deal in salvage vehicles. Semi-Trailer-A vehicle of the trailer type having a gross weight in excess of four thousand (4,000) pounds so designed or used in conjunction with a motor vehicle that some part of its own weight and that of its load rests upon or is carried by another vehicle. Statement of fact-A written declaration executed by the seller or involved party of a motor vehicle that clarifies an error made on evidence of ownership which supports the application for certificate of title. Subsequent sale -A bargain, sale, transfer, or delivery, with intent to pass an interest therein, other than a lien, of a motor vehicle which has been registered with this state or elsewhere, save and except when such vehicle is not required under law to be registered in this State. Token trailer fee-A registration fee paid for certain semitrailers, meeting the qualifications delineated in Transportation Code, sec.502.167, and used in combination with truck tractors or commercial motor vehicles whose registration is based upon a combined gross weight. Trailer-Every vehicle having a gross unloaded weight in excess of four thousand (4,000) pounds and designed or used to carry its load wholly on its own structure and to be drawn by a motor vehicle. Used motor vehicle -A motor vehicle that has been the subject of a first sale whether within this state or elsewhere. Vehicle identification number-A number assigned by the manufacturer of a motor vehicle or the department that describes the motor vehicle for purposes of identification. sec.17.3. Motor Vehicle Certificates of Title. (a) Certificates of Title. Unless otherwise exempted by law or this chapter, the owner of any vehicle that is required to be registered in accordance with Transportation Code, Chapter 502, shall be required to apply for a Texas Certificate of Title in accordance with the Certificate of Title Act, Transportation Code, Chapter 501. (1) Motorcycles, motor-driven cycles, and mopeds. (A) The title requirements of a motorcycle are the same requirements prescribed for any motor vehicle. (B) A motorcycle, motor-driven cycle, or a moped designed for or used exclusively on golf courses is not classified as a motor vehicle and, therefore, title cannot be issued until such time as the unit is registered. (C) A vehicle which meets the criteria for a moped and has been certified as a moped by the Department of Public Safety, must be registered and titled as a moped; otherwise, if the vehicle does not appear on the list of certified mopeds published by that agency, the vehicle will be treated as a motorcycle for title and registration purposes. (D) A motor installed on a bicycle must be certified by the Department of Public Safety before the vehicle may be classified as a moped. (2) Farm vehicles. (A) The term motor vehicle does not apply to implements of husbandry and may not be titled. (B) Farm tractors owned by agencies exempt from registration fees in accordance with Transportation Code, sec.502.283, and farm tractors used as road tractors to mow rights-of-way or used to move commodities over the highway for hire are required to be registered and titled. (3) Exemptions from title. Vehicles registered with the following distinguishing license plates may not be titled under the Certificate of Title Act, Transportation Code, Chapter 501: (A) vehicles eligible for machinery license plates in accordance with Transportation Code, sec.502.278; (B) vehicles eligible for farm trailer license plates in accordance with Transportation Code, sec.502.163; and (C) vehicles eligible for permit license plates in accordance with Transportation Code, sec.sec.502.351-502. 353. (4) Trailers, semitrailers, and house trailers. Owners of trailers and semitrailers must apply for and receive a Texas Certificate of Title for any stand alone (full) trailer, including homemade full trailers, having an empty weight in excess of 4,000 pounds or any semitrailer having a gross weight in excess of 4,000 pounds. House trailer-type vehicles must meet the criteria outlined in subparagraph (C) of this paragraph in order to be titled. (A) In the absence of a manufacturer's rated carrying capacity for trailers and semitrailers, the rated carrying capacity shall not be less than one-third of its empty weight. (B) Mobile office trailers, mobile oil field laboratories, and mobile oil field bunkhouses are not designed as a dwelling, but classified as commercial semitrailers, and must be registered and titled as such if operated upon the public streets and highways. (C) House trailer-type vehicles and camper trailers must meet the following criteria in order to be titled. (i) A house trailer-type vehicle designed for living quarters and which is eight body feet or more in width or forty body feet or more in length (not including the hitch) , is classified as a mobile home and is titled under the Texas Manufactured Housing Standards Act, Texas Civil Statutes, Article 5221f, administered by the Department of Licensing and Regulation. (ii) A house trailer-type vehicle which is less than eight feet in width and less than forty feet in length is classified as a travel trailer and must be registered and titled. (iii) A camper trailer must be titled as a house trailer and must be registered with travel trailer license plates. (b) Initial application for Certificate of Title. (1) Place of application. When motor vehicle ownership is transferred, except as provided by 16 TAC, sec.111.15(c) (relating to Record of Sales and Inventory) and sec.17. 8(a)(1) (relating to Certificates of Title for Salvage Vehicles), a certificate of title application must be filed with the county tax assessor- collector in the county in which the applicant resides, or the county in which the motor vehicle was purchased or encumbered, within 20 working days of the date of sale. (2) Information to be included on application. An applicant for an initial certificate of title shall file an application on a form prescribed by the department. The form shall at a minimum require the: (A) motor vehicle description which includes, but is not limited to, the motor vehicle's: (i) year; (ii) make; (iii) model; (iv) identification number; (v) body style; (vi) manufacturer's rated carrying capacity in tons for commercial motor vehicles; and (vii) empty weight; (B) license plate number, if the motor vehicle is subject to registration under Transportation Code, Chapter 502; (C) odometer reading and brand, or the word "exempt" if the motor vehicle is exempt from federal and state odometer disclosure requirements; (D) previous owner's name and city and state of residence; (E) name and complete address of the applicant; (F) name and mailing address of any lienholder and the date of lien, if applicable; (G) signature of the seller of the motor vehicle or the seller's authorized agent and the date the certificate of title application was signed; and (H) the signature of the applicant or the applicant's authorized agent and the date the certificate of title application was signed. (3) Serial Number. If no serial number is die-stamped by the manufacturer upon a motor vehicle, house trailer, trailer, semi-trailer, or an item of equipment required to be titled, or if the serial number assigned and die-stamped by the manufacturer has been lost, removed or obliterated, the department will upon proper application, presentation of evidence of ownership, and presentation of a law enforcement physical inspection, assign a serial number to the motor vehicle, trailer or equipment; the manufacturer's serial number or the assigned serial number will be used by the department as the major identification of the motor vehicle or trailer in the issuance of a certificate of title. (4) Accompanying documentation. The certificate of title application shall be supported by, at a minimum, the following documents: (A) evidence of vehicle ownership, as described in subsection (c) of this section; (B) odometer disclosure statement properly executed by the seller of the motor vehicle and acknowledged by the purchaser, if applicable; (C) the identification certificate required by Transportation Code, sec.548.256, and Transportation Code, sec.501.030, if the vehicle was last registered in another state or country; and (D) release of any liens or, if not released, the liens shall be carried forward on the new certificate of title application pursuant to the following limitations. (i) An out-of-state lien recorded on out-of-state evidence as described in subsection (c) of this section cannot be carried forward to a Texas title when there is a transfer of ownership, unless a release of lien or authorization from the lienholder is attached. (ii) A lien recorded on out-of-state evidence as described in subsection (c) of this section is not required to be released when there is no transfer of ownership from an out-of-state title and the same lienholder is being recorded on the Texas application as is recorded on the out-of-state title. (c) Evidence of motor vehicle ownership. Evidence of motor vehicle ownership properly assigned to the applicant shall accompany the certificate of title application. Evidence shall include, but is not limited to, the following documents. (1) New motor vehicles. A manufacturer's certificate of origin assigned by the manufacturer or the manufacturer's representative or distributor to the original purchaser shall be required for a new motor vehicle that is sold or offered for sale. (A) The manufacturer's certificate of origin shall be in the form prescribed by the division director and shall contain, at a minimum, the following information: (i) motor vehicle description which includes, but is not limited to, the motor vehicle's year, make, model, identification number, body style and empty weight; (ii) the manufacturer's rated carrying capacity in tons when the manufacturer's certificate of origin is invoiced to a Texas dealer as defined in 16 TAC, sec.111.2, (relating to Definitions), and is issued for commercial motor vehicles as that term is defined in Transportation Code, Chapter 502; and (iii) a statement identifying a motor vehicle designed by the manufacturer for off-highway use only. (B) When a motor vehicle manufactured in another country is sold directly to a non-manufacturer's representative or distributor, the manufacturer's certificate of origin shall be assigned to the purchaser by the importer. (2) Used motor vehicles. A certificate of title issued by the department, a certificate of title issued by another state if the motor vehicle was last registered and titled in another state, or other evidence of ownership shall be relinquished in support of the certificate of title application for any used motor vehicle. A letter of Title and Registration verification is required from a vehicle owner coming from a state that no longer titles vehicles after a certain period of time. (3) Imported motor vehicles. An application for certificate of title for a motor vehicle last registered or titled in a foreign country shall be supported by, but is not limited to, the following documents: (A) the motor vehicle registration certificate or other verification issued by a foreign country which reflects the name of the applicant as the motor vehicle owner, or reflects that such evidence of ownership has been legally assigned to the applicant; and (B) proof of compliance with United States Department of Transportation regulations for all 1968 and subsequent year model motor vehicles and for all 1969 and subsequent year model motorcycles which shall include, but is not limited to, the following documents: (i) the original bond release letter with all attachments advising that the motor vehicle meets federal motor vehicle safety requirements or a letter issued by the United States Department of Transportation, National Highway Traffic Safety Administration, verifying the issuance of the original bond release letter; (ii) a legible copy of the motor vehicle importation form validated with an original United States Customs stamp, date, and signature as filed with the United States Department of Transportation confirming the exemption from the bond release letter required in subitem (i) of this subparagraph, or a copy thereof certified by United States Customs; (iii) a verification of motor vehicle inspection by United States Customs certified on United States Customs letterhead and signed by a United States Customs agent verifying that the motor vehicle complies with United States Department of Transportation regulations; (iv) a written confirmation that a physical inspection of the safety certification label has been made by the department and that the motor vehicle meets United States motor vehicle safety standards; (v) the original bond release letter, or verification thereof, or written confirmation from the previous state verifying that a bond release letter issued by the United States Department of Transportation was relinquished to that jurisdiction, if the non United States standard motor vehicle was last titled or registered in another state for one year or less; or (vi) verification from the vehicle manufacturer on their letterhead stationary. (4) Alterations to documentation. An alteration to a registration receipt, certificate of title, manufacturer's certificate, or other evidence of ownership shall constitute valid reason for the rejection of any transaction to which such altered evidence is attached. The department may accept certain types of alterations provided that they are corrected in accordance with the following procedures. (A) Altered lien information on any surrendered evidence of ownership requires a release from the original lienholder or a statement from the proper authority of that state in which the lien originated verifying the correct lien information. (B) A strikeover on any document which leaves any doubt as the legibility of any digit in a number will not be accepted. (C) A correct manufacturer's certificate of origin will be required if the documents shows an: (i) incomplete or altered vehicle identification number; (ii) alteration or strikeover of the vehicle's year model; (iii) alteration or strikeover to the body style, or omitted body style on the manufacturer's certificate of origin; or (iv) alteration or strikeover to the manufacturer's rated carrying capacity. (D) A Statement of Fact may be requested to explain errors, corrections, or conditions from which doubt does or could arise concerning the legality of any instrument. A Statement of Fact will be required in all cases: (i) where the date of sale on an assignment has been erased or altered in any manner; or (ii) of alteration or erasure on a Dealer's Reassignment of Title. (d) Certificate of title issuance. Upon receiving a completed application for certificate of title, along with the applicable fees, the department or its designated agent will process and issue a certificate of title. (1) Negotiable titles. The department will issue and mail or deliver negotiable titles, marked "Original," to the applicant or, in the event that there is a lien disclosed in the application, to the first lienholder. (2) Non-negotiable titles. The department will issue non-negotiable titles, which may be used only as evidence of title and may not be used to transfer any interest or ownership in a motor vehicle, or to establish a new lien: (A) in the event that there is a lien disclosed in the application a duplicate certificate of title marked "Duplicate Original," will be mailed or delivered to the address of the applicant as disclosed upon the application; (B) in the event that the owner of a vehicle last registered or titled in another state (and subject to registration in this state) cannot or does not wish to relinquish the negotiable out-of-state evidence of ownership to obtain a negotiable Texas title, a duplicate certificate of title marked "Registration Purposes Only" will be mailed or delivered to the address of the applicant as disclosed upon the application (in instances where the title or registration receipt is assigned to the applicant, an application for "Registration Purposes Only" will not be processed). (e) Replacement of certificate of title. The owner or lien holder of a lost or destroyed certificate of title may obtain a certified copy of that title upon proper application with the department. (1) Certified Copy. A certificate of title will be marked "Certified Copy" until such time that ownership of the vehicle is transferred, when the words "Certified Copy" will be eliminated from the new certificate of title. (2) Recovery of lost title. In the event that the "Duplicate Original" or "Original" certificate of title is recovered, the owner shall relinquish the certified copy to the department for cancellation and the words "Certified Copy" will be eliminated from certificates issued thereafter by the department as a result of transfer of ownership. (f) Suspension, revocation, or refusal to issue Certificates of Title. (1) Grounds for title suspension, revocation, or refusal to issue. The department will refuse issuance of a certificate of title, or having issued a certificate of title, suspend or revoke the certificate of title if the: (A) application contains any false or fraudulent statement; (B) applicant has failed to furnish required information requested by the department; (C) applicant is not entitled to the issuance of a certificate of title under the Certificate of Title Act, Transportation Code, Chapter 501; (D) department has reasonable ground to believe that the vehicle is a stolen or converted vehicle, or that the issuance of a certificate of title would constitute a fraud against the rightful owner or a mortgagee; (E) registration of the vehicle stands suspended or revoked; or (F) required fee has not been paid. (2) Contested case procedure. Any person who has an interest in a motor vehicle to which the department has refused to issue a certificate of title or has suspended or revoked the certificate of title may contest such decisions in accordance with the Certificate of Title Act, Transportation Code, sec.sec.501.052-501.053, in the following manner: (A) Hearing. Any person who has an interest in a motor vehicle to which the department has refused to issue a certificate of title or has suspended or revoked the certificate of title may apply to the designated agent of the county in which they reside for a hearing. At the hearing the applicant and the Department may submit evidence, and a ruling of the designated agent will bind both parties. An applicant wishing to appeal the ruling of the designated agent may do so to the County Court of the county in which the applicant resides. (B) Alternative to hearing. In lieu of a hearing, any person who has an interest in a motor vehicle to which the department has refused to issue a certificate of title or has suspended or revoked a certificate of title may file a bond with the department, in an amount equal to one and one-half times the value of the vehicle as determined by the department, and in a form prescribed by the department. Upon the filing of the bond, the department may issue a certificate of title. The bond shall expire three years after the date it becomes effective and shall be returned to the person posting bond, upon expiration, unless the department has been notified of the pendency of an action to recover on the bond. sec.17.8. Certificates of Title for Salvage Vehicles. (a) Certificate of title applications for salvage vehicles. (1) Place of application. (A) When ownership of a new or late model salvage motor vehicle or nonrepairable motor vehicle, which has not been issued a salvage motor vehicle certificate of title, a nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction is transferred, and the vehicle will not be dismantled, scrapped, or destroyed, the person who acquires ownership must submit a salvage or nonrepairable motor vehicle certificate of title application to the department along with the applicable fee within ten days of receiving the title document which transfers ownership. (B) A person who acquires ownership of a motor vehicle other than a new or late model salvage motor vehicle or a nonrepairable motor vehicle may voluntarily submit a salvage or nonrepairable motor vehicle certificate of title application to the department along with the applicable fee for issuance of a salvage or nonrepairable motor vehicle certificate of title. (C) When a new or late model salvage or nonrepairable motor vehicle has been rebuilt and the vehicle's and parts' identification numbers, as well as compliance with state safety standards, have been certified to by a specially trained commissioned officer of the Texas Department of Public Safety, the owner shall file a certificate of title application with the county tax assessor- collector in the county in which the applicant resides, or the county in which the motor vehicle was purchased or encumbered supported by the evidence required by subsection (b)(2) of this section. (2) Information to be included on application. (A) An applicant for a salvage or nonrepairable motor vehicle certificate of title shall submit an application on a form prescribed by the department. The form, in addition to any other information required by the department, shall at a minimum include: (i) the name and current address of the owner; (ii) a description of the vehicle, including, the motor vehicle's model year, make, model, identification number, body style, manufacturer's rated carrying capacity in tons for commercial motor vehicles, and empty weight; (iii) a description of the damage to the vehicle; (iv) the predamaged actual cash value of the vehicle; (v) odometer reading and brand, or the word "exempt" if the motor vehicle is exempt from federal and state odometer disclosure requirements; (vi) previous owner's name and city and state of residence; (vii) name and mailing address of any lienholder and the date of lien (applicable only in instances of salvage motor vehicle certificate of title issuance); (viii) the signature of the applicant or the applicant's authorized agent and the date the certificate of title application was signed; and (ix) the estimated cost of repair parts and labor (for the purpose of this section, the estimated cost of repair parts shall be determined by using a manual of repair costs or other instrument that is generally recognized and commonly used in the motor vehicle insurance industry to determine those costs or an estimate of the actual cost of the repair parts and the estimated labor costs shall be computed by using the hourly rate and time allocations that are reasonable and commonly assessed in the repair industry in the community in which the repairs are performed). (B) An applicant for a certificate of title involving a transaction for a rebuilt salvage motor vehicle shall submit an application on a form prescribed by the department, and shall present such to the tax assessor-collector in the county in which the applicant resides, or the county in which the motor vehicle was purchased or encumbered. The form, in addition to any other information required by the department, shall at a minimum require or include in the transaction: (i) the name and current address of the owner; (ii) a description of the vehicle, which includes, but is not limited to, the motor vehicle's model year, make, model, identification number, body style, manufacturer's rated carrying capacity in tons for commercial motor vehicles, and empty weight; (iii) description of each major component part used to repair the vehicle and shows the identification number required by federal law to be affixed to or inscribed on the part; (iv) the description or disclosure of the vehicle's former condition in a manner that is understandable to a potential purchaser of the vehicle; (v) license plate number, if the motor vehicle is subject to registration under Transportation Code, Chapter 501; (vi) odometer reading and brand, or the word "exempt" if the motor vehicle is exempt from federal and state odometer disclosure requirements; (vii) previous owner's name and city and state of residence; (viii) name and mailing address of any lienholder and the date of lien, if applicable; (ix) signature of the seller of the motor vehicle or the seller's authorized agent and the date the certificate of title application was signed; and (x) the signature of the applicant or the applicant's authorized agent and the date the certificate of title application was signed. (3) Accompanying documentation. (A) The salvage and nonrepairable motor vehicle certificate of title applications shall be supported by, at a minimum, the following documents: (i) evidence of vehicle ownership, as described in subsection (b)(1) of this section; (ii) odometer disclosure statement properly executed by the seller of the motor vehicle and acknowledged by the purchaser, if applicable; and (iii) release of any liens. (B) The application for certificate of title for a transaction involving a rebuilt salvage shall be supported by, at a minimum, the following documents: (i) evidence of vehicle ownership, as described in subsection (c)(2) of this section; (ii) odometer disclosure statement properly executed by the seller of the motor vehicle and acknowledged by the purchaser, if applicable; (iii) proof of financial responsibility in the title applicant's name, as required by Transportation Code, sec.502.153; (iv) the identification certificate required by Transportation Code, sec.548.256, and Transportation Code, sec.501.030, if the vehicle was last registered in another state or country; (v) release of any liens or, if not released, an out-of-state lien (recorded on out-of-state evidence as described in subsection (b)(2) of this section) cannot be carried forward to a Texas title involving a rebuilt salvage when there is a transfer of ownership, unless a release of lien or authorization from the lienholder is attached. (A lien is not required to be released when there is no transfer of ownership from an out-of-state title and the same lienholder is being recorded on the Texas application as is recorded on the out-of-state title); and (vi) a written statement signed by a specially trained commissioned officer of the Texas Department of Public Safety certifying to the department that the vehicle identification numbers and parts identification numbers are accurate, the applicant has proof that the applicant owns the parts used to repair the vehicle, the vehicle may be safely operated, and the vehicle complies with all applicable motor vehicle safety standards of this state. (b) Evidence of salvage motor vehicle ownership. (1) Evidence of salvage motor vehicle ownership properly assigned to the applicant shall accompany the salvage or nonrepairable motor vehicle certificate of title application. Evidence shall include, but is not limited, to the following documents: (A) an Original Texas Certificate of Title; (B) a Certified Texas Certificate of Title; (C) a Texas Salvage Certificate; or (D) a comparable ownership document issued by another state or jurisdiction. (2) Evidence of motor vehicle ownership on a rebuilt salvage properly assigned to the applicant shall accompany the certificate of title application involving the transaction. Evidence shall include the following documents: (A) a Texas Salvage Certificate; (B) a Texas Salvage Motor Vehicle Certificate of Title; (C) a Texas Nonrepairable motor Vehicle Certificate of Title; or (D) a comparable ownership document issued by another state or jurisdiction. (c) Certificate of title issuance for salvage vehicles. (1) Upon receipt of a completed salvage and nonrepairable motor vehicle certificate of title application, along with the prescribed fee of $3.00 and the required documentation, the department shall, before the sixth business day after the date of receipt, issue the applicant a salvage or nonrepairable motor vehicle certificate of title, as appropriate. If the condition of salvage is caused exclusively by flood, a "Flood Damage" notation shall be reflected on the face of the document and shall be carried forward upon subsequent title issuance. (A) Texas Civil Statutes, Article 6687-1, sec.37A(j) provides that a person who holds a salvage motor vehicle certificate of title is entitled to record a lien on the vehicle. If a salvage or nonrepairable motor vehicle certificate of title application records a lien, such lien is only applicable with the issuance of a salvage motor vehicle certificate of title. Presentation of the application with the lien disclosed therein and surrender of the current salvage motor vehicle certificate of title, along with the applicable fee, to the department shall constitute the notation of a lien on a salvage motor vehicle certificate of title. When a salvage motor vehicle certificate of title recording a lien is issued, the original will be mailed to the lienholder. For proof of ownership purposes, the applicant will be mailed a receipt or printout of the newly established motor vehicle record, which records the lien. (B) A nonrepairable motor vehicle certificate of title must state on its face that, except as provided by Texas Civil Statutes, Article 6687-1, sec.37A(n) and (p), the vehicle: (i) may not be issued a regular certificate of title or registered in this state; and (ii) may only be used for parts or scrap metal. (2) Upon receiving a completed certificate of title application for a rebuilt salvage transaction, along with the applicable fees and required documentation, the department or its designated agent will process and issue a certificate of title, which includes a "Rebuilt Salvage" remark on its face and describes or discloses the vehicle's former condition in a manner that is understandable to a potential purchaser of the vehicle. If the transaction is on a new or late model salvage vehicle that has been assembled from component parts or a new or late model salvage vehicle for which a Texas Salvage Certificate is being surrendered, only the "Rebuilt Salvage" remark will be reflected on the face of the certificate of title. (3) On proper application by the owner of a vehicle brought into this state from another state or jurisdiction that has on any certificate of title issued by the other state or jurisdiction a "Rebuilt," "Salvage," "Nonrepair able," or analogous notation, the department shall issue the applicant a certificate of title or other appropriate document for the vehicle. A certificate of title or other appropriate document issued under this subsection must, in addition to other information required by the department, show on its face: (A) the date of issuance; (B) the name and address of the owner; (C) any registration number assigned to the vehicle; (D) a description of the vehicle as determined by the department; and (E) any notation the department considers necessary or appropriate. (d) Replacement of certificates of title for salvage vehicles. The owner or lienholder of a lost or destroyed certificate of title for a salvage vehicle may obtain a certified copy of that title upon proper application and applicable fee being submitted to the department. The appropriate certificate of title for a salvage vehicle will be issued and shall reflect "Certified Copy" and the date issued. The appropriate motor vehicle record will be noted accordingly until such time that ownership of the vehicle is transferred, when the notation will be eliminated from the new certificate of title. (e) Transfer of ownership. (1) New or late model salvage motor vehicles. (A) Transfer of a salvage or nonrepairable motor vehicle without a salvage or nonrepairable motor vehicle certificate of title. A person who owns a new or late model salvage motor vehicle may not sell, transfer, or release the vehicle to a person other than a salvage vehicle dealer, the former owner of the vehicle, a governmental entity, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, Section (g), and shall deliver to that person a properly assigned certificate of title for the vehicle. If the assigned certificate of title is not a salvage motor vehicle certificate of title, a nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction, the purchaser shall follow the procedures described in subsections (a)(1)(A), (a) (2)(A), (a)(3)(A), and (b)(1) of this section. (B) Transfer of a salvage or nonrepairable motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title. An owner, other than an insurance company, may sell a new or late model salvage motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title for the vehicle only to a salvage vehicle dealer in this state, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, sec.(g). (C) Transfer of a salvage or nonrepairable motor vehicle by an insurance company. An insurance company may sell a new or late model salvage motor vehicle by assignment of a salvage or nonrepairable motor vehicle certificate of title for the vehicle only to a salvage vehicle dealer, an out-of-state licensed buyer, a buyer in a casual sale at auction, or a person described by Texas Civil Statutes, Article 6687-2b, sec.(g). (D) Exemption. The owner of a new or late model salvage motor vehicle or a nonrepairable motor vehicle so classified solely because of water damage caused by flood conditions is not prohibited from selling the vehicle to any person. (2) Motor vehicle other than a new or late model salvage or nonrepairable motor vehicle. (A) If an insurance company acquires ownership of this type of vehicle through payment of a claim, the company shall, on delivery of the vehicle to a buyer of the vehicle, deliver to the buyer a properly assigned certificate of title for the vehicle. (B) An insurance company or other person who acquires ownership of this type of vehicle may voluntarily and upon proper application obtain a salvage or nonrepairable motor vehicle certificate of title. (f) Notification required of an insurance company. An insurance company shall submit to the department, before the 31st day after the date of the payment of the claim, on the form prescribed by the department, a report stating that: (1) the insurance company has paid a total loss claim on the late model salvage motor vehicle or nonrepairable motor vehicle; and (2) the insurance company has not acquired ownership of the late model salvage motor vehicle or nonrepairable motor vehicle. (g) Noting of motor vehicle record with total loss claim information. Upon receipt of the report described in subsection (f) of this section, the department shall note the appropriate motor vehicle record accordingly to prevent transfer of ownership prior to the issuance of a salvage or nonrepairable motor vehicle certificate of title. (h) Acquisition of salvage vehicles for the purpose of dismantling, scrapping, or destruction. (1) A salvage vehicle dealer that acquires ownership of a new or late model salvage or nonrepairable motor vehicle for such purposes shall, before the 31st day after the date the dealer acquires the vehicle, submit to the department, on the form prescribed by the department, a report stating that the vehicle will be dismantled, scrapped, or destroyed, accompanied by a properly assigned regular certificate of title, salvage or nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction for the vehicle. (2) A salvage vehicle dealer that acquires an older model vehicle for such purposes shall submit the report addressed in paragraph (1) of this subsection and shall keep on the dealer's business premises a record of the vehicle, until the third anniversary of the date the report on the vehicle is submitted to the department. (i) Receipt of the report and the ownership documents by the department. On receipt of the report and the ownership documents, the department shall issue the salvage vehicle dealer a receipt for the certificate of title, salvage or nonrepairable motor vehicle certificate of title, or a comparable ownership document issued by another state or jurisdiction. (j) Noting of motor records on which ownership documents have been surrendered to the department. The department will note applicable motor records on which ownership documents have been surrendered to the department by salvage vehicle dealers with an appropriate notation. 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 7, 1995. TRD-9516011 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: December 28, 1995 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-8630 Salvage Vehicles Dealers 43 TAC sec.sec.17.60-17.64 The Texas Department of Transportation adopts new sec. sec.17.60-17.64, concerning salvage vehicle dealers' and agents' licenses, with changes to the proposed text as published in the October 17, 1995, issue of the Texas Register (20 TexReg 8428). House Bill 2599, 74th Legislature, 1995, created Texas Civil Statutes, Article 6687-1a, which empowers the department to issue licenses to salvage vehicle dealers and agents. The bill provides that all dealers and agents must be licensed effective March 1, 1996. New sec.17.60 describes the requirements applicable to these sections. New sec.17.61 defines the words and terms applicable to these sections. New sec.17.62 describes who must obtain a salvage dealer or agent license; classifications of licenses; application procedure; procedures for investigation of the applicant's qualifications; issuance of salvage vehicle dealer and agent licenses; renewal and late fees; the terms of licenses; requirements for the use of agents by salvage vehicle dealers; record keeping procedures; and the entities to whom a new or late model salvage or nonrepairable motor vehicle may be sold, transferred, or released. New sec.17.63 provides for registration of business locations; a procedure for notification to the department of a change of licensee's status; and a prohibition of off-site sales. New sec.17.64 prescribes the procedures for denial, suspension, or revocation of license. On October 27, 1995, a public hearing was held to receive comments, views, or testimony concerning the proposed adoption of new sec.sec.17.60-17.64. Texas Auto Dealers, Recyclers, and Dealers Association indicated that it was in favor of the sections as proposed. One individual, Auto Net, Inc., and COPART indicated that they were against the sections as proposed. The Texas Independent Auto Resellers Association commented that it was in favor of some provisions and against some provisions. Insurance Auto Auctions, Inc., Texas Automotive Dismantlers & Recyclers Association (TADRA), the Tarrant County Auto Theft Task Force, the Texas Automobile Dealers Association, Farmers Insurance Group of Companies, and Capital Consultants requested revisions. State Farm Insurance Companies expressed that it was in full support of the comments submitted by Insurance Auto Auctions, Inc. Regarding sec.sec.17.60-17.64 in general, Auto Net, Inc., stated that such rules were a burden to all taxpayers, and questioned the reasoning behind changing a "working system." Capital Consultants requested that the rules be postponed. In response, the proposed rules are being adopted to comply with House Bill 2599, 74th Legislature, 1995, which established Texas Civil Statutes, Article 6687-1a, to authorize the department to issue licenses to salvage vehicle dealers and agents, and which stipulates that all dealers and agents must be licensed effective March 1, 1996. The department is responsible for implementing this legislative mandate. Regarding sec.17.61, Definitions, the Texas Automobile Dealers Association requested that the department consider changing the definition for "new automobile dealer" to "franchised dealer" as set out in Texas Civil Statutes, Article 4413(36), sec.1.03(4). The department has reviewed this definition and has determined that it is necessary for the definition of "new automobile dealer" to address the buying of salvage and nonrepairable motor vehicles to repair and sell. The definition has not been revised. Regarding sec.17.61, Definitions, Insurance Auto Auctions, Inc. suggested in the definition of "new model salvage motor vehicle" that the words shown parentheses should also include the phrase "that is a nonrepairable motor vehicle, that the word "license" in the definition for "salvage vehicle broker" should be changed to "licensed," and suggested revising the definition of "used automobile dealer" by changing "and sell" to "and/or sell." In response, the department agrees with the suggested parenthetical punctuation correction in the definition for "new model salvage motor vehicle" and has made the appropriate revision. Additionally, the department agrees that the word "license" included in the definition of "salvage vehicle broker" should be "licensed," and has made this change. In response to the comment regarding the definition of "used automobile dealer," the department has determined that such definition addresses the buying and selling of salvage and nonrepairable motor vehicles, and that the suggested revision would not be appropriate because it would not include the sale. Regarding sec.17.62(c)(1), Classification of licenses -Application for salvage vehicle dealer license, Insurance Auto Auctions, Inc. commented that the rules did not include the application form. In response, the department does not generally adopt required forms as rules. However, upon final adoption of these rules, this form will be developed, approved, printed, and available the early part of 1996. Requests for this form may be submitted to the Vehicle Titles and Registration Division, Texas Department of Transportation, Austin, Texas 78779- 0001. Regarding sec.17.62(d)(1)(A)(iv) and sec.17.62(d)(3)(A)(v), Application for salvage vehicle dealer or agent license, Insurance Auto Auctions, Inc. suggested inserting the word "dealer" between the words "vehicle" and "license" in two places within paragraphs (1)(A)(iv), (3)(A)(v), and (4)(D) for clarity. In response, the department has reviewed the referenced paragraphs, and agrees with the comment. Therefore, subsection (d) has been revised accordingly. Regarding sec.17.62(h), License renewal, Insurance Auto Auctions, Inc. suggested that paragraph (3) should follow paragraph (1), since paragraph (2) explained what happens if a renewal is not effective before the first anniversary of the expiration of the license. In response, the department has reworded subsection (h) for clarity. Regarding sec.17.62(i)(1)(A), Licensee duties-Proper assignment of ownership, Insurance Auto Auctions, Inc. suggested that the word "dealer" be inserted after the word "vehicle" for clarity. In response, the department has reviewed subsection (i)(1)(A) and agrees with the comment. Therefore, this subparagraph has been revised accordingly. Regarding sec.17.62(i)(2)(A), Licensee duties-Unique inventory number, Insurance Auto Auctions, Inc. suggested adding "with an endorsement as a used vehicle parts dealer" to the word "dealer" to further define who shall assign a unique inventory number In response, the department has reviewed subsection (i)(2)(A) with regard to the suggestion and has determined that the definition of "salvage vehicle dealer" includes the acquisition, sale, or otherwise dealing in salvage vehicles and parts. Therefore, this subsection will not be revised. Regarding sec.17.62(i), Licensee duties-Unique inventory number, Insurance Auto Auctions, Inc. commented that certain component parts were not exempted in the proposed section in accordance with the statute. In response, the department has reviewed House Bill 2599 and has determined that this exemption should be addressed by rule. Therefore, subparagraph (D) will be added to subsection (i)(2) to state that the provisions of (i)(2)(A) and (B) do not apply to a nonoperable engine, transmission, or rear axle assembly purchased by one salvage vehicle dealer from another salvage vehicle dealer or an automotive-related business. Also regarding sec.17.62(i), Licensee duties, TADRA stated that it believes this provision applies only to purchases made from individuals and does not apply to dealer-to-dealer sales or to deliveries from common carriers. In response, the department has revised sec.17.62(i) to clarify the applicability of this subsection. House Bill 2599 does not specify an exemption for dealer-to- dealer sales. Regarding 17.62(j), Record of purchases, sales, and inventory, Insurance Auto Auctions, Inc. questioned why the proposed section did not establish rules for "casual sales." In response, as specified in this section, salvage vehicle dealers with a salvage pool operator classification will be required to maintain records of purchases, sales, and inventory. Such records will reflect casual sales. Regarding sec.17.62(j)(1), Record of purchases, sales, and inventory, Insurance Auto Auctions, Inc. suggested adding "if applicable" after the phrase "These records shall include . . . evidence indicating that an older model salvage vehicle was dismantled, scrapped, or destroyed." The department has reviewed this subsection and determined that it tracks the language of House Bill 2599. Regarding sec.17.62(k), Authorized sale, Insurance Auto Auctions, Inc. suggested that flood vehicles be excluded from this subsection. In response, the department has reviewed House Bill 2599 and concurs that flood damaged vehicles are excluded from the transfer restrictions. Subsection (k) has been revised to reflect this exclusion. Regarding sec.17.62(k)(2), Authorized sale, TADRA suggested that this provision require that the original sale should be solely to licensed buyers, and that a licensed salvage dealer may resell a salvage vehicle with a salvage title, which may then be sold, rebuilt, and transferred into the buyer's name. In response, the department does not have the authority to include this provision, as House Bill 2599 clearly stipulates to whom a salvage or nonrepairable motor vehicle may be sold, transferred, or released. Farmers Insurance Group of Companies requests that the section be revised to make clear that the transfer restrictions apply only to late model motor vehicles. In response, no revision is necessary because this section only applies to new or late model motor vehicles. Regarding sec.17.62(l)(2), Determination of estimated cost of repair, Insurance Auto Auctions, Inc. commented that it understood that "estimated labor cost" is not required upon submission of an application for Texas salvage or nonrepairable motor vehicle certificate of title. Rather, the estimated cost of repairs to the vehicle, including parts and labor, is required. Also, they suggested that the words "are performed" should be replaced by "would be performed." In response, the department has reviewed House Bills 2151 and 2599 with regard to the comments on "estimated labor cost" and the determination of estimated cost of repair. The provisions of House Bills 2151 and 2599 clearly indicate that the estimated cost of repair shall include parts and labor. This clarification is reiterated in House Bill 2151, which requires application for salvage or nonrepairable motor vehicle certificate of title to include "the estimated cost of repairs to the vehicle, to include parts and labor." Therefore, the applicant is required to determine the estimated cost of parts and labor. The combination of these two costs provides the estimated cost of repair that is required to be indicated on the application for salvage or nonrepairable motor vehicle certificate of title. Subsection (l) has been revised to clarify determination of estimated repair costs. Additionally, the department has reviewed the comment regarding subsection (l)(2) to replace the words "are performed" with the words "would be performed. " The department has determined that the currently proposed verbiage tracks the provisions of House Bill 2599, and no revisions are required. Regarding sec.17.63(a)(4), Place of Business, Registration of business locations, Insurance Auto Auctions, Inc. commented that this subsection seems to be contradictory to the time frame applicable to the registration requirement. In response, the department has reviewed the comment and revised subsection (a) to clarify requirements that the department be notified of the new location ten days prior to its opening. Regarding sec.17.63(b), Established and permanent place of business, Insurance Auto Auctions, Inc. questioned whether the word "owner" in the second sentence could be employees of a salvage vehicle dealer for the purposes of this requirement, if the owner is a corporation. Insurance Auto Auctions, Inc. also questioned whether every corporate salvage vehicle dealer would be required to license one or more of its employees as salvage vehicle agents, since a corporation can only act through its employees. In response, the department has reviewed this section and has determined that its authority does not extend to office, sign and lease requirements. This subsection has been deleted in it's entirety. Due to the deletion of sec.17.63(b), proposed subsections (c) and (d) have been renumbered. Also due to the deletion of sec.17.63(b), the lease and photographic application requirements in proposed sec.17.62(d)(1)(C) and sec.17.62(d)(1)(D) (relating to Salvage Vehicle Dealer and Agent Licenses- Application for salvage vehicle dealer or agent license) and the last sentence of sec.17.63(a)(4) concerning registration of business locations have been deleted. Also due to the deletion of sec.17.63(b), sec.17. 64(a)(2) and (b)(1) (relating to Denial, Suspension, or Revocation), which provided that a license may be denied, suspended, or revoked if the requirements of the established and permanent place of business are not met, have been deleted and proposed subsections (a) and (b) have been renumbered. Additionally, any reference to providing "evidence of ownership or lease agreement," which was found in proposed sec.17.64(b)(2) (relating to Denial, Suspension, or Revocation - Suspension or revocation) has been deleted, as well as any reference to "an established and permanent place of business" in proposed sec.17.63(c) (relating to Place of Business-Off-site sales). The reference to place of business in sec.17.64(b)(12) (relating to Denial, Suspension, or Revocation-Suspension or revocation) has been deleted and replaced by "the licensed salvage vehicle dealer's business address." The Tarrant County Auto Theft Task Force requested a change to sec.17.64(b) (3) (relating to Denial, Suspension or Revocation). This paragraph provides that the department may suspend or revoke a salvage vehicle dealer or agent license if the dealer or agent refuses to permit or fails to comply with a request of the department to examine documents during normal working hours. The Tarrant County Auto Theft Task Force requested that sec.17.63(b)(3) be revised to include that any peace officer may also examine a dealer's records as provided in House Bill 2599. The Tarrant County Auto Theft Task Force also feels that the term "normal working hours" in this subsection implies that inspections may only be conducted from 8:00 a.m. to 5:00 p.m., Monday through Friday. As many salvage dealers and agents work hours other than these, the Tarrant County Auto Theft Task Force requested changes which would allow examination of documents "at any reasonable time." The department concurs and section has been modified accordingly. The Tarrant County Auto Theft Task Force also requested that a rule be added to close the dealer's business during the time that a dealer's license is suspended or revoked. The department has determined that it does not have the authority to enforce a closure of the business. House Bill 2599 provides that a district attorney may enjoin a business operations if a dealer or an employee is convicted of an offense under this bill. Regarding sec.17.64(b)(4); Denial, Suspension, or Revocation; Suspension or revocation, Insurance Auto Auctions, Inc. questioned whether there would be license classifications for agents. In response, the department has determined that salvage vehicle dealer agent licenses must be issued for the same classifications held by the salvage vehicle dealer that employs the agent. Also regarding sec.17.64(b), if a vehicle dealer's license is suspended or revoked, such suspension or revocation shall also apply to any licensed vehicle dealer agents employed by such dealer, as provided in sec.17.64(d)(1)(A) (4). Regarding sec.17.64(b)(7), Suspension or revocation, Insurance Auto Auctions, Inc. commented that the reference to "sec.17.62(l)" should be "sec.17.62(k)," and regarding sec.17.64(b)(8), Suspension or revocation, the reference to sec.17. 62(l) is incorrect. Insurance Auto Auctions, Inc. also requested an explanation of sec.17.62(l). In response, the department agrees that the references to "sec.17.62(l)" in sec.17.64(b) are incorrect and this subsection has been revised accordingly. Section 17.62(l) refers to determination of estimated cost of repair. Farmers Insurance Group of Companies has requested that the department address changes to the Tax Code related to the treatment of "totaled," nonrepairable and salvage vehicles. Because these tax changes are within the purview of the Comptroller of Public Accounts, they will not be addressed in these rules. 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 6687-1a, which authorizes the department to adopt rules to administer the licensing of salvage vehicle dealers and agents. sec.sec.>17.60. Purpose and Scope. Texas Civil Statutes, Article 6687-1a, provides that a person may not act as an automobile recycler, salvage vehicle agent, or salvage vehicle dealer, including storing or displaying vehicles as an agent or escrow agent of an insurance company, unless the department issues that person a salvage vehicle dealer or agent license. This undesignated head describes procedures by which a person may obtain a license to act as an automobile recycler, salvage vehicle agent, or salvage vehicle dealer; conditions under which a licensee must operate the facility; and the procedures by which the department will enforce this undesignated head. sec.17.61. Definitions. The following words and terms, when used in this undesignated head, shall have the following meanings, unless the context clearly indicates otherwise. Actual cash value-The market value of a motor vehicle as determined: (A) from publications commonly used by the automotive and insurance industries to establish the value of motor vehicles; or (B) if the entity determining the value is an insurance company, by any other procedure recognized by the insurance industry, including market surveys, that is applied by the company in a uniform manner. Automobile recycler -A person in the business of dealing in salvage motor vehicles for the purpose of dismantling the vehicles to sell used parts and the resulting scrap metal or a person otherwise engaged in the business of acquiring, selling, or dealing in salvage parts. The term includes a dealer in used motor vehicle parts. Casual sale-The sale at auction of not more than one nonrepairable motor vehicle or new or late model salvage motor vehicle to the same person during a calendar year. Commission-The Texas Transportation Commission. Department-The Texas Department of Transportation. Division director -The director of the department's Vehicle Titles and Registration Division. Late model motor vehicle-A motor vehicle with a model year equal to the then current calendar year or one of the five preceding calendar years. Late model salvage vehicle-A late model motor vehicle with a major component part that is damaged or missing to the extent that the total estimated cost of repairs to rebuild or reconstruct the vehicle, including parts and labor, but excluding the cost of repairs to repair hail damage, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition; or a damaged vehicle that comes into this state under a salvage vehicle certificate of title or other comparable certificate of title. Major component part-One of the following parts of a vehicle: (A) the engine; (B) the transmission; (C) the frame; (D) the right or left front fender; (E) the hood; (F) a door allowing entrance to or egress from the passenger compartment of the vehicle; (G) the front or rear bumper; (H) the right or left quarter panel; (I) the deck lid, tailgate, or hatchback; (J) the cargo box of a pickup truck; (K) the cab of a truck; or (L) the body of a passenger vehicle. Motor vehicle-Every vehicle which is self-propelled and every vehicle which is propelled by electric power obtained from overhead trolley wires, but not operated upon rails. New automobile dealer-A person whose primary business is selling new motor vehicles, but who may also buy salvage and nonrepairable motor vehicles to repair and sell. New model motor vehicle-A motor vehicle with a year model that is newer than the current calendar year. New model salvage motor vehicle-A new model motor vehicle (other than a new model vehicle that is a nonrepairable motor vehicle), that is damaged to the extent that the total estimated cost of repairs, other than repairs related to hail damage but including parts and labor, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition. Nonrepairable vehicle -A new or late model motor vehicle that is damaged or missing a major component part to the extent that the total estimated cost of repairs to rebuild or reconstruct the vehicle, including parts and labor other than the costs of materials and labor for repainting the vehicle and excluding sales taxes on the total cost of the repairs, and excluding the cost of repairs to repair hail damage, is equal to or greater than an amount equal to 95% of the actual cash value of the vehicle in its predamaged condition; or a vehicle that comes into this state with a nonrepairable vehicle certificate of title or other comparable certificate of title. Nonrepairable vehicle certificate of title-A document issued by the department that evidences ownership of a nonrepairable vehicle. Older model motor vehicle-A motor vehicle that was manufactured in a model year before the sixth preceding model year, including the current model year. Other comparable certificate of title-A document other than a Texas certificate of title or a salvage certificate of title that relates to a motor vehicle that the department considers sufficient to support issuance of a Texas certificate of title for the vehicle. Out-of-state buyer -A person licensed by another state or jurisdiction in an automotive business if the Texas Department of Transportation has listed the holders of such license as permitted purchasers of salvage motor vehicles or nonrepairable motor vehicles based on substantially similar licensing requirements and on whether salvage vehicle dealers licensed in Texas are permitted to purchase salvage motor vehicles or nonrepairable motor vehicles in the other state or jurisdiction. Person-An individual, partnership, corporation, trust, association, or other private legal entity. Salvage part-A major component part of a new or late model salvage vehicle that is serviceable to the extent that it can be reused. Salvage pool operator-A person who is engaged in the business of selling nonrepairable or salvage vehicles at auction, including wholesale auction. Salvage vehicle -A new or late model motor vehicle with a major component part that is damaged or missing to the extent that the total estimated cost of repairs to rebuild or reconstruct the vehicle, including parts and labor, but excluding the cost of repairs to repair hail damage, is equal to or greater than an amount equal to 75% of the actual cash value of the vehicle in its predamaged condition; or a damaged vehicle that comes into this state under a salvage vehicle certificate of title or other comparable certificate of title. Salvage vehicle agent-A person employed by a licensed salvage vehicle dealer to acquire, sell, or otherwise deal in new or late model salvage vehicles or salvage parts in this state. Salvage vehicle broker-A person who buys, sells, or exchanges salvage and nonrepairable motor vehicles with other licensed salvage dealers. Salvage vehicle certificate of title-A document issued by the department that evidences ownership of a salvage vehicle. Salvage vehicle dealer-A person who is engaged in this state in the business of acquiring, selling, or otherwise dealing in salvage vehicles or vehicle parts of a type required to be covered by a salvage vehicle certificate of title or nonrepairable vehicle certificate of title under a license issued by the department that allows the holder of the license to acquire, sell, dismantle, repair, or otherwise deal in salvage vehicles. Salvage vehicle pool operator-A person who is engaged in the business of selling nonrepairable vehicles or salvage vehicles at auction, including wholesale auction. Salvage vehicle rebuilder-A person who acquires and repairs, for operation on public highways, five or more late model salvage motor vehicles in any 12 month period. Salvage vehicle record-The record of sales and purchases for each salvage vehicle handled by a salvage vehicle dealer. Used automobile dealer-A person whose primary business is selling used motor vehicles, but who may also buy salvage and nonrepairable motor vehicles to repair and sell. Used vehicle parts dealer-A person who is engaged in the business of obtaining salvage or nonrepairable motor vehicles for scrap disposal, resale, repairing, rebuilding, demolition, or other form of salvage. sec.17.62. Salvage Vehicle Dealer and Agent Licenses. (a) Applicability. A person who acts as an automobile recycler, salvage vehicle agent, or salvage vehicle dealer, including a person who stores or displays vehicles as an agent or escrow agent of an insurance company, must obtain a salvage vehicle dealer or an agent license in accordance with Texas Civil Statutes, Article 6687-1a, and the provisions of this undesignated head. (b) Exemptions. The provisions of this undesignated head do not apply to: (1) a person who purchases a nonrepairable or salvage vehicle from a salvage pool operator in a casual sale; (2) an insurance company authorized to engage in the business of insurance in this state; (3) a person predominantly engaged in the business of obtaining ferrous or nonferrous metals; (4) a person who sells or offers for sale less than five new or late model salvage motor vehicles of the same type in a calendar year when such vehicles are owned, and registered and titled in the name of such person; (5) a person who sells or offers to sell a new or late model salvage motor vehicle acquired for personal or business use if the person does not sell or offer to sell to a retail buyer and the transaction is not held for the purpose of avoiding the provisions of Texas Civil Statutes, Article 6687-1a; (6) an agency of the United States, this state, or local government; (7) a financial institution or other secured party selling a vehicle in which it holds a security interest, in the manner provided by law for the forced sale of that vehicle; (8) a receiver, trustee, administrator, executor, guardian, or other person appointed by or acting pursuant to the order of a court; (9) a person selling an antique passenger car or truck that is at least 25 years old or a collector selling a special interest motor vehicle as defined in the Transportation Code, sec.683.077, if the special interest vehicle is at least 12 years old; and (10) a licensed auctioneer who, as a bid caller, sells or offers to sell property to the highest bidder at a bona fide auction if neither legal nor equitable title passes to the auctioneer and if the auction is not held for the purpose of avoiding a provision of Texas Civil Statutes, Article 6687-1a, and this undesignated head; and provided that if an auction is conducted of vehicles owned, legally or equitably, by a person who holds a salvage dealer's license, the auction may be conducted only at a location for which a salvage dealer's license has been issued to that person or at a location approved by the department as provided by this section. (c) Classification of licenses. The department will classify salvage vehicle dealers according to the type of activity performed by the dealer. A salvage vehicle dealer may not engage in activities of a particular classification as indicated in this subsection unless the salvage vehicle dealer holds a license authorizing business under that classification. An applicant may apply for a salvage vehicle dealer license in one or more of the following classifications: (1) new automobile dealer; (2) used automobile dealer; (3) used vehicle parts dealer; (4) salvage vehicle pool operator; (5) salvage vehicle broker; or (6) salvage vehicle rebuilder. (d) Application for salvage vehicle dealer or agent license. (1) Application for salvage vehicle dealer license. An applicant for a salvage vehicle dealer license must apply on a form prescribed by the department. An applicant who will operate as a salvage vehicle dealer under a name other than the name of that applicant shall use the name under which that applicant is authorized to do business, as filed with the secretary of state or county clerk, and the assumed name of such legal entity shall be recorded on the application form using the letters "DBA." (A) Form of application. The application form must be signed by the applicant, be accompanied by the application fee of $95, and include: (i) the name, business address(es), and business telephone number(s) of the applicant; (ii) the name under which the applicant will do business; (iii) the location, by number, street, and municipality, of each office from which the applicant will conduct business; (iv) a statement indicating whether the applicant has previously applied for a salvage dealer vehicle license under this section, the result of the previous application, and whether the applicant has ever been the holder of a salvage vehicle dealer license that was revoked or suspended; (v) an affidavit containing a statement that the applicant has never been convicted of a felony and three business association references; (vi) the applicant's federal tax identification number, if any; (vii) the applicant's state sales tax number; (viii) the applicant's social security number, if the applicant is an individual; and (ix) the classification(s) of license(s) for which the form is being submitted. (B) Verification of assumed name. The department will require verification of the assumed name, if applicable, in the form of an assumed name certificate on file with the secretary of state or county clerk at the time the application form is submitted. (2) Application for salvage vehicle agent license. An applicant, who is authorized to operate as an agent for a salvage vehicle dealer must apply on a form prescribed by the department. The application form must be signed by the applicant, be accompanied by the application fee, and include: (A) the name of the applicant; (B) the name, business address, and business telephone number of the salvage vehicle dealer authorizing the applicant as a salvage vehicle agent; (C) the name under which the salvage vehicle dealer will do business; (D) the location, by number, street, and municipality, of each office from which the applicant will conduct business; (E) a statement indicating whether the applicant has previously applied for a salvage vehicle dealer or agent license under this section, the result of the previous application, and whether the applicant has ever been the holder of a salvage vehicle dealer or agent license that was revoked or suspended; (F) an affidavit containing a statement that the applicant has never been convicted of a felony and three business association references; (G) the applicant's federal tax identification number, if any; (H) the applicant's state sales tax number; and (I) the applicant's social security number. (3) Application for corporate salvage vehicle dealer license. If a salvage vehicle dealer license applicant intends to engage in business through a corporation, the applicant must apply on a form prescribed by the department. (A) Form of application. The form must indicate the name of the corporation, as it appears on file with the secretary of state, be signed by the applicant, be accompanied by the application fee, and include: (i) the name, business address(es), and business telephone number(s) of the corporation; (ii) the name under which the corporation will do business; (iii) the location, by number, street, and municipality, of each office from which the corporation will conduct business; (iv) the state of incorporation; (v) a statement indicating whether an employee, officer, or director has previously applied for a salvage vehicle dealer license under this section, the result of the previous application, and whether an employee, officer, or director has ever been the holder of a salvage dealer vehicle license that was revoked or suspended; (vi) an affidavit containing a statement that each officer and director has never been convicted of a felony and three business association references; (vii) the applicant's federal tax identification number, if any; (viii) the applicant's state sales tax number; (ix) the name, address, date of birth, and social security number of each of the principal officers and directors of the corporation; (x) the classification(s) of license(s) for which the form is being submitted. (B) Verification of corporate franchise taxes. The corporation must also provide verification that all corporate franchise taxes required under the Texas Business Corporation Act, Article 2.45, have been paid at the time the application form is submitted to the department. (4) Partnerships. If the license applicant intends to engage in business through a partnership, the applicant must apply on a form prescribed by the department. The form must be signed by the applicant, be accompanied by the application fee, and include: (A) the name, business address(es), and business telephone number(s) of the partnership; (B) the name under which the partnership will do business; (C) the location, by number, street, and municipality, of each office from which the partnership will conduct business; (D) a statement indicating whether an owner, partner, or employee, has previously applied for a salvage vehicle dealer license under this section, the result of the previous application, and whether an owner, partner, or employee, has ever been the holder of a salvage vehicle dealer license that was revoked or suspended; (E) an affidavit containing a statement that each owner and partner has never been convicted of a felony and three business association references; (F) the partnership's federal tax identification number, if any; (G) the partnership's state sales tax number; (H) the name, address, date of birth, and social security number of each owner and partner; (I) the classification(s) of license(s) for which such form is being submitted. (e) Issuance, investigation, and report by the department. The department will not grant a salvage vehicle dealer or an agent a license until the department completes an investigation of the applicant's qualifications and references in accordance with Texas Civil Statutes, Article 6687-1a. Such investigation shall be conducted not later than the 15th day after the date the application is received by the department. Upon completion of the investigation, the results of the investigation shall be reported to the applicant(s) by written notification from the department. If the applicant is denied, the applicant may appeal the decision as specified in sec.17.64 of this title (relating to Denial, Suspension, or Revocation). (f) License issuance. The department will issue a license to an applicant who meets the license qualifications of subsection (d) of this section and pays the required fees described in this subsection. (1) The license fee for each salvage vehicle dealer or agent license issued for a period of less than one year shall be prorated and only that portion of the $95 license fee allocable to the number of months for which the license is issued shall be payable by the licensee. The amount of such license fees will be rounded off to the nearest dollar. (2) A license may not be issued in a fictitious name that may be confused with or is similar to that of a governmental entity or that is otherwise deceptive or misleading to the public. (3) A person whose license has been revoked in accordance with sec.17.64 of this title (relating to Denial, Suspension, or Revocation) may not be issued a new license before the first anniversary of the date of the revocation. (g) Use of agents by salvage vehicle dealers. The holder of a salvage vehicle dealer license may authorize not more than five persons to operate as salvage vehicle agents under the dealer's license. An agent may acquire, sell, or otherwise deal in new or late model salvage or nonrepairable vehicles or salvage parts as directed by the dealer. An agent authorized to operate for a salvage vehicle dealer is entitled to a salvage vehicle agent license on application to the department and payment of the required $95 fee as provided by subsection (e) of this section. (h) License renewal. (1) A salvage vehicle dealer or agent license expires on the first anniversary of the date of issuance and may be renewed annually on or before the expiration date on payment of the required renewal fee of $85. (2) If the license is not renewed prior to the expiration date, the license holder may renew the license on payment of the renewal fee and a late fee of $10, provided such fees are submitted within one year of expiration. (3) If the license has been expired for a period of one year or longer, the license holder must apply for a new license in the same manner as an applicant for an initial license. (i) Licensee duties. (1) Proper assignment of ownership. (A) If a salvage vehicle dealer acquires ownership of a new or late model salvage vehicle from an owner, the dealer must receive a properly assigned certificate of title. If the assigned certificate of title is not a salvage or nonrepairable motor vehicle certificate of title or comparable ownership document issued by another state or jurisdiction, the licensed salvage vehicle dealer shall, not later than the 10th day after the date of receipt of the title, surrender the assigned certificate of title to the department and apply for a salvage or nonrepairable motor vehicle certificate, as appropriate as provided by sec.17.8 of this title (relating to Certificates of Title for Salvage Vehicles). (B) If a new or late model salvage or nonrepairable vehicle is to be dismantled, scrapped, or destroyed, the salvage vehicle dealer shall surrender the assigned ownership document to the department in the manner prescribed by the department not later than the 30th day after the date the vehicle is acquired and report to the department that the vehicle was dismantled, scrapped, or destroyed. (C) If the holder of a salvage vehicle dealer license acquires ownership of an older model vehicle from an owner and receives an assigned certificate of title and the vehicle is to be dismantled, scrapped, or destroyed, the license holder shall surrender the assigned certificate of title to the department on a form prescribed by the department not later than the 30th day after the date on which the title is received. Evidence that the vehicle was dismantled, scrapped, or destroyed must also be presented. (D) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer licensed as a used vehicle parts dealer may not receive a motor vehicle unless the dealer first obtains a certificate of authority, sales receipt, or transfer document in accordance with Transportation Code, Chapter 683, or a certificate of title showing that there are no liens on the vehicle or that all recorded liens have been released. (2) Unique inventory number. (A) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer shall assign a unique inventory number to each transaction in which the dealer purchases or takes delivery of one or more component parts. The unique inventory number shall contain the: (i) salvage vehicle dealer's license number; (ii) day, month, and year of the purchase or delivery; and (iii) sequential log number for that day. (B) The unique inventory number shall then be attached to each component part the dealer obtains in the transaction. The unique inventory number may not be removed from the component part while the part remains in the inventory of the salvage vehicle dealer. (C) Each component part shall be retained in its original condition on the business premises of the salvage vehicle dealer who originally purchased the part for at least three calendar days, excluding Sundays, after the date on which the dealer obtains the part. (D) The provisions of subsection (i)(2)(A) and (B) do not apply to a nonoperable engine, transmission, or rear axle assembly purchased by one salvage vehicle dealer from another salvage vehicle dealer or an automotive-related business. (E) The provisions of subsection (i) do not apply to: (i) interior used component parts or special accessory parts on a motor vehicle more than 10 years of age; or (ii) used component parts delivered by commercial freight lines or commercial carriers. (j) Record of purchases, sales, and inventory. (1) Each holder of a salvage vehicle dealer license shall maintain records of each salvage or nonrepairable vehicle and any salvage parts purchased, sold, or being held in inventory by the license holder. Such records, except as specified in paragraph (2)(C) of this subsection, shall be maintained for a five-year period. These records shall include the: (A) date of purchase; (B) name and address of the person selling the vehicle or part to the dealer; (C) a description of the vehicle or part to include the year model, make, and vehicle identification or component part number, if applicable; (D) ownership document number and state of issuance, if applicable; (E) copy of the front and back of the ownership document for the vehicle or salvage part purchased by the dealer unless the year model exceeds 10 or more years; (F) date the ownership document was surrendered to the department; (G) evidence indicating that an older model salvage vehicle was dismantled, scrapped, or destroyed; (H) date of sale; (I) name and address of the person purchasing the vehicle or part from the dealer; and (J) copy of the front and back of the ownership document for the vehicle or salvage part sold by the dealer unless the year model exceeds 10 or more years. (2) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer licensed as a used vehicle parts dealer shall keep an accurate and legible inventory of each used component part purchased by or delivered to the dealer. (A) Such parts inventory shall include: (i) the date of purchase or delivery; (ii) the name, age, address, sex, and driver's license number of the seller and a legible photocopy of the seller's driver's license; (iii) the license number of the motor vehicle used to deliver the used component part; (iv) a complete description of the item purchased, including the type of material and, if applicable, the make, model, color, and size of the item; and (v) the vehicle identification number of the motor vehicle from which the used component part was removed. (B) In lieu of the information required in subparagraph (A) of this paragraph, a salvage vehicle dealer may record the name of the business from which the motor vehicle or motor vehicle part is purchased and the Texas certificate of inventory number or federal taxpayer identification number of the business. (C) A salvage vehicle dealer is not required to keep records under this subsection for: (i) interior used component parts or special accessory parts on a motor vehicle more than 10 years of age; or (ii) used component parts delivered by commercial freight lines or commercial carriers. (D) As required by Texas Civil Statutes, Article 6687-2, a salvage vehicle dealer shall maintain two copies of each record for used component parts addressed by paragraph (2) of this subsection on a form prescribed by the department for one year after the date of sale or disposal of the item. (k) Authorized sale. (1) New or late model water damaged salvage motor vehicles. The owner of a new or late model salvage motor vehicle or a nonrepairable motor vehicle so classified solely caused by flood conditions is exempt from the provisions of this subsection, and is not prohibited from selling such vehicle to any person. (2) Sales, transfer or release of new or late model salvage or nonrepairable motor vehicle. A salvage vehicle dealer or agent may not sell, transfer, or release a new or late model salvage or nonrepairable motor vehicle to anyone other than: (A) a governmental entity; (B) the vehicle's former owner; (C) a licensed salvage vehicle dealer; (D) an out-of-state buyer; (E) a buyer in a casual sale at auction; or (F) a person described by Texas Civil Statutes, Article 6687-2b, Section (g). (l) Determination of estimated cost of repair. If it is necessary for a salvage vehicle dealer or agent to determine the estimated cost of repair, which includes parts and labor, for completion of an application for Texas salvage or nonrepairable motor vehicle certificate of title, the estimated cost of repair parts shall be determined as follows: (1) by using a manual of repair costs or other instrument that is generally recognized and commonly used in the motor vehicle insurance industry to determine those costs or an estimate of the actual cost of the repair parts; and (2) the estimated labor costs shall be computed by using the hourly rate and time allocations that are reasonable and commonly assessed in the repair industry in the community in which the repairs are performed. sec.17.63. Place of Business. (a) Registration of business locations. (1) A license applicant who intends to operate as a salvage vehicle dealer at more than one location within a county must: (A) list each location in the application; (B) notify the department of any additionally acquired locations within that specific county; and (C) not employ more than five salvage dealer agents at all locations. (2) A licensed applicant who intends to operate as a salvage vehicle dealer with additional locations within another county will be required to obtain a separate license. (3) A licensed applicant with additional locations which are operated under a different name will be required to obtain a separate license for each location. (4) Before moving a place of business or opening an additional place of business, a salvage vehicle dealer must register the new location with the department within 10 days prior to the opening or relocation of the business establishment. (b) Change of licensee's status. (1) Licensee name change. A licensed salvage vehicle dealer shall notify the department in writing within 10 days if there is a licensee name change. Upon notification of a name change, the department shall indicate the change on the dealer's file. The dealer shall retain the same salvage vehicle dealer license number. (2) Change of ownership. A salvage vehicle dealer shall notify the department in writing within 10 days if there is a change of ownership. Upon notification of a complete change of ownership, the department shall cancel the existing salvage vehicle dealer license. The new owner must qualify for a new salvage vehicle dealer license by submission of a completed application for Texas salvage vehicle dealer or agent to the department. (3) Change of operating status. A salvage vehicle dealer shall notify the department in writing within 10 days of the closing of any dealer location. (c) Off-site sales. A salvage vehicle dealer or agent is not permitted to sell or offer for sale salvage or nonrepairable vehicles or salvage vehicle parts from a location other than the licensed salvage vehicle dealer's business address, which has been approved by the department. sec.17.64. Denial, Suspension, or Revocation. (a) Denial of salvage vehicle dealer or agent license. The department shall deny issuance of a salvage vehicle dealer or agent license if: (1) all the information required on the application is not complete; (2) the affidavit and business references required by sec.17.62 of this title (relating to Salvage Vehicle Dealer and Agent Licenses) are inadequate; or (3) the applicant's previous salvage vehicle dealer or agent license was revoked and the first anniversary of the date of revocation has not occurred. (b) Suspension or revocation. The department may suspend or revoke a salvage vehicle dealer or agent license if the dealer or agent: (1) fails to maintain purchase, sales, and inventory records as provided in sec.17.62(m) of this title (relating to Salvage Vehicle Dealer and Agent Licenses); (2) refuses to permit or fails to comply with a request by a representative of the department or a peace officer to examine, during normal working hours, or while the premises are occupied, the purchase, sales, and inventory records and ownership documents for salvage or nonrepairable vehicles or salvage parts owned by that dealer or under that dealer's control; (3) holds one or more classifications of salvage vehicle dealer or agent license(s) and is found to be dealing in another classification for which a license has not been issued to the dealer or agent; (4) fails to notify the department of a change of address within 10 days after such change; (5) fails to notify the department of a dealer's name or ownership change within 10 days after such change; (6) fails to follow the restriction of the sale, transfer, or release of a late model salvage or nonrepairable motor vehicle as provided in sec.17.62(k) of this title (relating to Authorized Sale); (7) fails to meet the time frames and requirements provided in sec.17.63 of this title (relating to Place of Business); (8) fails to remain regularly and actively engaged in the business for which such salvage vehicle dealer or agent license is issued; (9) sells more than one new or late model salvage or nonrepairable motor vehicle to the same person in a casual sale during a calendar year; (10) uses or allows use of the dealer's or agent's license or location for the purpose of avoiding the provisions of the salvage vehicle dealer law; (11) sells or offers for sale salvage or nonrepairable vehicles or salvage vehicle parts from a location other than the licensed salvage vehicle dealer's business address, which has been approved by the department; (12) makes a material misrepresentation in any application or other information filed with the department; (13) fails to remit payment for civil penalties assessed by the department; or (14) violates any of the provisions of Transportation Code, Chapter 501, or any provisions of this undesignated head. (c) Suspension due to failure to pay court ordered child support. (1) On receipt of a final order suspending license, issued under Family Code, sec.232.008, the department will suspend a dealer or agent's certificate of registration. (2) The department will charge an administrative fee of $10 to a dealer or agent who is the subject of an order suspending license. (d) Proceedings relating to the denial, suspension, or revocation of a salvage dealer's or agent's license. (1) Upon determination that a dealer or agent license should be denied, suspended, or revoked, the director will mail a notice of the denial, suspension, or revocation to the last known address of the dealer or agent by certified mail. (A) The notice shall clearly state: (i) the reason for the denial, suspension, or revocation; (ii) the effective date of the denial, suspension, or revocation; (iii) the right of the dealer or agent to request an administrative hearing on the question of denial, suspension, or revocation; and (iv) that the notice of suspension or revocation shall also apply to licensed salvage vehicle dealer agents employed by such dealer. (B) A request for an administrative hearing under this section must be made in writing to the director within 10 days of the receipt of notice of denial, suspension, or revocation. (2) If timely requested, an administrative hearing shall be conducted in accordance with sec.sec.1.21-1.61 of this title (relating to Contested Case Procedure). (e) Re-application after revocation of license. A person whose license is revoked may not apply for a new license before the first anniversary of the date of the revocation. (f) Refund of fees. The department will not refund fees paid by a salvage vehicle dealer or agent, if the license is revoked or suspended. 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 7, 1995. TRD-9516013 Robert E. Shaddock General Counsel Texas Department of Transportation Effective date: March 1, 1996 Proposal publication date: October 17, 1995 For further information, please call: (512) 463-8630 Texas Department of Insurance Exempt Filing Notification Pursuant to the Insurance Code, Chapter 5, Subchapter L (Editor's Note: As required by the Insurance Code, Article 5.96 and 5. 97, the Texas Register publishes notices of actions taken by the Department of Insurance pursuant to Chapter 5, Subchapter L, of the Code. Board action taken under these articles is not subject to the Administrative Procedure Act. These actions become effective 15 days after the date of publication or on a later specified date. The text of the material being adopted will not be published, but may be examined in the offices of the Department of Insurance, 333 Guadalupe, Austin.) The Commissioner of Insurance, at a public hearing held on November 28, 1995, under Docket Number 2185, at 1:30 p.m., in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas, adopted amendments to the Dwelling Section and the Farm and Ranch Section of the Texas Personal Lines Manual (Manual) to provide optional large deductibles for coverage afforded under a dwelling policy and a farm and ranch policy. The amendments were proposed by Department staff in a petition filed on October 16, 1995. In addition to the staff petition, two other entities petitioned the Commissioner for adoption of the optional large deductibles-National Lloyds Insurance Company and the Association of Fire and Casualty Companies (AFACT), a trade association composed of 37 property and casualty insurance companies licensed to do business in Texas. Notice of the proposal (Reference Number P-1095-38-I) was published in the October 20, 1995, issue of the Texas Register (20 TexReg 8743). The Commissioner adopted, with one change to the proposal as published, a new rule (Rule 5 in the Dwelling Section of the Manual under the General Requirements Section V, Deductibles Subsection D and Rule 6 in the Farm and Ranch Section of the Manual under General Requirements Section V, Deductibles Subsection D) to provide for optional large deductibles of 1-1/2%, 2.0%, 2-1/2%, 3.0%, 4.0% or 5.0% of the limit of liability for each item of insurance shown on the declarations page of Texas Dwelling Policy Forms TDP-1, TDP-2, and TDP-3 and for each item of insurance shown on the declarations page of Texas Farm and Ranch Policy Forms TFR-1, TFR-2, and TFR-3 and on the declarations page of any endorsement attached to Texas Farm and Ranch Policy Forms TFR-1, TFR-2, and TFR- 3. The adopted rule provides that the large deductible may be selected at the option of the insured, with an appropriate reduction in premium, subject to certain requirements and conditions: (1) the minimum deductible amount may not be less than $100; (2) the optional large deductible may not be applied to a loss caused by the perils of fire and lightning; (3) the actual deductible amount in dollars must be shown on the declarations pages of the dwelling policy and the farm and ranch policy and on the declarations page of any endorsements attached to Texas Farm and Ranch Policy Forms TFR-1, TFR-2, and TFR-3; and (4) the option of the large deductibles may only be provided under the policy if the insured is offered, in addition to an optional large deductible, at least one of the other deductible options promulgated by the Department for use in Texas. Based on comments received on the published proposal, the Commissioner did not adopt the requirement that the premium credit for the optional large deductibles be shown on the requisite declarations pages because the Commissioner determined that to provide space on the declarations pages for this credit amount would require a redesign of the declarations pages and reprogramming of insurers' computer systems. This redesign and reprogramming would be costly to insurers, and these costs would be passed on to policyholders. In most instances, the agent will discuss the differences in the cost of deductibles with insureds. The Commissioner has determined, therefore, that it is unnecessary to require the premium credit for the optional large deductible to be shown on the declarations page. The adopted rule also references the optional large deductible adjustment chart, which will be included in the Manual, for the appropriate credits. In the past, insureds covered under dwelling policies and under farm and ranch policies have had the option of selecting varying deductibles of zero, $100, $250, $500, $1,000, or 1.0% of the limit of liability of Coverage A (Dwelling) of each item of insurance shown on the declarations page of the policy and of any endorsement attached thereto. Under the adopted rule, these insureds will be able to select additional deductible options of 1-1/2%, 2.0%, 2-1/2%, 3.0%, 4.0% or 5.0% of the limit of liability of Coverage A (Dwelling). The option of these larger deductibles, however, may only be provided if the insured is offered, in addition to these deductibles, at least one of the other deductible options promulgated by the Department. The Commissioner has determined that the new rules are necessary to provide those insureds who are financially able to do so to assume a greater portion of the risk in return for lower premiums and, secondly, to encourage insurers to expand their writings in an otherwise restrictive market. The Commissioner has further determined that the applicable premium credits for the optional large deductibles should be determined at the next residential property insurance benchmark rate hearing held pursuant to Articles 5.101 and 1.33B of the Insurance Code, and that the effective date for the use of the new rules shall be the effective date of the residential property insurance benchmark rates determined at such hearing. The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.35, 5.101, 5.96, and 5.98. The amendments as adopted by the Commissioner of Insurance are on file in the Chief Clerk's Office of the Texas Department of Insurance under Reference Number P-1095-38-I and are incorporated by reference by Commissioner's Order Number 95- 1284 Consistent with the Insurance Code, Article 5.96(h), prior to the effective date of this action, the Texas Department of Insurance will notify all insurers affected by this action. IT IS THEREFORE THE ORDER of the Commissioner of Insurance that a new Rule 5 in the General Requirements Section V, Deductibles Subsection D in the Dwelling Section of the Texas Personal Lines Manual and a new Rule 6 in the General Requirements Section V, Deductibles Subsection D in the Farm and Ranch Section of the Texas Personal Lines Manual, as specified herein and which are attached to this Order and incorporated into this Order by reference, are adopted. IT IS FURTHER ORDERED that the applicable premium credits for the optional large deductibles shall be determined at the next residential property insurance benchmark rate hearing held pursuant to Articles 5.101 and 1.33B of the Insurance Code and that the new rules shall be effective for all applicable policies issued on and after the effective date of the residential property insurance benchmark rates determined at such hearing. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure Act. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on December 8, 1995. TRD-9516115 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: December 30, 1995 For further information, please call: (512) 463-6327 The Commissioner of Insurance, at a public hearing held on November 28, 1995, under Docket Number 2187, at 10:00 a.m., in Room 100 of the Texas Department of Insurance Building, 333 Guadalupe Street in Austin, Texas, adopted residential property insurance policy forms and endorsements for use in designated underserved areas served by the Property Protection Program (Program) pursuant to Article 5.35-3 of the Insurance Code. The policy forms and endorsements were proposed by Department staff in a petition filed on October 16, 1995. The petition requested that current rates, premiums, and rating rules currently promulgated in the Texas Personal Lines Manual (Manual) continue to apply to those coverages that have previously been adopted pursuant to Article 5.35 of the Insurance Code and that are proposed for adoption pursuant to Article 5.35-3 of the Insurance Code for use under the Program. In addition, the petition requested the adoption of newly developed endorsements to attach to certain residential property insurance policies to add or exclude individual or combined coverages or perils insured against for use under the Program. These endorsements are intended for use with the Texas Dwelling Form TDP-1, Texas Homeowners Form HO-A, Texas Farm and Ranch Owners Form FRO-A, and Texas Farm and Ranch Form TFR-1, under the Program. The petition requested that new Manual rating rules be promulgated under a separate rulemaking procedure for these endorsements and that new rates and premiums be developed at the next residential property insurance benchmark rate hearing. Notice of the proposal (Reference Number P-1095-40-I) was published in the October 24, 1995 issue of the Texas Register (20 TexReg 8860). The Commissioner adopted the entire staff proposal with two changes to the proposal as published. One commenter noted that Endorsement Numbers (PPP) HO-700 and (PPP)FRO-800, which relate to exclusion of coverages for vandalism and malicious mischief and theft under the Homeowners Policy Form HO-A and the Farm and Ranch Owners Policy Form FRO-A, are confusing and misleading because of the inclusion of exceptions to when theft coverage does not apply (items a, b, and c under the theft exclusion provision). In concurring, the Commissioner has determined that when theft coverage is provided under the basic policy forms, these exceptions are necessary to clearly indicate the extent of the theft coverage provided under the policy; however, when the peril of theft is being excluded, as in these two endorsements, there is no need to repeat the exceptions in the theft exclusion provision. The Commissioner, therefore, has determined that Endorsement Numbers (PPP)HO-700 and (PPP)FRO-800 should be adopted with the deletion of exceptions a, b, and c under the theft exclusion provision. The second change is in Endorsement Numbers (PPP)TDP-031, (PPP) HO- 702, (PPP)FRO-803, and (PPP)TFR-081, relating to the perils of accidental discharge, leakage, or overflow of water or steam; and freezing. The Commissioner has determined that these endorsements should provide for a limitation in tear-out and replacement coverage of "no more than a total of 5. 0% of Coverage A (Dwelling) limit of liability or $3,500, whichever is greater, " in lieu of the proposed coverage limit of "no more than a total of 5.0% of Coverage A (Dwelling) limit of liability or $2,500, whichever is greater." This limitation in coverage applies only to the cost of tearing out and replacing any part of the building and land necessary to access, repair, or replace that part of a plumbing drain system located within or under the slab or foundation of the dwelling in the event of accidental discharge or leakage of water from such plumbing drain system. This change is necessary because of the Commissioner's adoption of the limitation in tear-out and replacement coverage of "no more than a total of 5.0% of Coverage A (Dwelling) limit of liability or $3,500, whichever is greater," in Endorsement Numbers HO-155, TDP-054, TDP-055, FRO-455, TFR-054, and TFR-055, pursuant to Commissioner's Order Number 95-1261 (December 1, 1995). The Commissioner has determined that this increase in the limit of coverage from $2,500 to $3,500 is necessary to provide adequate tear-out and replacement coverage for those policyholders with lower value dwellings. The Property Protection Program is authorized by Article 5.35-3 of the Insurance Code, which was enacted by the 74th Legislature in House Bill 1367 (Acts 1995, 74th Legislature, Page 3007, Chapter 415, sec.3, effective August 28, 1995.) Article 5.35-3 provides that the Commissioner by rule may determine and designate areas as underserved areas for residential property insurance. The statute requires the Commissioner, in determining which areas will be designated as underserved, to consider whether residential property insurance is not reasonably available to a substantial number of owners of insurable property in the underserved area and any other relevant factors as determined by the Commissioner. Article 5.35-3 in sec.1(a) defines residential property insurance for purposes of the Property Protection Program as insurance coverage against loss to real or tangible personal property at a fixed location provided in a homeowners policy, residential fire and allied lines policy, or farm and ranch owners policy. The statute prohibits the Property Protection Program from including windstorm and hail insurance coverage for a risk eligible for that coverage under Article 21.49 of the Insurance Code. All insurers authorized to write property or casualty insurance in this state and writing residential property insurance in this state, including those insurers licensed under Chapters 18 (Lloyd's plans) and 19 (reciprocal exchanges) of the Insurance Code are authorized to write insurance on the forms adopted under Article 5.35-3. Article 5.35-3 in sec.3 authorizes the Commissioner to adopt policy forms for residential property insurance specifically for use in the designated underserved areas. Section 3 further provides that the policy forms adopted pursuant to Article 5.35-3 shall include a basic policy covering fire and allied lines perils with endorsements providing additional coverages at the option of the insured. The statute provides that the adopted policy forms may be used by all insurers writing insurance in underserved areas and that all insurers shall make available to their agents and all agents shall offer all insureds the full range of coverages promulgated under Article 5. 35-3 subject to the applicable rates and underwriting guidelines of each such insurer. The Commissioner has determined that in order to efficiently and effectively implement the Property Protection Program pursuant to Article 5. 35-3 of the Insurance Code, it is necessary and in the public interest to use currently promulgated forms and endorsements with modifications, in the form of newly developed endorsements, to allow for the addition and exclusion of certain coverages and perils. The Commissioner has determined that this approach is cost-effective for insurers while still providing consumers the option of purchasing necessary basic coverages and additional coverages. The Commissioner has further determined that because this approach is less confusing to insurers, agents, and consumers, implementation of the Property Protection Program is facilitated. The Commissioner has determined that in order to implement the Property Protection Program in the most efficient and cost-effective manner, certain basic policy forms with new and currently promulgated endorsements should be adopted for use in the Program, including Texas Dwelling Policy Form TDP-1 with an amended declarations page, eight new endorsements, and 12 current endorsements; Texas Homeowners Policy Form HO-A with an amended declarations page, seven new endorsements, and 30 current endorsements; Texas Farm and Ranch Owners Policy Form FRO-A with an amended declarations page, ten new endorsements, and 23 current endorsements; and Texas Farm and Ranch Policy Form TFR-1 with an amended declarations page, ten new endorsements, and 15 current endorsements. The adoption of these policy forms and endorsements does not affect the coverage, provisions, or use of any of the current policy forms and endorsements adopted under Article 5.35 of the Insurance Code for use in the entire state of Texas. The Commissioner has determined that the following policy and endorsement forms, should be adopted, with any applicable premium charges, rates, and rating rules as indicated, for use under the Property Protection Program to provide fire and allied lines coverage in designated underserved areas: (1) Dwelling Policy Declarations Page with amendments to reflect additional perils that are available for coverage under the policy. (2) Texas Dwelling Policy Form TDP-1 without change to the currently promulgated policy form with the current rates and rating rules for Form TDP-1. (3) New Endorsements. The following new endorsements are designated with the prefix "(PPP)" to identify their use under the Program: (a) Endorsement Number (PPP)TDP-031, Perils of Accidental Discharge, Leakage, or Overflow of Water or Steam and Freezing -combines the two perils of (i) accidental discharge, leakage, or overflow of water or steam and (ii) freezing to provide coverage that is not currently available under the Form TDP-1. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (b) Endorsement Number (PPP)TDP-032, Perils of Collapse of Building, Breakage of Glass, and Falling Objects-combines the three perils of (i) collapse of building, (ii) breakage of glass, and (iii) falling objects to provide coverage that is not currently available under the Form TDP-1. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (c) Endorsement Number (PPP)TDP-033, Theft-adds the peril of theft which provides coverage that is not currently available under Form TDP-1. An additional premium shall be charged for the attachment of this endorsement, and this rate shall be determined at the next residential property insurance benchmark rate hearing. (d) Endorsement Number (PPP)TDP-034, Additional Living Expense -adds coverage for loss of use when a peril insured against makes the insured dwelling wholly or partially untenantable. The limit of liability may be selected by the insured. An additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (e) Endorsement Number (PPP)TDP-035, Replacement Cost Coverage A (Dwelling) - amends three provisions (Your Duties After Loss, Loss Settlement, and Appraisal provisions) in the Conditions Section of Form TDP-1 to provide replacement cost coverage on the insured dwelling. No additional premium is necessary for this endorsement; however, the insured value of the dwelling must reflect at least 80% of the replacement cost value of the dwelling . (f) Endorsement Number (PPP)TDP-036, Replacement of Personal Property-provides replacement cost coverage for Coverage B (Personal Property) and includes the appropriate Loss Settlement provisions. An additional premium is necessary for the attachment of this endorsement; however, since no substantive changes in coverage are adopted, current rates and rating rules applicable to Endorsement Number TDP-002 shall apply to this endorsement. (g) Endorsement Number (PPP)TDP-037, Agreed Amount on Dwelling -for use only when Endorsement Number (PPP)TDP-035 (Replacement Cost Coverage A (Dwelling)) is attached to the policy. This endorsement is an agreement that the limit of liability shown on the declarations page for Coverage A (Dwelling) is the amount of insurance required for replacement cost coverage for the dwelling. No additional premium is necessary for this endorsement. (h) Endorsement Number (PPP)TDP-038, Miscellaneous Property Schedule-a redesignated Endorsement Number TDP-012, which is amended to reflect additional perils that are available for coverage under this endorsement. Current rates and rating rules applicable to Policy Form TDP-1 shall apply to this endorsement for coverage for losses caused by the perils of (i) fire and lightning; (ii) sudden and accidental damage from smoke, windstorm, hurricane, hail, explosion, aircraft and vehicles, riot and civil commotion; and (iii) vandalism and malicious mischief; each additional premium for the coverages for losses caused by the perils of (iv) accidental discharge, leakage, or overflow of water or steam and freezing of plumbing, heating and air conditioning systems or household appliance; (v) collapse of building, breakage of glass, and falling objects; and (vi) theft shall be determined at the next residential property insurance benchmark rate hearing. (4) Current Endorsements. The Commissioner has determined that the following current endorsements, which have previously been adopted pursuant to Article 5.35 of the Insurance Code, should be adopted, without changes, for attachment to Texas Dwelling Policy Form TDP-1 for use under the Program. The Commissioner has determined that current rates and rating rules should apply to any of the endorsements requiring a premium charge or credit. The adopted endorsements are as follows: (a) Endorsement Number TDP-001, Windstorm, Hurricane and Hail Exclusion Agreement; (b) Endorsement Number TDP-003, Exclusion of Residential Community Property Clause; (c) Endorsement Number TDP-007, Additional Named Insured; (d) Endorsement Number TDP-009, Residence Glass Coverage; (e) Endorsement Number TDP-010, Loss Payable Clause; (f) Endorsement Number TDP-011, Vacancy Clause; (g) Endorsement Number TDP-013, Loss Assessment Property Coverage; (h) Endorsement Number TDP-014, Texas Dwelling Policy Sworn Statement in Proof of Loss; (i) Endorsement Number TDP-015, Contract of Sale; (j) Endorsement Number TDP-017, Fair Rental Value; (k) Endorsement Number TDP-020, Premium Surcharge-Claims; (l) Endorsement Number TDP-021, Windstorm, Hurricane and Hail Deductible. The Commissioner has determined that the following policy and endorsement forms should be adopted, with any applicable premium charges, rates, and rating rules as indicated, for use under the Property Protection Program to provide homeowners coverage in designated underserved areas: (1) Homeowners Policy Declarations Page with amendments to reflect additional perils that are available for coverage under the policy. (2) Texas Homeowners Policy Form HO-A without changes to the currently promulgated policy Form HO-A with the current rates and rating rules for Form HO-A. (3) New Endorsements. The following new endorsements are designated with the prefix of (PPP) to identify their use under the Program: (a) Endorsement Number (PPP)HO-700, Exclusion of Coverages -excludes coverage for losses caused by the two perils of (i) vandalism and malicious mischief and (ii) theft. Each peril may be separately excluded or both perils may be excluded. A separate reduction in premium shall be determined for each of the two perils to be excluded under the endorsement, and the amount of reduction in premium for each peril shall be determined at the next residential property insurance benchmark rate hearing. (b) Endorsement Number (PPP)HO-702, Accidental Discharge, Leakage, or Overflow of Water or Steam and Freezing-combines the two perils of (i) accidental discharge, leakage, or overflow of water or steam and (ii) freezing to provide coverage that is not currently available under the Homeowners Policy Form HO-A. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (c) Endorsement Number (PPP)HO-703, Collapse of Building, Breakage of Glass, and Falling Objects-combines the three perils of (i) collapse of building, (ii) breakage of glass and (iii) falling objects to provide coverage that is not currently available under Homeowners Policy Form HO-A. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (d) Endorsement Number (PPP)HO-708, Replacement Cost Coverage A (Dwelling) - amends three provisions (Your Duties After Loss, Loss Settlement and Appraisal provisions) of the Conditions Section of Homeowners Policy Form HO-A to provide replacement cost coverage on the insured dwelling. No additional premium is necessary for this endorsement; however, the insured value of the dwelling must reflect at least 80% of the replacement cost value of the dwelling. (e) Endorsement Number (PPP)HO-709, Replacement Cost for Personal Property- provides replacement cost coverage for Coverage B (Personal Property) and includes the appropriate Loss Settlement provisions. An additional premium is necessary for the attachment of this endorsement; however, since no substantive changes in coverage are adopted, current rates and rating rules applicable to current Endorsement Number HO-101 shall apply to this endorsement. (f) Endorsement Number (PPP)HO-710, Agreed Amount on Dwelling -for use only when Endorsement Number (PPP)HO-708 (Replacement Cost Coverage A (Dwelling)) is attached to the policy. This endorsement is an agreement that the limit of liability shown on the declarations page for Coverage A (Dwelling) is the amount of insurance required for replacement cost coverage for the dwelling. No additional premium is necessary for this endorsement. (g) Endorsement Number (PPP)HO-711, Increased Limit on Jewelry, Watches and Furs-provides for the increase in the limit of liability for jewelry, watches and furs under Coverage B (Personal Property) when the peril of theft is a Peril Insured Against under the Program's Form HO-A. Current rates and rating rules applicable to current Endorsement Number HO-110 shall apply to this endorsement. (4) Current Endorsements. The Commissioner has determined that the following current endorsements, which have previously been adopted pursuant to Article 5.35 of the Insurance Code, should be adopted, without changes, for attachment to the current Texas Homeowners Policy Form HO-A for use under the Program. The Commissioner has determined that current rates and rating rules should apply to any of the endorsements requiring a premium charge or credit. The adopted endorsements are: (a) Endorsement Number HO-105, Residence Glass Coverage; (b) Endorsement Number HO-111, Increased Limit on Business Personal Property; (c) Endorsement Number HO-112, Increased Limit on Money/Bank Cards; (d) Endorsement Number HO-113, Increased Limit on Bullion/Valuable Papers; (e) Endorsement Number HO-120, Television and Radio Antenna; (f) Endorsement Number HO-121, Windstorm Coverages for Greenhouses; (g) Endorsement Number HO-122, Windstorm Coverage for Cloth Awnings; (h) Endorsement Number HO-125, Physicians', Surgeons' and Dentists' Outside Coverage; (i) Endorsement Number HO-126, Personal Computer Coverage; (j) Endorsement Number HO-140, Windstorm, Hurricane and Hail Exclusion Agreement; (k) Endorsement Number HO-142, Exclusion of Residential Community Property Clause; (l) Endorsement Number HO-145, Homeowners Amendatory Mandatory Endorsement; (m) Endorsement Number HO-146, Homeowners Amendatory Mandatory Endorsement; (n) Endorsement Number HO-147, Business Property Special Limits Mandatory Endorsement; (o) Endorsement Number HO-160, Scheduled Personal Property; (p) Endorsement Number HO-190, Texas Homeowner Policy Sworn Statement in Proof of Loss; (q) Endorsement Number HO-201, Personal Injury Coverage; (r) Endorsement Number HO-205, Office, Private School or Studio-Section II Liability; (s) Endorsement Number HO-210, Farmers Personal Liability; (t) Endorsement Number HO-215, Watercraft Liability Coverage; (u) Endorsement Number HO-220, Business Pursuits Liability Coverage; (v) Endorsement Number HO-225, Additional Premises Liability Coverage; (w) Endorsement Number HO-231, Pre-Judgment Interest Mandatory Endorsement; (x) Endorsement Number HO-301, Additional Insured; (y) Endorsement Number HO-305, Amended Definition of Residence Premises; (z) Endorsement Number HO-310, Townhouse Loss Assessment Coverage; (aa) Endorsement Number HO-315, Neighborhood Homeowners Loss Assessment Coverage; (bb) Endorsement Number HO-320, General Change Endorsement; (cc) Endorsement Number HO-330, Premium Surcharge-Claims; (dd) Endorsement Number HO-382, Condominium Loss Assessment Coverage. The Commissioner has determined that the following policy and endorsement forms should be adopted, with any applicable premium charges, rates, and rating rules as indicated, for use under the Property Protection Program to provide farm and ranch owners coverage in designated underserved areas: (1) Farm and Ranch Owners Declarations Page with amendments to reflect additional perils that are available for coverage under the policy. (2) Texas Farm and Ranch Owners Policy Form FRO-A without changes to the currently promulgated policy form with the current rates and rating rules for Form FRO-A. (3) New Endorsements. The following new endorsements are designated with the prefix of "(PPP)" to identify their use under the Program: (a) Endorsement Number (PPP)FRO-800, Exclusion of Coverages -excludes coverage for losses caused by the two perils of (i) vandalism and malicious mischief and (ii) theft. Each peril may be separately excluded or both perils may be excluded. A separate reduction in premium shall be determined for each of the two perils to be excluded under the endorsement, and the amount of reduction in premium for each peril shall be determined at the next residential property insurance benchmark rate hearing. (b) Endorsement Number (PPP)FRO-803, Accidental Discharge, Leakage, or Overflow of Water or Steam and Freezing-combines the two perils of (i) accidental discharge, leakage, or overflow of water or steam and (ii) freezing to provide coverage that is not currently available under the Form FRO-A. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (c) Endorsement Number (PPP)FRO-804, Collapse of Building, Breakage of Glass, and Falling Objects-combines the three perils of (i) collapse of building, (ii) breakage of glass, and (iii) falling objects to provide coverage that is not currently available under Form FRO-A. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (d) Endorsement Number (PPP)FRO-808, Replacement Cost Coverage A (Dwelling) - amends three provisions (Your Duties After Loss, Loss Settlement, and Appraisal provisions) in the Conditions Section of Form FRO-A to provide replacement cost coverage on the insured dwelling. No additional premium is necessary for this endorsement; however, the insured value of the building must reflect at least 80% of the replacement cost value of the dwelling. (e) Endorsement Number (PPP)FRO-809, Replacement Cost for Personal Property- provides replacement cost coverage for Coverage B (Personal Property) and includes the appropriate Loss Settlement provisions. An additional premium is necessary for the attachment of this endorsement; however, since no substantive changes in coverage are adopted, current rates and rating rules applicable to current Endorsement Number FRO-401 shall apply to this endorsement. (f) Endorsement Number (PPP)FRO-810, Agreed Amount on Dwelling -for use only when Endorsement Number (PPP)FRO-808 (Replacement Cost Coverage A (Dwelling)) is attached to the policy. This endorsement is an agreement that the limit of liability shown on the declarations page for Coverage A (Dwelling) is the amount of insurance required for replacement cost coverage for the dwelling. No additional premium is necessary for this endorsement. (g) Endorsement Number (PPP)FRO-811, Increased Limit on Jewelry, Watches and Furs-provides for the increase in the limit of liability for jewelry, watches and furs under Coverage B (Personal Property) when the peril of theft is a Peril Insured Against under the Program's Form FRO-A. Current rates and rating rules applicable to current Endorsement Number FRO-410 shall apply to this endorsement. (h) Endorsement Number (PPP)FRO-859, Scheduled Farm and Ranch Property-a redesignated Endorsement Number FRO-459 which is amended to reflect additional perils that are available for coverage under this endorsement. Current rates and rating rules applicable to Policy Form FRO-A shall apply to this endorsement for coverage for losses caused by the perils of (i) fire and lightning; (ii) sudden and accidental damage from smoke, windstorm, hurricane, hail, explosion, aircraft and vehicles, riot and civil commotion; and (iii) vandalism and malicious mischief; each additional premium for the coverages for losses caused by the perils of (iv) accidental discharge, leakage, or overflow of water or steam and freezing of plumbing, heating and air conditioning systems or household appliance; (v) collapse of building, breakage of glass, and falling objects; and (vi) theft shall be determined at the next residential property insurance benchmark rate hearing. (i) Endorsement Number (PPP)FRO-881, Additional Residence Coverage-a redesignated Endorsement Number FRO-481 with the declarations revised to reflect additional perils that are available for coverage under this endorsement. Current rates and rating rules applicable to current Form FRO-A shall apply to this endorsement. (j) Endorsement Number (PPP)FRO-889, Damage By Weight of Ice, Sleet or Snow-a redesignated Endorsement Number 489 which is amended to reflect the reference to a new Endorsement Number (PPP)FRO-859 in the title of the endorsement. Current rates and rating rules shall apply to this endorsement. (4) Current Endorsements. The Commissioner has determined that the following current endorsements, which have previously been adopted pursuant to Article 5.35 of the Insurance Code, should be adopted, without changes, for use with the Texas Farm and Ranch Owners Policy Form FRO-A under the Program. The Commissioner has determined that current rates and rating rules shall apply to any of the endorsements requiring a premium credit or charge. The adopted endorsements are: (a) Endorsement Number FRO-405, Residence Glass Coverage; (b) Endorsement Number FRO-411, Increased Limit on Business Personal Property; (c) Endorsement Number FRO-412, Increased Limit on Money/Bank Cards; (d) Endorsement Number FRO-413, Increased Limit on Bullion/Valuable Papers; (e) Endorsement Number FRO-420, Television and Radio Antenna; (f) Endorsement Number FRO-421, Windstorm Coverages for Greenhouses; (g) Endorsement Number FRO-425, Physicians', Surgeons' and Dentists' Outside Coverage; (h) Endorsement Number FRO-426, Personal Computer Coverage; (i) Endorsement Number FRO-440, Windstorm, Hurricane and Hail Exclusion Agreement; (j) Endorsement Number FRO-442, Exclusion of Residential Community Property Clause; (k) Endorsement Number FRO-460, Scheduled Personal Property; (l) Endorsement Number FRO-490, Texas Farm and Ranch Owner's Sworn Statement in Proof of Loss; (m) Endorsement Number FRO-500, Mandatory Farm and Ranch Owners Endorsement; (n) Endorsement Number FRO-501, Personal Injury Coverage; (o) Endorsement Number FRO-505, Office, Private School or Studio Section II Liability; (p) Endorsement Number FRO-515, Watercraft Liability Coverage; (q) Endorsement Number FRO-520, Business Pursuits Liability Coverage; (r) Endorsement Number FRO-525, Additional Premises Liability Coverage; (s) Endorsement Number FRO-530, Farm and Ranch Owners Amendatory Endorsement; (t) Endorsement Number FRO-600, General Change Endorsement; (u) Endorsement Number FRO-601, Additional Insured; (v) Endorsement Number FRO-605, Amended Definition of Residence Premises; (w) Endorsement Number FRO-630, Premium Surcharge-Claims. The Commissioner has determined that the following policy and endorsement forms should be adopted, with any applicable premium charges, rates, and rating rules as indicated, for use under the Property Protection Program to provide farm and ranch coverage in designated underserved areas: (1) Farm and Ranch Policy Declarations Page with amendments to reflect additional perils that are available for coverage under the policy. (2) Texas Farm and Ranch Policy Form TFR-1 without changes to the currently promulgated policy form with current rates and rating rules for Form TFR-1. (3) New Endorsements. The following new endorsements are designated with the prefix of "(PPP)" to identify their use under the Program: (a) Endorsement Number (PPP)TFR-081, Perils of Accidental Discharge, Leakage, or Overflow of Water or Steam and Freezing -combines the two perils of (i) accidental discharge, leakage, or overflow of water or steam and (ii) freezing to provide coverage that is not currently available under Form TFR-1. A single additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (b) Endorsement Number (PPP)TFR-082, Perils of Collapse of Building, Breakage of Glass, and Falling Objects-combines the three perils of (i) collapse of building, (ii) breakage of glass, and (iii) falling objects to provide coverage for Coverage A (Dwelling) and Coverage B (Personal Property) that is not currently available under the Form TFR-1. This endorsement also provides coverage for falling objects for Coverage C (Farm Building) and Coverage D (Scheduled Farm Property). This endorsement specifically excludes coverage to farm buildings (Coverage C) or scheduled farm property (Coverage D) for the perils of collapse of building and breakage of glass. A single additional premium shall be charged for the attachment of this endorsement, and the additional premium shall be determined at the next residential property insurance benchmark rate hearing. (c) Endorsement Number (PPP)TFR-083, Theft-adds the peril of theft to provide coverage that is not currently available under Form TFR-1. An additional premium shall be charged for the attachment of this endorsement, and the additional premium shall be determined at the next residential property insurance benchmark rate hearing. (d) Endorsement Number (PPP)TFR-084, Additional Living Expense -adds coverage for loss of use when a peril insured against makes the insured dwelling wholly or partially untenantable. This endorsement does not apply to any farm and ranch buildings. The limit of liability may be selected by the insured. An additional premium shall be charged for the attachment of this endorsement, and this additional premium shall be determined at the next residential property insurance benchmark rate hearing. (e) Endorsement Number (PPP)TFR-085, Agreed Amount on Dwelling or Farm Building-for use only when Endorsement Number (PPP)TFR-086 (Replacement Cost Coverage A (Dwelling(s)) or Endorsement Number (PPP)TFR-087A (Reimbursement for Replacement of Farm Building(s)) is attached to the policy. This endorsement is an agreement that the limit of liability shown on the declarations page for Coverage A (Dwelling) or Coverage C (Farm Building) is the amount of insurance required for replacement cost coverage for the dwelling or farm building. No additional premium is necessary for this endorsement. (f) Endorsement Number (PPP)TFR-086, Replacement Cost Coverage A (Dwelling) - amends three provisions (Your Duties After Loss, Loss Settlement, and Appraisal provisions) in the Conditions Section of Form TFR-1 to provide replacement cost coverage on the insured dwelling. No additional premium is necessary for this endorsement; however, the insured value of the dwelling must reflect at least 80% of the replacement cost value of the dwelling. (g) Endorsement Number (PPP)TFR-087, Replacement of Personal Property-provides replacement cost coverage for Coverage B (Personal Property) and includes the appropriate Loss Settlement provisions. An additional premium is necessary for the attachment of this endorsement; however, since no substantive changes in coverage are adopted, current rates and rating rules applicable to current Endorsement Number TFR-052 shall apply to this endorsement. (h) Endorsement Number (PPP)TFR-087A, Reimbursement For Replacement of Farm Building-provides replacement cost coverage on Coverage C (Farm Building). No additional premium is necessary for this endorsement; however, the insured value of the building must reflect at least 80% of the replacement cost value of the building. (i) Endorsement Number (PPP)TFR-088A, Miscellaneous Property Schedule-a redesignated Endorsement Number TFR-062 which is amended to reflect additional perils that are available for coverage under this endorsement. Current rates and rating rules applicable to Policy Form TFR-1 shall apply to this endorsement for coverage for losses caused by the perils of (i) fire and lightning; (ii) sudden and accidental damage from smoke, windstorm, hurricane, hail, explosion, aircraft and vehicles, riot and civil commotion; and (iii) vandalism and malicious mischief; each additional premium for coverages for losses caused by the perils of (iv) accidental discharge, leakage, or overflow of water or steam and freezing of plumbing, heating and air conditioning systems or household appliance; (v) collapse of building, breakage of glass, and falling objects; and (vi) theft shall be determined at the next residential property insurance benchmark rate hearing. (j) Endorsement Number (PPP)TFR-089, Scheduled Farm and Ranch Property-a redesignated Endorsement Number TFR-077 which is amended to reflect additional perils that are available for coverage under this endorsement. Current rates and rating rules applicable to Policy Form TFR-1 shall apply to this endorsement for coverage for losses caused by the perils of (i) fire and lightning; (ii) sudden and accidental damage from smoke, windstorm, hurricane, hail, explosion, aircraft and vehicles, riot and civil commotion; and (iii) vandalism and malicious mischief; each additional premium for coverages for losses caused by the perils of (iv) accidental discharge, leakage, or overflow of water or steam and freezing of plumbing, heating and air conditioning systems or household appliance; (v) collapse of building, breakage of glass, and falling objects; and (vi) theft shall be determined at the next residential property insurance benchmark rate hearing. (4) Current Endorsements. The Commissioner has determined that the following current endorsements, which have previously been adopted pursuant to Article 5.35 of the Insurance Code, should be adopted, without changes, for attachment to Texas Farm and Ranch Policy Form TFR-1 for use under the Program. The Commissioner has determined that current rates and rating rules should apply to any of the endorsements requiring a premium charge or credit. The adopted endorsements are: (a) Endorsement Number TFR-051, Windstorm, Hurricane and Hail Exclusion Agreement; (b) Endorsement Number TFR-053, Exclusion of Residential Community Property Clause; (c) Endorsement Number TFR-057, Additional Named Insured; (d) Endorsement Number TFR-059, Residence Glass Coverage; (e) Endorsement Number TFR-060, Loss Payable Clause; (f) Endorsement Number TFR-061, Vacancy Clause; (g) Endorsement Number TFR-064, Texas Farm & Ranch Policy Sworn Statement in Proof of Loss; (h) Endorsement Number TFR-065, Contract of Sale; (i) Endorsement Number TFR-067, Fair Rental Value; (j) Endorsement Number TFR-071, Mobile Agricultural Machinery and Equipment Coverage; (k) Endorsement Number TFR-073, Premium Surcharge-Claims; (l) Endorsement Number TFR-074, Windstorm, Hurricane, and Hail Deductible; (m) Endorsement Number TFR-080, Windstorm Coverages for Greenhouses -Farming; (n) Endorsement Number TFR-088, Farm and Ranch Amendatory Endorsement. The Commissioner has determined that the effective date for the use of the adopted policy forms and endorsements shall be the later of the effective date of the applicable residential property insurance benchmark rates determined at the next residential property insurance benchmark rate hearing or the effective date of the rule designating the underserved areas to be served by the Property Protection Program pursuant to Article 5.35-3 of the Insurance Code. The Commissioner has further determined that rating rules for those endorsements adopted solely for use under the Property Protection Program shall be promulgated under a separate rulemaking procedure following the next residential property insurance benchmark rate hearing. The Commissioner has jurisdiction of this matter pursuant to the Insurance Code, Articles 5.35-3, 5.96, 5.98, and 5.101. Consistent with the Insurance Code, Article 5.96(h), prior to the effective date of this action, the Texas Department of Insurance will notify all insurers affected by this action. IT IS THEREFORE THE ORDER of the Commissioner of Insurance that the policy forms and endorsement forms, as specified herein and which are attached to this Order and incorporated into this Order by reference, are adopted for use in designated underserved areas served by the Property Protection Program pursuant to Article 5.35-3 of the Insurance Code. IT IS FURTHER ORDERED that current rates, premiums, and rating rules currently promulgated in the Texas Personal Lines Manual shall apply to any policy forms that have previously been adopted pursuant to Article 5.35 of the Insurance Code and that are adopted for use in the Property Protection Program. IT IS FURTHER ORDERED that current premiums, rates, and rating rules currently promulgated in the Texas Personal Lines Manual shall apply to any endorsements previously adopted pursuant to Article 5.35 of the Insurance Code and that are adopted for use in the Property Protection Program, which require a premium charge or credit, as specified herein. IT IS FURTHER ORDERED that the applicable rates and premium charges or credits for the new endorsements adopted solely for use under the Property Protection Program, as specified herein, shall be determined at the next residential property insurance benchmark rate hearing held pursuant to Articles 5.101 and 1.33B of the Insurance Code. IT IS FURTHER ORDERED that the effective date for the use of the policy forms and endorsements shall be the later of the effective date of the applicable residential property insurance benchmark rates determined at the next residential property insurance benchmark rate hearing or the effective date of the rule designating the underserved areas to be served by the Property Protection Program pursuant to Article 5.35-3 of the Insurance Code. IT IS FURTHER ORDERED that rating rules for the new endorsements adopted solely for use under the Property Protection Program, as specified herein, shall be promulgated under a separate rulemaking procedure following the next residential property insurance benchmark rate hearing. This notification is made pursuant to the Insurance Code, Article 5.96, which exempts it from the requirements of the Administrative Procedure Act. This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's authority to adopt. Issued in Austin, Texas, on December 8, 1995. TRD-9516114 Alicia M. Fechtel Chief Clerk Texas Department of Insurance Effective date: December 30, 1995 For further information, please call: (512) 463-6327