ADOPTED RULES An agency may take final action on a section 30 days after a proposal has been published in the Texas Register. The section becomes effective 20 days after the agency files the correct document with the Texas Register, unless a later date is specified or unless a federal statute or regulation requires implementation of the action on shorter notice. If an agency adopts the section without any changes to the proposed text, only the preamble of the notice and statement of legal authority will be published. If an agency adopts the section with changes to the proposed text, the proposal will be republished with the changes. TITLE 4. AGRICULTURE PART I. Texas Department of Agriculture CHAPTER 3.Boll Weevil Eradication Program SUBCHAPTER A.Election Procedures 4 TAC sec.sec.3.1-3.6 The Texas Department of Agriculture (the department) adopts amendments to sec.sec.3.1-3.6, concerning election procedures for the conducting of elections and referenda held by the Texas Boll Weevil Eradication Foundation (the foundation), without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4289). The foundation was established in accordance with the Texas Agriculture Code (the Code), Chapter 74, Subchapter D, which provides for the establishment of a boll weevil or pink bollworm eradication program for the state of Texas to be implemented by the foundation. The amendments are adopted in order to make the sections consistent with statutory changes made to the Code, Chapter 74, Subchapter D during the 74th Legislative Session (1995), to delete unnecessary language, including language already stated in the statute, and to clarify the sections. One comment was received regarding sec.3.1 and the definition of cotton producer. The commenter requested that the definition be changed to clarify that cotton growers and cost-share entities as defined by the Farm Service Agency of the USDA are eligible to vote. The department believes that this clarification is not necessary as the definition of cotton grower already provides that persons who share in the proceeds from cotton are eligible and encompasses the federal definition. Accordingly, no changes have been made to proposed sec.3.1. The amendments are adopted under the Texas Agriculture Code, sec.74.114, which requires the Texas Department of Agriculture to adopt procedures for the conducting of elections and referenda by the Texas Boll Weevil Eradication Foundation. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9609997 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: August 1, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 463-7583 SUBCHAPTER C.Prohibition of Planting of Cotton and Requirements for Participation in the Eradication Program 4 TAC sec.sec.3.50, 3.51, 3.54, 3.55, 3.57 The Texas Department of Agriculture (the department) adopts amendments to sec.sec.3.50, 3.51, 3.54, 3.55 and 3.57, concerning the prohibition of planting of cotton in eradication zones established by the Texas Boll Weevil Eradication Foundation (the foundation) and the requirements for participating in the eradication program established by the foundation, without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4192). The amendments are adopted in order to make the sections consistent with statutory changes made to the Code, Chapter 74, Subchapter D, during the 74th Legislative Session (1995). The amendments will clarify the sections and make enforcement of the sections more efficient. No comments were received regarding adoption of the amendments. The amendments are adopted under the Texas Agriculture Code, sec.74.118, which provides the Texas Department of Agriculture with the authority to adopt rules prohibiting the growing of cotton in eradication zones, requiring participation in the eradication program established by the foundation, and establishing penalties for failure to comply with such rules. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9609998 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: August 1, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 463-7583 SUBCHAPTER D.Collection of Assessments and Assessment Penalties 4 TAC sec.sec.3.70, 3.71, 3.80, 3.81 The Texas Department of Agriculture (the department) adopts amendments to sec.sec.3.70, 3.71, 3.80 and 3.81, concerning the collection of assessments and penalties by the Texas Boll Weevil Eradication Foundation (the foundation), without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4291). The amendments are adopted in order to make the sections consistent with statutory changes made to the Code, Chapter 74, Subchapter D, during the 74th Legislative Session (1995), and to clarify the sections. The amendment to sec.3.80 updates legal citations and the name of the federal agricultural agency that deals with certification of cotton production, and makes changes due to changes in statutory language. Section 3.81 is amended to provide a new timeline for initiating judicial action and foreclosure of a lien by the department. No comments were received on the proposal. The amendments are adopted under the Texas Agriculture Code, sec.74.116, which provides the Texas Department of Agriculture with the authority to adopt rules setting criteria for exemption from payment of assessment penalties. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9609999 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: August 1, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 463-7583 SUBCHAPTER E.Boll Weevil Quarantine 4 TAC sec.sec.3.100-3.107 The Texas Department of Agriculture (the department) adopted the repeal of sec.sec.3.100-3.107, concerning boll weevil quarantine, without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4293). The department's boll weevil quarantine regulations found in Chapter 6 are established under the authority House Bill 3003, enacted by the 74th Legislature, amending the Texas Agriculture Code (the Code), Chapter 74, Subchapter D, (Vernon Supplement 1995), which establishes the authority for eradication efforts including boll weevil and pink bollworm. The repeals are adopted in order to allow the department to include all of its boll weevil quarantine regulations in one chapter, Chapter 6 of Title 4. Upon the repeal of sec.sec.3.100-3.107, Chapter 6 will apply to all boll weevil quarantines, including those in a boll weevil eradication zone established by the Texas Boll Weevil Eradication Foundation. No comments were received regarding adoption of the repeal. The repeals are adopted under the Texas Agriculture Code, sec.74.122, which provides the Texas Department of Agriculture with the authority to adopt rules relating to quarantining areas of the state that are infested with the boll weevil or the pink bollworm. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9610000 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: August 1, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 463-7583 SUBCHAPTER F.Miscellaneous Provisions 4 TAC sec.3.200 The Texas Department of Agriculture (the department) adopts an amendment to sec.3.200, concerning expiration provision, without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4293). The amendment is adopted to require the department to review all sections in Chapter 3 and determine what, if any, sections need to be repealed, replaced or amended. The amendment provides an expiration date of August 31, 2000, for all sections that are not repealed, amended, or reaffirmed by the department by that date. No comments were received regarding adoption of the amendment. The amendment is adopted under the Texas Agriculture Code, sec.12.016, which provides the Texas Department of Agriculture with the authority to adopt rules as necessary for administration of the code. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9610001 Dolores Alvarado Hibbs Deputy General Counsel Texas Department of Agriculture Effective date: August 1, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 463-7583 TITLE 10. COMMUNITY DEVELOPMENT PART I. Texas Department of Housing and Community Affairs CHAPTER 9.Texas Community Development Program SUBCHAPTER A.Allocation of Program Funds 10 TAC sec.9.10 The Texas Department of Housing and Community Affairs (TDHCA) adopts the repeal of sec.9.10 concerning the Interim Financing Fund and the allocation of Community Development Block Grant (CDBG) non-entitlement area funds under the Texas Community Development Program, without changes to the proposed text as published in the June 4, 1996, issue of the Texas Register (21 TexReg 4929). The repeal eliminates the Interim Financing Fund as a separate fund category that was previously available under this section. A new Housing Demonstration Fund section, sec.9.10, establishing the standards and procedures by which TDHCA will allocate fiscal year 1996 housing demonstration funds, is being adopted to replace this section. No comments were received regarding the adoption of the repealed section. The repeal is adopted under Texas Government Code, Chapter 2306, sec.2306.098, which provides TDHCA with the authority to allocate Community Development Block Grant non-entitlement area funds to eligible counties and municipalities according to department rules. sec.9.10.Interim Financing Fund. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 10, 1996. TRD-9610110 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: August 5, 1996 Proposal publication date: June 4, 1996 For further information, please call: (512) 475-3916 The Texas Department of Housing and Community Affairs (TDHCA) adopts a new sec.9.10 concerning the allocation of Community Development Block Grant (CDBG) non-entitlement area funds under the Texas Community Development Program, without changes to the proposed text as published in the June 4, 1996, issue of the Texas Register (21 TexReg 4929). The new section establishes the standards and procedures by which TDHCA will allocate fiscal year 1996 housing demonstration funds. The new section includes housing demonstration fund application requirements and selection procedures. No comments were received regarding the adoption of the new section. The new section is adopted under Texas Government Code, Chapter 2306, sec.2306.098, which provides TDHCA with the authority to allocate Community Development Block Grant non-entitlement area funds to eligible counties and municipalities according to department rules. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 10, 1996. TRD-9610111 Larry Paul Manley Executive Director Texas Department of Housing and Community Affairs Effective date: August 5, 1996 Proposal publication date: June 4, 1996 For further information, please call: (512) 475-3916 TITLE 28. INSURANCE PART I. Texas Department of Insurance CHAPTER 5.Property and Casualty Insurance SUBCHAPTER E.Texas Catastrophe Property Insurance Association Plan of Operation 28 TAC sec.5.4001 The Commissioner of Insurance adopt an amendment to sec.5.4001, concerning the plan of operation of the Texas Catastrophe Property Insurance Association (TCPIA), without changes to the proposed text as published in the May 10, 1996 issue of the Texas Register (21 TexReg 3998). The amendment was considered and adopted by the Commissioner of Insurance in a public hearing on June 20, 1996, Docket Number 2229. Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas legislature in 1971 and is composed of all property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to residents in designated catastrophe areas who are unable to obtain such coverage in the voluntary market. Since its inception, the TCPIA has provided this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio and Willacy. Pursuant to Commissioner's Order Number 95-1200 (November 14, 1995), effective March 1, 1996, the TCPIA also provides coverage to residents in two additional coastal areas--the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). Pursuant to Commissioner's Order Number 96-0380 (April 5, 1996), effective June 1, 1996, the TCPIA provides coverage to residents in the City of Morgan's Point (Harris County). The adopted amendments are necessary to amend subsection (e) of the TCPIA plan of operation, relating to Building Codes, to include the City of Morgan's Point as a designated catastrophe area that is subject to the TCPIA building code specifications and standards and to the Department's Windstorm Inspection Program. Subsection (e)(3), relating to limitations on the applicability of building codes, specifies the designated areas to which the TCPIA building code standards apply. An amendment is adopted to subsection (e)(3) to add a new subparagraph (C) to specify that the City of Morgan's Point (Harris County) is subject to the building code requirements set forth in subsection (e) of the plan of operation. Subsection (e)(4) is amended to add a new subparagraph (D) to provide that a structure constructed, repaired, or to which additions were made on and after January 1, 1988 and before June 1, 1996, that is located in the City of Morgan's Point shall be considered approved by the Commissioner of Insurance as being in compliance with the TCPIA's inland building code requirements contained in paragraph 2 of subsection (e) (Standard Building Code, 1973 Edition) and, therefore, shall be considered insurable property by the TCPIA if the owner of the structure presents to the TCPIA at the time of application a statement, as specified in subparagraph (D), signed by a city building official. In the statement, the city building official shall affirm that to his/her best belief and knowledge, the structure to be insured by the TCPIA was constructed, repaired, or an addition was made on and after January 1, 1988 and before June 1, 1996, in accordance with building specifications and standards which comply with the Standard Building Code (1973 Edition) or an equivalent recognized code, and that the City of Morgan's Point has inspected the structure and enforced compliance to said code. Subsection (e)(4) is also amended to add a new subparagraph (E) to provide that a structure constructed, repaired, or to which additions were made on and after June 1, 1996, that is located in the City of Morgan's Point shall be considered insurable property for windstorm and hail insurance from the TCPIA only if the structure is inspected or approved by the Commissioner of Insurance for compliance with building specifications as provided in the plan of operation, including any specifications for roofing materials as provided in Article 21.49, sec.6A(a) of the Insurance Code. Subparagraphs (A), (B), and (C) of subsection (e)(4) are amended to add catchlines for easier reference. These amendments are adopted to be effective July 15, 1996. No comments were received regarding the adoption of the amendment. The amendment is adopted pursuant to the Insurance Code, Articles 21.49 and 1.03A, and the Government Code, sec.sec.2001.004-2001.038. Article 21.49, sec.3(h) authorizes the Commissioner to designate a city or a part of a city or a county or a part of a county as a catastrophe area to be served by the TCPIA upon determination, after notice of not less than 10 days and hearing, that windstorm and hail insurance is not reasonably available to a substantial number of owners of insurable property within that city or a part of that city or county or a part of that county that is subject to unusually frequent and severe damage resulting from windstorms and/or hailstorms. Pursuant to Commissioner's Order Number 96-0380, effective June 1, 1996, the City of Morgan's Point is designated by the Commissioner of Insurance as a catastrophe area eligible for windstorm and hail insurance coverage through the TCPIA. Article 21.49, sec.6A specifies building code requirements and approval or inspection procedures for windstorm and hail insurance through the TCPIA. Article 21.49, sec.5(c) of the Insurance Code provides that the Commissioner of Insurance by rule shall adopt the TCPIA plan of operation with the advice of the TCPIA board of directors. Section 5(f) of Article 21.49 provides that any interested person may petition the Commissioner to modify the plan of operation in accordance with the Administrative Procedure Act (Government Code, title 10, subtitle A, ch. 2001). Article 21.49, sec.5, subsections (c) and (f), by their terms, delegate the foregoing authority to the State Board of Insurance. However, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to 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. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 24, 1996. TRD-9610125 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: July 15, 1996 Proposal publication date: May 10, 1996 For further information, please call: (512) 463-6327 Manual 28 TAC sec.5.4501 The Commissioner of Insurance adopts an amendment to sec.5.4501, concerning the adoption by reference of a revised manual of rules governing the writing of windstorm and hail insurance by the Texas Catastrophe Property Insurance Association (TCPIA), without changes to the proposed text as published in the May 10, 1996 issue of the Texas Register (21 TexReg 4000). The amendment was considered and adopted by the Commissioner of Insurance in a public hearing on June 20, 1996, Docket Number 2230. Pursuant to the Catastrophe Property Insurance Pool Act (Article 21.49 of the Insurance Code), the TCPIA was created by the Texas legislature in 1971 and is composed of all property insurers authorized to transact property insurance in Texas. The purpose of the TCPIA is to provide windstorm and hail insurance coverage to residents in designated catastrophe areas who are unable to obtain such coverage in the voluntary market. Currently, the TCPIA provides this coverage to residents of 14 coastal counties, including Aransas, Brazoria, Calhoun, Cameron, Chambers, Galveston, Jefferson, Kenedy, Kleberg, Matagorda, Nueces, Refugio, San Patricio, and Willacy. Pursuant to Commissioner's Order Number 95-1200 (November 14, 1995), effective March 1, 1996, the TCPIA also provides coverage to residents in two additional coastal areas--the area located east of the boundary line of State Highway 146 and inside the city limits of the City of Seabrook (Harris County) and the area located east of the boundary line of State Highway 146 and inside the city limits of the City of La Porte (Harris County). Pursuant to Commissioner's Order Number 96-0380 (April 5, 1996), effective June 1, 1996, the City of Morgan's Point (Harris County) became eligible for coverage through the TCPIA. The revised manual is necessary to incorporate rule amendments to provide for the applicability of the TCPIA's building code and inspection requirements to the newly designated catastrophe area of the City of Morgan's Point. Rule C, relating to Determination of Territory (Catastrophe Areas), in Section I--General Rules of the revised manual is amended to add a new subdivision 3 to include the City of Morgan's Point (Harris County) as a designated catastrophe area eligible for TCPIA coverage. Rule D, relating to Insurable Property, in Section I--General Rules, is amended (i) to designate as subdivision 4-a the current provisions relating to approval requirements for structures constructed, repaired, or to which additions were made on and after January 1, 1988, and before March 1, 1996, in the designated catastrophe areas in the cities of Seabrook and La Porte and (ii) to add a new subdivision 4-b to provide that structures constructed, repaired or to which additions were made on and after January 1, 1988 and before June 1, 1996 that are located in the City of Morgan's Point are approved as complying with the TCPIA inland building code (1973 Edition, Standard Building Code) if the City of Morgan's Point has issued to the owner of the property a statement signed by a city building official that the structure was constructed, repaired, or an addition was made in accordance with the building specifications and standards which comply with the Standard Building Code, (1973 Edition) or an equivalent recognized code; and the City of Morgan's Point inspected the structure and enforced compliance to said code. Under the adopted amendment, this signed statement must be provided to the TCPIA upon application to the TCPIA for windstorm and hail insurance and shall be considered evidence of the insurability of the structure by the TCPIA. Rule D is also amended to add a new subdivision 5-b to provide that a structure constructed, repaired, or to which additions were made on and after June 1, 1996, that is located in the City of Morgan's Point, and that has been certified by the Texas Department of Insurance as being in compliance with the building specifications of the plan of operation shall be considered insurable property by the TCPIA. A certificate of compliance (Form WPI-8) issued by the Texas Department of Insurance shall be considered evidence of insurability of the structure by the TCPIA. The revised manual is adopted to be effective July 15, 1996. No comments were received regarding the adoption of the amendment. The amendment is adopted pursuant to the Insurance Code, Articles 21.49 and 1.03A, and the Government Code, sec.sec.2001.004-2001.038. Article 21.49, sec.3(h) authorizes the Commissioner to designate a city or a part of a city or a county or a part of a county as a catastrophe area to be served by the TCPIA upon determination, after notice of not less than 10 days and hearing, that windstorm and hail insurance is not reasonably available to a substantial number of owners of insurable property within that city or a part of that city or county or a part of that county that is subject to unusually frequent and severe damage resulting from windstorms and/or hailstorms. Pursuant to Commissioner's Order Number 96-0380, effective June 1, 1996, the City of Morgan's Point is designated by the Commissioner of Insurance as a catastrophe area eligible for windstorm and hail insurance coverage through the TCPIA. Article 21.49, sec.6A specifies building code requirements and approval or inspection procedures for windstorm and hail insurance through the TCPIA. Article 21.49, sec.5A authorizes the Commissioner, after notice and hearing, to issue any orders which the Commissioner considers necessary to carry out the purposes of Article 21.49, including, but not limited to, maximum rates, competitive rates and policy forms. Article 21.49, sec.8 authorizes the Commissioner to approve every manual of classifications, rules, rates, rating plans, and every modification of any of the foregoing for use by the TCPIA. Articles 21.49, sec.sec.5A, 6A, and 8, by their terms delegate the foregoing authority to the State Board of Insurance; however, under Article 1.02 of the Insurance Code, a reference in the Insurance Code or another insurance law to the State Board of Insurance means the Commissioner of Insurance or the Texas Department of Insurance, as consistent with the respective powers and duties of the Commissioner and the Department under Article 1.02. Article 1.03A authorizes the Commissioner of Insurance to 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. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on June 24, 1996. TRD-9610126 Alicia M. Fechtel General Counsel and Chief Clerk Texas Department of Insurance Effective date: July 15, 1996 Proposal publication date: May 10, 1996 For further information, please call: (512) 463-6327 TITLE 30. ENVIRONMENTAL QUALITY PART I. Texas Natural Resource Conservation Commission CHAPTER 7.Memoranda of Understanding 30 TAC sec.7.101 The commission adopts new sec.7.101, concerning entering into a Memorandum of Understanding (MOU) with the Texas Department of Commerce (TDOC), without changes to the proposed text as published in the April 12, 1996, issue of the Texas Register (21 TexReg 3145). The purpose of the MOU is to coordinate assistance to small businesses applying for environmental permits. The MOU will allow the commission and the TDOC to coordinate their activities and programs directed toward small businesses in a more efficient manner. The addition of this section will satisfy statutory requirements established in Texas Health and Safety Code, sec.382.0365(e) and Texas Government Code, sec.sec.481.028, 481.123, and 481.129. The agency has conducted a Takings Impact Assessment and determined this rule will have no affect on private real property. A public hearing on the proposal was held May 2, 1996, in Austin. The comment period closed on May 16, 1996. There was no oral testimony given during the public hearing. However, the commission received written testimony on the proposal from an individual asking for inclusion in any materials given to the TDOC giving information about the health and welfare costs of pollution and the benefit costs of reducing air pollution. One of the duties of the commission listed in the MOU requires the commission to research costs related to pollution control equipment and pollution prevention techniques. The commission will provide to the TDOC any results of that research. The new section is adopted under Texas Water Code, sec.sec.5.103, 5.105, 13.041, 26.011, 27.019, 32.009, 33.007, and 34.006 and Texas Health and Safety Code, sec.sec.341.002, 341.031, 361.011, 361.017, 361.024, 366.012, 382.017, 401.011, 401.051, and 401.412, which provide the commission with the authority to adopt the rules necessary to carry out its powers and duties. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 10, 1996. TRD-9610107 Kevin McCalla Director, Legal Division Texas Natural Resource Conservation Commission Effective date: August 5, 1996 Proposal publication date: April 12, 1996 For further information, please call: (512) 239-1966 TITLE 34. PUBLIC FINANCE PART I. Comptroller of Public Accounts CHAPTER 3.Tax Administration SUBCHAPTER V.Franchise Tax 34 TAC sec.3.576 The Comptroller of Public Accounts adopts new sec.3.576, concerning earned surplus: allocation, without changes to the proposed text as published in the March 19, 1996, issue of the Texas Register (21 TexReg 2204). This new section is the result of new Tax Code, sec.171.1061. Comments were received from General Motors Corporation. GM suggested that subsection (a) was an attempt to make the rule retroactive. They also commented that the comptroller had no authority to create a presumption that all income is unitary, as stated in subsection (b). The firm's final comment was that the rule did not define the term "related expenses" as used in subsection (c)(3). The comptroller declined to make the suggested changes because to do otherwise would be contrary to the franchise tax law and United States Supreme Court decisions, including Allied Signal, Inc. v. Director, 504 U.S. 768 (1992). The new section is adopted under the Tax Code, sec.111.002, which provides the comptroller with the authority to prescribe, adopt, and enforce rules relating to the administration and enforcement of the provisions of the Tax Code, Title 2. The new section implements the Tax Code, sec.171.1061. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 11, 1996. TRD-9609979 Martin Cherry Chief, General Law Comptroller of Public Accounts Effective date: August 1, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 463-4028 PART IV. Employees Retirement System of Texas CHAPTER 73.Benefits 34 TAC sec.73.37 The Employees Retirement System of Texas adopts new sec.73.37, concerning plan limitations resulting from changes in the federal tax law, without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4302). This new section will implement federal tax legislation limiting a member's compensation for pension purposes to limits set forth in the Internal Revenue Code. It will also provide "grandfather" protection to those persons employed as August 31, 1996. This new section is needed in order for the plans to remain qualified plans. No comments were received regarding adoption of the new section. The new section is adopted under Government Code, sec.815.507, concerning the Plan Qualifications which gives the Employees Retirement System of Texas the authority to adopt rules to maintain plan qualifications. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 15, 1996. TRD-9610099 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: August 5, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 867-3336 CHAPTER 77.Judicial Retirement 34 TAC sec.77.17 The Employees Retirement System of Texas adopts new sec.77.17, concerning plan limitations resulting from changes in the federal tax law, without changes to the proposed text as published in the May 17, 1996, issue of the Texas Register (21 TexReg 4303). This new section will implement federal tax legislation limiting a member's compensation for pension purposes to limits set forth in the Internal Revenue Code. It will also provide "grandfather" protection to those persons employed as of August 31, 1996. This new section is needed in order for the plans to remain qualified plans. The new section applies to the Judicial Retirement System of Texas Plan Two. No comments were received regarding adoption of the new section. The new section is adopted under Government Code, sec.840.406, concerning Plan Qualifications which gives the Employees Retirement System of Texas the authority to adopt rules to maintain plan qualifications. This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 15, 1996. TRD-9610100 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: August 5, 1996 Proposal publication date: May 17, 1996 For further information, please call: (512) 867-3336 CHAPTER 85.Flexible Benefits 34 TAC sec.85.7 The Employees Retirement System of Texas (ERS) adopts an amendment to sec. 85.7, concerning eligible changes in family status in the Flexible Benefits (Cafeteria Plan), without changes to the proposed text as published in the May 24, 1996 issue of the Texas Register (21 TexReg 4522). These adopted changes will enhance benefits available to state employees, enabling the state to continue to attract qualified persons into the workforce. This rule is being amended to provide plan participants broader opportunities to make changes in their plan outside of annual enrollment. No comments were received regarding adoption of the amendment. The amendment is adopted under the Insurance Code, Article 3.50-2, sec.4A, which provides the ERS with the authority to promulgate all rules and regulations necessary to implement and to administer a Flexible Benefits (Cafeteria Plan). This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 15, 1996. TRD-9610098 Charles D. Travis Executive Director Employees Retirement System of Texas Effective date: September 1, 1996 Proposal publication date: May 24, 1996 For further information, please call: (512) 867-3336 TITLE 40. SOCIAL SERVICES AND ASSISTANCE PART I. Texas Department of Human Services CHAPTER 19.Nursing Facility Requirements for Licensure and Medicaid Certification SUBCHAPTER S.Reimbursement Methodology for Nursing Facilities 40 TAC sec.19.1807 The Texas Department of Human Services (DHS) adopts an amendment to sec.19.1807, with a change to the proposed text as published in the March 19, 1996, issue of the Texas Register (21 TexReg 2213). Justification for the amendment is to include more residents who are not currently eligible for the ventilator reimbursement supplement. The amendment will function by allowing additional nursing facility Medicaid recipients to participate in the ventilator-dependent supplemental reimbursement. The amendment will also allow facilities to receive supplemental reimbursement for recipients who require less-than-continuous ventilation. A correction of error concerning the preamble was published in the April 12, 1996, issue of the Texas Register (21 TexReg 3268). The department received one comment from the Texas Health Care Association concerning the amendment. Comment: The costs for residents requiring less-than-continuous ventilation are not lower than those for residents requiring continuous ventilation because the facility still has the cost of the ventilator equipment twenty-four hours a day and, in addition, the nursing time required to monitor for possible immediate intervention is not reduced. The department should consider reimbursing 100% of the per diem ventilator rate supplement for residents requiring less-than- continuous artificial ventilation daily. Response: The initial supplemental reimbursement for continuous ventilation was calculated based on residents with tracheostomies who needed continuous ventilation and, as a result, required extensive nursing care to prevent infection, etc. Residents requiring less-than-continuous ventilation are often sleep apnea victims receiving BiPAP (bilevel positive airway pressure) or CPAP (continuous positive airway pressure) without a tracheostomy. Consequently, the department believes that the proposed new supplement is an equitable method of reimbursing facilities for the care they provide to residents with less-than- continuous ventilation. A provider who serves multiple residents who will qualify for the proposed new supplement for less-than-continuous ventilation has indicated that the proposed new ventilator supplement was adequate. The department made one change to sec.19.1807(b)(3)(F) to specify the date when qualifying residents may receive a supplement to the per diem rate. The amendment is adopted under the Human Resources Code, Title 2, Chapters 22 and 32, which authorizes the department to administer public and medical assistance programs, and under Texas Government Code, sec.531.021, which provides the Health and Human Services Commission with the authority to administer federal medical assistance funds. The amendment implements the Human Resources Code, sec.sec.22.001-22.024 and sec.sec.32.001-32.042. sec.19.1807.Rate Setting Methodology. (a) (No change.) (b) Rate determination. The Texas Board of Human Services determines general reimbursement rates for medical assistance programs for Medicaid recipients under provisions of the Human Resources Code, Chapter 24 (relating to Reimbursement Methodology). The Texas Board of Human Services determines reimbursement rates for nursing facilities based on consideration of Texas Department of Human Services (DHS) staff recommendations. To develop reimbursement rate recommendations for nursing facilities, DHS staff apply the following procedures. (1)-(2) (No change.) (3) Per diem rate methodology. Staff determine per diem rate recommendations for each of the 11 TILE groups and for the default group according to the following procedures: (A)-(E) (No change.) (F) Supplemental reimbursement for ventilator-dependent residents. As of March 1, 1996, qualifying residents may receive a supplement to the per diem rate specified in paragraph (3)(E) of this subsection. (i) To qualify for supplemental reimbursement, a resident must require artificial ventilation for at least six consecutive hours daily and the use must be prescribed by a licensed physician. (ii) A ventilator-dependent resource differential case mix index is calculated, based on time- study research data. This resource differential index reflects the difference between direct nursing services for ventilator-dependent residents and services for residents in the most severe heavy-care TILE group. The per diem rate supplement is calculated by multiplying the resource differential case mix index times the per diem average recipient care rate component, as described in subparagraph (C) of this paragraph. (I) The supplemental reimbursement for residents requiring continuous artificial ventilation is 100% of the per diem ventilator rate supplement. (II) The supplemental reimbursement for residents not requiring continuous artificial ventilation daily but requiring artificial ventilation for at least six consecutive hours daily is 40% of the per diem ventilator rate supplement. (4)-(5) (No change.) (c)-(e) (No change.) This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority. Issued in Austin, Texas, on July 15, 1996. TRD-9610109 Glenn Scott General Counsel, Legal Services Texas Department of Human Services Effective date: August 5, 1996 Proposal publication date: March 19, 1996 For further information, please call: (512) 438-3765