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 7. BANKING AND SECURITIES
PART I. State Finance Commission
CHAPTER 3.Banking Section
SUBCHAPTER C.Foreign Bank Agency
7 TAC sec.sec.3.41-3.45
The Finance Commission of Texas (the commission) adopts the repeals to 
sec.sec.3.41-3.45, concerning foreign bank agencies, without changes to the 
repeals as published in the July 2, 1996, issue of the Texas Register (21 TexReg 
6051). 
The repeal of sec.3.41 is necessary because Texas Civil Statutes, Article 342-
1006(f)(1), the statute that underlies sec.3.41, was repealed effective 
September 1, 1995, in connection with the enactment of Texas Civil Statutes, 
Articles 342-1.001 et seq (Texas Banking Act sec.sec.1.001 et seq) (the Act). No 
provision similar to repealed Article 342-1006(f)(1) is contained in the Act. 
Repeal of sec.3.42, concerning loan production offices, is necessary because 
these provisions have been included in the Act, sec.9.008(c), and the section is 
therefore superfluous. 
Repeal of sec.3.43, concerning records of foreign bank agencies, is necessary 
because these provisions have been included in the new sec.3.41 adopted in this 
issue of the Texas Register, and the section is therefore duplicative. 
Repeal of sec.3.44, concerning credit balances, is necessary because these 
provisions have been included in the new sec.3.41 and sec.3.42, adopted in this 
issue of the Texas Register, and the section is therefore duplicative. 
Repeal of sec.3.45, concerning applications for foreign bank agencies, is 
necessary because Texas Civil Statutes, Article 342-1007, one of the statutes 
that underlies sec.3.45, was repealed effective September 1, 1995, in connection 
with the enactment of the Act. No provision similar to Article 342-1007(b)-(e) 
is contained in the Act. In addition, other provisions of this section have been 
incorporated into the uniform rules in Title 7, Chapter 9, relating to appeals 
of administrative decisions, and Title 7, Chapter 15, addressing fees and other 
provisions of general applicability. Applications for foreign bank agencies will 
be treated according to the procedures for applications for bank and trust 
charters under sec.15.6 of Title 7, which governs hearings and applications. 
No comments were received regarding the adoption of the repeals.
The repeals are adopted pursuant to rulemaking authority under the Act, 
sec.1.012(a)(1)and sec.9.002(b). The Act, sec.1.012(a), provides that the 
commission may adopt rules "to accomplish the purposes of this Act," including 
rules that "implement and clarify" it. The Act, sec.9.002(b), provides that the 
commission may adopt rules specifically applicable to foreign bank agencies.
As required by the Act, sec.1.012(b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within the state.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612392
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.3.41
The Finance Commission of Texas (the commission) adopts new sec.3.41, regarding 
applications, notices, and annual reports required to be filed by foreign bank 
agencies, with nonsubstantive changes to the text as proposed in the July 2, 
1996, issue of the Texas Register (21 TexReg 6052). 
Statutory requirements regarding foreign bank agencies changed as a result of 
the recent enactment of Texas Civil Statutes, Articles 342-1.001 et seq (Texas 
Banking Act, sec.sec.1.001 et seq) (the Act). As adopted, sec.3.41(a) outlines 
the information that must be submitted by the foreign bank corporation in order 
to establish an agency office in the state. Applications for foreign bank 
agencies will be treated according to the procedures for applications for bank 
and trust charters under sec.15.6 of Title 7, which governs hearings and 
applications, and the uniform rules in Title 7, Chapter 9, relating to appeals 
of administrative decisions. Current sec.3.45, concerning the same subject, is 
repealed in this issue of the Texas Register Section 3.41(b) as adopted 
identifies the notices that a foreign bank agency must file with the banking 
commissioner. Required notice filings are consistent with the attempt to reduce 
regulatory burden. Section 3.41(c) identifies the information that a foreign 
bank agency must include in its annual report to the banking commissioner, a 
required filing under the Act, sec.9.013. 
Three comments were received regarding proposed sec.3.41, one of which suggested 
changes without expressing either support or opposition and the others of which 
expressed support while suggesting changes. 
The Independent Bankers Association of Texas (IBAT) neither expressly supported 
nor opposed the rule. IBAT suggests that the rule should require an English 
translation of the annual report required by sec.3.41(c)(1) and the 
certification required by sec.3.41(c)(2). The agency concurs and has modified 
these provisions. Filings by foreign bank agencies have historically been in 
English and would continue to be so, even without the added clarification. 
Further, IBAT notes that accounting standards differ from nation to nation and 
suggests that financial statements should be prepared under generally accepted 
accounting principles applicable in the United States. The agency believes the 
suggestion is well intended but impractical. Within each country, local 
regulations govern, to a greater or lesser degree, the issue of financial 
statements. Such local regulations include accounting standards which are 
promulgated by the regulatory bodies and/or the professional accountancy bodies 
in the countries concerned. These professional accountancy bodies have for the 
last 20 years cooperated and continue to cooperate in developing International 
Accounting Standards that facilitate understanding of financial statements in an 
international context, and financial statements of international entities often 
explain differences between local accounting standards and International 
Accounting Standards. To require foreign financial statements filed in Texas to 
be restated in accordance with United States generally accepted accounting 
principles would be unduly burdensome and would not be supported by the 
accounting profession or by federal regulatory authorities. 
One commenter expressed concern that the information required by proposed 
sec.3.41(c)(3)-(5) and (6)(C) could be very burdensome to produce. The agency 
disagrees, noting that this information is generally contained in annual reports 
(financial statements and commentary, as distinguished from the "annual report" 
requirement of sec.3.41(c)) prepared by foreign banks, and applicants can 
incorporate this information in an application by reference to its annual 
report. However, the commenter identified several unnecessary details that are 
deleted in light of the purpose of requiring the information. The commenter 
further notes that the degree of detail required by, for example, a description 
of the foreign bank corporation's premises and business activities, does not 
seem reasonably related to regulatory requirements for the information. The 
agency accepts the comment and has added clarification as warranted. 
Finally, a commenter noted that no due date was specified for the required 
annual report to the banking commissioner. A due date has been added. 
This section is adopted pursuant to rulemaking authority under the Act, 
sec.1.012(a) and sec.9.002(b). The Act, sec.1.012(a), provides that the 
commission may adopt rules "to accomplish the purposes of this Act," including 
rules that "implement and clarify" it. The Act, sec.9.002(b), provides that the 
commission may adopt rules specifically applicable to foreign bank agencies. 
As required by the Act, sec.1.012 (b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within this state.

sec.3.41.Applications, Notices, and Reports of a Foreign Bank Corporation.
(a) (No change.)
(b) Notices. A foreign bank corporation maintaining a Texas agency shall file 
with the banking commissioner the following information: 
(1) notice of change in location at least 30 days before the effective date of a 
relocation of a licensed foreign bank agency; 
(2) notice of the establishment of a representative office or loan production 
office at least 30 days before the effective date of the opening of the office; 
and 
(3) notice of the closing of an agency office at least 30 days before the 
effective date of the closing. On the date of the closing, an officer, manager, 
or agent of the foreign bank corporation shall deliver to the banking 
commissioner: 
(A) all copies of examination reports or other property of the department; 
(B) a statement under oath by an authorized officer, manager, or agent of the 
foreign bank corporation that there are no outstanding liabilities of the 
agency; 
(C) the license issued by the banking commissioner; 
(D) the certificate or order required by Texas Civil Statutes, Article 342-
9.015, or appropriate board resolution closing the agency; and 
(E) the location where the records of the agency will be kept after the closing. 
(c) Annual reports. A foreign bank corporation maintaining a Texas agency shall 
file an annual report with the banking commissioner within 120 days after the 
close of the corporation's fiscal year. The report must be made under oath of 
one of the authorized officers, managers, or agents transacting business in this 
state. The report must include, in English or accompanied by an English 
translation: 
(1) a copy of the most recent audited financial statement of the foreign bank 
corporation, expressed in the currency of the country of its incorporation or 
organization and in United States currency; 
(2) a letter from the certified public accountant, chartered accountant, or 
similar independent service provider of the foreign bank corporation certifying 
that the statements have been prepared in accordance with generally accepted 
accounting principles of the home country of the foreign bank corporation; 
(3) a general description of the foreign bank corporation's business activities; 
(4) the location and a general description of the foreign banking corporation's 
headquarters office if the office has been relocated since the last annual 
report filed under this subsection [premises, if different from the prior annual 
report]; 
(5) disclosure of all material legal proceedings in which the foreign banking 
corporation or any of its subsidiaries has been named as a defendant that could 
result in a material adverse impact [and the potential impact that such legal 
proceedings could have] on the financial condition of the foreign banking 
corporation , and a description of such potential impact, quantified to the 
extent feasible
(6) a listing of the foreign banking corporation's: 
(A) board of directors; 
(B) executive officers; and 
(C) overseas operations by office [, including the address and telephone number 
of the office, and the officer responsible for overseeing the operations of the 
office]; and 
(7) a copy of the foreign banking corporation's organizational chart by 
functional department.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612393
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.3.42
The Finance Commission of Texas (the commission) adopts new sec.3.42, regarding 
records of foreign bank agencies, with one nonsubstantive change to the text as 
proposed in the July 2, 1996, issue of the Texas Register (21 TexReg 6053).
The section consolidates all record-keeping requirements relating to foreign 
bank agencies in one section. Substantially similar provisions were previously 
contained in former sec.3.43 and sec.3.44(c), both repealed in this issue of the 
Texas Register.
Two comments were received regarding the proposed sec.3.42, one of which 
suggested changes without expressing either support or opposition and the other 
of which expressed support while suggesting changes. 
The Independent Bankers Association of Texas (IBAT) neither expressly supported 
nor opposed the rule. IBAT suggests that the rule should require financial 
records to be in English and prepared under generally accepted accounting 
principles applicable in the United States. The agency has modified the rule to 
require records to be in English. The agency believes the suggestion regarding 
financial records is inapposite. The manner in which financial records are 
maintained is not the subject of generally accepted accounting principles, which 
govern financial reporting. 
Another commenter noted that the proposed language of sec.3.42(4) implies that a 
foreign bank corporation must have an agency office in order to be empowered to 
open a representative office. The agency disagrees in that the rule by its terms 
and title applies only to foreign bank corporations that have an agency office 
in this state. 
The section is adopted pursuant to rulemaking authority under the Act, 
sec.1.012(a) and sec.9.002. The Act, sec.1.012(a) provides that the commission 
may adopt rules "to accomplish the purposes of this Act," including rules that 
"implement and clarify" it. The Act, sec.9.002(b), provides that the commission 
may adopt rules specifically applicable to foreign bank agencies.
As required by the Act, sec.1.012(b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within this state. 

sec.3.42.Foreign Bank Agency Records.
A foreign bank agency shall maintain the following records in English, or 
accompanied by an English translation, at its authorized location: 
(1) separate accounting records relating to its assets, liabilities, income and 
expenses resulting from its operations in the state; 
(2) records relating to all filings or permits required by federal regulators; 
(3) records of all credit balances, including: 
(A) a list of each credit balance; 
(B) the contractual terms applicable to each credit balance; and 
(C) the contractual terms specifying the completion of the transactions to which 
the credit balance relates; 
(4) records listing all representative offices or loan production offices 
maintained in the state by the foreign bank agency or by the foreign bank 
corporation that controls the agency; and 
(5) such other records that the banking commissioner may require to be 
maintained. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612394
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.3.43
The Finance Commission of Texas (the commission) adopts new sec.3.43, regarding 
credit balances held by foreign bank agencies, without changes to the proposed 
text as published in the July 2, 1996 issue of the Texas Register (21 TexReg 
6054). The text of the adopted section will not be republished. 
The new section is necessary because the recent enactment of Texas Civil 
Statutes, Articles 342-1.001 et seq (Texas Banking Act, sec.sec.1.001 et seq) 
(the Act), changed the statutory provisions relating to foreign bank agencies 
and provided regulatory flexibility. Substantially similar provisions were 
formerly located in sec.3.44, repealed in this issue of the Texas Register. The 
section as adopted itemized permissible credit balances, including cash 
collateral held for a loan. 
One comment was received regarding the proposed sec.3.43 that neither expressly 
supported nor opposed the rule. The Independent Bankers Association of Texas is 
concerned that sec.3.43(b)(2), classifying loan payments received from customers 
as credit balances, is capable of abuse, and suggests limiting the paragraph to 
"current" loan payments from customers. The agency disagrees based on its past 
experience and customs and usages developed among foreign bank agencies, and 
declines to so limit the paragraph. However, the agency will be alert for abuses 
in the examination process. 
The section is adopted pursuant to rulemaking authority under the Act, 
sec.sec.1.002(a)(15), 1.012(a), and 9.002(b). The Act, sec.1.002(a)(15), defines 
a deposit and provides that the commission may, by rule, determine obligations 
that are not a deposit liability. The Act, sec.1.012(a), provides that the 
commission may adopt rules "to accomplish the purposes of this Act," including 
rules that "implement and clarify" it. The Act, sec.9.002(b), provides that the 
commission may adopt rules specifically applicable to foreign bank agencies.
As required by the Act, sec.1.012(b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within this state.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612407
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.3.44
The Finance Commission of Texas (the commission) adopts new sec.3.44, regarding 
the statement of registration, notices, and filings required from a 
representative office of a foreign bank corporation, with nonsubstantive changes 
to the proposed text as published in the July 2, 1996, issue of the Texas 
Register (21 TexReg 6055). 
The section is necessary because the enactment of Texas Civil Statutes, Articles 
342-1.001 et seq (Texas Banking Act, sec.sec.1.001 et seq) (the Act) changed and 
established additional requirements for a representative office of a foreign 
bank corporation. The Act, sec.9.006, requires a foreign bank corporation, which 
does not maintain an agency office in this state, to file a verified statement 
of registration in order to establish a representative office in this state. The 
statement of registration must be filed to establish a representative office. An 
existing representative office must also file a statement of registration. 
Pursuant to the Act of May 18, 1995, 74th Legislature, Chapter 914, 1995 Texas 
Session Law Service 4451, 4552, a foreign bank corporation with a representative 
office in Texas that existed on September 1, 1995, must make its required 
filings by September 1, 1996. 
Section 3.44(b) as adopted identifies the information required in the statement 
of registration. Section 3.44(c) addresses registration fees. Section 3.44(d) 
outlines the notices regarding the foreign bank corporation or its 
representative office in this state that must be filed with but do not require 
approval by the banking commissioner. Notice filings are consistent with the 
goal to reduce regulatory burden. 
One comment was received regarding the proposed sec.3.44 from the Independent 
Bankers Association of Texas (IBAT). IBAT neither expressly supports or opposes 
the rule, but suggests that the required registration statements and notices be 
in English. The agency concurs and has so modified the rule. 
The section is proposed pursuant to rulemaking authority under the Act, 
sec.1.012(a) and sec.9.002. The Act, sec.1.012(a), provides that the commission 
may adopt rules "to accomplish the purposes of this Act," including rules that 
"implement and clarify" it. The Act, sec.9.002(b), provides that the commission 
may adopt rules specifically applicable to foreign bank agencies.
As required by the Act, sec.1.012(b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within this state.

sec.3.44.Statement of Registration, Notices and Filings by a Representative 
Office.
(a) (No change.)
(b) Statement of registration. A foreign bank corporation that does not possess 
a license to operate a foreign bank agency in this state shall file with the 
banking commissioner a statement of registration to establish a representative 
office in this state, and may proceed to establish its representative office or 
offices immediately after receipt of written confirmation from the banking 
commissioner that the statement of registration is complete and accepted for 
filing and all required fees have been paid. The statement of registration must 
be in English, subscribed to and acknowledged by an officer of the foreign bank 
corporation or another duly authorized agent, and must include the following: 
(l) a copy of the full registration form, application, filing, or notice 
submitted to the Board of Governors of the Federal Reserve System under 12 
United States Code, sec.3107; 
(2) the name, address and phone number of the principal office in the country of 
domicile of the foreign bank corporation; 
(3) a certified copy of the foreign bank corporation's articles of incorporation 
and bylaws, or other equivalent constitutive documents. If the documents are in 
a language other than English, an attached English translation of the documents, 
under the oath of the translator, must be attached; 
(4) the street and post office address, phone number and county where each 
representative office is to be located in this state; 
(5) the name, title, and qualifications of each officer and director of the 
foreign bank corporation who will have control of all or part of the business 
affairs at the representative office; 
(6) a complete and detailed statement of the financial condition of the foreign 
bank corporation as of a date not more than 360 days before the date of the 
filing; 
(7) evidence of compliance with Texas Civil Statutes, Article 342-9.007, 
concerning designation of the secretary of state as agent for service of 
process; 
(8) a list of those activities in which the representative office plans to 
engage; 
(9) a list of other states in which the foreign bank corporation operates and 
the corporate form of each such operation; and 
(10) the date upon which the foreign bank corporation plans to commence business 
at the representative office. 
(c) (No change.)
(d) Notices. A representative office of a foreign bank corporation that does not 
also maintain a foreign bank agency in this state shall file the following 
notices in English with the banking commissioner on the designated dates: 
(1) notice of a change in control, merger, or other business combination of the 
foreign bank corporation at least 30 days before the effective date of such 
event; 
(2) notice of the closing of a representative office in this state at least 30 
days before the effective date of the closing; and 
(3) notice of a change in location containing the street, post office and 
mailing address, and county of the new location at least 30 days before the 
effective date of the relocation. 
(4) copies of other notices or applications filed with a federal regulator 
affecting the representative office in this state, at the time filed with the 
federal regulator. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612395
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.3.45
The Finance Commission of Texas (the commission) adopts new sec.3.45, regarding 
records required to be maintained by a representative office of a foreign bank 
corporation, with nonsubstantive changes to the proposed text as published in 
the July 2, 1996 issue of the Texas Register.
The section is necessary because the recent enactment of Texas Civil Statutes, 
Articles 342-1.001 et seq (Texas Banking Act, sec.sec.1.001 et seq) (the Act), 
changed the statutory provisions relating to representative offices of foreign 
bank corporations. The Act, sec.9.006(f), provides that the banking commissioner 
may examine representative offices. Section 3.45(a) outlines the records that a 
representative office must maintain for thorough examination by the banking 
commissioner. Section 3.45(a)(13) clarifies that credit approval and 
permissible, delegated authority from the foreign bank agency, branch, or 
corporation may be in facsimile or telex form. Section 3.45(b) explains that if 
a foreign bank corporation has an agency in the state, the records required by 
the representative office may be maintained at the office of the agency. 
Two comments were received regarding the proposed sec.3.45, one of which 
suggested changes without expressing either support or opposition and the other 
of which expressed support while suggesting changes. 
The Independent Bankers Association of Texas (IBAT) neither expressly supported 
nor opposed the rule. IBAT suggests that the rule should require financial 
records to be in English and prepared under generally accepted accounting 
principles applicable in the United States. The agency has modified the rule to 
require records to be in English. The agency believes the suggestion regarding 
financial records is inapposite. The manner in which financial records are 
maintained is not the subject of generally accepted accounting principles, which 
govern financial reporting. 
Another commenter requested that proposed sec.3.45(a)(11)(A) be clarified to 
address permitted authorization for the representative office to execute loan 
documents. Because such practice is permitted by the Act, sec.9.006(c)(6), the 
agency has no objection to the clarification. 
The new section is adopted pursuant to rulemaking authority under the Act, 
sec.1.012(a) and sec.9.002. The Act, sec.1.012(a), provides that the commission 
may adopt rules "to accomplish the purposes of this Act," including rules that 
"implement and clarify" it. The Act, sec.9.002(b), provides that the commission 
may adopt rules specifically applicable to foreign bank agencies.
As required by the Act, sec.1.012(b), the commission considered the need to 
promote a stable banking environment, provide the public with convenient, safe, 
and competitive banking services, preserve and promote the competitive position 
of foreign bank agencies in this state consistent with safety and soundness, and 
allow for economic development within this state. 

sec.3.45.Records of a Representative Office.
(a) A representative office established in this state by a foreign bank 
corporation shall maintain the following records in English or accompanied by an 
English translation: 
(1) copies of all reports sent to the foreign bank corporation by the 
representative office; 
(2) copies of all policies pertaining to the solicitation, origination, and 
accounting of loans between the representative office and other offices of the 
foreign bank corporation; 
(3) a description of all activities in which the representative office is 
engaged and its target market; 
(4) assets, liabilities, and income and expense journals for the representative 
office; 
(5) the organizational chart of the representative office, including officer 
titles, functions, and reporting lines; 
(6) marketing, business plans, and budgets for the representative office; 
(7) copies of all lease agreements on rented office space and fixed assets in 
this state, including details of the sharing arrangement covering the office 
space if the office space is shared with another unit of the foreign bank 
corporation; 
(8) a copy of the most recent audited annual report of the foreign bank 
corporation, in English; 
(9) copies of all insurance policies covering fraud and fixed assets that relate 
to the representative office; 
(10) a list of other operations and affiliates of the foreign bank corporation 
in the United States; 
(11) for all extensions of credit solicited or handled by the representative 
office: 
(A) copies of the credit approval from the domestic agency, branch facility, or 
foreign bank corporation, which may authorize the representative office to sign 
and execute the loan contract and related documentation. The approval may be in 
the form of a facsimile transmission or telex from the applicable foreign bank 
corporation office; 
(B) complete copies of all loan agreements and all subsequent revisions and 
amendments; and 
(C) complete copies of credit and collateral documentation, including borrowing 
base calculations and reports; and 
(12) such other records the banking commissioner may require to be maintained. 
(b) (No change.)
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612396
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

CHAPTER 4.Currency Exchange
7 TAC sec.4.11
The Finance Commission of Texas (the commission) adopts new sec.4.11, concerning 
fees under the Currency Exchange Act, Texas Civil Statutes, Article 350 (the 
Act). Section 4.11 is adopted without changes to the proposed text as published 
in the July 2, 1996, issue of the Texas Register (21 TexReg 6058), and will not 
be republished. 
This new section establishes the fees necessary to enable the currency exchange 
section of the special audits division to be self-funding and formalizes the 
examination fee structure currently in place. The amounts of the application and 
annual renewal filing fees established in sec.4.11 reasonably approximate the 
agency's cost of administering the Act with respect to each such filing, and the 
examination rate of $400 per day offsets the balance of the cost of 
administering the Act. Travel expenses associated with examinations are 
collected separately. 
To determine the cost of administering the Act, the department analyzed existing 
fiscal data pertaining to salaries of staff and overhead costs (less associated 
travel expenses) related to the department's administration of the Act. After 
adjusting this total to account for application and renewal fee revenues and 
travel costs related to examinations, the department divided the number of 
examiner hours for the fiscal year into the balance of its administrative costs. 
This figure multiplied by eight hours is $400, the daily rate set for the 
examination. Based on the current number of licensees and the department's 
experience in regulating them, the fees in this section appear to provide the 
funding required by the special audits division to regulate currency exchange 
operations in Texas. 
As a result of this adoption, the currency exchange industry will wholly fund 
its regulation by state government and, as a consequence, such regulation will 
not require the expenditure of public monies from other sources. 
No comments were received regarding the adoption of the new section. 
The new section is adopted under Texas Civil Statutes, Article 350, sec.5 and 
sec.6, which authorize the banking commissioner to set fees for licensees and 
the commission to adopt rules necessary to implement the Act. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612397
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

7 TAC sec.4.12
The Finance Commission of Texas (the commission) adopts sec.4.12, concerning the 
processing of initial currency exchange license applications and issuance of 
currency exchange licenses, without change to the proposed text as published in 
the July 2, 1996, issue of Texas Register (21 TexReg 6059). The text of the 
adopted section will not be republished. 
The new section establishes specific provisions for the processing of initial 
currency exchange license applications and issuance of currency exchange 
licenses. No comments were received regarding the adoption of the new section.
The new section is made under Texas Civil Statutes, Article 350, sec.7, which 
authorizes the commission to adopt implementing rules. Adoption of this section 
is also made under Texas Government Code sec.2005.003, which provides that a 
state agency that issues permits must adopt procedural rules for processing 
permit applications and issuing permits. Also, adoption of this section is made 
under Texas Government Code sec.2005.006, which requires a state agency to 
establish by rule complaint procedures through which a permit applicant can 
complain and seek redress if a state agency exceeds the established period for 
processing permits. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 23, 1996.
TRD-9612398
Everette D. Jobe
General Counsel
Texas Department of Banking 
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

PART II. Texas Department of Banking
CHAPTER 15.Corporate Activities
SUBCHAPTER C.Bank Offices
7 TAC sec.15.41
The Finance Commission of Texas (the commission) adopts an amendment to 
sec.15.41, concerning notice or application for change of home office by a state 
bank, with one nonsubstantive change to the text as proposed in the July 2, 1996 
issue of the Texas Register (21 TexReg 6060). 
The amendment implements statutory changes made in connection with the repeal of 
Texas Civil Statutes, Articles 342-101 through 342-1011 (The Texas Banking Code, 
Chapters I-X) and replacement by Texas Civil Statutes, Articles 342-1.001 et seq 
(Texas Banking Act, sec.1.001 et seq.) (the Act). Specifically, the relocation 
of home office of a state bank is now governed by the Act, sec.3.202. 
Pursuant to the Act, sec.3.202(b), a state bank can change its home office to 
one of its previously established branch offices by filing a notice with the 
banking commissioner, provided the previous home office remains as a branch 
office of the bank. In the event the proposed relocation is to a new facility, a 
state bank must file an application under the Act, sec.3.202(c), and await prior 
approval by the banking commissioner. Adopted sec.15.41(c) sets forth the 
information requirements for both notice and application. 
However, in the event a relocation could be considered "an abandonment of all or 
part of the community served by the bank," before permitting the relocation, the 
banking commissioner must find, pursuant to the Act, sec.3.202(d), that the 
abandonment is consistent with the original determination of public necessity 
for the establishment of the bank at its original home office location. Section 
15.41(c)(7) and (8) address the potential abandonment issue by eliciting 
information from the bank regarding potential reduction in business or possible 
abandonment at the existing home office location. Affirmative responses to 
either question will require the bank to submit application and obtain the 
written approval of the banking commissioner before the relocation can be 
effected, even if the relocation is to a previously established branch office. 
Banks can be expected to respond truthfully to these questions because of 
potential criminal sanctions under Penal Code, sec.37.10, for false statements 
made in a governmental filing. 
A change of home office to a previously established branch office, assuming the 
bank does not anticipate potential reduction in business or possible abandonment 
at the existing home office location, takes effect under the Act, sec.3.202(b), 
on the 31st day after the date the banking commissioner receives the required 
notice unless the banking commissioner consents to a different effective date. 
Under sec.15.41(a), the relocation in such circumstance can be effective 
immediately after the notice is acknowledged by the banking commissioner as 
complete and accepted for filing, in recognition of the absence of a reason for 
supervisory concern in this situation. 
If an application is required, sec.15.41(b) provides that, to the extent 
applicable, the banking commissioner will evaluate the application under this 
subsection in light of potential abandonment issues regarding the existing home 
office location, and will apply the criteria applicable to an application for a 
branch office in the event the new location did not previously exist as a 
branch. 
Finally, adopted sec.15.41(f) clarifies that a change of home office location, 
whether by notice or prior approval, does not require amendment of the bank's 
articles of association. Under the Act, sec.3.002(10), subsequent to September 
1, 1995, the articles of association are required to contain the address of the 
bank's "initial" home office but are not required to contain the address of the 
bank's current home office. However, if the articles of association are 
subsequently restated for any reason, the bank must include the address of its 
then current home office in the restated articles of association. 
One comment was received in support of the proposed amendments to sec.15.41 from 
the Independent Bankers Association of Texas ("IBAT"), and no comments were 
received that opposed adoption of the amendments. IBAT did suggest that it may 
be helpful to remind state banks of the need to comply with federal branch 
relocation law, if applicable. The agency concurs and has added a new paragraph 
to sec.15.41(c) that requires a bank to consider the potential applicability of 
federal law. 
Amendment of this section is adopted pursuant to rule-making authority under the 
Act, sec.1.012(a)(1), which authorizes the commission to adopt rules necessary 
or reasonable to implement and clarify the Act. As required by the Act, 
sec.1.012(b), the commission considered the need to promote a stable banking 
environment, provide the public with convenient, safe, and competitive banking 
services, preserve and promote the competitive parity of state banks with 
national banks and other depository institutions in this state consistent with 
the safety and soundness of state banks and the state bank system, and allow for 
economic development within this state.

sec.15.41.Written Notice or Application for Change of Home Office.
(a) Relocation by notice. Unless an application is required, a state bank may 
change its home office to one of its previously established branch locations 
pursuant to the Act, sec.3.202(b), by filing a written notice setting forth the 
information required by subsection (c) of this section with the banking 
commissioner, accompanied by the required filing fee pursuant to sec.15.2 of 
this title (relating to Filing Fees and Cost Deposits). A bank filing notice for 
a home office relocation under this subsection may relocate its home office 
immediately after the required notice and fee has been acknowledged in writing 
as complete and accepted for filing by the banking commissioner. However, an 
application for prior written approval under subsection (b) of this section is 
required and the bank may not use the notice provisions of this subsection if 
the proposed home office relocation: 
(1) will result in an abandonment of all or part of the community served by the 
bank's present home office location; or 
(2) is anticipated to result in a reduction in banking services presently 
offered by the bank at its present home office location within the 18 month 
period after the effective date of the relocation. 
(b) Relocation by application. A state bank desiring to change its home office 
to a location pursuant to the Act, sec.3.202(b), if subsection (a) of this 
section does not apply, or pursuant to the Act, sec.3.202(c), must file an 
application setting forth the information required by subsection (c) of this 
section with the banking commissioner, accompanied by the required filing fee 
pursuant to sec.15.2 of this title (relating to Filing Fees and Cost Deposits). 
Eligible banks may file an expedited application pursuant to sec.15.3 of this 
title (relating to Expedited Filing). The banking commissioner shall issue a 
written notice as required by sec.15.4 of this title (relating to Required 
Information and Abandoned Filings) informing the applicant either that all 
filing fees have been paid and the application is complete and accepted for 
filing, or that the application is deficient and specific additional information 
is required. Except as otherwise provided in this section and to the extent 
applicable, the banking commissioner shall evaluate an application under this 
subsection in light of the Act, sec.3.202(d), and apply the criteria applicable 
to an application for a branch office under sec.15.42(e) of this title (relating 
to Establishment and Closing of a Branch Office). An applicant under this 
subsection may not relocate its home office without the prior written approval 
of the banking commissioner. 
(c) Contents of notice or application. The notice filed under subsection (a) of 
this section or the application submitted under subsection (b) of this section 
must disclose: 
(1) the name of the bank requesting the home office relocation; 
(2) the street address of the bank's home office before the requested home 
office relocation; 
(3) the street address of the bank's proposed home office; 
(4) the effective date of the home office relocation under subsection (a) of 
this section, or the requested effective date for a proposed home office 
relocation under subsection (b) of this section; 
(5) a copy of the resolution adopted by the bank's board of directors 
authorizing the proposed home office relocation; 
(6) a written statement signed by the principal executive officer of the bank or 
a majority of the bank's board of directors stating whether or not the proposed 
home office relocation will result in an abandonment of all or part of the 
community served by the bank's present home office location and, if so, an 
explanation of how the abandonment is consistent with the original determination 
of public necessity for the establishment of the bank at its existing location; 
(7) a written statement signed by the principal executive officer of the bank or 
a majority of the bank's board of directors stating whether or not the proposed 
home office relocation is anticipated to result in a reduction in banking 
services presently offered by the bank at its present home office location 
within the 18 month period after the proposed effective date of the relocation 
and, if so, an explanation of the anticipated reduction in banking services and 
how the diminution in services is consistent with the original determination of 
public necessity for the establishment of the bank at its existing location; 
(8) a description of any actual, proposed, or contemplated financial involvement 
by an officer, director, manager, managing participant, or principal shareholder 
or participant of the state bank with respect to the home office relocation; 
(9) evidence that the bank has considered the applicability of federal law 
governing main office or branch closing or relocation, such as 12 United States 
Code, sec.1828(d)(1), and regulations and policy statements issued thereunder; 
and 
(10) such other information as the banking commissioner may require. 
(d) Public notice. 
(1) Within 14 days of the initial submission of a written application under 
subsection (b) of this section, the applicant shall publish notice of the 
submission, as required by sec.15.5 of this title (relating to Public Notice). 
Notice shall be published in the community where the current home office of the 
bank is located and in the community of proposed home office. 
(2) The notice must comply with the content requirements of sec.15.5(b) of this 
title (relating to Public Notice) and must also disclose the current location 
and the proposed home office location. 
(e) Public comment and protest. For a period of 14 days after publication of 
notice or such longer period as the banking commissioner may allow for good 
cause shown, the public may submit written comments or protests regarding an 
application under subsection (b) of this section. Persons submitting comments 
are not be entitled to further notice of or participation in the proceedings. In 
the event of a properly filed protest, each protesting party has the rights and 
responsibilities of a protesting party to a branch application under sec.15.42 
of this title (relating to Establishment and Closing of a Branch Office). 
(f) Articles of association. An amendment to the articles of association of the 
state bank is not required to effect a change in the location of its home 
office. However, if the articles of association are subsequently restated for 
any reason, the bank must include the address of its then current home office in 
the restated articles of association. 
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 August 23, 1996.
TRD-9612386
Everette D. Jobe
General Counsel
Texas Department of Banking
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

CHAPTER 29.Sale of Checks Act
7 TAC sec.29.2
The Finance Commission of Texas (the commission) adopts new sec.29.2, concerning 
fees and assessments under the Sale of Checks Act, Texas Civil Statutes, Article 
489d (the Act). The text of the adopted section corrects one typographical error 
("an fee" changed to "a fee") in the text as proposed in the July 2, 1996, issue 
of the Texas Register (21 TexReg 6062). No other change has been made to the 
proposed text, and the section will not be republished. 
Under the Act, sec.9B(b), financial audits are funded at the sole cost and 
expense of the licensee. This new section establishes fees and assessments in 
amounts sufficient for administering the Act and provides for the cost of the 
financial audit to be covered by the sale-of-checks licensee. To this end, 
sec.29.2 authorizes the agency to collect a $2,500 application fee for a new 
license, references the $500 annual renewal fee set under the Act, sec.10, and 
establishes a fee rate for financial audits. 
To determine the full cost of the financial audit, the agency analyzed existing 
fiscal data pertaining to salaries of staff and overhead costs (less associated 
travel expenses) comprising the full cost of the audit, including both fixed and 
variable costs. After adjusting this total to account for other revenues set in 
this section, including those collected as a result of reopened annual financial 
audits, the agency divided the number of industry transactions into the balance 
to arrive at the proper ratio for assessment. Under this formula, sec.29.2 
authorizes the agency to collect an annual financial audit fee from each 
licensee, with limited exception, in an amount not to exceed $10,000 in a fiscal 
year, assessed at a rate not greater than $0.018 per $1,000 of money orders, 
travelers checks, and other payment instruments sold and transmission money 
received by the licensee within Texas. Section 29.2 provides for a minimum 
$2,000 financial audit fee and requires each licensee to reimburse the agency 
for any travel costs related to the financial audit. 
The adopted section also requires a licensee to pay an additional fee of $500 
per day, plus travel costs, for each examiner required to perform audits that 
result from the reopening of an annual financial audit because the licensee 
fails to comply with applicable laws and regulations. The agency determined the 
cost of the reopened annual financial audit by analyzing existing fiscal data 
associated with conducting audits, including salaries of staff and overhead 
costs (less associated travel expenses) that relate to the audit. To determine 
the hourly rate of a financial audit, the agency added these amounts together 
and divided the total by the approximate number of examiner hours spent 
conducting financial audits. This figure multiplied by eight hours is the daily 
rate of the reopened audit. 
The agency computed the application fee to include all costs associated with 
processing the application and the issuance of license. 
As a result of this adoption, the cost of regulating the sale-of-checks industry 
under the Act will be fully borne by licensees under the Act. 
The agency received one comment opposing the proposed new section. This 
commenter, the Ad Hoc Industry Group of Non-Bank Money Transmitters, stated that 
the fee and expenses imposed under the section are too high and, in essence, 
will force large businesses to subsidize the agency's examination of all 
licensees. The agency disagrees with this comment: as the preamble explains, the 
cost of a licensee's financial audit is based on the number of transactions that 
it performs in Texas; as a result, the cost of financial audits is equitably 
assessed across the industry, and assessment does not impact any one segment 
more than another. This commenter also stated that the financial audit fee is 
"not based on actual out-of-pocket expenses expended for a particular 
examination." The agency considers that the audit includes much more than the 
field examination (e.g., the investigation of complaints against the licensee, 
the review of quarterly permissible investment data, and administrative 
processing of various reports); in that the agency's involvement with such 
issues is directly proportionate to the volume of a licensee's business in 
Texas, the agency has determined that the most equitable manner of assessing the 
financial audit fee is in relation to the volume of a licensee's business in 
Texas. Furthermore, this group stated that the increase would make Texas "one of 
the highest, if not the highest, cost state for examination purposes." The 
agency disagrees, noting first that California imposes the highest fees by far 
on licensees, including the constituent members of this group; secondly, this 
comparison fails to consider that many states with lower fees are not 
statutorily required to perform annual examinations, as is Texas. Finally, this 
group criticizes the increase as "unwarranted," "unnecessary," and "contrary to 
the public interest." The agency also disagrees with these criticisms. The fees 
imposed under the adopted section are warranted and necessary in that the agency 
is required by statute to be self funding; in addition, such fees are in the 
public interest because they enable the agency to adequately regulate licensees 
under the Act. No other comments were received. 
This section is adopted under Texas Civil Statutes, Article 489d, sec.9E, which 
authorizes the commission to adopt rules necessary for the enforcement and 
orderly administration of the Act. 
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 August 23, 1996.
TRD-9612387
Everette D. Jobe
General Counsel
Texas Department of Banking
Effective date: September 13, 1996
Proposal publication date: July 2, 1996
For further information, please call: (512) 475-1300

TITLE 16. ECONOMIC REGULATION
PART I. Railroad Commission of Texas
CHAPTER 13.Regulations for Compressed Natural Gas (CNG) and Liquefied Natural 
Gas (LNG)
The Railroad Commission of Texas adopts new sec.sec.13.2010, 13.2013, 13.2019, 
13.2022, 13.2028, 13.2034, 13.2037, 13.2046, and 13.2049, relating to LNG report 
forms; categories of licenses; examination and course of instruction; denial, 
suspension, or revocation of licenses or certifications, and hearing procedure; 
franchise tax certification and assumed name certificates; self- insurance 
requirements; components of LNG stationary installations not specifically 
covered; filings required for school bus, mass transit and special transit 
vehicles; and report of LNG incident/accident, without changes to the versions 
published in the April 5, 1996, Texas Register (21 TexReg 2870), and 
sec.sec.13.2004, 13.2007, 13.2016, 13.2025, 13.2031, 13.2040, 13.2043, and 
13.2052, relating to applicability, severability, and retroactivity; 
definitions; licensing requirements; designation of outlet and operations 
supervisor (branch manager); insurance requirements; filings and notice 
requirements for stationary LNG installations; temporary installations; and 
application for an exception to a safety rule, with changes to the versions 
published in the April 5, 1996, Texas Register (21 TexReg 2870). These new 
sections in subchapter G, relating to general applicability and requirements, 
specify administrative procedures such as licensing requirements, hearings, 
filings required for certain types of liquefied natural gas (LNG) activities, 
including notice to adjoining property owners, reports of accidents, and 
applications for exceptions to rules, as well as specifying other types of 
requirements such as insurance, and franchise tax and assumed name certificates. 
The Railroad Commission also adopts new sec.sec.13.2104, 13.2113, 13.2119, 
13.2125, 13.2128, 13.2134, and 13.2140, relating to uniform safety requirements; 
maintenance tanks; transport vehicle loading and unloading facilities and 
procedures; hoses and arms; communications and lighting; container purging 
procedures; and inspection and maintenance, without changes to the versions 
published in the April 5, 1996, Texas Register (21 TexReg 2870), and 
sec.sec.13.2101, 13.2107, 13.2110, 13.2116, 13.2122, 13.2131, and 13.2137, 
relating to uniform protection requirements; stationary LNG storage containers; 
LNG container installation distance requirements; transfer of LNG; transfer 
systems, including piping, pumps, and compressors, used for LNG and 
refrigerants; fire protection; and employee safety and training, with changes to 
the versions published in the April 5, 1996, Texas Register (21 TexReg 2870). 
These sections in new subchapter H, relating to general rules for all stationary 
LNG installations, describe specific distance and protection requirements for 
stationary installations, procedures to be used for LNG transfer, safety devices 
required such as lighting and communication devices, and procedures for employee 
training and inspection of installations.
The Railroad Commission also adopts new sec.sec.13.2301, 13.2307, 13.2310, 
13.2313, 13.2316, 13.2319, 13.2322, 13.2325, and 13.2328, relating to 
applicability; indoor fueling; emergency refueling; fuel dispensing systems; 
filings required for installation of fuel dispensers; automatic fuel dispenser 
safety requirements; protection of automatic and other dispensers; LNG transport 
unloading at fueling facilities; and training, written instructions, and 
procedures required, without changes to the versions published in the April 5, 
1996, Texas Register (21 TexReg 2870), and sec.13.2304, relating to general 
facility design, with changes to the version published in the April 5, 1996, 
Texas Register (21 TexReg 2870). These sections in new subchapter J, relating to 
general rules for LNG fueling facilities, contain rules on fueling facility 
design, procedures for indoor or emergency fueling, filings required for fuel 
dispensers, requirements for automatic and other dispensers, and employee 
training and procedures.
The Railroad Commission also adopts new sec.sec.13.2401, 13.2404, 13.2407, 
13.2410, 13.2413, 13.2416, 13.2419, 13.2422, 13.2425, 13.2428, 13.2431, 13.2434, 
13.2437, and 13.2440, relating to general provisions for piping systems and 
components; piping materials; fittings used in piping; valves; installation of 
piping; installation of valves; welding at piping installations; pipe marking 
and identification; pipe supports; inspection and testing of piping; welded pipe 
tests; purging of piping systems; pressure and relief valves in piping; and 
corrosion control, without changes to the versions published in the April 5, 
1996, Texas Register (21 TexReg 2870). These sections in new subchapter K, 
relating to piping systems and components for all stationary LNG installations, 
include rules on piping systems and components, valves, pipe markings, 
inspections, testing, types of valves required, and other protection measures. 
The Railroad Commission also adopts new sec.sec.13.2501, 13.2504, 13.2507, 
13.2510, 13.2513, and 13.2516, relating to liquid level gauging; pressure 
gauges; vacuum gauges; emergency failsafe; electrical equipment; and electrical 
grounding and bonding, without changes to the versions published in the April 5, 
1996, Texas Register (21 TexReg 2870). These sections in new subchapter L, 
relating to instrumentation and electrical services, describe requirements for 
types of gauges and electrical equipment. 
The Railroad Commission also adopts new sec.sec.13.2601, 13.2607, 13.2613, 
13.2619, 13.2625, 13.2631, 13.2634, 13.2637, 13.2640, 13.2643, relating to 
applicability; vehicle fuel containers; engine fuel delivery equipment; 
installation of piping; installation of pressure gauges; wiring; vehicle fueling 
connection; signs and labeling; system testing; and maintenance and repair, 
without changes to the versions published in the April 5, 1996, Texas Register 
(21 TexReg 2870), and sec.sec.13.2604, 13.2610, 13.2616, 13.2622, and 13.2628, 
relating to system component qualification; installation of vehicle fuel 
containers; installation of venting systems and monitoring sensors; installation 
of valves; and installation of pressure regulators, with changes to the versions 
published in the April 5, 1996, Texas Register (21 TexReg 2870). These sections 
in new subchapter M, relating to engine fuel systems, delineate requirements for 
the manufacture and installation of containers and systems on vehicles, 
including labeling, testing, and maintenance. 
The Railroad Commission also adopts new sec.sec.13.2701, 13.2704, 13.2710, 
13.2713, 13.2716, 13.2719, 13.2722, 13.2725, 13.2728, 13.2731, 13.2734, 13.2737, 
13.2740, 13.2743, 13.2746, 13.2749, relating to DOT requirements; registration 
of LNG transports; markings; pressure gauge; supports; electrical equipment and 
lighting; liquid level gauging devices; exhaust systems; extinguishers required; 
manifests; transfer of LNG on public highways, streets, or alleys; parking of 
LNG transports and container delivery units, and use of chock blocks; uniform 
protection standards; inspection of transport containers; delivery of inspection 
report to licensee; and issuance of LNG Form 2004 decal, without changes to the 
versions published in the April 5, 1996, Texas Register (21 TexReg 2870), and 
sec.13.2707, relating to testing requirements, with changes to the version 
published in the April 5, 1996, Texas Register (21 TexReg 2870). These sections 
in new subchapter N, relating to LNG transports, specify requirements for the 
tanker-type vehicles which deliver LNG to stationary installations and fueling 
facilities. Adopted requirements include registration of transports, safety 
devices required such as gauges, exhaust systems, fire extinguishers, and other 
equipment, filings and inspections required, procedures for parking of 
transports and transfer of LNG on roadways, and inspection requirements.
Adoption with changes to some of the sections is necessary following review by 
Commission staff and the Commission's LNG advisory committee of the comments 
submitted. The changes, discussed in the following paragraphs, are made for 
clarification and consistency. Sections adopted with changes do not add any 
further burden or affect any other persons than originally proposed; in fact, 
some sections adopted with changes reduce the regulatory burden or provide more 
options to those persons required to comply. Some comments suggested changes 
that are beyond the scope and notice for this rulemaking; the Commission has 
specified several items that will be considered for future rulemakings. 
The new sections, collectively known as the Regulations for Liquefied Natural 
Gas, implement the statutory authority delegated to the Commission by the 
legislature to adopt rules specifying requirements for the construction, 
installation and operation of stationary installations and engine fuel systems, 
as well as licensing and registration requirements. 
The Commission adopts the new sections to provide for the safe handling of LNG 
and to protect the health, safety, and welfare of the public. LNG is a cryogenic 
fuel which is liquefied and stored at approximately -260 degrees Fahrenheit, 
composed primarily of methane, and usually delivered by transports rather than 
pipelines. LNG is commonly used by large fleet operations; its physical 
characteristics and the equipment required for safe operation make it 
uneconomical for use in personal vehicles. The new sections are consistent with 
nationally recognized safety standards. 
Two public hearings were held to take comments from interested persons regarding 
these regulations. A working draft of the regulations was made available prior 
to both hearings. Comments at both hearings were generally favorable; comments 
and corrections offered concerned minor or technical matters. The LNG advisory 
committee, appointed by the Railroad Commission, met twice to review and revise 
the working draft, and approved publication of the new sections. The committee 
is made up of three LNG consumers, three industry representatives, and one local 
government representative. At least one of the members must be a registered 
professional engineer. (The eighth but nonvoting member is a Commission 
representative.) The committee also met following the conclusion of the comment 
period to review all the comments submitted and make its recommendations 
regarding any further amendments; the committee's recommendations are discussed 
in the following paragraphs in relation to the specific comments received. 
One technical issue which is not addressed in these regulations is the use of 
odorization as a leak detection method. Other types of gaseous fuels, such as 
liquefied petroleum gas and pipeline natural gas, are combined with a material 
having a distinctive odor ("odorant") in order to allow persons to detect the 
presence of the fuel and to detect leaks. Because the natural gas liquefaction 
process removes the odorants which have previously been added to the natural 
gas, many in the industry believe that an odorant should be added back into the 
LNG after liquefaction. Others believe that odorization of LNG is impossible, 
others maintain it is possible as it is currently being done, while yet others 
concede that it may be possible, but that the technology is not adequately 
developed or commercially available. Although odorization was discussed at both 
public meetings, given the lack of scientific evidence to prove its 
effectiveness, the Commission at this time is not proposing to require 
odorization. However, in sec.13.2101 (relating to uniform protection 
requirements) and sec.13.2616 (relating to installation of venting systems and 
monitoring sensors), the Commission will require monitors for both stationary
installations and public transportation vehicles. 
Another issue which is addressed in some nationally recognized standards is 
liquefaction facilities. The earlier working drafts of these regulations, which 
were circulated to the public, included extensive rules on liquefaction 
facilities. With the action of the 74th legislature to remove liquefaction from 
the LP-gas section's statutory authority, the related draft rules were deleted 
from the proposed version and were not published for public comment. 
These regulations do not apply to original equipment manufacturers, liquefaction 
facilities, locomotives, railcar tenders, marine terminals, loading or unloading 
of LNG on watercraft, or fuel cells approved by the Federal Aviation 
Administration for use in hot air balloons. As permitted under Texas Natural 
Resources Code sec.116.031(a)(2), the regulations exempt mass transit 
authorities, common users of LNG, from licensing requirements if they use LNG 
only for their own vehicles. However, even though certain LNG entities, referred 
to as "nonlicensees," are not required to be licensed, their facilities may have 
to comply with other Regulations for Liquefied Natural Gas. Persons required to 
be licensed include anyone who sells or performs any LNG service to the public; 
public or private entities performing LNG activities for their own use only are 
not required to be licensed. 
Comments were received from Lone Star Energy Company (LSE), Lone Star Gas 
Company, the ATA Foundation (ATA), and the Houston Metropolitan Transit 
Authority (METRO). No other groups or associations submitted comments. 
Several comments requested additions or changes to the definitions in 
sec.13.2007. LSE suggested adding definitions for "LNG activities," "LNG 
installations," "LNG refueling station," and Regulations for Liquefied Natural 
Gas"; these terms, however, are used in their general sense and are not given 
any special meaning, so the Commission declines to add definitions. LSE also 
provided revisions to the definitions of "failsafe" and "vaporizer," although 
the Commission determined that the changes did not result in a better definition 
for either term. LSE also suggested deleting the definitions for "public transit 
vehicle" and "representative." Although the definition of "public transit 
vehicle" is necessary to distinguish it from "mass transit vehicle," the 
Commission agrees with the deletion of "representative"; after searching the 
proposed rules, Commission staff found that the word "representative" is used 
only twice; once, in sec.13.2025(c)(6), in its broadest sense (i.e., an 
"authorized representative"), and then in subsection (j), where it has been 
corrected to "company representative. The definition of "representative" has 
been deleted. LSE also pointed out that the definitions for "person" and 
"special transit vehicle" were circular; the Commission agrees with the 
suggested deletion of the phrase "or licensee" from the definition of "person," 
but could not identify what change LSE recommended for "special transit 
vehicle." However, the word "person" in the definition of "special transit 
vehicle" has been changed to "individual," which is the correct word for that 
usage. The word "person" was also corrected to "individual" in the table in 
sec.13.2031 and in sec.13.2616(e) and (f). 
METRO (which was also represented by a member on the LNG advisory committee) 
requested clarification for the definitions for "LNG activities," "industrial 
trucks," "mass transit vehicle," "transfer area," and "ultimate consumer." The 
suggested change of adding weight, size, passenger number and other specific 
information concerning a mass transit vehicle was declined, because nearly every 
bus is different from the next one. The Commission agrees that "ultimate 
consumer" could be more precise, and a revised definition will be proposed in a 
future rulemaking. The Commission will also propose in a future rulemaking the 
addition of a definition for "building," following the definition in the 
National Fire Protection Association's Pamphlet 57, Standard for Liquefied 
Natural Gas (LNG) Vehicular Fuel Systems (NFPA 57), as recommend by the advisory 
committee. METRO's request to add "sources of ignition" is unnecessary, since 
"ignition source" is identified; however, the terms, used interchangeably in the 
proposed rules, have been standardized so that only "ignition source" is used 
throughout the rules.
Some comments regarded the implementation and effective date, found in 
sec.13.2004, for the proposed rules; the committee recommended changing the 
effective date to September 1, 1996. LSE requested clarification that 
nonlicensees must still comply with the proposed rules; however, the advisory 
committee and Commission staff declined to make this change. The term 
"nonlicensee" is specifically defined (as is "licensee"); these terms refer only 
to who must obtain a license, not who must comply with the rules. 
Also in sec.13.2004, the wording "or to an installation or connection that is 
part of a distribution or pipeline system that is covered by Title 49, Code of 
Federal Regulations, Part 192" was added to clarify that pipelines or other 
facilities are governed by other regulations. This change was suggested both by 
Lone Star Gas Company and the Commission's Pipeline Safety section. In addition, 
the committee recommended adding a sentence to sec.13.2004(d) to allow persons 
already engaged in LNG activities as of September 1, 1996, to have until January 
1, 1997, to comply with licensing and examination requirements. This extra time 
will give Commission staff time to implement and schedule training courses and 
examinations, as well as to allow staggered license renewal dates. 
LSE also requested deletion of the requirement in sec.13.2025(c) that an 
individual be operations supervisor at only one outlet; the advisory committee 
agreed with this suggestion, but upon hearing Commission staff's reasons for 
this requirement changed its vote. The requirement is necessary because 
"operations supervisor" is defined as being the individual who actively 
supervises the daily activities. In order for an individual to accomplish this, 
he or she must be on site, or at least nearby. Commission staff wanted to 
prevent someone from being operations supervisor at outlets, for example, 200 
miles apart because the required "active supervision" could not occur. Following 
this discussion, the advisory committee agreed in principle with the comment, 
but saw the need to keep the requirement; therefore, the language "unless 
approved by the Commission" has been added to allow operations supervisors and 
their companies to address their particular situations with the Commission. 
METRO had several comments regarding other administrative-type rules. METRO 
requested clarification in sec.13.2013(d) regarding the supply of LNG by a 
nonlicensee to another nonlicensee for use in a demonstration project, and 
whether the supplying of LNG constituted a "sale" which would require a license. 
The advisory committee suggested a letter of agreement between the two companies 
be filed with the Commission; however, Commission staff will research this type 
of project and any necessary rule amendments will be proposed in future 
rulemakings. 
In sec.13.2016(c), METRO recommended that the requirement to maintain current 
copies of the Commission's Regulations for Liquefied Natural Gas be extended to 
both licensees and nonlicensees; the Commission agrees and has made this change. 
METRO suggested several other changes which, after review and discussion with 
the advisory committee, the Commission declines to accept. In sec.13.2040(c) and 
sec.13.2052(d)(2)(B) and (C), METRO asked to delete the notification to 
adjoining property owners requirement; the committee disagreed and, in fact, the 
Commission is examining its notice requirements for its other fuels to possibly 
expand the area in which notice is required. Any changes will be handled in 
future rulemakings, but the language as adopted is not changed. METRO also 
commented that sec.13.2040(k)(3) regarding "heavily populated or congested 
areas" is too restrictive and will not allow LNG to compete with conventional 
fuels in some urban areas. The committee and the Commission decline to make any 
change; the restrictions are necessary in heavily populated or congested areas 
because the number of people who could be affected by an accident is greater 
than in a rural area. Section 13.2052 involves applications for exceptions to 
safety rules; the Commission believes that adjoining property owners have a 
right to know if an installation is requesting such an exception. 
In sec.13.2043(a)(1), METRO requested clarification of what would be acceptable 
proof of the local fire marshal's approval; the Commission prefers to leave the 
form of this proof up to the fire marshal, who may use a stamp similar to a 
notary public's, a letter, or some other form. Also in that section, METRO 
requests a limit of one year for temporary installations, but to allow such 
installations to reapply for temporary status for up to three years when they 
are part of a demonstration project; as stated earlier, the Commission will 
review such demonstration projects but declines to make any change in the rules 
at this time. 
METRO questioned if the requirements in sec.13.2046 apply to original equipment 
manufacturers, retrofit companies, or both; the committee and the Commission 
believe the current wording clearly applies to both. In sec.13.2049(a), METRO 
suggested changing the word "suspected" to "known to be the cause", and also in 
(a)(1), (2)and (3), that all three conditions must be present before the notice 
of the accident is required to be filed. The Commission disagrees because such a 
definitive determination could take several weeks to accomplish and it is 
necessary for the Commission to be informed as soon as possible about 
potentially serious accidents that may occur. The specific conditions in 
subsection (a)(1), (2) and (3) were developed by the advisory committee to cover 
as many potentially serious accidents as possible. Also, in sec.13.2049(a)(1), 
METRO suggested increasing the amount or changing it to a percentage of the 
gross amount in the container because most spills would quickly be vaporized. 
The committee disagreed because LNG systems are designed to prevent any amount 
of spill, so if a spill does occur, a problem exists which needs to be 
identified and corrected.
METRO commented on the guardrailing and fencing requirements for both temporary 
and permanent installations. METRO suggested adding the wording "unless 
otherwise approved by the Commission" to sec.13.2043(c), which would allow 
installations to use other types of barriers, such as the concrete dividing 
walls frequently used on highways, as long as they were approved by the 
Commission. METRO also suggested that sec.13.2101(f), which applies to permanent 
installations, be changed to performance-related language rather than the 
specific requirements for the guardrails. The committee disagreed with this 
suggestion, but, upon further review, Commission staff recommended that the 
possible exception to fencing and guardrailing requirements may be appropriate 
for a future rulemaking in order to obtain the industry's comments. While the 
suggested Commission-approved exception is included in the adopted rules for 
temporary installations, it will be considered for a future rulemaking for 
permanent installations. 
METRO also submitted several comments regarding rules for stationary 
installations. Again, in sec.13.2101(e), METRO requested performance-related 
requirements instead of specific language; however, the Commission prefers 
specific language because it is easier to comply with and easier to enforce. 
METRO questioned the effectiveness of methane sensors required in 
sec.13.2101(h); the committee agreed that sensors do not necessarily cover a 
particular distance or area, but that it is most important for an installation 
to have at least two sensors for redundancy and protection, in case one fails. 
The wording "the manufacturer's instructions regarding" has been deleted from 
the fourth sentence, and other language covering the lower flammability limit 
(LFL) has been added. The LFL language is based on NFPA requirements in Pamphlet 
59A, Standard for the Production, Storage, and Handling of Liquefied Natural 
Gas, sec.9-4.2 for stationary installations (requiring 1/4 LFL) and sec.2-12.4.2 
for vehicles (requiring 1/5 LFL). The new language, added to sec.13.2101(h) for 
stationary installations and sec.13.2616(g) for vehicles, is more specific, but 
is also more lenient than the proposed language regarding the LFL. 
In sec.13.2104(a), METRO suggested adding the word "stationary" to describe the 
type of containers to which this section applies; however, this is unnecessary 
since this rule is in the subchapter regarding stationary containers. METRO had 
two comments for sec.13.2107(d); first, to delete the phrase "and filled with 
LNG", and second, to specify a test protocol. The advisory committee agreed with 
the first suggestion but not the second one. The phrase "and filled with LNG" 
has been deleted because the system can be tested without being filled with LNG 
or by using other testing means. Since there are several test protocols that can 
be used, the Commission declines to specify a particular one. 
METRO asked if the distances specified in sec.13.2110(a)(1) and (2) also 
extended to underground storage tanks holding other types of fuel besides LNG; 
the committee agreed that this could be confusing and the Commission has added 
the word "aboveground" for clarification. Also, in subsection (c), METRO 
suggested using NFPA language regarding distances from power lines; however, the 
proposed language is more specific than the NFPA language and has been retained. 
METRO's suggested change to sec.13.2116(a) has been made because it further 
clarifies that venting of LNG is prohibited except in very limited 
circumstances. Again, in sec.13.2119(c)(4), METRO requests a specific test 
protocol; however, the Commission declines to require a specific test. Also in 
sec.13.2119(c)(5), METRO suggested including language from the Texas commercial 
driver's license regulations regarding backing a truck. The Commission declines 
to include this; driver's license requirements are the jurisdiction of the 
Department of Public Safety, and issuance of a commercial driver's license to an 
individual indicates that he or she has complied with those requirements. 
In sec.13.2122(a), METRO asked for a definition of the word "suitable"; however, 
since this word did not add anything to the proposed rule, it has been deleted. 
METRO also requested specification of a maximum distance in subsection (c) for 
the location of the remote shutdown device to ensure that it can be reached 
quickly in an emergency. However, since every installation will be designed 
differently, the Commission specifies only that it must be at least 25 feet from 
the transfer area; the farthest distance depends on the site. 
METRO suggest several changes to sec.13.2131 concerning fire protection. METRO 
requested a definition of "operating area" in subsection (c) and proposed to add 
language on communication of the emergency procedures manual with operators and 
employees with LNG duties. The committee and Commission staff agree these 
changes are unnecessary. However, METRO's suggested clarification in subsection 
(d) has been made, further clarifying that the subsection applies to employees 
engaged in LNG activities. In subsection (e), METRO suggested expanding the 
level of fire control coordination; however, the Commission chooses to leave 
this area of responsibility with the local fire and emergency agencies. METRO 
suggested changing subsection (f) to require a test as recommended by the 
manufacturer's instructions or according to local requirements, instead of once 
a year, and also to limit the time that such documentation must be maintained to 
four years. The advisory committee, which includes a local fire marshal, 
disagreed with this recommendation; however, the Commission has added that 
documentation must be kept for two years or as required by other safety record 
retention schedules, whichever is greater. In subsection (h), METRO proposed 
that the amount of fire protection shall follow the local fire marshal's 
recommendations; the committee disagreed with this change, but Commission staff 
agreed with METRO and has made the change because it makes the rule more 
specific. 
Regarding container purging procedures in sec.13.2134, METRO requested a 
definition for "qualified" with regard to persons who may perform container 
purging; however, the committee believed the wording was clear as proposed, and 
no change has been made. In subsection (c), METRO asked for clarification on 
"out of service." The phrase "out of service" has a special connotation for bus 
companies, meaning that a bus may be driving on a street but its passenger 
schedule for the day is concluded. Since the rule applies to buses being removed 
from service for periods of maintenance or repair, Commission staff agrees 
further clarification is needed; however, this will require a future rulemaking 
to receive comments on how to define this term. 
In sec.13.2137(c), METRO suggested clarifying that a self- contained breathing 
apparatus should only be used by trained individuals and then only in enclosed 
areas; the committee partially agreed with the recommendation, but since this is 
a requirement by other agencies such as the Department of Transportation, 
subsection (c) has been deleted and the remaining subsections redesignated 
appropriately. METRO also wanted to clarify in proposed subsection (f) (now 
redesignated as subsection (e)) whether nonlicensees must maintain safety and 
training records; since the Commission has already established that nonlicensees 
must comply with the regulations, aside from licensing, this change is 
unnecessary. 
Regarding the general rules for LNG fueling facilities, LSE requested 
clarification for sec.13.2319(e); however, the committee was unable to determine 
what needed further clarification and, therefore, no change has been made. 
METRO had several comments regarding this subchapter, including that 
sec.13.2304(e) specify that the instructions be within eyesight of the 
operator's control; however, the proposed language of "conspicuously posted" 
clearly indicates what is required. In sec.13.2304(j), METRO wanted 
clarification on vehicles being sources of ignition; the committee disagreed 
because the rule already specifies what is a source of ignition. Also in 
subsection (j), METRO recommended increasing the lighting requirement of two 
footcandles; the committee agreed and suggested ending the sentence after the 
words "transfer and operation." Commission staff, however, recommended leaving 
the two footcandle requirement as proposed, since installations may provide more 
lighting if desired.
METRO suggested expanding the requirement in sec.13.2313(e) to illustrate 
various methods of acceptable drive-away protection. The committee disagreed 
that this was necessary and no change has been made. In subsection (i)(3), METRO 
requested that the fueling hose length not be restricted to 36 inches; however, 
subsection (i)(3) applies to metallic hose, not fueling hose, so no change has 
been made. 
In sec.13.2316, METRO wanted clarification that a system given tentative 
approval by the Commission may use LNG to test the system to insure proper 
operation. The committee disagreed that this was necessary; however, Commission 
staff recognized the need to test a system before final approval is granted and 
that a very small amount of LNG may be used for such a test. This situation will 
be addressed in future rulemakings. 
METRO suggested deleting the specification of "Class 1, Group D, Division 1" in 
sec.13.2319(b) because a reference to "NEC " would be clear enough; the 
committee disagreed because the NEC covers many types of installations and the 
proposed language is more specific. METRO also suggested deleting 
sec.13.2322(a), which requires an LNG dispenser to be six inches above normal 
grade and two inches above the grade of other liquid fuel dispensers. This 
language, however, is crucial because the six-inch requirement provides for the 
fuel island, which protects the dispenser from vehicle collision, and the two-
inch requirement prevents other fuels from pooling around the LNG dispenser. The 
Commission makes no change to sec.13.2322(a). 
Comments regarding the engine fuel system subchapter were made by both METRO and 
ATA. METRO's comments regarding sec.13.2604(a) and (b) concerned components that 
may be exposed to cryogenic temperatures and suggested language to allow these 
cryogenic ratings to be determined by the equipment's location on the vehicle, 
not by their placement in the system. The language has been changed to conform 
to NFPA 57, sec.sec.2-11.2 and 2-11.3, which covers components inside and 
outside the engine compartment, and components exposed to both cryogenic and 
severely hot temperatures. 
ATA recommended changing sec.13.2610(b)(2) and (3) to conform to a recent 
interim amendment to NFPA 57 requiring a static force of four instead of eight; 
the committee agreed. The language has been changed to require a static force of 
eight for vehicles with gross vehicle weights of 19,500 pounds or less, and a 
static force of four times for vehicles with gross vehicle weights of 19,501 
pounds or more, as specified in the NFPA 57 amendment. 
ATA also recommended deleting sec.13.2616(g) because it is not practicable for 
heavy duty trucks and because the condition the subsection is designed to 
prevent is already covered in subsection (d) of that section. The Commission has 
made this change and redesignated the following subsection. 
In sec.13.2622(c), ATA suggested adding wording to the beginning of the sentence 
to clarify that only vehicles which do not already have automatic shutoffs must 
have a positive shutoff valve. The proposed wording would cause some trucks to 
be required to have two shutoffs, which is unnecessary. The Commission has made 
the proposed change. 
In sec.13.2628(a), ATA recommending adding wording to the end of the sentence to 
indicate that the automatic pressure regulators may not be needed if the tank 
relief setting is below the maximum allowable fuel pressure to the engine. The 
committee agreed with this recommendation and the language has been changed. 
In addition to the changes made resulting from the comments received, the 
advisory committee recommended one further change to sec.13.2707(b). The 
committee recommended changing the hydrostatic test requirement to a pneumatic 
test requirement; however, Commission staff recommended allowing either test, 
which would make the Commission's rule consistent with Department of 
Transportation rules. The language has been changed to allow a hydrostatic test 
at a test pressure of 1 1/2 times the maximum allowable working pressure of the 
container or a pneumatic test at 1 1/4 times the maximum allowable working 
pressure of the container. 
Commission staff also identified another change; the title of Chapter 13 has 
been changed to "Regulations for Compressed Natural Gas (CNG) and Liquefied 
Natural Gas (LNG)," in order to include the new regulations being adopted. 
Following the advisory committee meeting and staff review of the submitted 
comments, two further changes became necessary. The original effective date of 
August 1, 1996, as proposed in sec.13.2004 in the April 5, 1996, Texas Register, 
was changed by the advisory committee to September 1, 1996, because of the 60-
day comment period and the time involved in reviewing the comments. The 
Commission has changed the date to October 1, 1996, to allow time for internal 
review and approval by the Commission. In addition, the extended time period for 
persons already engaged in LNG activities as of the new date of October 1, 1996, 
to comply with the licensing and examination requirements has been changed from 
January 1, 1997, to February 1, 1997, as noted in sec.13.2004(d). 

SUBCHAPTER G.General Applicability and Requirments
16 TAC sec.sec.13.2004, 13.2007, 13.2016, 13.2025. 13.2031, 13.2040, 13.2043, 
13.2052
The new sections are adopted under the Texas Natural Resources Code, 
sec.116.012, which authorizes the Commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the adopted new 
sections: sec.sec. 13.2004, 13.2007, 13.2010, 13.2013, 13.2016, 13.2019, 
13.2022, 13.2025, 13.2028, 13.2031, 13.2034, 13.2037, 13.2040, 13.2043, 13.2046, 
13.2049, and 13.2052 --Texas Natural Resources Code, sec.116.012.

sec.13.2004.Applicability, Severability, and Retroactivity. 
(a) The Regulations for Liquefied Natural Gas are intended to apply to the 
design, installation, and operation of liquefied natural gas (LNG) dispensing 
systems, the design and installation of LNG engine fuel systems on vehicles of 
all types and their associated fueling facilities, and the construction and 
operation of equipment for the storage, handling, and transportation of LNG. 
These standards do not apply to locomotives, railcar tenders, marine terminals, 
or to the transportation, loading, or unloading of LNG on ships, barges, or 
other types of watercraft, or to any fuel cell approved by the Federal Aviation 
Administration and intended to be used solely as a fuel cell for aircraft, 
including hot air balloons, or to an installation or connection that is part of 
a distribution or pipeline system that is covered by Title 49, Code of Federal 
Regulations, Part 192. From the point at which LNG in a system has been 
vaporized and converted to compressed natural gas (CNG), the equipment and 
components must comply with the commission's Regulations for Compressed Natural 
Gas. 
(b) If any term, clause, or provision of these rules is for any reason declared 
invalid, the remainder of the provisions shall remain in full force and effect, 
and shall in no way be affected, impaired, or invalidated. 
(c) Nothing in these rules shall be construed as requiring, allowing, or 
approving the unlicensed practice of engineering or any other professional 
occupation requiring licensure. 
(d) Unless otherwise stated, the Regulations for Liquefied Natural Gas are not 
retroactive; however, the Railroad Commission of Texas has jurisdiction over all 
LNG installations in Texas and installations placed into operation after October 
1, 1996, shall comply with these regulations. All other LNG installations in 
operation prior to October 1, 1996, shall be maintained and operated in a safe 
manner as determined by the Railroad Commission of Texas. Persons engaged in LNG 
activities on the effective date of these rules shall comply with licensing and 
examination requirements by February 1, 1997. 

sec.13.2007.Definitions.
The following words and terms when used in the Regulations for Liquefied Natural 
Gas shall have the following meanings unless the context clearly indicates 
otherwise. 
Administrative Procedure Act -Texas Gov't Code, Chapter 2001.
Aggregate water capacity-The sum of all individual container capacities as 
measured by weight or volume of water when the containers in a battery at an 
installation are full. 
ANSI-American National Standards Institute.
API-American Petroleum Institute. 
Approved-Authorized by the commission or the Railroad Commission of Texas.
ASME-American Society of Mechanical Engineers. 
ASME Code-The American Society of Mechanical Engineers Boiler and Pressure 
Vessel Code, Section I, Section IV, Section VIII, and Section IX.
Automatic fuel dispenser-A fuel dispenser which requires transaction 
authorization. 
Branch manager-See "Operations supervisor."
Certified-Authorized to perform LNG activities under the direction of a licensee 
as set forth in the Texas Natural Resources Code. Certification alone does not 
allow an employee to perform those activities which require licensing. 
Combustible material-A solid material which, in the form in which it is used and 
under the conditions anticipated, can be ignited and will burn, support 
combustion, or release flammable vapors when subjected to fire or heat.
Commercial installation-An LNG equipment installation located on premises other 
than a single-family dwelling used primarily as a residence.
Commission-Any operating division of the Railroad Commission of Texas or any of 
the division's employees.
Company representative-An owner or employee of a licensee designated by that 
licensee to take any required courses and exams and to actively supervise LNG 
operations of the licensee.
Container-Any LNG vessel manufactured to the applicable sections of the API 
Code, ASME Code, or DOT requirements in effect at the time of manufacture.
Container appurtenances-Components installed in container openings, including 
but not limited to pressure relief devices, shutoff valves, backflow check 
valves, excess flow check valves, internal valves, liquid level gauges, pressure 
gauges, and plugs. 
Conversion-The changes made to a vehicle to allow it to use LNG as a motor fuel.
Design pressure -The pressure for which a system or portion of that system is 
designed.
Dike -A structure used to establish an impounding area.
Dispensing system -That combination of valves, meters, hoses, piping, electrical 
connections, and fuel connections used to distribute LNG to mobile or motor fuel 
containers.
Division -The Liquefied Petroleum Gas Section, Gas Services Division of the 
Railroad Commission of Texas. 
DOT-The United States Department of Transportation.
Employee-Any individual who renders or performs any services or labor for 
compensation, including individuals hired on a part-time or temporary basis, 
full-time or permanent basis; independent contractors; and owner-employees.
Failsafe-Design features which provide for safe conditions in the event of a 
malfunction of control devices or an interruption of an energy source or an 
emergency shutdown. 
Final approval-The authority issued by the commission or the Railroad Commission 
allowing the introduction of LNG into a container and system.
Fired equipment-Any equipment in which the combustion of fuels takes place.
Fixed-length dip tube-A pipe with a fixed open end positioned inside a container 
at a designated elevation to measure a liquid level.
General Rules of Practice and Procedure of the Railroad Commission of Texas -16 
Texas Administrative Code, Chapter 1.
Ignition source -Any item, substance, or event having adequate temperature and 
energy release of the type and magnitude sufficient to ignite any flammable 
mixture of gases or vapors that could occur at a site. 
Impounding area-An area defined through the use of dikes or the topography at 
the site for the purpose of containing any accidental spill of LNG. 
Individual-One human being. (See also "Person".) 
Interim approval -The authority issued by the Railroad Commission following a 
public hearing allowing construction of an LNG installation.
Labeled LFL-Lower flammability limit.
Licensed-Authorized to perform LNG activities through the issuance of a valid 
license by the Liquefied Petroleum Gas Section.
Licensee-A person which has applied for and been granted an LNG license by the 
commission. 
Listed-The inclusion of equipment or materials in a list published by a 
nationally recognized testing laboratory or a Category 50 licensee which 
conducts product evaluation, periodically inspects production of listed 
equipment or materials, and whose listing states either that the equipment or 
material meets appropriate standards or has been tested and found suitable for 
use in a specified manner.
LNG-Natural gas, consisting primarily of methane, that has been condensed to 
liquid by cooling. 
LNG system-A system of safety devices, containers, and other LNG equipment 
installed at a facility or on a vehicle and designed for use in the sale, 
storage, transportation for delivery, or distribution of LNG.
LNG transport-Any vehicle or combination of vehicles and LNG containers designed 
or adapted for use or used principally as a means of moving or delivering LNG 
from one place to another, including but not limited to any truck, trailer, 
semi-trailer, cargo tank, or other vehicle used in the distribution of LNG. 
Mass transit vehicle -Any vehicle which is used primarily in the conveyance of 
the general public. 
Maximum allowable working pressure -The maximum gauge pressure permissible at 
the top of completed equipment, containers, or vessels in their operating 
position for a design temperature.
Mobile fuel container-An LNG container mounted on a vehicle and used to store 
LNG as the fuel supply for uses other than motor fuel. 
Mobile fuel system-An LNG system to supply fuel to an auxiliary engine other 
than the engine used to propel the vehicle or for other uses on the vehicle.
Motor fuel container-An LNG container mounted on a vehicle and used to store LNG 
as the fuel supply to an engine used to propel the vehicle.
Motor fuel system -An LNG system to supply LNG as a fuel for an engine used to 
propel the vehicle. 
NEC-National Electric Code (NFPA 70).
NFPA -National Fire Protection Association.
Noncombustible material-A solid material which in no conceivable form or 
combination with other material will ignite.
Nonlicensee-A person not required to be licensed, but which shall comply with 
all other applicable Regulations for Liquefied Natural Gas. 
Operations supervisor-An individual who actively supervises LNG operations at an 
outlet. 
Outlet-A site operated by an LNG licensee at which the business conducted 
materially duplicates the operation for which the licensee is initially granted 
a license. 
Person-An individual, sole proprietor, partnership, firm, joint venture, 
corporation, association, or any other business entity, state agency or 
institution, county, municipality, school district, or other governmental 
subdivision.
Point of transfer-The point at which a connection is made to transfer LNG from 
one container to another.
Pressure relief valve-A valve which is designed both to open automatically to 
prevent a continued rise of internal fluid pressure in excess of a specified 
value (set pressure) and to close when the internal fluid pressure is reduced 
below the set pressure.
Pressure vessel-A container or other component designed in accordance with the 
ASME Code. 
Primary component-Those safety-related components which may be stressed to a 
significant level, those whose failure would permit release of flammable fluids, 
and those subject to thermal shock. Primary components include but are not 
limited to the following parts of a single-wall tank or of the inner tank in a 
double-wall tank: seals, gaskets, shell plates, bottom plates, roof plates, 
knuckle plates, compression rings, shell stiffeners, manways, and nozzles 
including reinforcement, shell anchors, pipe, tubing, forging, and bolting.
Property line-That boundary which designates the point at which one real 
property interest ends and another begins. (See also "Right-of-way").
PSF-Pounds per square foot. PSI - Pounds per square inch.
PSIG - Pounds per square inch gauge.
PSIA-Pounds per square inch absolute.
Public transportation vehicle -A vehicle for hire or service to the general 
public including but not limited to taxis, buses, and airport courtesy cars.
Railroad Commission of Texas-The members of the Railroad Commission of Texas. 
Repair to container-The correction of damage or deterioration to an LNG 
container, the alteration of the structure of such a container, or the welding 
on such a container in a manner which causes the temperature of the container to 
rise above 400 degrees Fahrenheit. 
Right-of-way-The strip of land over which a public roadway such as a street, 
alley, or highway is built, or land occupied by a railroad for its main line. 
School-A public or private institution which has been accredited through the 
Texas Education Agency or the Texas Private School Accreditation Commission. 
School bus-A vehicle that is sold or used for purposes that include carrying 
students to and from school or related events.
Special transit vehicle-A vehicle which is primarily used by a school or mass 
transit authority for special transit purposes such as transport of mobility 
impaired individuals. 
TEMA-Tubular Exchanger Manufacturers Association. 
Temporary installation-A dispensing station, either skid-mounted or on a 
transport unit, that is intended to be used for a finite period of time.
Tentative approval-The authority issued by the commission without a hearing 
allowing construction of an LNG installation.
Thermal expansion relief valve-A pressure relief valve that is activated by 
pressure created by a fluid temperature rise. 
Trainee-An individual employed by a licensee for a period not to exceed 45 days 
without that individual having successfully completed the required examinations 
for the LNG activities to be performed.
Transfer area-That portion of an LNG refueling station where LNG is introduced 
into or dispensed from a stationary installation.
Transfer system-All piping and equipment used in transferring LNG between 
containers.
Transition joint-A connector fabricated of two or more metals used to join 
piping sections of two different materials.
Ultimate consumer-The person controlling LNG immediately prior to its ignition. 
Vaporizer-A device other than a container that receives LNG in liquid form and 
adds sufficient heat to convert the liquid to a gaseous state.
Water capacity-The amount of water in gallons required to fill a container. 

sec.13.2016.Licensing Requirements.
(a) Applicants for a license or license renewal shall file with the commission 
LNG Form 2001 designating a company representative who shall be an owner or 
employee of the licensee, and shall be directly responsible for actively 
supervising LNG operations of the licensee. A licensee may have more than one 
company representative. 
(1) An applicant for license may not engage in LNG activities until its company 
representative has successfully completed the management examination 
administered by the commission. 
(2) The licensee shall notify the commission in writing upon termination of its 
company representative and shall at the same time designate a replacement by 
submitting a new LNG Form 2001. 
(3) The licensee shall cease LNG activities if, at the termination of its 
company representative, there is no other qualified company representative of 
the licensee acknowledged and recorded by the commission. The licensee shall not 
resume operation until such time as it has a qualified company representative, 
unless it has been granted an extension of time in which to comply as specified 
in sec.13.2052 of this title (relating to application for an exception to a 
safety rule). 
(b) Licenses issued under this chapter expire one year after issuance at 
midnight on the last day of the month prior to the month in which they are 
issued. 
(c) Persons engaged in LNG activities, including licensees and nonlicensees, 
shall maintain a copy of the current version of the Regulations for Liquefied 
Natural Gas published by the commission and shall provide at least one copy to 
each company representative and operations supervisor. The copies shall be 
available to employees during business hours. Failure to maintain the required 
number of copies may result in enforcement action such as penalties or 
suspension of licenses. 
(d) Licensees and operations supervisors at each outlet shall have all current 
licenses and certificates available for inspection during regular business 
hours. 
(e) In addition to complying with other licensing requirements set out in the 
Texas Natural Resources Code and the Regulations for Liquefied Natural Gas, 
applicants for license or license renewal in the following categories shall 
comply with the specified additional requirements: 
(1) A Category 15 licensee shall file with the commission for each of its 
outlets legible copies of: 
(A) its current DOT authorization. A licensee may not continue to operate after 
the expiration date of the DOT authorization; and 
(B) its current ASME Code, Section VIII certificate of authorization. If ASME is 
unable to issue a renewed certificate of authorization prior to the expiration 
date, the licensee may request in writing an extension of time from the 
commission not to exceed 60 calendar days past the expiration date. The 
licensee's request for extension shall be received by the commission prior to 
the expiration date of the ASME certificate of authorization and shall include a 
letter or statement from ASME that ASME is unable to issue the renewal 
certificate of authorization prior to expiration and that a temporary extension 
will be granted for its purposes. A licensee shall not continue to operate after 
the expiration date of an ASME certificate of authorization until the licensee 
files a current ASME certificate of authorization with the commission, or the 
commission grants a temporary extension. 
(2) A Category 15 or 20 licensee making repairs on ASME containers shall file 
with the commission a legible copy of its current "U" certificate of 
authorization for the repair of ASME containers by the National Board of Boiler 
and Pressure Vessel Inspectors. 
(3) A Category 50 licensee shall file a properly completed LNG Form 2505 with 
the commission, certifying that the applicant will follow the testing procedures 
indicated. The LNG Form 2505 shall be signed by the company representative 
designated on LNG Form 2001. 
(f) The commission shall notify the licensee at the last filed address on LNG 
Form 2001 of the impending license expiration at least 30 days prior to the 
expiration date. Renewals shall be submitted to the commission along with the 
renewal fee specified in Table 1 of sec.13.2013 of this title (relating to 
categories of licenses) before the renewal date in order for the licensee to 
continue LNG activities. Failure to meet the renewal deadline shall result in 
expiration of the license. If a person's license expires, that person shall 
immediately cease performance of any LNG activities authorized by that license. 
(1) If a person's license has been expired for fewer than 90 days, the person 
shall submit a late-filing penalty of one-half the amount of the renewal fee in 
addition to the required renewal fee. Upon receipt of the renewal fee and late-
filing penalty, the commission shall verify that the person's license has not 
been suspended, revoked, or expired for more than two years. After verification, 
if the licensee has met all other requirements for licensing, the commission 
shall renew the license, and the person may resume LNG activities authorized by 
the license. 
(2) If a person's license has been expired for 90 days but less than one year, 
the person shall submit a late-filing penalty equal to the amount of the renewal 
fee in addition to the required renewal fee. Upon receipt of the renewal fee and 
late- filing penalty, the commission shall verify that the person's license has 
not been suspended, revoked, or expired for more than one year. After 
verification, if the person has met all other requirements for licensing, the 
commission shall renew the license, and the person may resume LNG activities 
authorized by the license. 
(3) If a person's license has been expired for more than one year, that person 
may not renew, but shall comply with the requirements for issuance of a new 
license. 

sec.13.2025.Designation of Outlet and Operations Supervisor (Branch Manager).
(a) The commission shall designate whether a site is an outlet for the purpose 
of this chapter. Criteria used by the commission in determining the designation 
of an outlet include but are not limited to: 
(1) distance from other LNG activities operated by the licensee;
(2) whether the operation duplicates the primary LNG operation; and 
(3) whether the operation is directly supervised on a routine basis. 
(b) A licensee maintaining more than one outlet shall file LNG Form 2001A with 
the commission designating an operations supervisor (branch manager) at each 
outlet. The operations supervisor shall pass the management examination 
administered by the commission before commencing or continuing the licensee's 
operations at the outlet. 
(c) An operations supervisor may be a company representative of the licensee; 
however, an individual may be designated as an operations supervisor at only one 
outlet unless approved by the Commission. 
(d) The operations supervisor shall be directly responsible for actively 
supervising LNG operations of the licensee at the designated outlet.

sec.13.2031. Insurance Requirements. 
(a) Pursuant to the Texas Natural Resources Code, Chapter 116, the commission 
has adopted the minimum amounts of insurance for LNG licensees authorized by the 
State of Texas specified in Table 1 of this section. A licensee shall file a 
valid certificate of insurance before the commission grants or renews a license. 
Figure: 16 TAC 13.2031(a)
(b) Certificates of insurance filed with the commission shall have one of the 
endorsements specified in Table 1 of subsection (a) of this section attached to 
the policy. Endorsements may not be cancelled without cancellation of the 
attached policy. 
(c) Each endorsement issued and attached to a certificate of insurance shall 
require the insurance carrier, noted as "company" on the certificate of 
insurance, to give the commission 30 days' written notice before the insurance 
cancellation. The 30-day notice commences from the date the commission receives 
the notice. 
(d) A licensee or applicant for a license that employs or contemplates employing 
any employees in LNG activities shall file LNG Form 2996A with the commission. A 
licensee or applicant for a license that does not employ or contemplate 
employing any employees in LNG activities shall file LNG Form 2996B in lieu of a 
certificate of workers' compensation, including employers' liability insurance, 
or alternative accident and health insurance. The licensee or applicant for a 
license shall file the required insurance certificate and forms with the 
commission before hiring any employee. 
(e) A Category 25 or 35 licensee or applicant for a license or ultimate consumer 
that operates or contemplates operating a motor vehicle equipped with an LNG 
transport container shall file LNG Form 2997A with the commission. A Category 25 
or 35 licensee or applicant for a license or ultimate consumer that does not 
operate or contemplate operating a motor vehicle equipped with an LNG transport 
container or does not transport or contemplate transporting LNG by vehicle in 
any manner shall file LNG Form 2997B in lieu of a certificate of motor vehicle 
bodily injury and property damage insurance if this certificate is not otherwise 
required. The licensee or applicant for a license shall file the required 
insurance certificate and forms with the commission before operating a motor 
vehicle equipped with an LNG cargo container or transporting LNG by vehicle in 
any manner. 
(f) A Category 15 licensee or applicant for a license that engages in or 
contemplates engaging in any LNG operations that would be covered by completed 
operations and product liability insurance shall file LNG Form 2998A with the 
commission. A Category 15 licensee or applicant for a license that does not 
engage in or contemplate engaging in any LNG operations that would be covered by 
completed operations and product liability insurance shall file LNG Form 2998B 
in lieu of a certificate of completed operations and product liability 
insurance. The licensee or applicant for a license shall file the required 
insurance certificate and forms with the commission before engaging in any 
operations that require completed operations and product liability insurance. 
(g) A licensee or applicant for a license that engages in or contemplates 
engaging in any operations that would be covered by general liability insurance 
shall file LNG Form 2998A with the commission. A licensee or applicant for a 
license that does not engage in or contemplate engaging in any operations that 
would be covered by general liability insurance shall file LNG Form 2998B in 
lieu of a certificate of general liability insurance. The licensee or applicant 
for a license shall file the required insurance certificate and forms with the 
commission before engaging in any operations that require general liability 
insurance. 
(h) Notwithstanding the requirements specified in Table 1 of subsection (a) of 
this section that each licensee carry a policy of workers' compensation 
insurance, the licensee may protect its employees by obtaining accident and 
health insurance coverage from an insurance company authorized to write such 
policies in Texas as an alternative to workers' compensation coverage. The 
alternative coverage shall be in the amounts specified in Table 1 of subsection 
(a) of this section. 

sec.13.2040.Filings and Notice Requirements for Stationary LNG Installations. 
(a) LNG shall not be introduced into any LNG container unless that container is 
installed in accordance with the statutes of the State of Texas and with the 
Regulations for Liquefied Natural Gas in effect at the time of installation. 
(b) Prior to an installation which would result in an aggregate water capacity 
of 15,540 gallons or more, the applicant shall submit LNG Form 2500 to the 
commission including plans and specifications for the installation. 
(1) Plans and specifications shall be sealed by a registered professional 
engineer licensed to practice in the State of Texas. 
(2) Plans and specifications shall include fire protection which complies with 
sec.13.2131 of this title (relating to fire protection). 
(3) If any modifications are made to the plans and specifications before 
tentative or interim approval is granted by the commission, they shall be 
resealed by a registered professional engineer licensed to practice in the State 
of Texas and resubmitted to the commission. 
(c) Prior to the installation of a single LNG container with a water capacity of 
15,540 to 46,620 gallons, the applicant or licensee shall notify all adjoining 
property owners within 500 feet of the container's location. 
(1) When the size of the container is 46,621 to 93,240 gallons, the notice area 
shall increase to 750 feet. 
(2) When the size of the container is 93,241 gallons or more, the notice area 
shall be 900 feet, and the applicant or licensee shall publish a notice of the 
proposed installation in a local newspaper with general circulation for three 
consecutive days of publication. In addition, a representative of the LP-Gas 
Section of the Railroad Commission shall inspect the site. 
(3) The notice shall be mailed to the adjoining property owners simultaneously 
with the filing of the required forms and plans and specifications with the 
commission. The notice shall be accomplished by certified mail, return receipt 
requested. The applicant or licensee shall retain the return receipts for 
commission review, if requested. 
(4) The newspaper public notice, if required, shall contain at least the 
following information: the applicant's name, address, phone number, contact 
person's name, the street address or physical description of the location of the 
proposed installation, and a statement informing the public on how to get more 
information concerning the proposed installation. The notice shall also include 
a statement that the application is currently pending before the Railroad 
Commission's LP-Gas Section. 
(5) Objections shall be filed with the commission within 18 days of the 
postmarked date on the notice letter. If the commission finds that the objection 
is not proper, the commission shall notify the property owner and the property 
owner shall have ten days from the date of the commission's postmarked letter to 
correct the objection. If one or more of the adjoining property owners files an 
objection and a written request for a hearing with the commission, the hearing 
shall be conducted as soon as possible and a recommendation presented to the 
commission within 90 days following the hearing. When possible, the hearing 
shall be held in a location near the proposed site. 
(6) Temporary installations which are used during peak demand times such as 
during cold weather or emergencies are not required to comply with these notice 
requirements. However, a sign should be installed at the site and brochures or 
other similar means of notification shall be available at the site to advise the 
public of the need and use for the temporary installation. 
(d) Prior to the installation of more than one LNG container at a facility, or 
the addition of one or more containers at an existing single-tank facility, the 
applicant or licensee shall notify all adjoining property owners within the 
distances specified in subsection (c) of this section. To determine the 
equivalent volume for a multi-container facility, and therefore which distance 
to use, the following formula shall be used: Equivalent volume = Single largest 
tank volume x [√ ] number of tanks 
(e) The commission shall grant tentative or interim approval prior to the 
setting of the LNG container and construction of the LNG installation. 
(f) When an LNG container is replaced with a container of the same or less 
overall diameter and length or height, and installed in the identical location 
of the existing container at an LNG storage installation of 15,540 gallons 
aggregate water capacity or more, the applicant shall file LNG Form 2501 with 
the commission. 
(1) LNG Form 2500, LNG Form 2500A, and LNG Form 2501, including plans and 
specifications, are not required to be filed prior to installation of bulkheads, 
pull-away devices, or emergency shutoff valves (ESV's), or when maintenance and 
improvements are being performed to the piping system at existing previously 
approved LNG installations having an aggregate water capacity of 15,540 gallons 
or more. 
(2) A nonrefundable fee of $27 shall be submitted with each LNG Form 2500. A 
nonrefundable resubmission fee of $17 shall be included with each incomplete or 
revised set of plans and specifications resubmitted. 
(3) The proposed installation shall not be operated or used in LNG service until 
approved by the commission. 
(g) Upon completion of a commercial installation having an aggregate water 
capacity of less than 15,540 gallons, the applicant shall submit LNG Form 2501, 
postmarked or physically delivered to the commission, within ten calendar days 
after completion of such installation. LNG Form 2501 shall state that: 
(1) the installation complies with the statutes and Regulations for Liquefied 
Natural Gas; 
(2) any necessary LNG licenses have been issued; and 
(3) the installation has been placed in LNG service. 
(h) If a licensee violates the provisions of this section, the commission may 
require the licensee to submit LNG Form 2500 and plans and specifications for 
future LNG installations. The commission shall notify the licensee in writing of 
this requirement. If the licensee disagrees with the determination of the 
commission, then that licensee may request a public hearing on the matter as 
described in sec.13.2022 of this title (relating to denial, suspension, or 
revocation of licenses or certifications, and hearing procedure). Until the 
commission issues a decision subsequent to a hearing on the matter, the licensee 
shall be required to submit plans and specifications as noted above. 
(i) A nonrefundable fee of $7 for each LNG container listed on LNG Form 2501 
shall be submitted with each LNG Form 2501 required to be filed by the 
applicable subsections of this section. A nonrefundable resubmission fee of $12 
shall be included for each LNG Form 2501 resubmitted. 
(j) The commission shall review all applications within 21 calendar days of 
their receipt and shall mail to the applicant within 21 calendar days written 
notice of whether the application is complete or incomplete. 
(k) When the commission notifies an applicant of an incomplete LNG Form 2500 or 
LNG Form 2500A, the applicant has 120 calendar days from the date of the 
notification letter to resubmit the corrected application or the application 
will expire. After 120 days, the applicant shall file a new application to 
reactivate commission review of the proposed installation. 
(1) The applicant may request in writing an extension of the 120-day time 
period. The request shall be postmarked or physically delivered to the 
commission before the expiration date. The commission may extend the application 
period for up to an additional 90 days. 
(2) If the tentatively approved installation is not completed within one year 
from the date tentative approval was granted, the application will expire. Prior 
to the date of expiration, the applicant may request in writing an extension of 
time of up to 90 days to complete the installation. If the applicant fails to 
request an extension of time within the time period prescribed in this 
subsection, the applicant will be required to submit a new application before 
the original installation can be completed. 
(3) Prior to the installation of an LNG container referenced in this section in 
a heavily populated or congested area, the commission shall determine whether 
the proposed installation poses a threat to the health, safety, and welfare of 
the general public. The commission shall determine restrictions on LNG container 
capacities in accordance with the following: 
(A) density of the population within 500 feet of the LNG installation; 
(B) nature of the land use on those pieces of property located within 500 feet 
of the LNG installation; 
(C) vehicular traffic in the area; 
(D) types and numbers of roadways in the area; 
(E) type of operations on the premises; 
(F) potential ignition sources in the area; 
(G) existence of dangerous or combustible materials in the area that might be 
affected in an emergency situation; 
(H) the number of members of the general public who are concentrated in the 
area; and 
(I) other factors related to the public health, safety, and welfare. 
(4) If the commission declines to administratively approve the installation, the 
commission shall notify the applicant in writing within 21 calendar days. The 
applicant may modify the submission and resubmit it for approval, or may request 
a hearing on the matter in accordance with the General Rules of Practice and 
Procedure of the Railroad Commission of Texas. 
(l) The commission shall examine all drawings, plans, reports, and 
specifications required by commission regulation to be submitted for approval to 
determine whether the design, manufacture, construction, or use of the depicted 
item, system, operations, procedure, or installation complies with the 
Regulations for Liquefied Natural Gas. The commission shall also determine 
whether the subject of the submission poses a threat to the health, safety, and 
welfare of the general public.
(1) If the commission declines to approve administratively the submission, the 
commission shall notify the applicant of this decision in writing within 21 
calendar days. The applicant may modify the submission and resubmit it for 
approval within 21 calendar days after receiving the notice, or may request a 
hearing to be conducted in accordance with the General Rules of Practice and 
Procedure of the Railroad Commission of Texas. The subject of the submission 
shall not be operated or used in LNG service in this state until approved by the 
commission following a hearing. 
(2) LNG Form 2005, LNG Form 2008, and any other documentation pertinent to the 
installation may be requested by the commission in order to further determine 
compliance with the Regulations for Liquefied Natural Gas. 

sec.13.2043.Temporary Installations. 
(a) Temporary installations shall comply with the following requirements: 
(1) Prior to the completion of a temporary installation with an individual or 
aggregate water capacity of 15,540 gallons or less, the licensee or non-licensee 
shall file LNG Form 2501, including proof of the local fire marshal's approval 
if the installation is within such jurisdiction. 
(2) Prior to the completion of a temporary installation with an individual or 
aggregate water capacity of 15,541 gallons or more, the licensee or non-licensee 
shall file LNG Form 2500, including plans and specifications, and proof of the 
local fire marshal's approval if the installation is with such jurisdiction. 
(b) Temporary installations shall be limited to one year. If the temporary 
installation needs to remain in service for more than one year, the licensee or 
nonlicensee responsible for the temporary installation shall inform the 
commission of this extension of time at least 30 days prior to the expiration of 
the one-year period. 
(c) Temporary installations shall be protected by guardrailing as specified in 
sec.13.2101(f) of this title (relating to uniform protection standards) unless 
otherwise approved by the Commission. 
(d) Temporary installations shall comply with the electrical requirements 
specified in subchapter K of this title (relating to instrumentation and 
electrical services). 
(e) Temporary installations shall be mounted on a secure surface, not to include 
bare earth. 
(f) Temporary installations are not required to have impounding areas. 
(g) The commission may inspect temporary installations for compliance with these 
requirements. 

sec.13.2052.Application for an Exception to a Safety Rule. 
(a) Any person may apply for an exception to the provisions of this chapter by 
filing an application for exception with the commission using LNG Form 2025. 
(b) In lieu of LNG Form 2025, the application or pleading shall be typewritten 
on paper not to exceed 8 1/2 by 11 inches and have an inside margin of at least 
one inch. Any attached exhibits shall be folded to the same size as the pleading 
itself. The text shall be double-spaced and appear on one side of the paper 
only. 
(c) The application shall contain the following information: 
(1) the section number of the rule for which the exception is being requested; 
(2) the type of relief desired, including the exception requested and 
information which may assist the commission in comprehending the requested 
exception; 
(3) a concise statement of facts which support the applicant's request for the 
exception, such as the reason for the exception, the safety aspects of the 
exception, and the social or economic impact of the exception; 
(4) for stationary installations, a description of the acreage and/or address 
upon which the subject of the exception will be located. The description shall 
be in writing and shall include the following: 
(A) a plat drawing; 
(B) sufficient identification of the site so that determination of property 
boundaries can be made; 
(C) the ownership of the land; and 
(D) the legal authority under which the applicant, if not the owner, is 
permitted occupancy. 
(5) the name, business address, and telephone number of the applicant and of the 
authorized agent, if any; 
(6) an original signature in ink by the applicant filing the application or by 
the applicant's authorized representative; and 
(7) a list of the names and addresses of all affected persons as defined in 
subsection (d) of this section. 
(d) Notice of the application for an exception to a safety rule shall include 
the following items and procedures: 
(1) The applicant shall send a copy of the application by certified mail, return 
receipt requested, to all affected persons on the same date on which the 
application is filed with or sent to the commission. Return receipts shall be 
forwarded to the commission. The application shall include, in addition to the 
other requirements, a notice to the affected persons that any objection shall be 
filed with the commission within 18 days of the postmarked date of the certified 
mail. 
(2) If an exception is requested for a stationary site, affected persons to whom 
the applicant shall give notice shall include but not be limited to: 
(A) persons and businesses owning or occupying property adjacent to the site; 
(B) the city council, if the site is within municipal limits; and 
(C) the county commission, if the site is outside municipal limits. 
(3) If an exception is requested for a nonstationary installation, affected 
persons to whom the applicant shall give notice shall include but not be limited 
to: 
(A) the Texas Department of Public Safety; and 
(B) all processed gas loading and unloading facilities used by the applicant. 
(4) The commission may require an applicant to give notice to persons in 
addition to those listed in paragraphs (2) and (3) of this subsection if doing 
so will not prejudice the rights of any person. 
(e) The commission shall review the application within 21 calendar days of 
receipt of the application. If the commission does not receive any objections 
from any affected persons as defined in subsection (d) of this section, the 
commission may grant administratively the exception if it will neither imperil 
nor tend to imperil the health, welfare, or safety of the general public. If the 
commission declines to grant administratively the exception, the applicant shall 
be notified of the reasons and any specific deficiencies. The applicant may 
modify the application to correct the deficiencies and resubmit the application, 
or may request a hearing on the matter in accordance with the General Rules of 
Practice and Procedure of the Railroad Commission of Texas. 
(f) A hearing shall be held when the commission receives objections from any 
affected party, or when the applicant requests one following an administrative 
denial. To be granted a hearing, the applicant shall file a request for hearing 
within 14 days of receiving notice of the administrative denial. Hearings will 
be held in accordance with the requirements of the Administrative Procedure Act 
and the General Rules of Practice and Procedure of the Railroad Commission of 
Texas. 
(g) The commission shall prepare a notice of hearing which shall be mailed to 
the applicant and all affected persons by certified mail, return receipt 
requested, at least 21 days prior to the date of the hearing. 
(h) Intentional misinformation submitted by an applicant or the authorized agent 
of such applicant shall be punishable as set out in Texas Natural Resources 
Code, sec.91.143, and may be grounds for the commission to dismiss an 
application, with or without a hearing, and with prejudice. 
(i) After hearing, the commission may grant exceptions to this chapter if the 
commission determines that granting the exception will neither imperil nor tend 
to imperil the health, safety, or welfare of the general public. 
(j) For good cause shown, the commission may grant a temporary exception of 30 
days or less to the examination requirements for company representatives and 
operations supervisors. Good cause includes but is not limited to death of a 
sole proprietor or partner, or severe economic hardship. Applicants for 
temporary exceptions shall comply with applicable safety requirements and shall 
furnish the commission with evidence that granting the exception will neither 
create a safety hazard nor endanger the public. 
(k) A request for an exception that is inactive for six months after the 
applicant has been notified by the commission of its deficiencies shall expire. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612234
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER M.Engine Fuel Systems
16 TAC sec.sec.13.2010, 13.2013, 13.2019, 13.2022, 13.2028, 13.2034, 13.2037, 
13.2046, 13.2049
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612240
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER H.General for All Stationary LNG Installations
16 TAC sec.sec.12.2101, 13.2107, 13.2110, 13.2116, 13.2122, 13.2131, 13.2137
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012.

sec.13.2101.Uniform Protection Requirements.
(a) This section applies to the protection from tampering and damage of 
stationary LNG installations, including LNG transfer systems, dispensing 
systems, and storage containers. 
(b) Protection shall be maintained in good condition at all times in accordance 
with the standards set forth in this subsection. The commission may impose 
additional requirements to ensure the safety of personnel and the general 
public. 
(c) Stationary LNG installations shall be protected from tampering and damage by 
either fencing or guardrails, or a combination of both as specified in this 
section. The operating end of the container, including the material handling 
equipment and the entire dispensing system, and any part of the LNG transfer 
system, dispensing system, or storage container which is exposed to vehicular 
traffic shall be protected from damage by the vehicular traffic to which it is 
normally exposed. The protection shall extend at least 24 inches beyond any part 
of the LNG transfer system, dispensing system, or storage container. 
(d) Stationary LNG installations may use fencing which is located more than 25 
feet from any point of the LNG transfer system, dispensing system, or storage 
containers. If such perimeter fencing is used, the LNG transfer system, 
dispensing system, or storage containers shall also be protected from the normal 
vehicular traffic to which they are subjected by guardrails at the operating end 
of the equipment, including all material handling equipment. Guardrails shall be 
located at least 24 inches beyond any part of the protected equipment which is 
exposed to vehicular traffic. 
(e) Fencing at LNG stationary installations shall comply with the following: 
(1) Fencing material shall be solid construction of noncombustible material or 
chain link with wire at least 12 1/2 American wire gauge in size. 
(2) Fencing shall be at least six feet in height at all points. Fencing may be 
five feet in height when topped with at least three strands of barbed wire, with 
the strands four inches apart. 
(3) Uprights, braces, and cornerposts shall be composed of noncombustible 
material if located within the minimum distances specified for ignition sources 
or combustible materials set forth in sec.13.2110 of this title (relating to LNG 
container installation distance requirements) for the enclosed LNG transfer 
system, dispensing system, or LNG containers. 
(4) A minimum clearance of 24 inches shall be maintained between the fencing and 
any part of an LNG transfer system, dispensing system, or storage container that 
is part of a stationary installation. 
(f) Guardrails at LNG stationary installations shall comply with the following: 
(1) Vertical supports for guardrails shall be at least four-inch concrete-filled 
schedule 40 steel pipe or material of equal or greater strength. The vertical 
supports shall be capped on top, anchored in concrete at least 36 inches below 
the ground, and rise at least 30 inches above the ground. Supports shall be 
spaced four feet apart or less. 
(2) The top of the horizontal guardrailing shall be secured to the vertical 
supports at least 30 inches above the ground. The horizontal guardrailing shall 
be at least three-inch schedule 40 steel pipe or other material with equal or 
greater strength. The horizontal guardrailing shall be welded or bolted to the 
vertical supports with bolts of sufficient size and strength to prevent damage 
to the protected equipment under normal conditions including the nature of the 
traffic to which the protected equipment is exposed. 
(3) Openings in the horizontal guardrailing shall not exceed 36 inches. A means 
of temporarily removing the horizontal guardrailing and vertical supports to 
facilitate the handling of heavy equipment may be incorporated into the 
horizontal guardrailing and vertical supports. In no case shall the protection 
provided by the horizontal guardrailing and vertical supports be decreased. 
Transfer hoses from the bulkhead shall be routed only over the horizontal 
guardrailing or through the 45- degree opening in front of the bulkhead. 
(4) A minimum clearance of 24 inches shall be maintained between the railing and 
any part of an LNG transfer system, dispensing system, or storage container. 
(g) Stationary LNG installations shall comply with the sign and lettering 
requirements specified in Table 1 of this section and the following: 
(1) Unless colors are specified, lettering shall be a color in sharp contrast to 
the background color of the sign and shall be easily readable. 
(2) Signs shall be visible from each point of transfer; 
(3) Signs on emergency shutdown devices shall be permanently affixed; 
(4) Signs bearing the words, "NATURAL GAS," shall be located on all operating 
sides of dispensers; and 
(5) Signs indicating the licensee's name shall be located at either the vehicle 
dispenser or refueling area, or at the loading or unloading area. 
Figure: 16 TAC 13.2101(g)(5)
(h) At least two monitoring sensors shall be installed at all stationary 
installations to detect hazardous levels of LNG. Sensors shall activate at not 
more than 25% of the lower flammable limit of LNG. If the level exceeds one-
fourth of the LFL, the sensor shall either shut the system down or activate an 
audible and visual alarm. The number of sensors to be installed shall comply 
with the area of coverage for each sensor and the size of the installation. The 
sensors shall be installed and maintained in accordance with the manufacturer's 
instructions. 

sec.13.2107.Stationary LNG Storage Containers.
(a) Used LNG containers shall meet the requirements of sec.13.2104 of this title 
(relating to uniform safety requirements) and any other applicable rules prior 
to being reused in LNG service. 
(b) ASME, DOT and API containers shall be identified by attachment of a 
stainless steel nameplate in a location that will remain visible after the 
container is installed and by a method which will minimize corrosion of the 
nameplate, its means of attachment, and the container. The nameplate shall be 
marked with the following information: 
(1) manufacturer's name and date of construction of container; 
(2) nominal liquid capacity (in barrels or gallons); 
(3) design pressure (in psig) for methane gas at the top of the container; 
(4) maximum permissible density of liquid to be stored; 
(5) maximum level to which container may be filled with stored liquid; 
(6) maximum level to which container may be filled with water for test, if 
applicable; and 
(7) minimum temperature in degrees Fahrenheit for which the container was 
designed. 
(c) Openings on storage containers shall be marked with a sign or tag showing 
the function of the opening. The markings shall remain readable during all 
operating conditions and shall be located to minimize the effects of possible 
frosting. 
(d) Shop-fabricated and shop-tested LNG containers shall be leak-tested to 90% 
of the pressure relief valve setting after being installed and filled with LNG. 

sec.13.2110.LNG Container Installation Distance Requirements. 
(a) LNG containers shall be installed in accordance with the following minimum 
distance requirements from the edge of the container or the impoundment area: 
(1) Containers with aggregate water capacities up to 15,540 gallons shall be 
located at least 25 feet from any building, property line, stationary ignition 
sources, or other aboveground flammable liquids; 
(2) Containers with aggregate water capacities from 15,541 to 93,240 gallons 
shall be located at least 50 feet from any building, property line, stationary 
ignition sources, or other aboveground flammable liquids; 
(3) Containers with aggregate water capacities of 93,241 gallons or more shall 
be located at a distance approved by the commission through its review of the 
required plans and specifications. The commission may refer to any nationally 
recognized standards in making its determination relating to the required 
distance. 
(b) Operating industrial trucks with only one container mounted on each truck 
may be stored inside buildings. Extra containers shall not be stored inside 
buildings. Operating industrial trucks shall be stored in an area that will 
reduce the likelihood of an accident. Service valves shall be closed whenever a 
truck with a mounted container is stored. A venting system shall be used any 
time a vehicle not in operation is inside a building to allow safe relief valve 
venting. 
(c) Stationary LNG containers and piping shall not be placed in the area 
directly beneath or above an electric transmission, distribution, or customer 
service line and the area six feet to either side of that line. If this distance 
is not adequate to prevent the line and the associated voltage from contacting 
the LNG container in the event of breakage of any conductor, then other suitable 
means of protection designed and constructed to prevent such contact with the 
container may be used if approval is received from the commission. The request 
for approval shall be in writing and shall specify the manner in which the 
container will be protected from contact, including specifications for the 
materials to be used. If the commission does not approve the proposed 
protection, then the container shall be located a sufficient distance from the 
line to prevent such contact. 

sec.13.2116.Transfer of LNG.
(a) Venting of LNG is prohibited as part of routine activities, except for the 
following: 
(1) as provided for in sec.13.2119 of this title (relating to transport vehicle 
loading and unloading facilities and procedures); and 
(2) through a trycock installed on a stationary storage tank during filling of 
the tank. 
(b) LNG being transferred into stationary storage containers shall be compatible 
in composition or temperature and density with the LNG already in the container. 
When making transfers into fueling facility containers, the LNG shall be 
transferred at a pressure that will not exceed the set pressure of the pressure 
relief device. 
(c) When the composition or temperature and density are not compatible, measures 
shall be taken to prevent an excessive rate of vapor evolution. 
(d) At least one licensed or certified individual shall be in attendance while 
unloading is in progress. 
(e) Ignition sources shall not be permitted within 25 feet of the transfer area 
or within the distances specified as classified areas in Table 1 of sec.13.2513 
of this title (relating to electrical equipment) while transfer of LNG is in 
progress. 
(f) Measuring instruments shall be provided to determine that containers are not 
overfilled. 

sec.13.2122.Transfer Systems, Including Piping, Pumps, and Compressors, Used for 
LNG and Refrigerants.
(a) Transfer systems and pumps used for transfer of LNG and refrigerants shall 
be provided with means for precooling to reduce the effect of thermal shock and 
overpressure. 
(b) Check valves shall be provided as required to prevent backflow in transfer 
systems and shall be located as close as practicable to the point of connection 
to any system from which backflow might occur. 
(c) In addition to a locally mounted device to shut down the pump or compressor 
drive, a readily accessible, remotely located device shall be provided at least 
25 feet away from the equipment to shut down the pump or compressor in case of 
emergency. The device shall be marked in accordance with sec.13.2101(i) of this 
title (relating to uniform protection requirements). Remotely located pumps and 
compressors used for loading or unloading tank vehicles shall be provided with 
shut-down controls at the transfer area and at the pump or compressor site. 
(d) Pressure gauges shall be installed on each pump and compressor discharge. 
(e) Valves shall be installed so that each pump or compressor can be isolated 
for maintenance. Where pumps or centrifugal compressors are installed for 
operation in parallel, each discharge line shall be equipped with a check valve. 
(f) Pumps and compressors shall be provided with pressure relief devices to 
limit the discharge pressure to their maximum allowable working pressure. 

sec.13.2131.Fire Protection.
(a) Fire protection shall be provided for all LNG facilities, as determined by 
sound fire protection engineering principles, analysis of local conditions, 
hazards within the facility, and exposure to or from other property. The 
evaluation shall determine at a minimum type, quantity, and location of: 
(1) equipment necessary for the detection and control of fires, leaks, and 
spills of LNG, flammable refrigerants, or flammable gases; 
(2) equipment necessary for the detection and control of potential non-process 
and electrical fires; 
(3) the methods necessary for protection of the equipment and structures from 
the effects of fire; 
(4) fire protection water systems; 
(5) fire extinguishing and other fire control equipment; 
(6) the availability and duties of employees and the availability of local 
emergency response organizations during an emergency; and 
(7) the protective equipment and special training needed by employees for their 
emergency duties. 
(b) A detailed emergency response manual shall be prepared for potential 
emergency conditions. The procedures shall include but not be limited to: 
(1) shut-down or isolation of all or part of the equipment to ensure that the 
escape of gas or liquid is promptly stopped or reduced as much as possible; 
(2) use of fire protection equipment; 
(3) notification of emergency response organizations and public authorities; 
(4) first aid; and 
(5) duties of employees. 
(c) The emergency procedure manual shall be available in the operating area and 
shall be updated as required by changes in equipment or procedures. 
(d) Employees engaged in LNG activities shall be trained in emergency duties and 
procedures. Refresher training shall be conducted at least once every two years. 
(e) Fire control measures shall be coordinated with the local fire and emergency 
response organizations. 
(f) Safety and fire protection equipment shall be visually inspected at least 
once a month and tested at least once a year. Documentation shall be maintained 
on inspections and tests for at least two years or consistent with other safety 
record retention schedules, whichever is greater. 
(g) Maintenance on fire control equipment shall be scheduled so that a minimum 
of equipment is out of service at any one time and fire protection safety is not 
compromised. Access routes for movement of fire control equipment to an LNG 
fueling facility shall be maintained at all times. 
(h) Fire extinguishing and other fire control systems shall follow the local 
fire marshal's requirements and recommendations for the protection of specific 
hazards. 
(i) Dry chemical fire extinguishers suitable for extinguishing gas fires shall 
be provided at each stationary LNG installation. 

sec.13.2137.Employee Safety and Training.
(a) Employees shall be advised of the hazards relative to LNG facility 
operations. 
(b) Protective clothing and equipment shall be provided to employees for both 
normal operations and emergency response. 
(c) Employees who handle and dispense LNG shall be trained in proper handling, 
operating duties, and procedures. 
(d) Employees shall be trained upon employment and as needed thereafter, but no 
less than every two years. Training shall include the following: 
(1) information on the nature, properties, and hazards of LNG in both the liquid 
and gaseous phases; 
(2) specific instructions on the facility equipment to be used; 
(3) use and care of protective equipment and clothing; 
(4) standard first aid; 
(5) response to emergency situations such as fire, leaks, and spills; 
(6) good housekeeping practices; 
(7) the emergency response plan; and 
(8) evacuation and fire drills. 
(e) Licensees shall retain employee safety training records for the past four 
years. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612235
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

16 TAC sec.sec.13.2104, 13.2113, 13.2119, 13.2125, 13.2128, 13.2134, 13.2140
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612241
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER J.General Rules for LNG Fueling Facilities
16 TAC sec.sec.13.2301, 13.2307, 13.2310, 13.2313, 13.2316, 13.2319, 13.2322, 
13.2325, 13.2328
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612242
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

16 TAC sec.13.2304
The new section is proposed under the Texas Natural Resources Code, sec.116.012, 
which authorizes the commission to adopt rules and standards relating to 
liquefied natural gas activities to protect the health, welfare, and safety of 
the general public. 
The following is the statute, article, or code affected by the proposed new 
section4: --Texas Natural Resources Code, sec.116.012.

sec.13.2304.General Facility Design.
(a) LNG fueling facilities shall be designed with provisions for securing all 
equipment in accordance with sec.13.2101 of this title (relating to uniform 
protection requirements). 
(b) Structures and support of LNG fueling facility equipment, piping, controls, 
and tanks shall be constructed of noncombustible material. 
(c) Dikes, grading, or diversion curbs shall be provided to prevent combustible 
or hazardous liquids from encroaching on the LNG refueling facility. 
(d) LNG shall not be vented to the atmosphere under normal operations unless the 
vent leads to a safe point of discharge. Vent pipes or stacks shall have the 
open end suitably protected to prevent entrance of rain, snow, and other foreign 
material. Vent stacks shall have provision for drainage. 
(e) Instructions identifying the location and operation of emergency controls 
shall be conspicuously posted in the facility area. 
(f) LNG fueling facility containers, liquid impoundment areas, and points of 
transfer shall be located according to the distances specified in sec.13.2110 of 
this title (relating to LNG container installation distance requirements). 
(g) LNG fueling facility containers may be sited above or below grade. Soil 
susceptible to freezing from contact with containers shall be heated directly or 
protected with an air space. 
(h) Containers having outer jackets made of materials subject to corrosion shall 
be protected against corrosion. 
(i) Vehicles delivering LNG to a facility or vehicles being fueled from a 
facility shall not be considered ignition sources. Vehicles containing fuel-
fired equipment, such as recreational vehicles and catering trucks, shall be 
considered ignition sources unless the fuel-fired equipment is shut off 
completely before the vehicle enters an area in which ignition sources are 
prohibited. 
(j) LNG fueling facilities which transfer LNG at night shall have permanent 
lighting at points of transfer and operation, including at least two lights with 
a total of at least two footcandles of power. 
(k) Temperature monitoring systems shall be provided where the foundations 
supporting cryogenic containers and equipment could be adversely affected by 
freezing or frost heaving of the ground.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612236
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER K.Piping System and Components for All Stationary LNG Installations
16 TAC sec.sec.13.2401, 13.2404, 13.2407, 13.2410, 13.2413, 13.2416, 13.2419, 
13.2422, 13.2425, 13.2428, 13.2431, 13.2434, 13.2437, 13.2440
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: sec.sec.13.2401, 13.2404, 13.2407, 13.2410, 13.2413, 13.2416, 13.2419, 
13.2422, 13.2425, 13.2428, 13.2431, 13.2434, 13.2437, and 13.2440--Texas Natural 
Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612243
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER L.Instrumentation and Electrical Services
16 TAC sec.sec.13.2501, 13.2504, 13.2507, 13.2510, 13.2513, 13.2516
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: sec.sec.13.2501, 13.2504, 13.2507, 13.2510, 13.2513, and 13.2516--
Texas Natural Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612244
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER M.Engine Fuel Systems
16 TAC sec.sec.13.2601, 13.2607, 13.2613, 13.2619, 13.2625, 13.2631,
13.2634, 13.2637, 13.2640, 13.2643
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612245
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

16 TAC sec.sec.13.2604, 13.2610, 13.2616, 13.2622, 13.2628
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 

sec.13.2604.System Component Qualification.
(a) Components in the engine compartment normally in contact with LNG shall be 
suitable for service over a range of temperatures of -260 degrees Fahrenheit to 
+250 degrees Fahrenheit. Other components not normally in contact with LNG shall 
be suitable for service over a range of -40 degrees Fahrenheit to +250 degrees 
Fahrenheit. 
(b) Components outside the engine compartment normally in contact with LNG shall 
be suitable for service over a range of temperatures from -260 degrees 
Fahrenheit to +180 degrees Fahrenheit. Other components not normally in contact 
with LNG shall be suitable for service over a range from -40 degrees Fahrenheit 
to +180 degrees Fahrenheit. 
(c) Fuel-carrying components (excluding service valves, tubing, and fittings) 
shall be labeled or stamped with the following: 
(1) the manufacturer's name or symbol; 
(2) the model designation; 
(3) the maximum allowable maximum allowable working pressure; 
(4) the design temperature range; 
(5) direction of flow of fuel when necessary for correct installation; and 
(6) capacity or electrical rating as applicable. 

sec.13.2610.Installation of Vehicle Fuel Containers. 
(a) Vehicle fuel containers shall comply with the following specifications: 
(1) Fuel containers on vehicles other than school buses, mass transit, or other 
vehicles used in public transportation may be located within, below, or above 
the driver or passenger compartments, provided all connections to the containers 
are external to or sealed and vented from those compartments. The motor fuel 
containers installed on a special transit vehicle may be installed in the 
passenger compartment, provided all connections to the cylinders are external to 
or sealed and vented from those compartments. 
(2) Fuel supply components and containers shall be mounted in a location to 
minimize damage from collision. No part of a container or its appurtenances 
shall protrude beyond any part of the vehicle at the point of installation. 
(3) Fuel systems shall be installed with as much road or ground clearance as 
practicable, but not less than the minimum road or ground clearance of the 
vehicle when loaded to its gross vehicle weight rating. The minimum distance 
shall be measured from the lowest part of the fuel system. 
(4) No portion of a fuel supply container or container appurtenance shall be 
located ahead of the front axle or behind the rear bumper mounting face of a 
vehicle. Fuel container valves shall be protected from physical damage using the 
vehicle structure, valve protectors, or a suitable metal shield. 
(5) Fuel supply containers located less than eight inches from the exhaust 
system shall be shielded from direct heat. 
(6) Mountings shall minimize fretting corrosion between the fuel container and 
the mounting system by means of rubber insulators or other suitable means. 
(7) Fuel containers shall not be installed where they would adversely affect the 
driving characteristics of the vehicle. 
(8) Fuel containers on school buses or mass transit vehicles shall be installed 
on the underside of the vehicle, except as specified in subsection (c) of this 
section. Fuel containers on special transit vehicles shall be installed in a 
location which will not interfere with vehicle operation. 
(9) Fuel containers, appurtenances, and connections may be enclosed in a shroud-
type structure, provided it is securely attached to the container and liquid-
tight. The shroud access doors shall be secured in place by fasteners such as 
wing nuts or spring-loaded latches and shall not require the use of tools for 
removal. The use of locks on shroud access doors is prohibited. 
(b) Fuel supply containers shall be connected or mounted to comply with the 
following specifications: 
(1) Fuel supply container connections shall be external to or sealed and vented 
from the driver and passenger compartments or any space containing radio 
transmitters or other spark- producing equipment. 
(2) Container brackets shall be secured to the vehicle body, bed, or frame with 
bolts, lock washers and nuts, or self- locking nuts of a size and strength 
capable of withstanding a static force in any direction of eight times the 
weight of a full container for vehicles with gross vehicle weights of 19,500 
pounds or less, and four times the weight of a full container for vehicles with 
gross vehicle weights of 19,501 pounds or more. Mounting brackets shall be 
marked with the manufacturer's name or logo. If self-locking nuts are installed, 
they shall not be reused once they are removed. Container mounting brackets 
shall prevent the container from jarring loose, slipping or rotating. 
(3) Fuel supply containers shall be secured in the mounting brackets by bolts, 
lock washers, and nuts, or self- locking nuts of a size and strength capable of 
withstanding a static force applied in any direction eight times the weight of 
the full container for vehicles with gross vehicle weights of 19,500 pounds or 
less, and four times the weight of a full container for vehicles with gross 
vehicle weights of 19,501 pounds or more. If self-locking nuts are installed, 
the nuts shall not be reused once they are removed. 
(4) The weight of the fuel container shall not be supported by the outlet, 
service valves, manifolds, or other fuel connections. 
(5) Containers shall be secured to a school bus, mass transit, or special 
transit vehicle frame excluding the floor by container fastenings or mounting 
brackets described in subsection 
(b) of this section. The fastenings or brackets shall be secured to the frame, 
backing plates, or other supporting structure without compromising the strength 
of that structure. 
(c) Roof-mounted containers are allowed if the vehicle was originally designed 
and manufactured to have roof-mounted containers or if the original manufacturer 
approves the design of the structure mounting. Vehicles shall not be modified to 
have roof-mounted containers. 
(d) Container markings shall be readable after a container is permanently 
installed on a vehicle. A portable lamp or mirror may be used to read markings. 
(e) Where an LNG container is substituted for the fuel container installed by 
the original manufacturer of the vehicle, whether or not that fuel container was 
for LNG, the LNG container shall either fit within the space in which the 
original fuel container was installed or comply with subsection (a) of this 
section. 
(f) If necessary, a plumbing chamber door shall be provided in the sidewall of 
the school bus, mass transit, or special transit vehicle to allow for easy 
access for filling or securing the service valve in the event of an emergency. 
The plumbing chamber door shall be hinged and latched, but not locked. 

sec.13.2616.Installation of Venting Systems and Monitoring Sensors. 
(a) Pressure relief devices and pressure carrying components installed within a 
closed compartment shall be vented to the outside of the vehicle in a suitable 
location. 
(b) Vents shall not exit into a wheel well. 
(c) Vents shall not restrict the operation of a fuel container pressure relief 
device or pressure relief device channel. Vent lines shall be located and 
secured to permit the required relief discharge capacity and to minimize the 
possibility of physical damage. 
(d) Vent lines shall be equipped with a means to minimize the possibility of 
water or other foreign material from entering the relief device or vent line. 
Such means shall remain in place except when the relief device operates and 
shall permit the relief device to operate at the required capacity. 
(e) Escaping gas shall not impinge on fuel supply containers and shall not be 
directed into wheel wells, at individuals or other vehicles in traffic, at the 
engine air intake, or in a manner that would create a hazard. 
(f) Safety relief valve discharge shall be directed or vented so that any gas 
released will not directly impinge upon containers, any part of the vehicle, 
adjacent individuals or vehicles, or the inside of the passenger or luggage 
compartment. 
(g) At least two monitoring sensors shall be installed on all LNG-fueled 
vehicles to detect hazardous levels of LNG. Sensors shall activate at not more 
than 20 percent of the lower flammable limit of LNG. If the level exceeds one-
fifth of the LFL, the sensor shall either shut the system down or activate an 
audible and visual alarm. The number of sensors to be installed shall comply 
with the area of coverage for each sensor and the size of the vehicle. The 
sensors shall be installed and maintained in accordance with the manufacturer's 
instructions. 

sec.13.2622.Installation of Valves.
(a) Valves, valve packings, gaskets, and seats shall be suitable for the 
intended service and shall comply with the following: 
(1) Shutoff valves shall have a maximum allowable working pressure of at least 
the maximum allowable working pressure of the container. Leakage shall not occur 
at less than 1 1/2 times the maximum allowable working pressure of the valve. 
(2) Valve parts, except gaskets, packing, and seats that come in contact with 
the fuel shall be stainless steel, brass, or copper. 
(b) Valves shall be securely mounted and shielded or installed in a protected 
location to minimize damage from vibration and unsecured objects. 
(c) In vehicles whose engines do not incorporate an automatic shutoff in the 
engine fuel system, a positive shutoff valve shall be installed in the fuel 
supply line at the inlet to the pressure regulator. The shutoff valve shall 
automatically close and prevent the flow of fuel to the engine when the ignition 
switch is off or in the accessory position, or when the engine is not running 
and the ignition switch is on. 
(d) When multiple fuel systems are installed on the vehicle, automatic valves 
shall be provided as necessary to shut off the fuel not being used. 
(e) Fueling systems shall be equipped with a backflow check valve which will 
prevent the return of gas from the container to the filling connection. 
(f) Valves shall be installed so that their weight is not placed on or supported 
by the attached lines.

sec.13.2628.Installation of Pressure Regulators.
(a) Automatic pressure reducing regulators shall be installed to reduce the fuel 
container pressure to a level consistent with the maximum allowable working 
pressure required by the engine fuel system, if the primary relief valve setting 
to the fuel container exceeds the maximum allowable engine inlet fuel pressure, 
and automatic pressure reducing regulator. 
(b) Means shall be provided to prevent regulator malfunctions due to low 
temperatures. 
(c) Regulators shall be installed so that their weight is not placed on or 
supported by the attached gas lines.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612238
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

SUBCHAPTER N.LNG Transports
16 TAC sec.sec.13.2701, 13.2704, 13.2710, 13.2716, 13.2719, 13.2722, 13.2725, 
13.2728, 13.2731, 13.2734, 13.2737, 13.2740, 13.2743, 13.2746, 13.2749
The new sections are proposed under the Texas Natural Resources Code, 
sec.116.012, which authorizes the commission to adopt rules and standards 
relating to liquefied natural gas activities to protect the health, welfare, and 
safety of the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: sec.sec.13.2701, 13.2704, 13.2710, 13.2713, 13.2716, 13.2719, 13.2722, 
13.2725, 13.2728, 13.2731, 13.2734, 13.2737, 13.2740, 13.2743, 13.2746, 13.2749-
-Texas Natural Resources Code, sec.116.012.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612246
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

16 TAC sec.13.2707
The new section is proposed under the Texas Natural Resources Code, sec.116.012, 
which authorizes the commission to adopt rules and standards relating to 
liquefied natural gas activities to protect the health, welfare, and safety of 
the general public. 
The following is the statute, article, or code affected by the proposed new 
sections: --Texas Natural Resources Code, sec.116.012. 

sec.13.2707.Testing Requirements.
(a) Transport container units required to be registered with the commission 
shall be tested at least once every five years in accordance with the commission 
approved manual of a Category 15, 20, or 50 licensee, or the registered testing 
laboratory performing the test. 
(1) Documentation of the required testing shall be filed by the Category 15, 20, 
or 50 licensee or by the testing laboratory registered with the commission. 
(2) The results of any test required under this section shall clearly indicate 
whether the transport container unit is safe for LNG service and shall be filed 
with the commission by the licensee or registered testing laboratory that 
performed the test on LNG Form 2008. The licensee or testing laboratory shall 
mail the form to the commission within 30 days of the due date of any tests 
required under this section. 
(3) If evidence of any unsafe condition is discovered as a result of any tests 
performed under this section, the transport container unit shall be immediately 
removed from LNG service and may not be returned to LNG service until the 
commission notifies the licensee in writing that the transport container unit 
may be returned to LNG service. 
(4) Transport container units that have been out of LNG service for one year or 
more shall not be returned to LNG service until they have met the testing 
requirements of this section. 
(b) Containers shall be subjected to either a hydrostatic or a pneumatic chart-
recorded test for a continuous period of 30 minutes. During such test, the 
internal pressure shall be hydraulically generated to 1 1/2 times the maximum 
allowable working pressure of the container for a hydrostatic test, or 1 1/4 
times the maximum allowable working pressure of the container for a pneumatic 
test. Valves shall be handled as follows: 
(1) Safety relief valves may be blocked during the test only if the blocks are 
placed immediately prior to the test and removed immediately upon completion of 
the test. 
(A) Safety relief valves shall be removed from the transport container and 
tested for the purpose of the five-year test. 
(B) Safety relief valves shall open at the required set pressure and reset to a 
leak-tight condition at 90% of the set-to-discharge pressure. If they do not 
meet this requirement, they shall be replaced. 
(2) Shutoff valves for the container openings may be closed during the test. 
(c) Containers shall be inspected for corroded areas, dents, or other conditions 
(including leakage under test pressure) which could render the container unsafe 
for LNG service. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 21, 1996.
TRD-9612239
Mary Ross McDonald
Assistant Director, Gas Services Section, Office of General Counsel
Railroad Commission of Texas
Effective date: October 1, 1996
Proposal publication date: April 5, 1996
For further information, please call: (512) 463-7008

PART II. Public Utility Commission of Texas
CHAPTER 22.Practice and Procedure
SUBCHAPTER M.Procedures and Filing Requirements in Particular Commission 
Proceedings
16 TAC sec.22.246
The Public Utility Commission of Texas adopts new Procedural Rule sec.22.246, 
relating to Administrative Penalties, with changes to the proposed text as 
published in the May 24, 1996 issue of the Texas Register (21 TexReg 4510). The 
new rule sets out procedures for the commission to follow when addressing 
enforcement actions that may result in administrative penalties against persons 
found to be engaging in any activity or conduct prohibited by the Public Utility 
Regulatory Act (PURA), a commission rule, or a commission order. 
A public hearing on the rule was held at commission offices on June 7, 1996 at 
10:00 a.m., however no comments were presented for the record. 
The commission received written comments on the proposed rule from The Office of 
the Attorney General-State of Texas (AG), Central and South West Corporation 
(CSW), and Houston Lighting and Power (HL&P). Each of the parties supported the 
rule in general, but recommended specific changes the proposed text as 
summarized below. 
The AG stated that the scope of the proposed rule is specific to enforcement 
actions related to administrative penalties only and does not apply to any other 
enforcement actions that may be undertaken by the commission or the commission 
staff. The AG commented that the proposed rule did not explain how the 
commission would determine whether a violation is subject to the administrative 
penalty process or is to be addressed under one of the commission's other 
procedures for pursuing enforcement action. 
Procedural Rule sec.22.246 is not intended to address all situations that may 
require commission enforcement action, or to detail the manner in which any 
other enforcement actions may be undertaken. The proposal was intended to 
complement the existing complaint resolution process, not supplant it. The 
commission adopts sec.22.246 to specify the internal procedures by which the 
specific provisions of sec.1.3215 of PURA (or "the Act") will be implemented. 
Section 1.3215 of the Act allows the commission to impose an administrative 
penalty against a person regulated under the Act who violates the Act or a rule 
or order adopted under the Act. The commission makes no changes to the proposed 
text based on this comment. 
The AG and CSW commented that the text in subsection (h)(2) of the proposed rule 
relating to the hearing process which states ". . . except that no intervention 
shall be allowed," jeopardizes the completeness of the record and that there may 
be situations where it would be appropriate to allow interventions in an 
administrative penalty hearing. 
The commission anticipates that the administrative penalty process will be 
limited to only those persons directly involved in the occurrence of the alleged 
violation and the commission staff involved in the processing of such alleged 
violation. However, the commission recognizes that there may be isolated 
incidences when intervention could be deemed appropriate and defers to the 
discretion of the administrative law judge for making a decision regarding 
specific requests for intervention. The commission removes the exclusionary 
language related to intervention from the rule. 
Finally, the AG stated that the proposed rule should state that the SOAH judge 
shall order that the "violator cease and not engage in the violative (sic) 
conduct" in the future. He recommends that such text should be added to 
subsection (h)(3) relating to the proposal for decision from the State Office of 
Administrative Hearings (SOAH). 
The commission finds that an order to cease and not engage in such conduct in 
the future is implicit in the enactment of the statutes, orders, and rules 
governing the activity in question. The commission believes that a specific 
"cease and not engage" statement in a proposal for decision related to an 
alleged violation would be iterative and unnecessary. The commission makes no 
changes to the rule based on this comment. 
HL&P stated that the commission should notify the person of an alleged 
violation, and any investigation initiated under subsection (d), when the 
commission receives a report of an alleged violation. They stated further that 
the rule should provide the commissioners with a means to "review and/or dismiss 
the alleged violation early in the process." 
Subsection (d) provides for the executive director to make a determination as to 
whether or not an investigation should be initiated. The commission does not 
believe that it is necessary or prudent to alert a person of the suggestion of 
an alleged violation, thereby potentially causing unnecessary alarm, prior to 
the preliminary review and determination by the executive director that an 
investigation is even warranted. Similarly, there would be insufficient 
information regarding the alleged violation prior to the completion of an 
initial investigation, if one is initiated, for the commissioners to "review 
and/or dismiss" at this stage of the process. The commission makes no changes to 
the text based on this comment. 
HL&P further stated that the commission should notify the person of the alleged 
violation and the initiation of an investigation at the same time the commission 
receives the "Report of Violation" under subsection (e) of the rule. 
Section 1.3215(e) of PURA requires that written notification shall be sent to 
the person alleged to have committed the violation within 14 days after the date 
a report is issued to the commission. The commission retains the language of the 
proposed text in the rule as it tracks the statute as cited. HL&P stated that 
the notice to the person should contain all the facts on which the allegation is 
alleged and that the rule should state that no penalty will be assessed if the 
violation is cured and was accidental or inadvertent. The commission agrees with 
HL&P regarding the notice and the statement affirming that no penalty will be 
assessed if the violation is cured pursuant to subsection (f)(1) of the rule. 
The commission adds language to the rule to address both concerns. 
SW commented that it was unclear whether the intent under subsection (f)(3) of 
the rule was to complete settlement discussions within 45 days or initiate 
settlement discussion within 45 days. 
The commission intends for settlement discussions to be completed within 45 days 
of the date the executive director receives a request for a settlement 
conference from the person alleged to have committed the violation. The text of 
the rule has been clarified in subsection (h) of the rule, relating to the 
hearing process, to state that if a settlement is not reached within the 45 days 
of the date the executive director receives a request for a settlement 
conference under subsection (g) of this section, a hearing date will be set. 
HL&P recommended that the commission clarify that a person may request a 
settlement conference at any time, including after the case has been referred to 
SOAH. 
The rule provides 30 days from the date the person receives the notice of the 
alleged violation to request a settlement conference before instructing the 
secretary to set a date for hearing and refer the case to SOAH. The commission 
believes that 30 days is ample time for making a determination regarding a 
request for a settlement conference and that the appropriate time to make such a 
request is before the referral to SOAH. After the case has been referred to 
SOAH, the SOAH judge, not the commission rule, will determine whether a person 
may request a settlement conference. The parties, if they so choose, are always 
free to discuss settlement while the hearing process is ongoing. The commission 
declines to adopt HL&P's suggestion. 
HL&P commented further that the rule should state that if a person requests a 
settlement conference within 30 days pursuant to subsection (f)(3) of the rule, 
a request for a hearing may be made within 10 days after conclusion of the 
settlement conference, if necessary. CSW stated since the person may request 
both a settlement conference and a hearing at the same time, it was unclear 
whether such a request for settlement would abate the hearing process while the 
parties attempt to settle. 
The intent of the rule was to provide the person with an "either/or" option 
regarding a request for a settlement conference or request for a hearing. 
However, the commission adds clarifying text to subsection (h) of the rule, 
relating to hearings, to specify at what point in the settlement process the 
secretary of the commission will set a hearing date and refer the case to SOAH. 
One such point clarifies that if a settlement is not reached by the parties 
within 45 days of the date the executive director receives notice of the request 
for a settlement, a hearing will be set and the case will be referred to SOAH. 
More specifically, to address CSW's concern, the commission notes that the 
person alleged to have committed the violation may request a hearing at any time 
during the 45 days allotted for settlement, and that a hearing date will be then 
be set. The commission notes that this provision of the rule presupposes that 
the person believes that a settlement of the issues is unlikely and therefore 
requests a hearing on the matter. The commission restates however that if the 
hearing is initiated because settlement was not reached within 45 days, the SOAH 
judge will determine whether there will be an abatement of the hearing for 
settlement discussions. 
CSW recommended a number of changes to proposed subsection (h) including that 
clarifying language be added which states that a hearing date shall be set if 
the executive director determines that further proceedings are necessary under 
subsection (f)(1)(B) of the rule; second, that (h)(3) be amended to include the 
language "whether the violation was cured within the 30-day period provided 
under PURA sec.1.3215(e)"; and finally, that (h)(4) add a subparagraph to state 
that based on a SOAH judge's proposal for decision, the commission may 
"determine that a violation occurred, but that the person cured the violation 
within the 30-day period authorized under PURA sec.1.3215(e), so that no 
administrative penalty will be assessed for the violation." 
The commission agrees with these suggested changes to subsection (h) and adds 
CSW's recommended language, but also includes the language from the statute that 
the person must cure and prove that the violation was "accidental or 
inadvertent." 
CSW stated that another sentence be added to paragraph (2) of subsection (h), 
which provides for the hearing to be conducted in accordance with the provisions 
of the chapter, that states "[t]he burden of proof to show that a violation has 
occurred shall be upon the legal division of the commission." The Commission 
believes that usually the burden of proof will be borne by the legal division, 
but that there may be instances in which that may not be true. For example, it 
is possible that sec.2.204 or sec.3.204 of PURA may assign the burden of proof 
to the utility. Furthermore, the possibility of intervenors participating in the 
proceeding creates the possibility that they may have the burden of proof. The 
commission declines to make any changes to the rule based on this comment. 
HL&P stated that both the commission secretary and the person alleged to have 
committed the violation forward a list of issues to the SOAH judge. The 
commission believes that it is the obligation of the commission to process the 
case according to the authority provided to it by statute and therefore declines 
to make the recommend change to the rule. See sec.2003.047(e) of the Government 
Code, which provides that "[a]t the time the office (SOAH) receives jurisdiction 
of a proceeding, the commission shall provide to the administrative law judge a 
list of issues or areas that must be addressed." CSW commented that subsection 
(f)(1) of the rule, relating to the opportunity to cure the violation, 
inappropriately curtails the 30 day grace period afforded by the language of the 
statute to cure the violation by requiring that the person prove that the 
violation was cured and accidental or inadvertent within 30 days. CSW recommends 
that the commission add language to the rule that allows the person to file with 
the commission the evidence proving that the violation was cured and accidental 
or inadvertent within 45 days of the receipt of the notice of violation. 
The commission intended to allow the person the entire 30 day grace period to 
cure the violation therefore language has been added to subsection (f)(1) which 
clarifies that the "proof that an alleged violation has been cured and that the 
alleged violation was accidental or inadvertent. . . shall be filed with the 
commission within 40 days of the person's receipt of the notice of violation." 
The commission finds that 40 days, and not 45 days as recommended by CSW, is a 
sufficient amount of time for the person to file the proof required. However, 
the person must still provide notice to the commission of his intent to provide 
such proof within 30 days of the commission's notice of the violation CSW stated 
that the proposed rule fails to provide for a formal determination by the 
commission if the executive director finds that no violation occurred or finds 
that the alleged violation was cured within the 30-day time frame. The 
commission did not intend for every initial investigation to rise to the level 
of attention that is implied by CSW's request for a formal determination by the 
commission that no violation occurred. The executive director must have the 
discretion to determine that no violation has occurred without tying up the 
process with a formal processing of such a determination on every allegation 
that is presented for investigation. Furthermore, if, based on the initial 
investigation, the executive director does determine that no violation has 
occurred, no report is issued to the commission and therefore no "final 
determination" by the commission is warranted. Similarly, CPL's second point 
regarding a final determination by the commission that the violation was cured 
and accidental or inadvertent is not warranted. If the person proves that the 
alleged violation was cured and accidental or inadvertent, subsection (f)(1)(B) 
clarifies that no penalty will be assessed. The commission does not believe any 
formal written declaration affirming the person's compliance with subsection 
(f)(1) of the rule is necessary. 
CPL noted that the commission expanded the 20-day statutory period for 
requesting a hearing or accepting the recommended penalty to 30 days. CSW stated 
that they are "concerned that the commission has no authority to expand the 
statutory time for response even if it makes more sense to have the deadline for 
(all) response options to occur on the same day." 
The commission expands the statutory time for accepting the determination and 
recommended penalty or requesting a hearing from 20 days to 30 days because the 
statute also affords 30 days for the person to cure the violation. The 
commission believes that the statutory language was intended to provide a grace 
period to allow the person to resolve the problem and prove that the violation 
was accidental or inadvertent prior to becoming embroiled in an enforcement 
proceeding. If the person needs the entire 30 days to cure the violation, it 
would be both inefficient and burdensome to the person, the commission, and SOAH 
to begin the hearing and process the case only to find that the person had cured 
the violation and proven to the satisfaction of the executive director that the 
violation was accidental and inadvertent. Furthermore, no one can claim to be 
aggrieved by the additional ten days. The person will either be agreeing to the 
penalty, in which case it would be meaningless to force a hearing, or the person 
will be requesting a hearing, which would result anyway if the person failed to 
respond the notice. The commission makes no changes to the text of the rule 
based on this comment. CSW commented that the settlement conference should be 
conducted by an independent third party mutually agreed upon by the parties and 
not by the legal administration division since that division is a division of 
the commission intending to impose the penalty. 
The commission declines to require the use of an independent third party in the 
language of the text because it is unclear who should pay for such independent 
third party and because the issue of who would pay was not noticed for comment 
in the rule. However, neither does the commission preclude the possibility that 
an independent third party may be utilized by the parties, but rather amends the 
text to state that "upon agreement by the parties, the legal administration 
division shall conduct the settlement conference and shall act as facilitator." 
Finally, CSW commented that the text of subsection (c)(3)(F) of the rule, 
relating to factors to be considered when setting the amount of a penalty should 
be revised to appear more neutral, by replacing ". . . whether the respondent 
has engaged in dilatory tactics during the investigation of the underlying 
complaint" with ". . . whether the respondent has cooperated with the commission 
during the investigation of the alleged violation." 
The commission agrees with CSW regarding the language of (c)(3)(F) and adopts 
the text as recommended. 
The new section is adopted under PURA sec.1.101, which provides the commission 
with the authority to make and enforce rules reasonably required in the exercise 
of its powers and jurisdiction; and specifically, sec.1.3215 of PURA, which 
allows the commission to impose an administrative penalty against a person 
regulated under the Act who violates the Act or a rule or order adopted under 
the Act. 
Cross Index to Statutes: sec.1.101 and sec.1.3215 Public Utility Regulatory Act 
of 1995, Texas Civil Statutes, Article 1146c-O (Vernon Supplement 1996) (PURA 
95).

sec.22.246.Administrative Penalties.
(a) Scope. This section is intended to address enforcement actions related to 
administrative penalties only and does not apply to any other enforcement 
actions that may be undertaken by the commission or the commission staff. 
(b) Definitions. The following words and terms, when used in this section, shall 
have the following meanings unless the context clearly indicates otherwise: 
(1) Executive Director-the executive director of the commission or the executive 
director's designee. 
(2) ORA Director-the director of the commission's office of regulatory affairs 
or the ORA director's designee. 
(3) Person-includes a natural person, partnership of two or more persons having 
a joint or common interest, mutual or cooperative association, and corporation. 
(4) Violation-any activity or conduct prohibited by the Public Utility 
Regulatory Act (PURA), commission rule or commission order.
(c) Amount of penalty. 
(1) Each day a violation continues or occurs is a separate violation for which a 
penalty can be levied, regardless of the status of any administrative procedures 
that are initiated under this subsection. 
(2) The penalty for each separate violation may be in an amount not to exceed 
$5,000.00 per day. 
(3) The amount of the penalty shall be based on: 
(A) the seriousness of the violation, including the nature, circumstances, 
extent, and gravity of any prohibited acts, and the hazard or potential hazard 
created to the health, safety, or economic welfare of the public: 
(B) the economic harm to property or the environment caused by the violation; 
(C) the history of previous violations; 
(D) the amount necessary to deter future violations; 
(E) efforts to correct the violation; and 
(F) any other matter that justice may require, including, but not limited to, 
the respondent's timely compliance with requests for information, completeness 
of responses, and the manner in which the respondent has cooperated with the 
commission during the investigation of the alleged violation. 
(d) Initiation of Investigation. Upon receiving an allegation of a violation, 
the executive director shall determine whether an investigation should be 
initiated. 
(e) Report of Violation. If, based on the investigation undertaken pursuant to 
subsection (d) of this section, the executive director and the ORA director 
determine that a violation has occurred, the executive director may issue a 
report to the commission. The executive director must obtain concurrence from 
the ORA director that a violation has occurred before the report is issued to 
the commission; provided, however, that if within 30 days of the date the draft 
report is provided to the ORA director, the ORA director does not expressly 
concur or not concur in the issuance of the report, the report may be issued 
without such concurrence. 
(1) Contents of the report of violation. The report of violation shall state the 
facts on which the determination is based and a recommendation on the imposition 
of a penalty, including a recommendation on the amount of the penalty. 
(2) Notice of report. Within fourteen days after the report is issued, the 
executive director shall, by certified mail, return receipt requested, give 
written notice of the report to the person who is alleged to have committed the 
violation which is the subject of the report. The notice must include: 
(A) a brief summary of the alleged violation; 
(B) a statement of the amount of the recommended penalty; 
(C) a statement that the person who is alleged to have committed the violation 
has a right to a hearing on the occurrence of the violation, the amount of the 
penalty, or both the occurrence of the violation and the amount of the penalty; 
(D) a copy of the report issued to the commission pursuant to this subsection; 
and, 
(E) a copy of this section, sec.22.246 of this title, relating to Administrative 
Penalties. 
(f) Options for Response to Notice of Violation. 
(1) Opportunity to cure. 
(A) Within 30 days of the date of receipt of the notice of violation set out in 
subsection (e)(2) of this section, the person against whom the penalty may be 
assessed may notify the commission in writing that the alleged violation will be 
cured and that the alleged violation was accidental or inadvertent, and that 
proof that the alleged violation has been cured and was accidental or 
inadvertent will be filed with the commission. Proof that an alleged violation 
has been cured and that the alleged violation was accidental or inadvertent 
shall be evidenced in writing, under oath, and supported by necessary 
documentation, and shall be filed with the commission within 40 days of the 
person's receipt of the notice of violation. 
(B) Within 20 working days of receipt of the evidence required by subparagraph 
(A) of this paragraph, the executive director shall make a determination as to 
whether further proceedings are necessary. The executive director must obtain 
the written concurrence from the ORA director before initiating such proceedings 
or closing the matter. However, if the ORA director does not expressly concur or 
not concur within ten days of receiving the request for concurrence within ten 
days of receiving the request for concurrence, the executive director may 
implement the decision to proceed or not to proceed without such concurrence. 
(C) If the executive director determines that the alleged violation has been 
cured, and was cured within 30 days, and that the alleged violation was 
accidental or inadvertent, and has obtained concurrence from the ORA director, 
no penalty will be assessed against the person who is alleged to have committed 
the violation. 
(2) Payment of penalty. Within 30 days after the date the person receives the 
notice set out in subsection (e)(2) of this section, the person may accept the 
determination and recommended penalty through a written statement sent to the 
executive director. The commission by written order shall approve the 
determination and impose the recommended penalty. 
(3) Request for settlement conference. Within 30 days of the date the person 
receives the notice set out in subsection (e)(2) of this section, the person may 
submit to the executive director a written request that a settlement conference 
be held to discuss the occurrence of the violation, the amount of the penalty, 
or both the occurrence of the violation and the amount of the penalty. A 
settlement conference shall be held within 45 days from the date the executive 
director receives the request and shall be conducted pursuant to the procedures 
set out in subsection (g) of this section. 
(4) Request for hearing. Within 30 days of the date the person receives the 
notice set out in subsection (e)(2) of this section, or at any time during the 
45 days within which a settlement conference is held pursuant to paragraph 
(3) of this subsection, the person may submit to the executive director a 
written request for a hearing on the occurrence of the violation, the amount of 
the penalty, or both the occurrence of the violation and the amount of the 
penalty. 
(g) Settlement Conference. A settlement conference requested pursuant to 
subsection (f)(3) of this section is not subject to the Texas Rules of Evidence 
or the Texas Rules of Civil Procedure; however, the discussions are subject to 
Texas Rules of Civil Evidence 408, relating to compromise and offers to 
compromise. The settlement conference shall be conducted in accordance with the 
procedures set out in paragraphs (1)-(3) of this subsection. 
(1) Upon request of the parties, the commission's legal administration division 
shall conduct the settlement conference and shall act as a facilitator. 
(2) If a settlement is reached: 
(A) the legal administration division shall send a report to the executive 
director setting forth the factual basis for the settlement; 
(B) the executive director shall issue the report of settlement to the 
commission; and 
(C) the commission by written order will approve the settlement. 
(3) If a settlement is reached after the matter has been referred to the State 
Office of Administrative Hearings (SOAH), the matter shall be returned to the 
commission and the commission by written order will approve the settlement. 
(h) Hearing. If a person requests a hearing under subsection (f)(4) of this 
section, or fails to respond timely to the notice of the report of violation 
provided pursuant to subsection (e)(2) of this section, or if a settlement is 
not reached within 45 days of the date the executive director receives a request 
for a settlement conference under subsection (g) of this section, or if the 
executive director, with the concurrence of the ORA director, determines that 
further proceedings are necessary under subsection (f)(1)(B) of this section, 
relating to the opportunity to cure the violation, the secretary shall set a 
hearing, provide notice of the hearing to the person, and refer the case to SOAH 
pursuant to sec.22.207 of this chapter. The case shall then proceed as set forth 
in paragraphs (1)-(5) of this subsection. 
(1) The secretary shall provide the administrative law judge a list of issues or 
areas that must be addressed. 
(2) The hearing shall be conducted in accordance with the provisions of this 
chapter. 
(3) The SOAH administrative law judge shall promptly issue to the commission a 
proposal for decision, including findings of fact and conclusions of law, about 
the occurrence of the alleged violation, whether the alleged violation was cured 
and was accidental or inadvertent, and the amount of the proposed penalty. 
(4) Based on the SOAH administrative law judge's proposal for decision, the 
commission may: 
(A) determine that a violation has occurred and impose a penalty; 
(B) determine that a violation occurred but that, pursuant to subsection (f)(1) 
of this section, the person cured the violation within 30 days and proved that 
the violation was accidental or inadvertent, and that no penalty will be 
imposed; or, 
(C) determine that no violation has occurred. 
(5) Notice of the commission's order issued pursuant to paragraph (4) of this 
subsection shall be provided under Chapter 2001 of the Government Code and 
sec.22.263 of this chapter and shall include a statement that the person has a 
right to judicial review of the order.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 22, 1996.
TRD-9612295
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Effective date: September 12, 1996
Proposal publication date: May 24, 1996
For further information, please call: (512) 458-0100

SUBCHAPTER P.Dispute Resolution
16 TAC sec.sec.22.301-22.310
The Public Utility Commission of Texas (commission) adopts new sec.sec.22.301-
22.310, relating to dispute resolution, with changes to the proposed text as 
published in the June 4, 1996, issue of the Texas Register (21 TexReg 4931). 
Section 22.301 is adopted without changes and will not be republished. The new 
sections establish procedures for dispute resolution proceedings conducted by 
the commission pursuant to the federal Telecommunications Act of 1996, Public 
Law Number 104-104, 110 Statutory 56 (1996) (to be codified at 47 U.S.C. 
sec.151, et seq) (FTA96). The rule is authorized by sec.252 of FTA96, and by 
sec.sec.1.101, 3.051, 3.451, 3.458, and 3.460 of the Public Utility Regulatory 
Act of 1995, Texas Civil Statutes, Article 1446c-0 (PURA95).  
The FTA96 allows parties negotiating agreements for interconnection, services, 
or network elements to seek mediation or arbitration by the commission, 
authorizes the commission to conduct compulsory arbitration proceedings and to 
review, approve and file negotiated or arbitrated agreements. The new sections 
establish the procedure for initiating mediation or compulsory arbitration under 
the FTA96; establish the scope and procedures for arbitration proceedings; 
establish the procedure for handling confidential information; and establish the 
procedure for obtaining commission approval of agreements negotiated or 
arbitrated under the FTA96. The new sections are needed to enable the commission 
to exercise its authority under PURA95 and the FTA96 in an orderly and timely 
manner so that state and federal policies favoring the establishment of 
competitive markets in telecommunications services are realized. 
The public benefit anticipated as a result of enforcing these sections will be 
procedural consistency in proceedings to implement the commission's dispute 
resolution authority under PURA95 and FTA96. The new sections will also provide 
guidance to persons seeking to invoke the commission's authority under PURA95 
and the FTA96 and will help to reduce the workload and expense of contested case 
proceedings by enabling parties to resolve disputes through negotiation, 
mediation, and arbitration. 
The following parties filed initial comments in response to the proposed rule as 
published in the June 4, 1996, issue of the Texas Register (21 TexReg 4931): 
AT&T Communications of the Southwest, Inc. (AT&T); GTE Southwest Incorporated 
(GTE); MCI Telecommunications Corporation (MCI); MFS Communications Company, 
Inc. (MFS); Southwestern Bell Telephone Company (SWBT); Sprint Communications 
Company, L.P. (Sprint); Telecommunications Resellers Association (TRA); TCG 
Dallas and Teleport Communications Houston Inc. (TCG); and Time Warner 
Communications (Time Warner). Reply comments were filed by AT&T, General 
Services Commission (GSC), GTE, MCI, MFS, Office of Public Utility Counsel 
(OPC), and SWBT. On June 21, 1996, a public hearing was held on the proposed 
rule, at which AT&T, GTE, MCI, SWBT, and Time Warner offered oral comments, 
which have been summarized to the extent they vary from written comments 
submitted by those parties. 
As a result of the comments received during the comment period and at the public 
hearing, the rule has been revised. Discussion of the comments will refer to the 
sections of the rule as published in the Texas Register and will note the new 
location of any affected provision. 
In the Texas Register notice seeking comments on the proposed rule, the 
commission invited specific comments regarding ten issues raised by the 
commission's implementation of the proposed dispute resolution sections. The 
commentators' responses and the commission's conclusions regarding these issues 
are summarized first, followed by discussion of comments on specific sections of 
the proposed rule. 
Issue 1: Does the commission have the authority to refer requests for 
arbitration to the State Office of Administrative Hearings (SOAH)? Differences 
of opinion regarding Issue 1 were rooted in clashing views of whether the 
arbitration proceedings provided for in FTA96 sec.252 constitute "contested 
cases," as that term is defined in sec.2001.003(1) of the Texas Administrative 
Procedure Act (APA). AT&T, MCI, and TCG answered the commission's question 
affirmatively, but for somewhat different reasons. AT&T and MCI contended that 
the FTA96 arbitration proceedings are "contested cases," and therefore may be 
transferred to SOAH pursuant to PURA95 sec.1.101(e) and sec.2003.047(b) of the 
Government Code. TCG stated that so long as the commission has the final say 
over an arbitrator's decision, then nothing in the law prohibits the commission 
from using SOAH or outside arbitrators. GTE, SWBT, and Time Warner stated that 
it is "unclear" and "questionable" whether SOAH is authorized to conduct FTA96 
arbitration proceedings because FTA96 arbitration proceedings are not "contested 
cases" under the APA. SWBT and Time Warner pointed out that under Government 
Code sec.2003.021(b) and PURA95 sec.1.101(e), SOAH is authorized to hear only 
the "contested cases" not heard by the Commissioners. 
The commission concludes that it has the authority to refer FTA96 dispute 
resolution proceedings to SOAH. Section 2003.047(b) of the Government Code 
authorizes the SOAH utility division to "conduct hearings relating to contested 
cases before the commission," and also provides that the commission "by rule may 
delegate the responsibility to hear any other matter before the commission if 
consistent with the duties and responsibilities of the division." Regardless of 
whether FTA96 dispute resolution proceedings are designated as APA "contested 
cases," the commission may delegate any of the functions associated with the 
proceedings (i.e., arbitration hearings and/or hearings regarding approval of 
negotiated or arbitrated agreements) to SOAH. It is completely consistent with 
the SOAH utility division's "duties and responsibilities" to conduct dispute 
resolution hearings such as those contemplated by FTA96, and the commission is 
well within its authority to delegate FTA96 dispute resolution matters to SOAH. 
Issue 2: If so, should the commission allow or require the referral of requests 
for arbitration to the State Office of Administrative Hearings (SOAH)? 
Commentators' views on this issue were also informed by their positions on 
whether FTA96 arbitrations constitute "contested cases" under the APA. AT&T, 
MCI, and TCG all commented that the commission should allow FTA96 arbitrations 
to be referred to SOAH. AT&T recommended that all cases in which parties could 
not agree to alternative procedures, e.g., private arbitration or arbitration by 
commission staff arbitrators, should be transferred to SOAH unless the 
Commissioners preside over the hearing, while MCI contended that the commission 
must refer arbitrations to SOAH as "the only alternative to the Commission 
itself hearing the case." GTE, MFS, and SWBT argued that the commission should 
not allow referral of FTA96 arbitrations to SOAH. MFS and SWBT commented that 
the FTA96 mandates arbitration of unresolved issues rather than litigation or 
traditional contested case proceedings, and that referral to SOAH therefore 
would be inappropriate. Time Warner stated that because FTA96 arbitrations are 
not contested cases, it is not clear whether SOAH has legal authority to conduct 
them. 
The commission determines that arbitration requests need not be referred to 
SOAH. As discussed in the commission's response on Issue 3, the commission 
concludes that FTA96 arbitration proceedings are not APA "contested cases." The 
proceedings are intended to resolve specific disputes between negotiating 
parties, and do not require the formal procedural requisites of administrative 
litigation under the APA. The commission therefore concludes that it is not 
required to assign arbitration proceedings to SOAH, and that arbitrations may be 
conducted by non-SOAH arbitrators appointed by the commission. Moreover, keeping 
arbitration proceedings within the commission would be consistent with the FTA96 
sec.252(b) provisions contemplating arbitration conducted by "the State 
commission." 
The rule permits the commission to delegate hearings in FTA96 approval 
proceedings to SOAH. The commission finds it necessary to retain several 
procedural options regarding review and approval of agreements. Under FTA96, 
approval of negotiated or arbitrated agreements involves several legal 
determinations. See FTA96 sec.252(e). Depending on the nature and scope of the 
agreement presented for approval, the commission may be convinced that it is 
necessary to conduct a searching inquiry before it can determine whether the 
agreement meets the standards of FTA96. Referring a matter to SOAH for an 
expedited hearing is one of the options that should be available to the 
commission in the approval process. 
Issue 3: If arbitration proceedings are referred to SOAH, should they be 
conducted as contested case hearings under the Administrative Procedure Act, 
Texas Government Code sec.2001.001, et seq.? AT&T, MCI, and Time Warner 
contended that arbitration proceedings referred to SOAH should be treated as 
contested case hearings. MCI went further, stating that "the contested case 
provisions of the APA would apply to an arbitration as a matter of law." Time 
Warner observed that conducting arbitration proceedings as contested cases is 
consistent with "SOAH's authority to hear only contested cases" and the need for 
discovery and contested case procedures in the resolution of interconnection 
issues. AT&T stated that contested case hearings are appropriate "except to the 
extent the APA is overridden by explicit requirements provided for under 
[FTA96]." AT&T provided examples of instances where FTA96 requirements override 
the APA: the timeframe for initiation of arbitration proceedings, the deadline 
for state commission disposition of the proceedings, and the method of judicial 
review of commission decisions. GTE, MFS, SWBT, and TCG contended that 
arbitration proceedings should not be conducted as contested case hearings. MFS 
stated that "Congress used the word 'arbitration' in [FTA96] Section 252 for a 
reason, and the reason surely was to avoid entangling interconnection disputes 
in the full panoply of litigation-like contested hearings." SWBT opined that the 
FTA96 arbitration provisions create a process that is "outside the APA." GTE 
urged that in establishing arbitration procedures, the commission consider "the 
use of alternatives other than the procedures and personnel currently being used 
for traditional contested case hearings." 
The commission disagrees with the contention that FTA96 arbitrations must be 
conducted as APA "contested cases." In FTA96 sec.252, Congress established 
particular procedures for "negotiation, arbitration, and approval of 
agreements." The sec.252 process seeks to expedite the negotiation, approval, 
and execution of agreements that will implement the FTA96's policy of advancing 
local exchange competition. The vehicles chosen by Congress for this task are 
the relatively informal and streamlined processes of mediation and arbitration. 
It is clear from the language of FTA96 that Congress recognized the distinction 
between arbitration and traditional adjudicatory hearing procedures. For 
example, in FTA96 sec.271(d)(6), Congress authorized the FCC to enforce 
conditions on Bell operating company entry into interLATA markets. Enforcement 
measures may be taken only "after notice and opportunity for hearing," which is 
the standard associated with APA adjudicatory hearings. In sec.252, however, 
Congress refers to "arbitration," and does not require that state commissions 
act "after notice and opportunity for hearing." The same is true with regard to 
the process established in sec.252 for review and approval of negotiated and 
arbitrated agreements. When traditional contested case procedures were intended, 
Congress knew how to express that intent. As MFS stated in its comments, 
Congress used the particular terms it did "for a reason." In sec.252, Congress 
directed the use of mediation and arbitration instead of the traditional 
machinery of administrative litigation; it would be contrary to the plain 
meaning of the statute to require the introduction of contested case 
complications into a procedural regime stressing simpler, swifter methods of 
dispute resolution. 
Moreover, the commission concludes that the arbitration process set forth in 
FTA96 sec.252 differs in significant ways from an APA contested case. First, as 
AT&T noted in its comments, FTA96 sec.252 includes several specific requirements 
regarding the timing of filing petitions and deciding arbitration cases that are 
significantly different than the deadlines established for contested cases in 
the APA. Second, contested cases decided under the APA are reviewable in state 
district court, while FTA96 reserves judicial review exclusively for the federal 
courts. Third, the language of FTA96 sec.252(b) contemplates that only 
negotiating parties will participate in arbitration proceedings. Section 252 
does not create a right of intervention for third parties not involved in a 
dispute arising in negotiations. Finally, arbitration is generally considered to 
be a process quite different from litigation, and one that is typically used as 
a less expensive, significantly faster, and more informal alternative to 
litigation. Conducting FTA96 arbitrations in the same manner as APA contested 
cases would ignore the contrast between arbitration and litigation drawn by 
Congress in establishing the sec.252 procedures.
The commission concludes that FTA96 sec.252 proceedings are not APA contested 
cases, that the commission thus is not required to conduct sec.252 proceedings 
as contested cases, and may utilize the procedural rules set forth in 
sec.sec.22.301 - 22.310. The authority to conduct proceedings for arbitration 
and approval of agreements is delegated by Congress to the commission by the 
terms of FTA96. Section 252 of FTA96 constitutes a valid delegation of authority 
to the states to conduct the proceedings necessary to implement the local 
competition policies of FTA96. Congress explicitly set forth the methods of 
dispute resolution to be utilized by the states in resolving issues between 
incumbents carriers and new entrants. Federal law, rather than the provisions of 
the state APA, establish the procedures for arbitrating disputes and approving 
agreements. 
PURA95 confers on the commission the state law authority to carry out the 
provisions of FTA96. First, PURA95 sec.1.101 provides the commission a broad and 
flexible grant of authority to take actions necessary to regulate and supervise 
public utilities. Second, provisions adopted by the 74th Legislature gave the 
commission broad authority to resolve disputes concerning policies related to 
local exchange competition. See PURA95 sec.3.460(a). That authority was not 
limited to conducting traditional contested cases. In PURA95 sec.3.458, the 
commission is authorized to "resolve disputes filed by a party" to 
interconnection negotiations, much as FTA96 sec.252 establishes dispute 
resolution mechanisms for negotiating parties. Third, in PURA95 the Legislature 
anticipated changes in federal telecommunications law, and provided that the 
commission "may establish rules that are responsive to changes in federal law." 
PURA95 sec.3.458(f). See also PURA95 sec.3.051(a)(references changes in 
telecommunications caused by "federal legislative ... actions," and grants 
commission the power to "carry out public policy" appropriate for the emerging 
competitive marketplace). 
In addition, the provision of PURA95 that requires application of the APA by the 
commission applies only to "proceedings under this Act ... ." The dispute 
resolution proceedings-including mediation, arbitration, and approval of 
agreements-while within the commission's jurisdiction, are not proceedings 
established in PURA95. They are proceedings created by FTA96 that are conducted 
by the commission pursuant to both the authority granted by PURA95 and the 
congressional delegation embodied in FTA96. FTA96, rather than the APA, is the 
appropriate source of law governing proceedings arising under FTA96, 
particularly when sec.252 explicitly sets forth substantive and procedural 
standards to be used in the FTA96 proceedings. 
These provisions of PURA95 make it abundantly clear that the Legislature gave 
the commission adequate authority to undertake mediation, arbitration, and 
approval of agreements using the procedures available pursuant to this rule. The 
grants of authority in PURA95 are sufficiently broad to encompass all the 
mediation, arbitration, and approval procedures called for by FTA96. The 
commission's rules are faithful to the federal law's call for resolution of 
disputes other than through litigation, while protecting the constitutional due 
process rights of the parties to disputes. The commission concludes that the 
rule need not include the full panoply of APA litigation procedures in order to 
provide due process to the parties to the dispute. In fact, it would be 
inconsistent with FTA96 to attach such procedural requirements to the structure 
constructed in sec.252. 
The comments on Issue 4 and Issue 5 are discussed together, as are the comments 
on Issue 6 and Issue 7. 
Issue 4: Absent a contested case, should there be a right of intervention in 
proceedings under the proposed rule? Issue 5: If so, at what stage of the 
proceedings should intervention be allowed? AT&T, MCI, Sprint, and TRA favored 
rights of intervention in FTA96 arbitration proceedings, and commented that 
intervention rights are necessary, particularly in the first arbitration 
proceeding, because the first commission- approved interconnection agreement 
will, as Sprint put it, "not only establish a standard for all subsequent 
interconnection agreements, but also will set important precedent concerning the 
interpretation of the pricing standards under the FTA96 and other important 
regulatory issues," and, as MCI added, will result in conditions that must be 
made available to other carriers pursuant to FTA96 sec.252(i). In addition, MCI 
took the position that, as a matter of state law, intervention as a party in an 
arbitration "must be afforded interested persons who can demonstrate a 
justiciable interest in the proceedings." AT&T agreed, but concluded that the 
commission "may determine that the only parties with a 'justiciable interest,' 
other than the parties to the negotiation are General Counsel and the Office of 
Public Utility Counsel ... and/or various agencies within the Attorney General's 
office." GSC stated that it is authorized by the Texas Legislature to intervene 
in telecommunications rate cases, and that it qualifies, for purposes of FTA96 
sec.252(b)(1), as "a party to negotiations by virtue of the Legislature's 
mandate permitting its participation in rate cases."
Similarly, OPC stated that its legislative mandate to represent residential and 
small commercial consumers requires its participation in arbitration 
proceedings. OPC requested that it be "granted participation" in the proceedings 
to the same extent as the commission's General Counsel. Time Warner concluded 
that the FTA96 contemplates arbitration proceedings including "only the parties 
to the interconnection negotiations," but added that the commission nevertheless 
may have the authority to allow limited participation by other parties who can 
show justiciable interests, and argued that such participation, if permitted, 
should be requested within 25 days of the filing of the arbitration request. 
GTE, MFS, and SWBT contended that intervention by third parties should not be 
permitted because FTA96 arbitration is a procedure to be used only to facilitate 
agreements between two negotiating parties. SWBT added that intervention, "if 
allowed to be in the form of presenting witnesses and cross-examination by non-
parties to the negotiations, will only serve to delay the process and overly 
burden an already burdened agency." MFS and SWBT stated that third parties 
should be allowed to participate only by filing comments prior to commission 
approval of an arbitrated agreement. 
The commission concludes that there should not be a right of intervention in 
FTA96 arbitrations. FTA96 sec.252 establishes a process in which incumbent local 
exchange carriers (ILECs) and telecommunications carriers must attempt to 
negotiate interconnection agreements. If those negotiations do not produce an 
agreement, the negotiating parties may seek mediation, or may file for 
compulsory arbitration. The compulsory arbitration procedures provided in FTA96 
sec.252(b) are focused solely on the negotiating parties. Arbitration is 
available according to a schedule that references the date a particular set of 
negotiations commenced; the "petition" and the "response" that define the issues 
in an arbitration are filed by the negotiating parties. The end result of the 
arbitration proceeding is an agreement that binds only the original parties to 
the relevant negotiations. The entire structure of FTA96 sec.252(b) contemplates 
participation in compulsory arbitration only by the negotiating parties. The 
commission notes that the Federal Communications Commission (FCC) has recently 
issued new rules indicating how it will handle arbitration proceedings under 
FTA96. First Report and Order, In the Matter of Implementation of the Local 
Competition Provisions in the Telecommunications Act of 1996, CC Docket Number 
96-98, FCC 96-325 (rel. August 8, 1996). The FCC's rules also limit 
participation in the arbitration proceeding to the requesting carrier and the 
incumbent local exchange carrier, thereby denying any right to intervention by 
interested third-parties. The commission's treatment of this issues is thus 
consistent with the procedures adopted by the federal agency that is also 
charged with implementing FTA96, as required by PURA95 sec.3.201. 
Even though interested persons do not have a right to intervene in individual 
arbitration proceedings, the commission believes that, in some instances, the 
arbitrator may want some additional input from interested persons concerning the 
issues in arbitration. Accordingly, the commission revises the rule to authorize 
the arbitrator to allow interested persons to file a statement of position 
and/or list of issues to be considered in the proceeding. This type of 
participation is also consistent with the rules adopted by the FCC. When 
combined with the comments allowed in the approval process, the commission 
believes that the rule provides an appropriate means for interested persons to 
inform the commission of any concerns they may have about a particular 
arbitration proceeding. 
As part of the sec.252 approval process, the rule permits any party to submit 
comments concerning the negotiated or arbitrated agreement filed with the 
commission. The commission concludes that the question of formal intervention in 
the approval process should be left to case-by-case determinations. In 
straightforward cases presenting few difficult issues, the commission may 
quickly approve agreements, thereby expediting a new entrant's ability to begin 
providing services. If a case is more complex, the rule includes the option of 
referral to SOAH as an expedited contested case. If the approval process is 
conducted as a contested case, non-negotiating parties would be allowed to 
intervene. 
Issue 6: What should be the role, if any, of the commission's General Counsel in 
compulsory arbitration proceedings? Issue 7: What should be the role of the 
commission's General Counsel in proceedings to approve negotiated or arbitrated 
agreements? AT&T and MCI stated that General Counsel should participate in all 
phases of the FTA96 compulsory arbitration process, and that General Counsel's 
role should be to provide a neutral viewpoint on an agreement's compliance with 
FTA96 requirements. MCI added that General Counsel's role should be the same as 
in other APA contested cases. Time Warner contended that General Counsel does 
not have a clear role in arbitration proceedings, but that if other non-
negotiating parties are allowed to intervene, General Counsel should be allowed 
to participate on a limited basis. GTE and SWBT contended that General Counsel 
should not be allowed to participate as a party in compulsory arbitrations. SWBT 
cautioned that opening arbitration proceedings to General Counsel "could lead to 
arguments by others for similar privileges." GTE, SWBT, and Time Warner agreed 
that General Counsel's only role should be to review arbitrated agreements and 
provide guidance to the commissioners regarding compliance with FTA96 
requirements. OPC stated that it should be allowed to participate in FTA96 
arbitration proceedings to the same extent that General Counsel is allowed to 
participate. 
The commission concludes that General Counsel (as a party) has, under FTA96, the 
same status as any other non-negotiating party. The FTA96 sec.252 no more 
contemplates the participation of the commission's general counsel as a party to 
arbitration than it does any other non-negotiating party. In the arbitration and 
approval process, staff members of General Counsel may be assigned to assist and 
advise the arbitrator or the Commission in considering the issues raised by the 
parties. However, such participation is advisory and not participation as a 
party to the proceedings. General Counsel may participate in a non-advisory role 
in the arbitration in the same manner that any other interested person may 
participate in the arbitration proceeding, by filing a statement of position 
and/or list of issues for consideration in the proceeding. Additionally, in the 
approval process, the rule permits General Counsel to file comments on 
agreements and otherwise participate in the same manner as other non-negotiating 
parties. 
Issue 8: Should the commission adopt more specific guidelines concerning the 
dispute resolution tools that are available to commission-designated 
arbitrators? AT&T and TRA supported more specific dispute resolution guidelines, 
based on their contention that additional procedures would prevent delay and 
uncertainty in the arbitration process, and provide guidance to arbitrators and 
participants regarding procedural issues. Time Warner stated that more specific 
guidelines for arbitrators would be helpful, but should not be adopted if the 
proposal of guidelines would delay adoption of the dispute resolution rule. GTE, 
MCI, and SWBT opposed adoption of more specific guidelines. MCI opined that the 
commission may not designate arbitrators because it "may not delegate to private 
parties" its authority to conduct arbitration hearings, and thus additional 
guidelines are not necessary. GTE and SWBT stated that specific guidelines are 
not needed because arbitrators may rely on American Arbitration Association 
(AAA) rules or other guidelines used by professional arbitrators. GTE added that 
additional commission guidelines would be unnecessarily "restrictive and 
cumbersome." 
The commission makes some minor additions to the proposed rules to further 
clarify the guidelines for arbitration proceedings (see changes in sec.22.305). 
The commission concludes, however, that guidelines in addition to those provided 
in the rules are not necessary. The rules provide sufficient guidance to 
arbitrators to ensure protection of parties' due process rights, while 
maintaining necessary flexibility to address issues quickly and creatively. 
Issue 9: Should the commission allow or require the use of final offer (i.e., 
baseball-type) arbitration? SWBT and TCG supported use of final offer 
arbitration, primarily because it would, as SWBT put it, "likely deter parties 
from gaming the process by taking unreasonable positions entering arbitration." 
GTE and Sprint stated that final offer arbitration should be allowed, but only 
if the parties to the negotiation agree to use the procedure. GTE added that the 
procedure should be disfavored because it prevents the arbitrator from 
fashioning an alternative between what may be extreme positions. AT&T, MCI, Time 
Warner, and TRA opposed the use of final offer arbitration. AT&T and MCI 
commented that it will be difficult, if not impossible, for the specific 
requirements of the FTA96 to be fulfilled in a final offer context that limits 
the arbitrator's choices to those offered by the two parties. Time Warner stated 
that final offer arbitration would "chill good faith negotiations because 
parties will be concerned about moving from their bottom-line position" in pre-
arbitration negotiations. TRA opposed the final offer approach, and recommended 
that the commission adopt "preferred outcomes" setting forth commission policy 
objectives regarding implementation of the FTA96 that should be met in each 
arbitrated agreement. 
The commission is not convinced that final offer arbitration should be required, 
and concludes that arbitrators should be given the flexibility to offer 
independent resolutions of the issues before them. Final offer restrictions do 
not allow adequate room for compromise, particularly in instances where the 
evidence presented insufficiently supports the stated positions of either party. 
In addition, final offer arbitration would be inefficient and procedurally 
awkward in cases where two or more arbitration requests are consolidated for 
hearing. For example, several new entrants may have a similar dispute with a 
single ILEC, but may not have similar positions on how to resolve the dispute. 
In a consolidated arbitration, the arbitrator should be allowed to craft a 
single solution to a single dispute where the evidence justifies it, rather than 
being forced to choose between what may be inconsistent answers to the same 
question. 
Issue 10: Should the arbitrator be able to review the terms of the resolved 
(non-arbitrated) issues in reaching a decision and propose an alternative 
resolution of those issues, in combination with the issues subject to 
arbitration, to reach a better final agreement? AT&T, GTE, MCI, SWBT, and Time 
Warner opposed review of resolved issues by arbitrators. They agreed that once 
an issue is resolved in negotiations, it should be removed from the list of 
issues that may be resolved through arbitration, and that the FTA96 provides no 
mechanism for arbitrators to revisit resolved issues. Sprint commented that 
review of resolved issues should not be mandated by the commission's rules, but 
"may be beneficial and should be allowed by agreement of the negotiating 
parties." TRA supported review of resolved issues by arbitrators "if a better 
final agreement may be reached." TRA added, however, that parties should not be 
compelled to accept an arbitrator's alternative proposal if an issue has been 
settled by negotiation. 
The dispute resolution provisions of FTA96 contemplate that issues settled by 
negotiation will be filed as negotiated agreements, and reviewed under 
sec.252(e)(2)(A). Issues submitted for arbitration are to be resolved by 
arbitration and reviewed under sec.252(e)(2)(B). The commission concludes that 
if an issue is presented to the arbitrator for resolution, he or she should 
review that issue and may offer an independent resolution. If parties do not 
want an undisputed issue to be reviewed by the arbitrator, FTA96 indicates that 
they should file that portion of their pact as a negotiated agreement.
The commission also invited comments on the costs associated with, and benefits 
that will be gained by, implementation of the new sections as proposed. GTE 
commented that the parties should agree on a cost splitting of the fee for 
private arbitrators. SWBT stated that the costs, "both in terms of expense and 
resources," would outweigh the benefits of the proposed rules if the commission 
permits intervention by non- negotiating parties and other contested case 
procedures in FTA96 arbitration. TRA commented that a dispute resolution 
framework is imperative for smaller providers "given the incumbent LEC's 
dominant position in the market, and the absence of alternative suppliers of 
local services in the immediate future." 
Comments on specific sections of the proposed rule. 
Proposed sec.22.302 provides definitions of certain terms used in the rule. MCI 
opined that the definitions proposed in sec.22.302 of the terms "arbitration," 
"arbitration hearing," "arbitrator," "compulsory arbitration," "independent 
arbitrator," and "private binding arbitration," should be revised or deleted 
because FTA96 arbitrations must be conducted as APA "contested cases." As 
contested cases, MCI maintained, FTA96 arbitrations may be conducted only by the 
Commissioners or SOAH judges. MCI also proposed a change in the definition of 
"mediator," to reflect its recommendation that only commission staff members who 
will not be called to testify in any related arbitration or review proceedings 
should perform the FTA96 mediation function. 
The commission concludes that FTA96 arbitration proceedings are not contested 
cases under the APA, for the reasons stated in the commission's response to 
Issues 1-4. The commission therefore declines to make the changes in sec.22.302 
definitions of the terms "arbitration," "arbitration hearing," "arbitrator," 
"compulsory arbitration," and "independent arbitrator," recommended by MCI. The 
commission agrees with MCI that a mediator should not be involved in arbitration 
or review proceedings related to a case in which he or she served as mediator.
Rather than revise the definition of "mediator," as suggested by MCI, the 
commission adds language to the mediation section of the rule, sec.22.303, that 
reflects MCI's concerns. The commission revises the definition of the term 
"arbitrator" to recognize the commission's authority to select SOAH 
administrative law judges to serve as arbitrators. 
The commission also deletes certain definitions that are unnecessary due to 
revisions made to sec.22.304 of the rule. As discussed later, the commission 
concludes that it is unnecessary to provide procedures for private binding 
arbitration in the rule. This change makes the defined terms "independent 
arbitrator" and "private binding arbitration" unnecessary. 
Proposed sec.22.303 sets forth the requirements for parties requesting mediation 
of disputes concerning requests for interconnection services or network elements 
under FTA96 sec.251. MCI commented that the mediation provisions should be 
revised to state that mediations are subject to the same procedural requirements 
as negotiations and arbitrations, including a requirement that negotiations be 
conducted in a public forum. MCI also stated that the mediation provision should 
clarify that only commission staff members who will not be called to testify in 
related arbitration proceedings may serve as mediators. SWBT found the mediation 
provisions "deficient" because they do not "address issues of confidentiality, 
the standards for mediators, the effect of agreement or non-agreement, or the 
time frame for mediation." SWBT recommended that the rule should adopt the 
dispute resolution provisions of Texas Civil Practices and Remedies Code, 
Chapter 154. 
The commission declines to adopt language requiring detailed procedural 
requirements for commission-sponsored mediation proceedings. The rule is 
sufficiently detailed to provide the opportunity for mediation contemplated by 
FTA96 sec.252(a)(2). The commission views the issues raised by SWBT as being 
susceptible to resolution by the negotiating parties who agree to submit to 
mediation. In response to MCI's concerns regarding commission mediators 
testifying in arbitration proceedings, the commission adds language prohibiting 
commission mediators from participating in related arbitration or review and 
approval proceedings. 
Proposed sec.22.304 prescribes procedures for private binding arbitration 
proceedings. MFS stated its general support for inclusion of private binding 
arbitration provisions in the rule because of the additional flexibility it 
provides to the commission and parties. GTE and SWBT commented that the rule 
should avoid the impression that parties are limited to only two options, i.e., 
binding arbitration or commission-conducted arbitration, and that there "should 
be no need for private arbitration rules" because negotiating parties have 
complete freedom to resolve disputes in any way they deem appropriate. MCI 
commented that the commission cannot delegate the authority granted it by the 
FTA96 to private parties; any agreements resulting from private arbitration must 
therefore be reviewed as fully negotiated agreements under FTA96 
sec.252(e)(2)(A), while any agreements resulting from commission arbitration 
must be considered binding. MCI added that a new proposal for private 
arbitration should be substituted for proposed sec.22.304 if the commission 
wishes to encourage private resolution of disputes. 
The commission is persuaded that the procedures for private binding arbitration 
in the proposed rule are unnecessary, and substantially revises sec.22.304. The 
commission agrees that negotiating parties are free to use any methods they wish 
in arriving at an interconnection agreement. An agreement, whether the result of 
a formal private binding arbitration process or a coin toss, is still an 
"agreement ... adopted by negotiation" for purposes of FTA96, and should be 
reviewed according to sec.252(e)(2)(A) standards. The revised sec.22.304 
encourages parties to utilize private alternative dispute resolution methods 
before approaching the commission with petitions for compulsory arbitration. 
Subsection 22.304(a) is revised to include this language; the remainder of 
sec.22.304 is deleted. By deleting the specific procedures proposed in 
sec.22.304, the commission is not rendering judgment on the efficacy of such 
procedures as a means of dispute resolution. Because the commission is not 
adopting the procedures for private binding arbitration set forth in the 
proposed rule, the commission does not summarize and respond to the comments on 
specific subsections of proposed sec.22.304. 
Proposed sec.22.305 sets forth the standards for compulsory arbitrations 
conducted by the commission. Proposed sec.22.305(c) provides that, upon receipt 
of a request for arbitration, the arbitrator(s) will be selected by the 
secretary of the commission and the parties will be notified of the commission-
designated arbitrator(s). AT&T agreed that it is appropriate for the commission 
secretary to designate the arbitrator due to "the compulsory nature of the 
arbitrations and the specific role granted to State commissions" by the FTA96. 
MCI suggested that (1) the commission retain some control over designation of 
the arbitrator, because the Commissioners themselves may want to conduct certain 
arbitrations; and (2) the rule should be modified to reflect that only the 
commission or SOAH may hear arbitration proceedings. AT&T commented that the 
commission should be required to give an applicant for arbitration prompt 
notification of any deficiency in its application so that it may be corrected 
without causing significant delay in the arbitration process. SWBT objected to 
the subsection because it does not give the parties any say in the selection of 
arbitrators. SWBT also suggested that the commission adopt pertinent provisions 
of the Texas Civil Practices and Remedies Code and/or the Texas or federal 
Arbitration Act to "fill gaps" concerning "challenges to arbitrators, standards 
for impartiality, oaths, disqualification, etc." 
The commission concludes that designation of an arbitrator by the commission 
secretary serves two salutary purposes. First, it ensures that an arbitrator 
will be assigned quickly and efficiently as petitions are filed. Expeditious 
assignment of arbitration petitions should address AT&T's concern that any 
deficiencies be noted as early in the process as possible. Second, it prevents 
parties from "shopping around" for a preferred arbitrator. As discussed 
previously, the commission does not share MCI's view that only the Commissioners 
or SOAH judges may conduct arbitration hearings. In response to MCI's concern 
regarding arbitration proceedings the Commissioners choose to hear themselves, 
the commission adds language clarifying that the secretary selects arbitrators 
only in cases where the Commissioners choose not to act as the arbitrators. The 
commission is not persuaded by SWBT's objection that parties will be prejudiced 
by commission selection of an arbitrator; parties will be no more prejudiced by 
this than they are by the selection of presiding officers in traditional 
commission proceedings. The commission agrees with SWBT that certain issues 
concerning challenges to arbitrators and oaths affirming competence and 
impartiality should be specifically addressed in the rule. Additional 
subsections clarifying the appropriate procedures for handling these issues are 
added as new sec.22.305(d) and (f), which are discussed elsewhere. 
To further refine the process for selection of arbitrators, the commission adds 
language to sec.22.305(c) providing that the commission secretary shall 
designate only one arbitrator in each requested arbitration. In order to ensure 
that the arbitrator has legal and technical expertise available to assist him or 
her in reaching decisions, the rule clarifies that arbitrators may rely on 
designated commission staff advisors. The new language provides that staff 
advisors may be designated by the arbitrator and identified to the parties to 
the arbitration. The staff advisors are subject to the same restrictions as 
arbitrators regarding participation in subsequent proceedings related to the 
arbitration. See sec.22.307 (relating to Subsequent Proceedings). The addition 
of a provision for staff advisors also requires the commission to revise the 
portions of the rule dealing with the number of copies of certain documents to 
be filed by the parties. In order to assure a sufficient number of copies of 
documents for use by the staff advisors, the commission increases the required 
number of copies of the request for arbitration [sec.22.305(a)], the response 
[sec.22.305(b)], and prefiled evidence [sec.22.305(m)] to 18 copies. 
The commission adds a new subsection (d) requiring that arbitrators take an oath 
of office before they may hear arbitration matters. In the commercial 
arbitration context, courts have held that arbitrators must be sworn in order to 
render legally valid decisions. New sec.22.305(d) provides that arbitrators must 
swear to an oath affirming their competence to serve and willingness to judge 
all proceedings fairly and impartially. The oath is to be administered by a 
commissioner or any person designated by the commission. Subsections following 
the new subsection (d) are renumbered accordingly. 
Proposed sec.22.305(d) (renumbered as new subsection (e))provides that only 
parties to negotiations may participate as parties in arbitration hearings. MFS 
stated that it strongly favored limiting participation in arbitration to the 
negotiating parties, while MCI, Sprint, and TRA stated opposition to the limits 
on intervention. Other parties expressed their views regarding this issue in 
comments responding to the commission's Issues 4 and 5, which were discussed 
previously. 
As stated in the commission's response to Issues 4 and 5, the commission 
concludes that the entire structure of FTA96 sec.252(b) contemplates 
participation in compulsory arbitration only by the negotiating parties. The 
commission declines to change the limits on participation stated in 
sec.22.305(e). However, the commission adds a provision authorizing the 
arbitrator to allow interested persons to file a statement of position and/or 
list of issues to be considered. 
The commission adds a new subsection (f). The new subsection serves two 
purposes. First, it provides a process through which parties may challenge the 
selection of an arbitrator or the arbitrability of any issue. These 
disqualification and jurisdictional claims must be raised at the first 
prehearing conference and will be ruled upon by the arbitrator within ten 
working days of the prehearing conference. Second, it requires the arbitrator to 
hold a prehearing conference as soon as practical after his or her appointment. 
This prehearing conference will give the parties a definite opportunity to 
discuss scheduling and other procedural matters with the arbitrator well in 
advance of the arbitration hearing. 
Proposed sec.22.305(e) (renumbered as new subsection (g)) provides for notice to 
the parties regarding the date of the arbitration hearing. AT&T commented that 
the proposed ten days' notice prior to hearing is insufficient. MCI commented 
that public notice, such as Texas Register publication, should be required 
because the rules propose that the hearing shall be open to the public. 
The commission considers the notice provisions adequate. The subsection states 
that an arbitration hearing may not be held earlier than 35 days after the 
commission receives an arbitration request. From the time a request is filed, 
parties have at least 35 days, and perhaps much more, to prepare for the 
hearing. Moreover, the parties involved presumably will have been engaged in 
negotiations regarding the unresolved issues for months before the arbitration 
request is filed. The ten day notice of hearing should not prejudice a party to 
the arbitration in any way. 
Proposed sec.22.305(f) (renumbered as new subsection (h)) establishes procedures 
for creation of a record of arbitration hearings, and provides that arbitration 
hearings shall be open to the public. GTE and SWBT opposed the proposed 
requirement that arbitration hearings be open to the public, and contended that 
public hearings are contrary to traditional arbitration practice and to 
alternative dispute resolution procedures established in the Texas Civil 
Practices and Remedies Code. AT&T and MCI supported public arbitration hearings. 
AT&T contended that because the end result of the arbitration will be a publicly 
available set of terms and conditions, neither the AAA's confidentiality 
practices nor the provisions of the Civil Practices and Remedies Code are 
applicable to FTA96 arbitrations. 
The commission believes it appropriate for proceedings conducted by the 
commission to be held in public, and finds nothing inconsistent with FTA96 in 
holding public arbitration hearings. The commission declines to accept SWBT's 
and GTE's proposed revisions. 
MCI commented that the portion of the proposed subsection that makes creation of 
a record of arbitration hearings optional is inconsistent with proposed 
sec.22.305(o) (renumbered as new subsection (r)), which requires that the final 
decision of the arbitrator "shall be based upon the record of the arbitration 
hearing." MCI added that subsection (f) should be revised to provide that a 
record will be created in accordance with Public Utility Commission Procedure 
Rule sec.22.204. AT&T opposed the proposal that a party requesting a record pay 
for the costs of its preparation; AT&T contended that all parties should share 
in this cost of the arbitration proceeding. TRA stated that the subsection 
should include provisions allowing intervention by non-negotiating parties. 
The commission agrees with MCI that the proposed language regarding creation of 
an arbitration hearing record should be clarified. Clarifying language has been 
added that more closely tracks relevant provisions of Public Utility Commission 
Procedure Rule sec.22.204. In addition, the revisions address AT&T's concerns 
regarding the cost of a stenographic record; the commission is persuaded that 
the party requesting a stenographic record should not be responsible for the 
cost of distributing the record to all parties. The revised language, like 
sec.22.204, provides that the requesting party is responsible for arranging for 
an official court reporter, and that any party may purchase a copy of the 
transcript from the court reporter. 
The commission also revises proposed sec.22.305(g) (renumbered as new subsection 
(i)), and adds a new subsection (j). In subsection (i), entitled "Hearing 
Procedures," the commission adds language to clarify that, although arbitrations 
are to be conducted in public, the arbitrator does have the authority to close a 
hearing temporarily if closure is the only way to protect confidential 
information from being revealed. This addition ensures that arbitrators have the 
necessary tools under the rules to temporarily close hearings if no other means 
are available to protect the information filed as confidential in the 
arbitration proceeding. 
New sec.22.305(j) clarifies the applicability of certain procedural standards to 
the arbitrations conducted pursuant to FTA96 sec.252. As stated in the 
commission's responses to Issues 1-4, the commission concludes that FTA96 
sec.252 proceedings are not contested cases under the APA. Therefore, it is not 
necessary to apply the formal procedures governing traditional administrative 
litigation in the arbitration context. Unless the inapplicability of traditional 
procedures is explicitly stated, however, parties may enter into arbitration 
proceedings with a misunderstanding of which rules may be relied upon. New 
subsection (j) provides that the Texas rules of civil procedure and civil 
evidence, and the commission's procedural rules, govern arbitration proceedings 
only to the extent such rules are specifically mentioned in this subchapter. The 
rule does not prevent the arbitrator and the parties from looking to traditional 
procedural rules for guidance, but clearly states that those rules do not govern 
the proceedings. The subsection does provide, however, that all rules of 
privilege and exemption recognized in Texas law will apply to arbitration 
proceedings. The commission finds such rules necessary to protect traditional 
expectations regarding the availability of privileged communications. 
Proposed sec.22.305(h) (renumbered as new subsection (k)) grants an arbitrator 
the authority given a presiding officer pursuant to Public Utility Commission 
Procedure Rule sec.22.202, and states that arbitrators have broad discretion in 
conducting arbitration hearings. AT&T expressed concern that this "generic grant 
of authority" is insufficiently detailed and could lead to confusion and delay. 
In particular, AT&T stated that the rule should make clear that parties are 
entitled to discovery and other administrative procedures as provided for in the 
commission's procedural rules. 
The commission believes the broad grant of authority in the rule will provide an 
arbitrator with the procedural flexibility needed to adequately address the 
novel issues raised by FTA96 arbitration proceedings. The commission is 
confident that the authority of the presiding officer set forth in Public 
Utility Commission Procedure Rule sec.22.202 is sufficient to meet the concerns 
expressed by AT&T 
Proposed sec.22.305(i) (renumbered as new subsection (l)) provides that 
arbitration hearings are to be conducted in an informal manner, and that, unless 
more time is allowed by the commission or required by an arbitrator, hearings 
may not exceed five working days. AT&T and MCI commented that due to the 
complexity and novelty of the issues in arbitration proceedings, parties may 
require more than five days to present their cases fully. AT&T suggested that 
the rule be revised to give arbitrators the authority to grant requests for 
additional time without commission approval. 
The intent of Congress expressed in FTA96 favors streamlined procedures for 
resolving disputes through arbitration. The commission's view is that this 
statutory intent will be frustrated if arbitration hearings are allowed to 
linger on in the manner of many fully litigated contested cases. The commission 
thus is hesitant to revise the proposed hearing schedule. Nevertheless, the 
subsection is slightly revised to permit an arbitrator, in all circumstances, to 
extend the hearing to the extent the arbitrator requests information that cannot 
be provided within the five day hearing period 
MCI opposed the provision that hearings be conducted in an "informal manner." 
MCI stated that arbitrations are APA contested cases, and the Texas Rules of 
Evidence apply as they would in nonjury trials. 
As discussed previously, the commission rejects MCI's view that arbitration 
hearings must be conducted as APA contested cases, and therefore declines to 
make the requested revision. 
Proposed sec.22.305(j) (renumbered as new subsection (m)) sets forth the 
procedures for filing prefiled evidence prior to the commencement of arbitration 
proceedings. GTE opposed the requirement that parties file copies of their 
direct cases with the commission, and stated that the exchange of parties' cases 
amongst themselves and the arbitrator is sufficient. MCI commented that 
arbitrations must, as a matter of law, follow APA contested case procedures. 
While it did not oppose the procedures in proposed sec.22.305(j), (k), (l), and 
(m), MCI commented that those subsections should be replaced with the rules of 
procedure contained in the APA, the Texas Rules of Evidence, and the 
commission's procedural rules. 
The commission declines to make the changes suggested by either GTE or MCI. The 
filing requirements adequately balance the commission's need to have evidence 
prefiled in a consistent manner with the generally more informal nature of 
arbitration proceedings. MCI's comments concerning proposed subsections (j), 
(k), (l), and (m) are based on their position that FTA96 arbitrations must be 
conducted as contested cases. The commission disagrees with MCI's position, and 
finds that the procedures established in the rule provide all parties due 
process without unnecessarily formalizing the arbitration hearing process. The 
commission does, however, make two clarifying changes in proposed sec.22.305(l) 
(renumbered as subsection (o). First, language is added allowing an arbitrator's 
designated staff advisors to ask clarifying questions at hearing. Second, the 
words "from whatever source derived" are added at the end of the subsection, to 
conform the subsection to language in FTA96. 
Proposed sec.22.305(n) (renumbered as new subsection (q)) provides that an 
arbitrator shall endeavor to issue a final decision within 30 days after the 
conclusion of an arbitration hearing, and that the decision must be issued not 
later than nine months after the date the LEC received the negotiation request. 
Time Warner commented that allowing nine months for the arbitrator to issue a 
decision is inconsistent with the FTA96 because, under FTA96 sec.252(b)(4)(C), 
the commission is required to render a final decision within nine months from 
the date a LEC receives an interconnection negotiation request. If the 
arbitrator is allowed nine months to issue a decision, Time Warner opined, the 
commission could be left with insufficient time to approve the arbitration 
decision before the nine month period ends. Time Warner suggested that 
arbitrators be permitted only one 14 day extension on the 30 day deadline for 
decision proposed in new subsection (q).
The commission disagrees with Time Warner's position. FTA96 sec.252(b)(4)(C) 
provides that a state commission shall "conclude the resolution of any 
unresolved issues" in arbitration "not later than 9 months after the date" of 
the request for interconnection, services, or network elements. The nine month 
deadline thus refers to the completion of the arbitration. FTA96 sec.252(e)(4) 
establishes the schedule for state commission approval of arbitrated or 
negotiated agreements; it provides 30 days from the date an arbitrated agreement 
is submitted for the commission to approve or reject it. Therefore, even if an 
arbitrator used the entire nine months to issue a final decision, the commission 
would still have 30 days in which to approve or reject the arbitrated agreement. 
The commission declines to make the change requested by Time Warner. 
Proposed sec.22.305(o) (renumbered as new subsection (r)) establishes standards 
for the final report and decision of an arbitrator. AT&T and SWBT commented that 
proposed sec.22.305(o)(3) is too broad, in that it requires a statement by the 
arbitrator that the entire agreement conforms to the requirements of FTA96 
sec.251. They stated that issues resolved by the parties should not, under 
FTA96, be reviewed by the arbitrator; therefore the arbitrator is not in a 
position to comment on compliance of resolved issues with the FTA96. SWBT 
suggested, and AT&T agreed, that language reflecting this limitation should be 
added to the subsection. 
The commission declines AT&T and SWBT's request to revise subsection (o)(3). The 
standard for commission approval of arbitrated agreements, FTA96 
sec.252(e)(2)(B), provides that an agreement may only be rejected if the 
"agreement (or any portion thereof) ... does not meet the requirements of 
section 251." The approval standard does not authorize state commissions to 
segregate out "portions" of an agreement that are exempt from review for sec.251 
compliance. The commission concludes that all the issues before an arbitrator 
will be subject to review in the commission's approval process for compliance 
with sec.251 and its implementing regulations. If parties wish to avoid sec.251 
compliance review, they should file resolved issues as negotiated agreements. 
Those issues would then be subject to review under FTA96 sec.252(e)(2)(A), which 
does not reference sec.251 compliance. Any issue that is submitted to the 
commission as part of an arbitrated agreement is subject to review under the 
standards for approval of arbitrated agreements in sec.252(e)(2)(B). 
The commission adds a clarifying reference to new sec.22.305(r)(2). Subpart 
(2)refers to "statements of conditions" that may be imposed on parties in 
arbitration proceedings. The revision replaces a general reference to FTA96 with 
a specific reference to FTA96 sec.252(c), where statements of conditions are 
discussed. In addition, the commission adds language to new sec.22.305(r)(6) 
clarifying that a "narrative report explaining the arbitrator's rationale" is 
unnecessary in cases where two or more of the Commissioners act as the 
arbitrator. 
MCI stated that, to the extent an arbitrator disagrees with the parties and 
proposes an alternative solution, that the arbitrator's decision should include 
conclusions that the decision is based on a preponderance of the record 
evidence, and is in conformance with applicable requirements of law. 
The commission finds that the particular findings recommended by MCI are neither 
required by FTA96 nor necessary for inclusion in an arbitrator's decision, and 
thus declines to make the requested change. 
Proposed sec.22.306 addresses issues regarding confidential information filed 
with the commission as part of the arbitration process. GTE stated that 
commission confidentiality rules are unnecessary, in that that the parties 
should be allowed to negotiate all terms of confidentiality agreements without 
commission interference. MCI urged the commission to ensure that negotiations 
are open, to prohibit nondisclosure agreements in interconnection negotiations 
except to protect bona fide proprietary business information, and to require 
disclosure of interconnection agreements immediately upon execution of a 
negotiated agreements or submission of issues for arbitration. SWBT commented 
that the proposed rules appear to offer less protection for confidential 
information than is afforded in proceedings such as the hearings for 
certificates of operating authority (COA) or service provider certificates of 
operating authority (SPCOA), and that the commission should consider developing 
a standardized protective order as it has done in the COA/SPCOA context. AT&T 
and MFS stated that the proposed rules appropriately balance the competing 
interests. MFS added, however, that it should be made clear that parties may 
challenge continuing entitlement to confidential status under proposed 
sec.22.306(c), and that a timetable should be provided for disposition of such 
challenges. 
Proposed sec.22.306(d) provides procedures for provision of material claimed to 
be confidential to the parties to an arbitration. SWBT stated that subsection 
(d) does not recognize the practice that requires "on site" inspection as the 
exclusive means of viewing certain information. AT&T commented that the 
protections provided in the proposed rule (such as limiting access to certain 
personnel) are sufficient to protect information without the "on site" 
inspection restriction. SWBT also states that the rule is unclear on how to 
handle references to confidential information if arbitration hearings are open 
to the public. 
The commission agrees with AT&T and MFS that the rules regarding confidential 
information provide a fair balance of the competing interests in arbitration 
proceedings. While sec.22.306 does not include every element of the traditional 
protective orders used in contested case litigation, the commission believes the 
rule provides sufficient safety and flexibility to ensure the smooth flow of 
information while protecting proprietary business information. 
Proposed sec.22.306(e) provides procedures governing review by the parties of 
material designated as confidential. AT&T and Time Warner opposed the proposed 
rule's requirement that each party designate five people who may be allowed 
access to confidential information. They stated that the issues to be addressed 
in arbitration are too broad, and will require too much expertise, to limit to 
five the number of experts and attorneys who may view information. AT&T and Time 
Warner suggested increasing the number to ten people; AT&T alternatively 
proposed not counting attorneys against the rule's limit. 
The commission is persuaded by AT&T and Time Warner that the proposed limit on 
the number of designated personnel should be expanded, but does not believe 
access by ten people is warranted. The commission concludes that the limit 
should increase to eight people, and sec.22.306(e) is amended to reflect that 
conclusion. 
Proposed sec.22.307 restricts the ways in which commission employees who have 
served as mediators and arbitrators may participate in subsequent commission 
proceedings concerning FTA96 review and approval of resulting agreements. AT&T, 
MCI, MFS, and SWBT commented that employees who have participated as arbitrators 
should not be called as witnesses in subsequent proceedings before the 
commission. SWBT stated that the commission employee should participate in 
subsequent proceedings only if the parties to the arbitration agree, and then 
only "to the extent necessary to explain any ambiguities in the arbitrator's 
final decision." MCI stated that the provision should be deleted based on its 
position that only the Commissioners and SOAH ALJs may serve as arbitrators. 
The commission recognizes the parties' concerns with arbitrators being called as 
witnesses in sec.252 proceedings to approve the arbitrated agreement. To address 
these concerns, sec.22.307 is clarified to provide that an arbitrator, or a 
designated staff advisor, may be called upon in an arbitration approval 
proceeding only to explain any ambiguities in the arbitrator's final decision. 
The prohibition on participation in subsequent proceedings does not apply to the 
approval proceedings for arbitrations in which two or more of the commissioners 
acted as arbitrators. 
Proposed sec.22.308 provides procedures for commission approval of negotiated 
agreements. AT&T and MCI commented that proceedings related to approval of 
negotiated agreements should be contested cases, and therefore must be heard by 
the Commissioners or referred to SOAH. In addition, MCI advocated expanding the 
scope of sec.22.308 to require all FTA96 sec.252 negotiations be conducted in 
public view, with publication of notice to the public and actual notice to all 
entities who have requested notice, or have negotiated with either of the 
parties to the relevant negotiation. 
As discussed previously, the commission disagrees with the contention that FTA96 
sec.252 proceedings must be conducted as APA contested cases. The commission 
declines to make the revisions suggested by AT&T and MCI. 
Proposed sec.22.308(a) sets forth the requirements for the application submitted 
to the commission for approval of an agreement. MCI commented that subsection 
(a) should be revised in three ways: (1) language should be added to reflect 
that agreements reached after mediation are subject to the same standard of 
review as agreements reached without mediation; (2) the service requirement 
should be expanded; and (3) the statement of the signatory parties should be 
sworn, and should describe how the agreement meets all applicable legal 
requirements. 
The commission does not believe MCI's first suggested change is necessary: 
whether mediation was used or not, negotiated agreements will be reviewed 
pursuant to FTA96 sec.252(e)(2)(A) and arbitrated agreements reviewed pursuant 
to sec.252(e)(2)(B). MCI's second suggestion is based on the flawed assumption 
that FTA96 sec.252 proceedings must be treated as APA contested cases. The 
commission agrees with the first part of MCI's third suggestion, and has revised 
sec.22.308(a)(3) to require the filing of an "affidavit" rather than a 
"statement." The commission declines to adopt the remainder of MCI's suggestion-
that compliance with all legal requirements must be explained-because it goes 
beyond the requirements of FTA96. 
TRA commented that negotiated agreements should be submitted to the commission 
within a specified period of time after the parties reach agreement, so that the 
commission will have sufficient opportunity review an agreement's compliance 
with FTA96 requirements. 
The commission believes that the rule as written, and the FTA96 process in 
general, provide incentives for expeditious submission of negotiated agreements. 
Additional deadlines in the rule are not necessary. The commission declines to 
make the change recommended by TRA. 
Proposed sec.22.308(a)(4) requires an affidavit of parties indicating their 
agreement to reimburse the commission for its costs in approving and filing a 
negotiated agreement. SWBT commented that the commission has no express 
authority under PURA 95 to accept fees from private donors to assist in the 
achievement of its statutory duties, and that the proposed fee charged by the 
commission to cover the costs of approving and filing arbitration agreements 
"may be viewed as improper or as tainted with impropriety." SWBT's comments 
referred to the fees proposed in sec.sec.22.304, 22.309, and 22.311, as well as 
in sec.22.308(a)(4). 
The commission concludes that it will not seek recovery from parties of its 
costs incurred in administering FTA96 sec.252 provisions. All sections of the 
proposed rules referring to fees from parties have been deleted. 
Proposed sec.22.308(b) provides the notice requirement for proceedings regarding 
approval of negotiated agreements. MCI commented that notice should be expanded 
to be equivalent to that required in traditional APA contested cases. 
As discussed previously, the commission disagrees with the contention that FTA96 
sec.252 proceedings must be conducted as APA contested cases. The commission 
agrees, however, that some additional notice is appropriate in the context of 
FTA96 review and approval proceedings. The commission revises sec.22.308(b) to 
provide that the commission secretary shall publish notice of the filing of 
negotiated agreements in the Texas Register. 
Proposed sec.22.308(c) prescribes the type of proceedings the commission may 
hold to approve negotiated agreements, and provides an opportunity for 
interested parties to comment on the agreements. GTE, MFS, SWBT, and TCG opposed 
the provision in subsection (c) that would allow negotiated agreements to be 
referred to SOAH for a contested case proceeding, and stated that allowing 
contested cases is antithetical to the intent of the FTA96, and would unduly 
burden the parties and slow the approval of negotiated agreements. SWBT added 
that the commission thus far has not treated negotiated interconnection 
agreements as contested cases. AT&T and MCI commented that the review of 
negotiated agreements should be treated as contested cases, and MCI added that 
the language of subsection (c) should be changed to indicate that proceedings 
"shall" be transferred to SOAH upon the request of a party, including a third 
party carrier who competes, or seeks to compete with a signatory to the 
negotiated agreement. 
The commission does not agree that review and approval proceedings for 
negotiated agreements should always be conducted as APA contested cases, but the 
commission does believe that review by SOAH in a contested case format may be 
necessary in some cases. Until they are filed, the commission will have no 
exposure to the terms of negotiated agreements. In some cases, the agreements 
may be unusually complex, or may present extremely difficult discrimination or 
public interest questions warranting examination through more formal litigation 
procedures. Considering the relatively short period in which a negotiated 
agreement must be approved or rejected, the commission considers it essential to 
have numerous procedural options available to it for review of negotiated 
agreements. Due to the date certain deadline for commission action set in FTA96 
sec.252(e)(4), the commission is not concerned that an expedited contested case 
process will unduly delay approval of a negotiated agreement. To make completely 
clear that any contested case must be processed rapidly, the commission added to 
subsection (c) that referrals to SOAH would be for "an expedited contested 
case." While this procedural option may or may not be used, the commission 
believes it is appropriate to preserve it. 
Time Warner suggested that the 35 day period in which parties may file comments 
on negotiated agreements be shortened to 25 days. 
The commission believes that Time Warner's suggestion will help expedite the 
review and approval of negotiated agreements, and thus adds the proposed 
revision to sec.22.308(c). 
Sprint and SWBT commented that the rule is not clear regarding the standards of 
review to be used when some issues are negotiated and others require 
arbitration. Sprint contended that parties may present negotiated and unresolved 
issues to the commission together in an arbitration, or separately as a 
negotiated component and a component that requires arbitration. SWBT suggested 
that when most issues have been resolved by negotiation and a few remain for 
arbitration, the commission should apply the FTA96 sec.252(e)(2)(A) (negotiated 
agreement) standards to those issues, and the FTA96 sec.252(e)(2)(B) (arbitrated 
agreement) standards to the review of the arbitrated agreement. 
The commission agrees that sec.252(e)(2)(A) standards should apply to issues 
where there is a negotiated resolution, and sec.252(e)(2)(B) standards apply to 
issues where there is an arbitrated agreement. FTA96 and the commission's rules 
give the parties to agreements choices of how to proceed. They may file 
negotiated and arbitrated issues as a single agreement for review and approval 
pursuant to FTA96 sec.252(e)(2)(B) arbitrated agreement standards. Thus, if 
parties choose to file an agreement as a "package deal" for review as an 
arbitrated agreement, all issues in the agreement are subject to review under 
sec.252(e)(2)(B). Conversely, the parties may file negotiated and arbitrated 
issues as separate agreements. The negotiated issues would then be reviewed 
pursuant to FTA96 sec.252(e)(2)(A) negotiated agreement standards, while the 
arbitrated issues would be subject to sec.252(e)(2)(B) review. 
Proposed sec.22.308(d) establishes standards for the filing of comments 
regarding negotiated agreements. MCI stated that the subsection should be 
expanded to include requests for contested hearings by non-signatory parties. 
SWBT commented that the provisions permitting interested persons to comment is 
inconsistent with the FTA96, in that the FTA96 does not provide for 
participation by non-signatory parties in the approval process for negotiated 
agreements. SWBT stated that if comment is to be allowed, due process and 
customary commission practice require that the signatory parties (as applicants 
in the commission proceeding) should be given an opportunity to file rebuttal 
comments. 
The commission disagrees with SWBT's characterization of the comment process as 
"inconsistent" with FTA96. FTA96 requires the commission to review agreements 
according to specific statutory standards. Particularly in the case of a 
negotiated agreement, input from non-signatory parties may provide useful 
insights that will inform the commission's review of the agreement. In addition, 
the commission does not find it necessary for advocates of a negotiated 
agreement to be given an opportunity to file rebuttal comments. The signatory 
parties will have had an opportunity to make their case in the filing of their 
agreement. They will also be given a full opportunity to present their arguments 
in the approval proceeding held by the commission. 
The commission also disagrees with MCI's recommendation that the comment process 
be turned into a full-blown contested case in every proceeding. 
Proposed sec.22.308(f) grants the presiding officer authority in the approval 
process, and provides that discovery is limited to issues relevant to the 
proceeding. MCI commented that if the scope of discovery is to be addressed in 
the rule, it should conform to the discovery standards of the APA and applicable 
Texas rules or procedure. GTE stated that all discovery issues should be worked 
out by the parties, and that the presiding officer should not have control over 
discovery issues in FTA96 proceedings. 
The commission believes the rule as written provides ample authority to the 
presiding officer to address discovery issues, while explicitly limiting 
discovery in the approval process to issues relevant to that process. 
Proposed sec.22.308(g) establishes requirements for issuance of a final decision 
by the commission. Time Warner suggested that the period in which the commission 
must issue a final decision should be shortened from 90 days following the 
filing of the application to 45 days if no hearing is required, or 60 days if a 
hearing is required.  
The commission is hesitant to shorten the time for decision provided in FTA96. 
While quicker decisions may be possible in many cases, the commission declines 
to truncate its time for decision by rule before it has any experience by which 
to judge the nature and complexity of the issues that will be before it. 
Proposed sec.22.309 provides rules governing the approval of arbitrated 
agreements. MCI commented that the hearing in which an arbitrated agreement is 
approved "must be treated as a contested case," and that in many ways, approval 
of the agreement would constitute a concluding phase of the arbitration hearing. 
The commission disagrees with the contention that the approval process for an 
arbitrated agreement must be conducted as a contested case. Moreover, FTA96 
makes clear that an approval proceeding is completely separate from an 
arbitration. MCI's comments recognize this in other contexts, such as when it 
expresses concern about the involvement of commission arbitrators in approval 
proceedings. The commission declines to make the changes suggested by MCI. 
In sec.22.309(a), the commission deletes references to "arbitration panel(s)" 
selected pursuant to sec.22.304, in conformance with revisions it makes to 
sec.22.304. As discussed previously, the commission concludes that it will not 
seek to recover the costs related to FTA96 proceedings from the parties. 
Therefore, the commission deletes sec.22.309(a)(4), which required an affidavit 
of the parties agreeing to reimburse the commission for the costs of approving 
and filing agreements. Additionally, the commission believes that the 
requirement to file the final arbitrated agreement should not be placed on the 
arbitrator, but should be assigned to one of the parties. Accordingly, the 
commission revises the rule to require that the agreement be filed by a party, 
in accordance with the requirements and schedule established by the arbitrator 
in the final decision and report. This will enable the arbitrator to assure that 
the agreement is filed in a timely manner so that the thirty day approval 
process is begun.
Proposed sec.22.309(b) grants the presiding officer discretion in determining 
the extent of notice to be provided. MCI stated that it does not object to 
giving the presiding officer discretion, but that notice must be provided in the 
Texas Register pursuant to the APA in addition to any other notice required. 
The commission disagrees with the contention that FTA96 sec.252 proceedings must 
be conducted as APA contested cases. The commission agrees, however, that some 
additional notice is appropriate in the context of FTA96 review and approval 
proceedings. The commission revises sec.22.309(b) to provide that the commission 
secretary shall publish notice of the filing of arbitrated agreements in the 
Texas Register. 
Proposed sec.22.309(c) prescribes the type of proceedings the commission may 
hold to approve arbitrated agreements, and provides an opportunity for 
interested parties to comment on the agreements. GTE, MFS, and TCG opposed the 
provision in subsection (c) that would allow arbitrated agreements to be 
referred to SOAH for a contested case proceeding, and stated that allowing 
contested cases is contrary to the intent of the FTA96, and would unduly burden 
the parties and slow the approval of negotiated agreements. MCI commented that 
unless the commission hears the case itself or processes the matter 
administratively, arbitrated agreements must be referred to SOAH for contested 
case proceedings. MCI added that provisions allowing interested persons to file 
comments on the agreements fail to comply with the APA or the standards of due 
process. 
The commission disagrees with the comments submitted regarding sec.22.309(c), 
and declines to make the suggested changes. As discussed previously in relation 
to sec.22.308(c), the commission believes it is essential to maintain all 
permissible procedural options for processing requests for approval of 
arbitrated agreements. This is particularly true in the case of approval of 
arbitrated agreements, where the commission must complete its review within 30 
days of submission of the agreement. This strict statutory deadline prevents 
undue delay in the review and approval of agreements. In addition, the 
commission believes the comment process provides a reasonable opportunity for 
third parties to express concerns about arbitrated agreements. MCI's due process 
arguments assume that FTA96 sec.252 review and approval proceedings are APA 
contested cases, which the commission has concluded they are not. 
Proposed sec.22.309(d) establishes standards for the filing of comments by 
parties regarding arbitrated agreements. MCI commented that (1) seven days is 
too short a period in which to file comments; (2) intervention by third parties 
must be permitted; and (3) the proposed rule impermissibly puts the burden on 
third party commentators to demonstrate why the arbitrated agreement is not 
consistent with FTA96 or should otherwise be rejected. 
The commission disagrees with MCI's comments. The seven day period for 
submitting comments may be shorter than in many situations, but is reasonable 
when viewed in the context of a 30 day period for conclusion of the commission's 
review process. MCI's insistence that intervention must be allowed is based on 
its position that FTA96 sec.252 review and approval proceedings must be treated 
as APA contested cases. As stated previously, the commission does not agree with 
MCI's position. Finally, the comment process does not impermissibly shift any 
burdens of proof. Neither the parties to the arbitration nor the third party 
commentators carry a burden of proof or production as parties do in traditional 
litigation. Rather, the comment period gives third parties an important 
opportunity to educate the commission regarding their concerns with an 
arbitrated agreement. 
Proposed sec.22.309(f) establishes requirements for issuance of a final decision 
by the commission. MCI stated that federal law requires that subsection (f) be 
revised to reflect that the commission "shall" issue a final decision within 30 
days of the filing of the application. MCI also suggested that the modifications 
in an agreement by the commission should be responsive to the requirements of 
federal law and regulations as well as state law. 
The commission believes that subsection (f) is sufficiently clear in requiring a 
commission decision within 30 days following the filing of the application for 
approval. The commission also disagrees with MCI's second comment. FTA96 
sec.252(e) provides that the commission may approve or reject the agreement as 
submitted, with any rejection based on the grounds stated in subsection (e)(2). 
The commission has no authority under sec.252(e) to make modifications 
responsive to federal law requirements. It does, however, have authority to 
require compliance with state law requirements, pursuant to subsection (e)(3). 
Therefore, an agreement could be approved with modifications needed to enforce 
compliance with state law; approval with modifications to comply with federal 
law is not contemplated in sec.252(e). 
Proposed sec.22.310 authorizes the commission or the arbitrator to consolidate 
proceedings for approval of negotiated or arbitrated agreements as appropriate 
under Public Utility Commission Procedure Rule sec.22.34 (relating to 
consolidation and severance). AT&T and MCI agreed that consolidation will, in 
many cases, offer administrative efficiencies and encourage procedural and 
substantive consistency in FTA96 proceedings. MCI suggested that the 
commission's rule on consolidation be amended to require consolidation where the 
same or similar issues arise, unless consolidation would prejudice the parties 
or hamper the commission's ability to meet statutory requirements. AT&T 
suggested that proceedings involving parties commencing negotiations more than 
25 days apart should not be consolidated, and that in consolidating issues, the 
commission should examine whether parties are similarly situated (e.g., 
consolidating parties by industry segment-cable-based providers together, 
interexchange carriers together, etc.). SWBT cautioned that overly broad 
consolidation could "taint proceedings" which are contemplated to be "bilateral" 
under the FTA96, and suggested that consolidation be limited to circumstances 
where the parties seeking interconnection are related (e.g., the Dallas and 
Houston operations of MFS or TCG). 
The commission believes that the rule as written provides adequate flexibility 
to address the various concerns of the parties. The flexibility provided by 
using Public Utility Commission Procedure Rule sec.22.34 allows the commission 
to respond appropriately to the particular consolidation scenarios that may come 
before it. 
Proposed sec.22.311 is deleted in its entirety. As discussed previously, the 
commission does not seek to recover the costs of approving and filing negotiated 
and arbitrated agreements by charging fees to the parties involved in FTA96 
proceedings. 
This section is adopted under: (1) the federal Telecommunications Act of 1996, 
Public Law Number 104-104, 110 Statute 56 (1996) (to be codified at 47 U.S.C. 
sec.151, et seq), sec.252, which delegates to state utility commissions the 
authority to conduct mediation, arbitration, and approval proceedings concerning 
agreements between providers of local telecommunications services for 
interconnection, services, and network elements; and (2) the Texas Civil 
Statutes, Article 1446c-0, sec.1.101, which provides the commission the 
authority to make and enforce rules reasonably required in the exercise of its 
powers and jurisdiction; sec.3.051, which provides the commission the authority 
to formulate and apply new rules and policies to protect the public interest and 
provide equal opportunity to all telecommunications utilities in a competitive 
market; sec.3.451, which provides the commission exclusive jurisdiction to 
enforce competitive safeguards and to ensure that rates are not unreasonably 
preferential, prejudicial, or discriminatory; sec.3.458, which provides the 
commission the authority to establish rules and policies that are responsive to 
changes in federal law; and sec.3.460, which provides the commission the 
authority to establish procedures for resolving disputes regarding the 
introduction of local exchange competition in ways that are consistent with 
federal law. 
Cross index to Statutes: Texas Civil Statutes, Article 1446c-0; 
Telecommunications Act of 1996, Public Law Number 104-104, 110 Stat. 56 (1996) 
(to be codified at 47 U.S.C. sec.151, et seq).

sec.22.302.Definitions.
The following terms, when used in this subchapter, shall have the following 
meanings, unless the context or specific language clearly indicates otherwise:
Arbitration-A form of dispute resolution in which each party presents its 
position on any unresolved issues to an impartial third person(s) who renders a 
decision on the basis of the information and arguments submitted.
Arbitration hearing-The hearing conducted by an arbitrator to resolve any issue 
submitted to the arbitrator. An arbitration hearing is not a contested case 
under the Administrative Procedure Act, Tex. Gov't Code sec.sec.2001.001, et. 
seq.
Arbitrator-The commission, any commissioner, any commission employee, or any 
SOAH administrative law judge selected to serve as the presiding officer in a 
compulsory arbitration hearing.
Compulsory arbitration-The arbitration proceeding conducted by the commission or 
its designated arbitrator pursuant to the commission's authority under sec.252 
of the FTA96.
FTA96-The Federal Telecommunications Act of 1996, Public Law Number 104-104, 110 
Statute 56 (1996), (to be codified at 47 U.S.C. sec.sec.151 et seq). 
Mediation-A voluntary form of dispute resolution in which an impartial person 
facilitates communication between parties to promote negotiation and settlement 
of disputed issues.

sec.22.303.Mediation.
Any party negotiating a request for interconnection, services or network 
elements under FTA96 sec.251 may request, in writing, that the commission assist 
the parties by mediating any differences that have arisen in the negotiations. 
Six copies of the request shall be filed with the commission filing clerk and a 
copy shall be served on each of the other parties involved in the negotiations. 
The request shall identify the parties involved in the negotiations, the 
potential issues for which mediation may be needed and, if possible, an estimate 
of the time period during which mediation will be pursued. The secretary shall 
notify the parties of the commission employee who is assigned to serve as a 
mediator. The commission employee assigned to serve as a mediator may not 
participate in arbitration or review and approval proceedings initiated under 
this subchapter involving the parties to the mediation. The mediator will work 
with the parties to establish an appropriate schedule and procedure for 
mediating any disputes. The mediator's role is limited to assisting the parties 
in attempting to reach an agreed resolution of the issues.

sec.22.304.Voluntary Alternative Dispute Resolution.
In order to facilitate negotiated resolutions of any dispute concerning a 
request for interconnection, services or network elements pursuant to sec.251 of 
the FTA96, the parties are encouraged, but not required, to pursue any method of 
alternative dispute resolution agreeable to them, including, without limitation, 
mediation or private binding arbitration, in which the commission is not a 
direct participant. Agreements reached through the parties' use of alternative 
dispute resolution methods will be considered as equivalent to negotiated 
agreements, and will be processed for review and approval pursuant sec.22.308 of 
this subchapter.

sec.22.305.Compulsory Arbitration.
(a) Request for Arbitration. Any party to negotiations concerning a request for 
interconnection, services or network elements pursuant to sec.251 of the FTA96 
may request arbitration by the commission by filing with the commission's filing 
clerk 18 copies of a request for arbitration. The request must be received by 
the commission during the period from the 135th to the 160th day (inclusive) 
after the date the LEC received the request for negotiation from the other 
negotiating party. The request for arbitration shall include
(1) the name, address and telephone number of each party to the negotiations and 
the party's designated representative; 
(2) a description of the parties' efforts to resolve their differences by 
negotiation; 
(3) a list of any unresolved issues and the position of each of the parties on 
each of those issues; 
(4) a list of the issues that have been resolved by the parties and how such 
resolution complies with the requirements of the FTA96; and 
(5) if the request concerns a request for interconnection under sec.23.97 of 
this title (relating to Interconnection), the material required by sec.23.97(g) 
of this title. 
(b) Response. Any non-petitioning party to the negotiation may respond to the 
request for arbitration by filing 18 copies of the response with the 
commission's filing clerk and serving a copy on each party to the negotiation. 
The response must be filed within 25 days after the commission received the 
request for arbitration. The response shall indicate any disagreement with the 
matters contained in the request for arbitration and may provide such additional 
information as the party wishes to present. 
(c) Selection of Arbitrator. Upon receipt of a complete request for arbitration, 
the secretary shall select an arbitrator to act for the commission, unless two 
or more of the Commissioners choose to hear the arbitration en banc. The 
secretary shall notify the parties of the commission-designated arbitrator, or 
of the Commissioners' decision to act as arbitrator themselves. The arbitrator 
may be advised on legal and technical issues by members of the commission staff 
designated by the arbitrator. The commission staff members selected to advise 
the arbitrator shall be identified to the parties. 
(d) Oath Required. Before an arbitrator may hear any matter, he or she must 
swear to an oath of office affirming the arbitrator's competence to serve and 
willingness to judge all proceedings fairly and impartially. The oath shall be 
administered by a commissioner or a person designated by the commission to 
administer oaths. 
(e) Participation. Only parties to the negotiation may participate as parties in 
the arbitration hearing. The arbitrator may allow interested persons to file a 
statement of position and/or list of issues to be considered in the proceeding. 
(f) Prehearing conference; challenges. As soon as practical after his or her 
selection, the arbitrator shall schedule a prehearing conference with the 
parties to the arbitration. At the prehearing conference, parties should be 
prepared to raise any challenges to the appointment of the arbitrator or the 
arbitrability of any issue. If such challenges are not raised at the first 
prehearing conference, they shall be deemed waived by the parties. The 
arbitrator shall serve on the parties orders ruling on challenges within ten 
working days of the first prehearing conference. 
(g) Notice. The arbitrator shall make arrangements for the arbitration hearing, 
which may not be scheduled earlier than 35 days after the commission receives a 
complete request for arbitration. The arbitrator shall notify the parties, not 
less than 10 working days before the hearing, of the date, time, and location of 
the hearing. 
(h) Record of Hearing. The arbitration hearing shall be open to the public. If 
any party requests it, a stenographic record shall be made of the hearing by an 
official court reporter appointed by the commission. It is the responsibility of 
the party desiring the stenographic record to arrange for the official reporter 
to be present. A party may purchase a copy of the transcript from the official 
reporter at rates set by the commission. The court reporter shall provide the 
transcript and exhibits in a hearing to the arbitrator at the time the 
transcript is provided to the requesting party. If no court reporter is 
requested by a party, the arbitrator shall record the proceedings and maintain 
the official record and exhibits. Each party to the arbitration hearing shall be 
responsible for its own costs of participation in the arbitration process. 
(i) Hearing Procedures. The parties to the arbitration are entitled to be heard, 
to present evidence, and to cross-examine witnesses appearing at the hearing. 
The arbitrator may temporarily close the arbitration hearing to the public to 
hear evidence containing information filed as confidential under sec.22.306 of 
this subchapter (relating to Confidential Information). The arbitrator shall 
close the hearing only if there is no other practical means of protecting the 
confidentiality of the information. 
(j) Rules Applicable. The rules of privilege and exemption recognized by Texas 
law shall apply to arbitration proceedings under this subchapter. The Texas 
Rules of Civil Procedure, Texas Rules of Civil Evidence, and sec.sec.22.1-22.284 
of this chapter are not applicable to proceedings under this subchapter unless 
specifically referenced in this subchapter.
(k) Authority of Arbitrator. The arbitrator has broad discretion in conducting 
the arbitration hearing and has the authority given to a presiding officer 
pursuant to sec.22.202 of this title (relating to Presiding Officer). 
(l) Time for Hearing. The arbitration hearing shall be conducted expeditiously 
and in an informal manner. Unless additional time is allowed by the commission 
or additional information is requested by the arbitrator, the hearing may not 
exceed five working days. 
(m) Prefiled Evidence. Parties to the hearing shall provide their direct cases 
to the arbitrator at least five working days prior to the hearing unless the 
arbitrator establishes a different deadline. Eighteen copies of the direct case 
shall be filed with the commission filing clerk and a copy shall be provided to 
each of the other parties to the hearing at the same time it is provided to the 
arbitrator. The prepared direct case shall include all of the party's direct 
evidence, including written direct testimony of all of its witnesses and all 
exhibits that the party intends to offer. The prepared case shall present the 
entirety of the party's direct evidence on each of the issues in controversy and 
shall serve as the party's complete direct case. Except as provided in 
sec.22.306 of this subchapter (relating to Confidential Information), all 
materials filed with the commission or provided to the arbitrator shall be 
considered public information under the Open Records Act, Texas Government. 
Code, sec.552.001, et seq. 
(n) Cross-examination. Each witness presenting written direct testimony shall be 
available for cross-examination by the other parties to the arbitration. The 
arbitrator shall judge the credibility of each witness and the weight to be 
given his or her testimony based upon his or her response to cross-examination. 
If the arbitrator determines that a witness' responses are evasive or non-
responsive to the questions asked, the arbitrator may disregard the witness' 
testimony on the basis of a lack of credibility. 
(o) Clarifying Questions. The arbitrator or a staff member identified as an 
advisor to the arbitrator may ask clarifying questions at any point during the 
proceeding and may direct a party or a witness to provide additional information 
as needed to fully develop the record of the proceeding. If a party fails to 
present information requested by the arbitrator, the arbitrator shall render a 
decision on the basis of the best information available from whatever source 
derived. 
(p) Briefs. The arbitrator may require the parties to submit post-hearing briefs 
or written summaries of their positions. The arbitrator shall determine the 
filing deadline and any limitations on the length of such submissions. 
(q) Time for Decision. The arbitrator shall endeavor to issue a final decision 
on the arbitration within 30 days after the conclusion of the hearing. The 
arbitrator shall issue a final decision not later than nine months after the 
date the LEC received the request for negotiation under the FTA96. 
(r) Decision. The final decision and report of the arbitrator shall be based 
upon the record of the arbitration hearing. The arbitrator may agree with the 
positions of one or more of the parties on any or all issues or may offer an 
independent resolution of the issues. The final decision and report of the 
arbitrator shall include: 
(1) a ruling on each of the issues presented for arbitration by the parties; 
(2) a statement of any conditions imposed on the parties to the agreement in 
order to comply with the provisions of FTA96 sec.252(c); 
(3) a statement of how the final decision meets the requirements of FTA96 
sec.251, including any regulations adopted by the FCC pursuant to sec.251; 
(4) the rates for interconnection, services, and/or network elements established 
according to FTA96 sec.252(d); 
(5) a schedule for implementation of the terms and conditions by the parties to 
the agreement; and 
(6) a narrative report explaining the arbitrator's rationale for each of the 
rulings included in the final decision, unless the arbitration is conducted by 
two or more of the commissioners acting as the arbitrator. 
(s) Distribution. The final decision and report of the arbitrator shall be filed 
with the commission as a public record and shall be mailed by first class mail 
to all parties of record in the arbitration. 

sec.22.306.Confidential Information. 
(a) General. If any party believes that any material it files with the 
commission or provides to the arbitrator during the arbitration process should 
be exempt from disclosure under the Open Records Act, it may designate such 
material as confidential information and submit the information under seal. 
(b) Filing Under Seal. Copies of the material shall be delivered to the Filing 
Clerk of the commission and to the arbitrator in a sealed envelope that is 
clearly marked on the outside, in letters at least one inch tall, as containing 
"Confidential Information". Each page of the material submitted under seal shall 
be consecutively numbered and the envelope shall clearly specify the number of 
pages contained therein. The party designating the material as confidential 
information shall clearly identify each portion of the material alleged to be 
confidential information, and provide a written explanation of the claimed 
exemption. Such explanation may be accompanied by affidavits providing 
appropriate factual support for any claimed exemption. The claim of exemption 
shall also indicate: 
(1) any and all exemptions to the Open Records Act claimed to be applicable to 
the alleged confidential information, 
(2) the reasons supporting the party's claim that the information is exempt from 
public disclosure under the Open Records Act and subject to treatment as 
confidential information, and 
(3) that counsel for the party has reviewed the information sufficiently to 
state in good faith that the information merits the confidential designation and 
is exempt from public disclosure under the Open Records Act. 
(c) Exemption From Disclosure. Material received by the commission or by the 
arbitrator in accordance with this procedure shall be treated as exempt from 
public disclosure until and unless such confidential information is determined 
to be public information as the result of an Open Records Decision by the 
Attorney General, or pursuant to an order of the presiding officer entered after 
notice to the parties and hearing, or pursuant to an order of a court having 
jurisdiction. 
(d) Material Provided to Parties. Material claimed to be confidential 
information must be provided to the other parties to the arbitration hearing 
provided they agree in writing to treat the material as confidential 
information. One copy of the material shall be provided to each party. The 
receiving party shall not make any copies of the confidential information and 
shall keep the confidential information properly secured during all times when 
the documents are not being reviewed by a person authorized to do so. 
(e) Review by Parties. Each receiving party may designate no more than eight 
individuals associated with the party who will be allowed access to the 
confidential information. The individuals who may have access to the 
confidential information shall be limited to the receiving party's counsel of 
record, regulatory personnel acting at the direction of counsel, and outside 
consultants employed by the receiving party. These individuals may use the 
confidential information only for the purpose of presenting or responding to 
matters raised in the arbitration hearing during the course of that proceeding 
and shall not disclose the confidential information to any person who is not 
authorized under this section to view this information. 
(f) Acknowledgment. Each individual who is provided access to the confidential 
information shall sign a notarized statement affirmatively stating that the 
individual has personally reviewed this section and understands and will observe 
the limitations upon the use and disclosure of confidential information. By 
signing such statements a party may not be deemed to have acquiesced in the 
designation of the material as confidential information or to have waived any 
rights to contest such designation or to seek further disclosure of the 
confidential information. 
(g) Disposition of Confidential Information. Upon the completion of commission 
proceedings to review the arbitration agreement pursuant to FTA96 sec.252 and 
any appeals thereof, confidential information received by the parties shall be 
returned to the producing party. Any notes or workproduct prepared by the 
receiving party which were derived in whole or in part from the confidential 
information shall be destroyed at that time. Material filed with the commission 
will remain under seal at the commission and will continue to be treated as 
confidential information under this subchapter. The commission may destroy 
confidential information in accordance with its records retention standards. 
(h) Use in Other Proceedings. Any confidential information produced pursuant to 
this section may not be used in any other proceedings before the commission. 
However, this section does not prevent the discovery or admissibility of any 
material otherwise discoverable, merely because the material was presented in 
the course of an arbitration hearing under this section. 

sec.22.307.Subsequent Proceedings.
A commission employee who has participated as a mediator under sec.22.303 of 
this subchapter, an arbitrator under sec.22.305, or a staff member designated as 
an advisor to the arbitrator under sec.22.305(c) may not participate in any 
subsequent commission proceedings concerning the review and approval of the 
resulting agreement pursuant to FTA96 sec.252(e), except in cases where two or 
more of the Commissioners act as the arbitrator. In a proceeding to approve an 
arbitrated agreement pursuant to sec.22.309 of this subchapter, the commission 
or the presiding officer may call upon a commission employee who has 
participated as an arbitrator under this subchapter to the extent necessary to 
explain any ambiguities in the arbitrator's final decision.

sec.22.308.Approval of Negotiated Agreements. 
(a) Application. Any agreement adopted by negotiation shall be submitted to the 
commission for review and approval and may be submitted by any of the parties to 
the agreement. The parties requesting approval shall submit an application for 
approval of the agreement by filing 18 copies of the application with the 
commission's filing clerk and serving a copy on each of the parties to the 
agreement. Any agreement submitted to the commission for approval is a public 
record and no portion of the agreement may be treated as confidential 
information under sec.22.306 of this subchapter (relating to Confidential 
Information). An application for approval of a negotiated agreement shall 
include: 
(1) a complete and unredacted copy of the negotiated agreement, 
(2) the name, address, and telephone number of each of the parties to the 
agreement, and 
(3) an affidavit by the signatory parties explaining how the agreement is 
consistent with the public interest, convenience, and necessity, including all 
relevant requirements of state law. 
(b) Notice. The presiding officer may require the parties to the agreement to 
provide reasonable notice of the filing of the agreement. The presiding officer 
may require publication of the notice in addition to direct notice to affected 
persons. The presiding officer shall determine the appropriate scope and wording 
of the notice to be provided. In addition to any notice ordered by the presiding 
officer, the secretary shall cause to be published notice of the filing of the 
agreement in the Texas Register. 
(c) Proceedings. The commission may conduct whatever proceeding it deems 
necessary in order to review the negotiated agreement, including, but not 
limited to, referral of the matter to SOAH for an expedited contested case 
hearing. The commission or the presiding officer may issue a procedural order or 
a preliminary order establishing additional procedural requirements for the 
proceedings. At a minimum, the commission will allow interested persons and the 
general counsel to file written comments, provided such comments are filed 
within 25 days of the filing of the application. 
(d) Comments. An interested person or the general counsel may file comments on 
the negotiated agreement by filing 18 copies of the comments with the 
commission's filing clerk and serving a copy of the comments on each party to 
the agreement. As a part of the comments, a person may include a request for a 
public hearing on the agreement. The comments shall include the following 
information: 
(1) a detailed statement of the person's interests in the agreement, including a 
description of how approval of the agreement may adversely affect those 
interests; 
(2) specific allegations that the agreement, or some portion thereof: 
(A) discriminates against a telecommunications carrier that is not a party to 
the agreement; or 
(B) is not consistent with the public interest, convenience, and necessity; or 
(C) is not consistent with other requirements of state law; and 
(3) the specific facts upon which the allegations are based. 
(e) Issues. In any proceeding conducted by the commission, the commission will 
consider only evidence and argument concerning whether the agreement, or some 
portion thereof: 
(1) discriminates against a telecommunications carrier that is not a party to 
the agreement; or 
(2) is not consistent with the public interest, convenience, and necessity; or 
(3) is not consistent with other requirements of state law. 
(f) Authority of Presiding Officer. The presiding officer has broad discretion 
in conducting the proceeding and has the authority given to a presiding officer 
pursuant to sec.22.202 of this title (relating to Presiding Officer). Any 
discovery allowed by the presiding officer shall be limited to the issues 
relevant to the proceeding. 
(g) Final Decision. The commission will issue its final decision on the 
agreement within 90 days following the filing of the application. The 
commission's final decision may reject the agreement as submitted, approve the 
agreement as submitted, or approve the agreement with modifications necessary to 
establish or enforce compliance with other requirements of state law. If the 
commission rejects the agreement, the final decision will include written 
findings indicating any deficiencies in the agreement. 
(h) Filing of Agreement. If the commission approves the agreement, it will be 
filed in central records, along with the commission's final decision approving 
the agreement.

sec.22.309.Approval of Arbitrated Agreements. 
(a) Application. Any agreement resulting from arbitration shall be submitted to 
the commission for review and approval in accordance with the requirements and 
schedule established in the arbitrator's final decision and report. Following 
the conclusion of an arbitration proceeding under sec.22.305 of this subchapter, 
a party shall submit an application for approval of the agreement by filing 18 
copies of the application with the commission's filing clerk and serving a copy 
of the application on each of the parties to the agreement. Any agreement 
submitted to the commission for approval is a public record and no portion of 
the agreement may be treated as confidential information under sec.22.306 of 
this subchapter (relating to Confidential Information). The application for 
approval of an arbitrated agreement shall include: 
(1) a complete and unredacted copy of the arbitrated agreement including any 
portions of the agreement that were not the subject of arbitration, 
(2) the name, address, and telephone number of each of the parties to the 
agreement, and 
(3) the final decision and report of the arbitrator(s) prepared in accordance 
with the requirements of this subchapter. 
(b) Notice. The presiding officer may require the parties to the agreement to 
provide reasonable notice of the filing of the agreement. The presiding officer 
may require publication of the notice in addition to direct notice to affected 
persons. The presiding officer shall determine the appropriate scope and wording 
of the notice to be provided. In addition to any notice ordered by the presiding 
officer, the secretary shall cause to be published notice of the filing of the 
agreement in the Texas Register. 
(c) Proceedings. The commission may conduct whatever proceeding it deems 
necessary in order to review the arbitrated agreement, including, but not 
limited to, authorizing a presiding officer to conduct an expedited contested 
case hearing. The commission or the presiding officer may issue a procedural 
order or a preliminary order establishing additional procedural requirements for 
the proceedings. At a minimum, the commission will allow interested persons and 
the general counsel to file written comments, provided such comments are filed 
within seven days of the filing of the application. 
(d) Comments. An interested person and the general counsel may file written 
comments concerning the agreement by filing 18 copies of the comments with the 
commission's filing clerk and serving a copy of the comments on each of the 
parties to the agreement. Such comments shall be limited to whether the 
agreement meets the requirements of the FTA96 and relevant portions of state 
law. If such comments request rejection or modification of the agreement, the 
interested person must provide the following information: 
(1) a detailed statement of the person's interests in the agreement, including a 
description of how approval of the agreement may adversely affect those 
interests; 
(2) specific allegations that the agreement, or some portion thereof: 
(A) does not meet the requirements of FTA96 sec.251, including any FCC 
regulation implementing sec.251; or 
(B) is not consistent with the standards established in FTA96 sec.252(d); or 
(C) is not consistent with other requirements of state law; and 
(3) the specific facts upon which the allegations are based. 
(e) Issues. In any proceeding conducted by the commission, the commission will 
consider only evidence and argument concerning whether the agreement, or some 
portion thereof: 
(1) does not meet the requirements of FTA96 sec.251, including any FCC 
regulation implementing sec.251; or 
(2) is not consistent with the standards established in FTA96 sec.252(d); or 
(3) is not consistent with other requirements of state law. 
(f) Final Decision. The commission will issue its final decision on the 
agreement within 30 days following the filing of the application. The 
commission's final decision may reject the agreement as submitted, approve the 
agreement as submitted, or approve the agreement with modifications necessary to 
establish or enforce compliance with other requirements of state law. If the 
commission rejects the agreement, the final decision will include written 
findings indicating any deficiencies in the agreement. 
(g) Filing of Agreement. If the commission approves the agreement, it will be 
filed in central records, along with the commission's final decision approving 
the agreement.

sec.22.310.Consolidation.
The commission or the arbitrator may consolidate separate arbitration 
proceedings and the presiding officer may consolidate separate applications for 
approval of negotiated or arbitrated agreements as appropriate under sec.22.34 
of this title (relating to Consolidation and Severance). The commission may 
consolidate the arbitration proceeding and the approval process for any 
arbitration conducted by the commission
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 22, 1996.
TRD-9612294
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Effective date: September 12, 1996
Proposal publication date: June 4, 1996
For further information, please call: (512) 458-0100

CHAPTER 23.Substantive Rules
Quality of Service
16 TAC sec.23.67
The Public Utility Commission of Texas adopts an amendment to sec.23.67, 
relating to transmission service for electric utilities. The amendment is 
adopted without changes to the proposed text as published in the July 12, 1996, 
issue of the Texas Register (21 Tex Reg 6403).
The commission recently adopted rules relating to transmission service for 
electric utilities, in compliance with Section 2.056 and sec.2.057 of the Public 
Utility Regulatory Act of 1995, Article 1446c-0, Revised Civil Statutes of 
Texas. Section 23.67(s) of the new rules requires parties to disputes concerning 
the terms of transmission service to attempt to resolve their disputes through 
alternative dispute resolution processes (ADR). Disputes may be referred to the 
commission, through its complaints procedures, but the parties to a dispute are 
first required to attempt to resolve it through ADR. 
The commission also directed the electric utilities within the Electric 
Reliability Council of Texas (ERCOT) to meet with other participants in the 
wholesale electric market to attempt to develop a proposal for an independent 
system operator to perform certain functions related to access to transmission 
services in ERCOT. The parties that participated in these discussions were 
successful in developing such a proposal, and on June 10, 1996 they filed for 
commission approval a proposal for an ERCOT independent system operator. In 
connection with the proposed independent system operator, these parties filed a 
petition for rulemaking, requesting that the Commission amend sec.23.67(s) to 
permit certain disputes to be referred directly to the commission for 
resolution, rather than requiring that they first be submitted to ADR. 
The commission published a proposed rulemaking, consistent with the petition for 
rulemaking, on July 12, 1996. Written comments were filed by Houston Lighting 
and Power Company, Central and South West Corporation, the Office of Public 
Counsel, and South Texas Electric Cooperative. These commenters emphasized the 
importance of reliable electric service and supported the adoption of the rule. 
The commission also held a public meeting to permit interested persons to make 
public comments on the proposed rule on August 1, 1996. Four parties made oral 
comments at the public meeting: Houston Lighting and Power Company (HL&P), South 
Texas Electric Cooperative (STEC), the City Public Service Board of the City of 
San Antonio, and Central and South West Corporation.
All of them commented in support of the rule. 
The concern expressed in connection with the petition for rulemaking is that a 
dispute relating to transmission service might arise concerning a matter that 
affects the continued provision of reliable electric service, and that the ADR 
requirement would delay the resolution of the dispute. Where such a dispute 
affects the provision of reliable electric service, the parties that joined in 
the ISO filing want the commission to resolve the matter quickly, and the rule 
would require the commission to hear the dispute in an emergency session. The 
proposed rule included blanket findings that such disputes affecting reliability 
of electric service constitute a threat to the health and welfare of the 
customers of the affected utility, thereby permitting the commission to hear the 
dispute in an emergency session. The proposed rule would also permit the 
Chairman of the commission to issue a decision concerning such a dispute if a 
quorum of the commission is not present. 
The parties that commented on the proposed rule expressed the view that 
reliability of electric service might be impaired, in some instances, if a 
dispute over transmission service cannot be resolved quickly. The amendment to 
the ADR requirement in the rule will permit disputes that affect reliability to 
be referred to the commission for a decision on an expeditious basis. The 
parties also noted that this rule amendment was one of the key elements in 
reaching agreement on the terms of an independent system operator for ERCOT. The 
utilities were particularly concerned that the role of the independent system 
operator under the new transmission rules might result in impaired reliability 
in some circumstances. These parties insisted on a mechanism for the expeditious 
resolution of disputes that affect reliability, in connection with their 
agreement to an ISO. 
In the preamble to the proposed rule, the commission noted that under the 
proposed amendment any market participant could file a petition seeking direct 
relief from the commission. The commission sought comments on whether this 
provision was so broad that it would undermine the requirement that parties 
first attempt to resolve their disputes through the alternative dispute 
resolution process. HL&P in its oral comments acknowledged that the amended rule 
would provide an exemption from the ADR requirement that is potentially very 
broad. HL&P noted, however, that it would be within the commission's discretion 
to accept a dispute for decision under the amended rule. If the commission 
concludes that the pendency of the dispute does not threaten reliability, it 
could require the parties to the dispute to first take advantage of ADR, prior 
to considering the merits of the dispute itself. In its written comments, HL&P 
noted that the ADR provisions of the Public Utility Regulatory Act are 
permissive, rather than mandatory, so that it is within the commission's 
discretion to create an exception to the ADR requirement in the rule for 
disputes that affect reliability of electric service. 
The commission also requested comments on whether it should include a blanket 
finding in the rule that matters threatening the reliability of electric service 
present an imminent threat to the health and welfare of the customers of the 
affected utility. The City of San Antonio, in its oral comments, noted that 
issues affecting the reliability of electric service often need to be resolved 
quickly and supported the provisions of the rule that would permit the 
commission to do so. HL&P and STEC noted that electricity is used for a number 
of purposes that relate directly to public safety and welfare and that the 
interruption of service may affect customers whose operations are essential to 
the public safety and welfare. For this reason, HL&P and STEC supported the 
blanket finding. 
Finally, the commission requested comments on whether it can delegate authority 
for the chairman of the commission to act on a dispute, in the absence of the 
other commissioners, as the proposed rule provides. HL&P noted that the Public 
Utility Regulatory Act permits an individual commissioner to conduct a hearing, 
and the commission's rules permit a presiding examiner to enter interim orders. 
Accordingly, the chairman, acting as a presiding examiner in a case, could enter 
an order on an interim basis that would be subject to review by the full 
commission. HL&P also argued in its oral comments that where reliability is 
concerned, the commission has inherent power to take action on a dispute to 
preserve the integrity of the electric network. STEC also argued that the 
amendment is lawful. 
Where a dispute over the terms of transmission service affects the provision of 
reliable electric service, the parties that joined in the ISO filing sought a 
mechanism for the quick resolution of the dispute. The rule will permit the 
parties to such a dispute to bypass the ADR procedures and refer the dispute 
directly to the commission. The rule includes blanket findings that such 
disputes affecting reliability of electric service constitute a threat to the 
health and welfare of the customers of the affected utility, thereby permitting 
the commission to hear the dispute in an emergency session. Finally, the rule 
permits the Chairman of the commission to issue a decision concerning such a 
dispute if a quorum of the commission is not present. 
The amendment is adopted under the Public Utility Regulatory Act, 1995, 
sec.sec.1.101, 2.056, 2.057, and 2.216, Texas Civil Statutes, Article 1446c-0, 
sec.sec.1.101, 2.056, 2.057, and 2.216. Section 1.101 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.2.056 
authorizes it to require utilities to provide transmission service, sec.2.057 
directs it to adopt rules relating to transmission service, and sec.2.216 
prohibits public utilities from engaging in anti-competitive conduct.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 22, 1996.
TRD-9612293
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Effective date: September 12,1996
Proposal publication date: July 12, 1996
For further information, please call: (512) 458-0100

Telephone
16 TAC sec.23.98
The Public Utility Commission of Texas adopts new sec.23.98, concerning 
Abbreviated Dialing Codes, with changes to the proposed text as published in the 
March 5, 1996 issue of the Texas Register (21 TexReg 1732). The rule defines the 
assigned uses of N11 dialing codes within the State of Texas. 
The primary public benefit anticipated as a result of enforcing the section will 
be uniform access to emergency services afforded by 911 and end user access to 
directory assistance through the 411 code. The public will also benefit through 
certified telecommunications utilities' (CTU's) use of 611 for repair service 
and 811 for business office contact, as well as the use of unassigned N11 codes 
for internal testing and maintenance functions. 
The rule is adopted pursuant to the following procedures. The proposed rule was 
published in the Texas Register on March 5, 1996 (21 TexReg 1732). Following 
publication of the proposed rule, the Commission conducted a public hearing on 
April 25, 1996 to discuss issues involving the proposed amendments. The public 
hearing was attended by Judith Shaw and Ronald Stutes representing the City of 
Dallas, Frank Fisher, Philip Campbell representing Lufkin-Conroe Telephone 
Exchange, Richard Muscat representing ACSEC, Joe Cosgrove representing SWB, and 
Michael Antash and T. Ray Taylor representing the City of Houston. The oral 
comments made by these parties are largely reflective of the written comments 
submitted by the City of Dallas, Frank Fisher, ACSEC and SWB. The written 
comments are summarized below.
Comments submitted in response to the March 5, 1996 Texas Register publication 
were received from Southwestern Bell Telephone Company (SWB), AT&T 
Communications (AT&T), the Town of Highland Park (Highland Park), Tarrant County 
911 District (Tarrant County), City of Duncanville (Duncanville), Texas 
Telephone Association (TTA), City of Dallas (Dallas), Advisory Commission on 
State Emergency Communications (ACSEC), City of University Park (University 
Park), Frank Fisher and Greater Harris County 9-1-1 (Harris County). The General 
Services Commission filed a letter stating that it would not file comments. 
Reply comments were filed by ACSEC, the Office of Public Utility Counsel (OPC) 
and Dallas. 
Harris and Tarrant Counties expressed concern that use of N11 dialing codes for 
any purpose other than the 911 emergency number, the 411 directory assistance 
number, and 811 for testing purposes would lead to confusion among their 
citizenry.
Harris County and Tarrant County stated that the use of a three-digit number for 
non-emergency requests for governmental services, could jeopardize the 
effectiveness of 911 service. These parties believe that confusion, misdials and 
delayed emergency assistance to individuals using 911 will result if additional 
N11 dialing codes are assigned. Harris and Tarrant Counties contend that the 
purpose of non-emergency numbers could be achieved equally well through some 
other numbering pattern such as gimmick telephone numbers and argue that this 
approach would avert any potential for public confusion. Tarrant County is 
particularly concerned with Dallas' proposal because its citizens share the 
Metroplex media market with Dallas. 
ACSEC opposed any assignment of the unassigned N11 dialing codes. ACSEC 
commented that any assignment of N11 dialing codes must not jeopardize 911 
emergency service in the State of Texas. In its reply comments, ACSEC supported 
the comments of Harris and Tarrant Counties and stated that any doubt about 
potential adverse consequences for N11 emergency service should be resolved in 
favor of protecting the integrity of 911 emergency service and not assigning the 
unassigned N11 dialing codes. 
Frank Fisher stated that the rule is an appropriate restriction on local 
exchange company (LEC) use of N11 dialing codes. Mr. Fisher also urged the 
commission not to terminate its examination of the public policy issues 
concerning telecommunication gateways to information services and the possible 
role of N11 dialing codes in fulfilling this purpose. 
Addressing whether governmental and non-emergency municipal services were an 
appropriate use of N11 dialing codes, SWB noted that while these services seem 
consistent with public interest considerations in assigning N11 codes, technical 
and cost recovery details would need to be worked out by all involved parties. 
TTA and OPC oppose assignment of N11 dialing codes on a temporary basis stating 
that interim use of an N11 code will most likely cause customer confusion. These 
parties stated that customer confusion may be extensive if a code is assigned 
for one purpose and then abandoned because of FCC actions. 
While University Park, Highland Park, Duncanville and Dallas acknowledge that 
N11 dialing codes are valuable resources that should be guarded and assigned 
with care, these parties oppose adoption of the rule because the rule does not 
assign an N11 number for non-emergency municipal purposes as requested by the 
City of Dallas petition. University Park, Highland Park, Duncanville and Dallas 
believe that assignment of an N11 number to access non-emergency municipal 
services is beneficial because three-digit numbers provide a simple, easy to 
remember number for accessing public services. Dallas stated that it was aware 
that action had not been finalized in the N11-related dockets and rulemakings 
pending at the FCC and that it was willing to assume the responsibility and 
ramifications that might follow any FCC action on this issue if the commission 
grants the city the use of an N11 dialing code for non-emergency municipal 
purposes. In its reply comments, Dallas stated it planned to undertake extensive 
education programs to prevent any confusion that may result if it is assigned an 
N11 code to provide non-emergency municipal services. 
The commission does not believe that it is appropriate to assign additional N11 
codes at this time. The commission is persuaded by the comments of the Harris 
County and Tarrant County emergency communication districts and is not convinced 
that the assignment of the unassigned N11 dialing codes will not adversely 
impact 911 emergency services. The commission also believes that there are 
unresolved issues as to the technical and economic feasibility of implementing 
plans such as that proposed in the City of Dallas petition. Furthermore, the 
commission observes that pending FCC proceedings could have a significant impact 
on abbreviated dialing issues and is sensitive to the importance of assigning 
N11 dialing codes in a manner consistent with the federal guidelines. 
Accordingly, the commission hesitates to assign N11 dialing codes for public 
uses prior to completion of the federal rulemaking and resolution of the pending 
FCC dockets which address N11 dialing code issues. 
AT&T commented that the rule appropriately reserves the use of N11 codes for 
non- commercial purposes that are in the public interest and provide the most 
wide-ranging benefit. While AT&T stated that the rule appropriately allows use 
of 911 to access emergency service and 411 to access local directory assistance, 
AT&T argued that as competition for local directory assistance develops, the use 
of 411 should not be exclusively reserved to the incumbent local directory 
assistance provider. Likewise, AT&T argued that to the extent that directory 
assistance call completion (DACC) is allowed through the use of 411, exclusive 
use of 411 for DACC must not exist only for use by the incumbent LEC. AT&T's 
comments imply that paragraph (a)(1) of the rule limits use of 411 to the 
incumbent local directory assistance provider and the use of 411 for DACC to the 
incumbent LEC. The commission disagrees and notes that the rule permits use of 
411 for directory assistance and/or DACC service by all CTUs. 
SWB stated that subparagraph (a)(1)(B) of the rule improperly attempts to alter 
the terms and conditions of SWB's tariff that authorizes SWB to provide 
intraLATA toll DACC. SWB argued that costs of the proposed rule outweigh the 
perceived benefits because the rule would require SWB to make investments to 
install technology that will allow local calling scope DACC while selectively 
blocking intraLATA DACC. SWB argued that the required investment will exceed the 
annual revenues generated from intraLATA toll DACC. SWB also stated that the 
commission is without authority to alter the terms and conditions of its tariff 
in light of SWB's election under Subtitle H of PURA 95 to be regulated under 
incentive regulation. SWB argues that limiting DACC to the local calling scope 
of the caller would be a change in terms and conditions of its tariff and such 
changes may only occur in a contested case. 
While the commission disagrees with SWB's argument that the commission does not 
have authority to require SWB to make tariff revisions upon adoption of a rule, 
the commission is persuaded that restricting DACC to call completion within the 
customer's local calling scope is not appropriate in light of the emerging 
competitive market. The commission amends subparagraph (a)(1)(B) to remove the 
limitation on DACC service to call completion within the customer's local 
calling scope. 
TTA contended that the rule is unnecessary as the NANP Administrator has 
established guidelines for assigning N11 codes. TTA stated that sec.23.98(c) of 
the rule which prohibits use of an N11 code except as directed by the PUC, 
appears to be in direct conflict with Section 23.98(e)(1) which recognizes that 
the NANP ultimately controls assignment and use of N11 codes. The commission 
disagrees. The FCC has jurisdiction over interstate communications while the 
commission maintains jurisdiction over intrastate communications. Absent FCC 
action on numbering plan issues, the commission may assign N11 dialing codes in 
a reasonable, non-discriminatory manner if their assignment and use can be 
discontinued on short notice. 
TTA also stated that sec.23.98(b) appears to be in conflict with the NANP. TTA 
argued that the NANP specifically allows 611 and 811 codes to be used for repair 
and business office purposes and that the rule is inconsistent with the NANP in 
this regard. TTA pointed out that when the N11 code issue first arose, local 
exchange competition was not allowed in Texas. SWB commented that while it no 
longer uses 611 or 811 for repair or business offices purposes, the use of 611 
and 811 provides convenient dialing access for many customers. SWB stated that 
this convenience outweighs any competitive impact, especially in today's 
environment when new entrants can use such codes and offer similar services. The 
commission recognizes that the regulatory environment in the telecommunications 
field has changed significantly since the passage of the Federal 
Telecommunications Act of 1996 and the Public Utility Regulatory Act of 1995. 
The ability of new entrants to enter the market and utilize their own switches 
in the provision of their services makes it possible for a new entrant to 
utilize N11 codes for repair and business office access. In order to achieve 
consistency with the NANP and let local exchange competitors, as well as 
incumbent local exchange companies, utilize the N11 codes on an equal basis, the 
commission amends subsection (a) of the proposed rule to allow CTUs to use 611 
for repair service and 811 for business office contact. The commission deletes 
paragraph (b)(4) and (b)(6) as published in the Texas Register. 
TTA sought clarification of the PUC definition of "telecommunications providers" 
as that term is used in sec.23.98(c) of the rule and suggested that certificate 
of authority (COA) and service provider certificate of authority (SPCOA) 
certificate holders be included in this definition. COA and SPCOA certificate 
holders are certificated telecommunications utilities within the State of Texas. 
The term "telecommunications providers" as defined in Section 3.002 of PURA 95 
includes within its meaning certificated telecommunications utilities. For 
clarification purposes, the rule has been amended to apply to "CTUs" rather than 
telecommunications providers. 
Addressing the designated use of abbreviated dialing codes, Tarrant County urged 
the commission to amend the rule to prohibit the assignment of N11 numbers for 
any purpose other than their internal use by telephone companies for the purpose 
of testing 911. The commission believes that the present use of 911 for 
emergency services access, 411 for directory assistance, 611 for repair service 
and 811 for business office contact is reasonable and in the public interest. No 
change has been made based on this comment. 
TTA and ACSEC sought clarification regarding the intent of subparagraph (c) of 
the proposed rule. TTA commented that subsection (c) of the rule was vague with 
respect to how a telecommunications provider requests assignment of an N11 code. 
TTA seeks to modify subsection (c) to reflect that a proceeding will be 
conducted by the PUC to fulfill the requirements of this section and determine 
the public interest in assignment of the code. ACSEC argued that subsection (c) 
was not intended to set up a contested case process whereby parties can request 
the assignment of the unassigned N11 dialing codes in subsection (b) even after 
the commission adopts the rule. 
AT&T agreed that all telecommunications providers should be allowed to request 
assignment or use of N11 codes, but noted that any request made to the 
Commission under subsection (c) must be subjected to statutory review with 
public comment and participation. 
The commission agrees with the comments of ACSEC regarding subsection (c) of the 
rule. The commission believes that any future requests for assignment of the 
unassigned N11 dialing codes will be addressed in a request for a rule revision. 
Tarrant County suggested deleting subsection (c) from the rule to prohibit the 
assignment of any N11 number for purposes other than testing. No change was made 
based on this comment. 
AT&T stated that it opposed subsection (d) of the rule to the extent that only 
the ILEC would be allowed to use N11 dialing codes for internal purposes. AT&T 
argued that new entrants should be entitled to use the same or comparable N11 
codes for internal purposes. In order to achieve consistency with the NANP and 
let local exchange competitors, as well as incumbent local exchange companies, 
utilize N11 codes on an equal basis, the commission amends subsection (d) of the 
rule to allow CTUs to use N11 dialing codes for internal business and testing 
purposes. 
ACSEC recommended that the commission clarify that telephone companies would be 
able to use unassigned N11 dialing codes for 911 purposes, such as for a 911 
system cutover. The commission agrees and makes the necessary clarification to 
subsection (d) of the rule. 
All comments, including those not specifically referenced herein, were fully 
considered by the Commission. 
The new section is adopted under Texas Civil Statutes, Article 1446-o, 
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; and sec.3.051, which provides that the public interest 
requires that new rule, policies, and principles be formulated and applied to 
protect the public interest and to provide equal opportunity to all 
telecommunications utilities in a competitive marketplace. 
Cross Index to Statutes: Texas Civil Statutes, Article 1446-o and sec.3.051(a)-
Public Utility Regulatory Act of 1995, 74th Legislative, Regular Session 1995.

sec.23.98.Abbreviated Dialing Codes.
(a) The following abbreviated dialing codes may be used in Texas: 
(1) 411 
(A) Directory Assistance 
(B) Directory Assistance Call Completion 
(2) 611 - Repair Service 
(3) 811 - Business Office 
(4) 911 - Emergency service 
(b) The following N11 dialing codes are not assigned for use in Texas: 
(1) 211 
(2) 311 
(3) 511 
(4) 711 
(c) A certified telecommunications utility (CTU) within the State of Texas may 
assign or use N11 dialing codes only as directed by the commission. 
(d) An unassigned N11 dialing code may be used by a CTU for internal business 
and testing purposes such as inspector ringback, line opener, dual tone 
multifrequency testing (DTMF Test), automatic number announcement, and 911 
system cutover. 
(e) The following limitations apply to a CTU's use of N11 dialing codes for 
internal business and testing purposes: 
(1) use may not interfere with the assignment of such numbers by the FCC and the 
NANP; and 
(2) use of an N11 dialing code must be discontinued on short notice if the 
number is reassigned on a statewide or nationwide basis.
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 22, 1996.
TRD-9612296
Paula Mueller
Secretary of the Commission
Public Utility Commission of Texas
Effective date: September 12, 1996
Proposal publication date: May 5, 1996
For further information, please call: (512) 458-0100

TITLE 19. EDUCATION
PART I. Texas Higher Education Coordinating Board
CHAPTER 21. Student Services
SUBCHAPTER A. General Provisions
19 TAC sec.21.5
The Texas Higher Education Coordinating Board adopts amendments to sec.21.5 
concerning General Provisions (Refund of Tuition and Fees at Public 
Community/Junior and Technical Colleges) without changes to the proposed text as 
published in the June 21, 1996, issue of the Texas Register (21TexReg 5654). 
These amendments were filed with the Secretary of State on February 16, 1996 and 
the publication date was to be February 27, 1996. However, the amendments were 
not published in that issue of the Texas Register as scheduled. The changes to 
rules established a refund policy for classes less than semester length and for 
continuing education courses. The changes were made to correct for unequal 
refund policies between drops and withdrawals and make changes the admissions 
officers believe will help in retaining students. The changes allow the schools 
to use state rules rather than federal refund policy rules. 
No comments were received regarding adoption of the amendment.
The amendment is adopted under Texas Education Code, sec.54.212 and sec.130.008 
which provides the Texas Higher Education Coordinating Board with the authority 
to adopt rules concerning General Provisions (Refund of Tuition and Fees at 
Public Community/Junior and Technical Colleges). 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 22, 1996. 
TRD-9612369
James McWhorter
Assistant Commissioner for Administration
Texas Higher Education Coordinating Board 
Effective date: September 13, 1996
Proposal publication date: June 21, 1996
For further information, please call: (512) 483-6160

TITLE 22. EXAMINING BOARDS
PART XXIX. Texas Board of Professional Land Surveying
CHAPTER 661. General Rules of Procedures and Practices
Applications, Examinations, and Licensing
22 TAC sec.661.45
The Texas Board of Professional Land Surveying adopts an amendment to sec.661.45 
concerning examinations. The amendment clearly defines what action might be 
taken if an applicant compromises the confidentiality of the examination. The 
adoption is with changes to the proposed text as published in the March 22, 
1996, issue of the Texas Register (21 TexReg 2355). 
No comments were received regarding adoption of the amendment. 
The amendment is adopted under Article 5282c, sec.9, V.T.C.S., which provides 
the Texas Board of Professional Land Surveying with the authority to make and 
enforce all reasonable and necessary rules, regulations and bylaws not 
inconsistent with the Texas Constitution, the laws of this state and this Act.

sec.661.45. Examinations. 
(a)-(e) (No change.) 
(f) The contents of all examination materials are confidential. Any registrant 
and/or applicant who takes an action with the intent to compromise the 
confidentiality of the examination is subject to disciplinary sanction, 
administrative penalties, or both. In assessing an appropriate penalty or 
sanction, the Board may: 
(1) impose the penalties and sanctions set out in Texas Revised Civil Statutes 
article 5282c; 
(2) disqualifying the applicant from taking future examinations for a period of 
three years 
(3) disqualifying the applicant from taking future examinations until the 
applicant successfully completes a Board-approved study of professional ethics. 
(4) disqualify the applicant from further consideration for certification or 
registration. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 26, 1996. 
TRD-9612434
Sandy Smith 
Executive Director
Texas Board of Professional Land Surveying
Effective date: September 16, 1996
Proposal publication date: March 22, 1996
For further information, please call: (512) 452-9427

22 TAC sec.661.50
The Texas Board of Professional Land Surveying adopts an amendment to sec.661.50 
concerning surveyor intern (SIT) experience requirements. The section clearly 
defines what requirements are necessary for the required two year SIT 
experience. The adoption is with changes to the proposed text as published in 
the April 16, 1996, issue of the Texas Register (21 TexReg 3308). 
A public hearing was held on March 25, 1996. Comments were received from several 
individuals representing groups of people. Most were concerned with the 
reference regarding part time. The agency agreed with the comments and all 
references to the word part time were deleted. 
The amendment is adopted under Article 5282c, sec.9, V.T.C.S.,which provides the 
Texas Board of Professional Land Surveying with the authority to make and 
enforce all reasonable and necessary rules, regulations and bylaws not 
inconsistent with the Texas Constitution, the laws of this state and this Act.

sec.661.50. Surveyor Intern (SIT) Experience Requirements. 
The following rules are to be used in evaluating the two years of experience 
(although some forms provided by the Board may allow an experience breakdown in 
hours, it is the intent of the Board that the required experience be obtained 
over a minimum time period of two calendar years) required for the Surveyor in 
Training, hereinafter referred to as Survey Intern (SI), under the direct 
supervision of a designated registered professional land surveyor (RPLS) 
acceptable to the Board: 
(1) All experience must be obtained under the direction and guidance of one or 
more registered professional land surveyors designated by the SI. The Board will 
be notified in writing of the name or names of the designated RPLS prior to the 
beginning of the internship. If during the internship any designated RPLS 
changes, the SI must notify the Board that a new RPLS has been designated by the 
SI and the date of change. 
(2) The TWO years of experience are to be obtained in the area of boundary 
surveying and boundary determination only. This MINIMUM of two years begins with 
the date of notification of the successful completion of the National Council of 
Examiners for Engineering and Surveying (NCEES) fundamentals of land surveying 
portion of the examination. Since only boundary related surveying experience 
will be accepted, the actual time to complete the internship may take longer 
than two calendar years. Adequate documentation of the conditions of employment 
as well as the experience gained therein will be required. Regardless of the 
total number of acceptable hours of experience gained in this manner, a minimum 
total time of 4,000 hours of experience extended over a minimum of two calendar 
years will still be required. 
(3)-(9) (No change.) 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612411
Sandy Smith 
Executive Director
Texas Board of Professional Land Surveying
Effective date: September 13, 1996
Proposal publication date: April 16, 1996
For further information, please call: (512) 452-9427

TITLE 25. HEALTH SERVICES
PART II. Texas Department of Mental Health and Mental Retardation
CHAPTER 404.Protection of Clients and Staff
SUBCHAPTER E.Rights of Persons Receiving Mental Health Services
25 TAC sec.sec.404.153, 404.166-404.169
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts 
amendments to sec.404.153 and new sec.sec.404.166-404.169, relating to rights of 
persons receiving mental health services. Section 404.153 and sec.404.166 would 
be adopted with changes. Existing sec.404.167 and sec.404.167 are 
contemporaneously repealed in this issue of the Texas Register. Sections 
404.167-404.169 were adopted without changes and will not be republished.
The amendment to sec.404.153 adds definitions for the following terms: "aversive 
conditioning," "behavior interventions," "informed consent," and "highly 
restrictive interventions." New sec.sec.404.166-404.167 include procedures which 
must be followed when the rights of individuals receiving mental health services 
are limited as part of a non-emergency and emergency behavioral interventions. 
New sec.sec.404.168-404.169 reiterate with minimal modification the reference 
and distribution sections which are proposed for repeal. 
On adoption, the definition of "highly restrictive intervention" was modified to 
replace the word "intrusion" with "distress." In sec.404.166(b), the word "when" 
was inserted to correct sentence structure. In sec.404.166(b)(3), the words "or 
other" are inserted to make language consistent throughout the rule. Subsections 
(d) and (e) have been reworded to be less ambiguous. Exhibit A is revised to 
replace the term "management/training" with "intervention" and to correct a 
typographical error. 
A public hearing was held in the auditorium of TDMHMR Central Office, 909 West 
45th Street, Austin, Texas, on July 9, 1996. Public testimony was given by Mary 
Dees, a consumer advocate, Austin, and the Texas Hospital Association, Austin. 
Written comments were received from Advocacy, Inc., Austin; Devereux Texas 
Treatment Network, League City; Tarrant County MHMR Services, Fort Worth; 
Mission Vista Hospital, San Antonio; and the Texas Hospital Association, Austin.
A commenter questioned the placement of the provisions in the rights rule and 
expressed concern that consumers might not understand if presented with the 
information at the time of admission. 
The department responds that as the provisions are implemented, and as surveys 
are conducted as part of the Medicare process, the complaint process, the QSO 
process, and others, it will become apparent if there need to be further 
adjustments in the policy, its placement, and how it is presented to consumers.
A commenter noted that psychologists are not mentioned and this represents a 
critical oversight since psychologists, not physicians, write all behavior 
therapy programs. The commenter called for psychologist representation in the 
review of behavior therapy programs by the Ethics Committee. 
The department responds that the focus of the rules is intended to address 
conditions under which limitations on rights can occur. Under law only a 
physician can limit a patient's rights. Representation on the Ethics Committee 
will involve psychologist representation as appropriate. 
A commenter described the process used at the commenter's facility for approval 
of behavior therapy programs and questioned if involving a statewide Ethics 
Committee was a duplication of effort. The commenter expressed concern that such 
a committee would slow things down to the point of endangering the health and 
welfare of clients who are in desperate need of services (noted by the fact that 
they need aversive procedures). 
The department responds that TDMHMR, as the state mental health authority, has 
an overarching interest in treatment for people with mental illness. The 
committee's review will not demonstrably slow the approval process. 
A commenter questioned if physicians will have adequate time to review programs 
monthly for clients who may or may not be on psychoactive medication, or are all 
clients who are receiving behavior modification also obtaining psychoactive 
medication automatically. 
The department responds that physician involvement should occur without regard 
to whether the patient is receiving psychoactive medication. By law, only a 
physician can limit an individual's rights for clinically justified reasons. The 
physician is the person ultimately responsible for overseeing the patient's full 
plan of care. The inclusion of reference to consent to medication in Exhibit A 
was confusing and in error and has been deleted. 
Regarding the definition of "informed consent" in sec.404.153, a commenter 
expressed concern that the definition is so broadly drafted that it includes 
even those gestures or words that are not reasonably interpreted to be a 
withdrawal, even though the client is trying to indicate the desire to withdraw. 
The commenter recommended that the subsection be revised to provide that the 
client's desire to withdraw be communicated clearly to the health care 
professional. 
The department responds that communication can take many forms. It is fair to 
accept other types of communication of withdrawal, even those that are not 
perfectly clear, given that not all individuals share the same communication 
skills. 
A commenter noted that the term "highly restrictive behavior intervention" as 
defined in sec.404.153 is too vague to allow the reader to understand what is 
meant. The commenter called for a clearer definition with examples in order to 
understand the proposed rules well enough to comment on them. The department 
responds that the definition of the term is sufficiently clear. 
With regard to the requirement for patient consent contained in sec.404.166, a 
commenter suggested that consent by the patient is equivalent to decisions 
regarding the type of treatment being determined by the patient rather than the 
physician/mental health professional. The commenter expressed concern that 
patients needing treatment are not able to determine which intervention is most 
therapeutic for them. 
The department responds that including the patient in decisionmaking processes 
is both therapeutic and respectful of the patient's interest in and knowledge of 
his or her own health. Only a physician is authorized by law to limit certain 
rights of patients, and then only on a time-limited basis with appropriate 
clinical justification. 
Concerning sec.404.166(b)(3), a commenter suggested that if the program is 
discontinued, allowing three work days for the team to meet to modify the 
program seems far too long. 
The department responds that three work days is the outside limit and there is 
nothing to prevent a team from meeting sooner if clinically indicated.
The new and amended sections are adopted under sec.532.015, Texas Health and 
Safety Code, which provides the Texas Board of Mental Health and Mental 
Retardation with rulemaking powers; and under sec.577.010, Texas Health and 
Safety Code, which authorizes the board to adopt rules and standards necessary 
to ensure the proper care and treatment of patients in psychiatric hospitals.  

sec.404.153.Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise:
Aversive conditioning-A highly restrictive behavior intervention designed to 
eliminate undesirable behavior patterns through learned associations with 
unpleasant stimuli or tasks.
Behavior interventions-Interventions to increase socially adaptive behavior and 
to modify maladaptive or problem behaviors and replace them with behaviors and 
skills that are adaptive and socially productive. Also referred to as "behavior 
management," "behavior training," "behavior therapy," and related terms. 
Ethics Committee-A Texas Board of MHMR-approved body composed of clinicians, 
consumers, family members, and outside experts convened for the purpose of 
reviewing and resolving issues surrounding clinical care and treatment.
Informed consent-The knowing written consent of an individual or the 
individual's legally authorized representative, so situated as to be able to 
exercise free power of choice without undue inducement or any element of force, 
fraud, deceit, duress, or other form of constraint or coercion. The basic 
elements of information necessary for informed consent include all of the 
following presented in language or format easily understood by the individual: 
(A) a thorough explanation of the procedures to be followed and their purposes, 
including identification of any experimental procedures; 
(B) a description of any attendant discomforts and reasonably expected risks; 
(C) a description of any reasonably expected benefits; 
(D) a disclosure of any appropriate alternative procedures as well as their 
reasonably expected risks and benefits, including those that might result if no 
procedure is utilized; 
(E) an offer to answer any questions about the procedures; and 
(F) an instruction that the individual can withdraw consent and stop 
participating in the program or activity at any time without prejudice to the 
individual. Withdrawal of consent may be in any form, including noncompliance, 
active resistance, or a verbal or other expression of unwillingness to continue 
participating in any aspect of the program.
Highly restrictive interventions-Any intervention (e.g., aversive conditioning) 
that poses potentially increased physical, emotional, or psychological distress 
to the individual upon whom it is imposed.

sec.404.166.Restriction of Rights as Part of Non-Emergency Behavioral 
Interventions. 
(a) Patients rights are guaranteed under the provisions of this subchapter. 
Although under special circumstances set out in this subchapter, certain rights 
can be limited without informed consent, it is usually mandatory and always 
preferable to obtain informed consent when limitation of rights is contemplated. 
(b) Except as otherwise noted in this subchapter, written informed consent must 
be obtained when a right guaranteed by law or department rule is limited. 
(1) The patient or legally authorized representative gives informed consent. 
Written informed consent is obtained from the: 
(A) adult individual, if legally competent and deemed to be capable of 
understanding the required elements which constitute informed consent; 
(B) guardian of the person of the adult individual if there has been a 
determination of mental incompetence by a court; or 
(C) parent or managing conservator of a minor under the age of 16. 
(2) Informed consent must be documented. Written informed consent is evidenced 
by a completed copy of the department's form for "Consent to Behavior 
Intervention," referenced as Exhibit A. Psychiatric hospitals and CSUs may use a 
different form provided that it includes all of the information included on the 
"Consent to Behavior Intervention" form. 
(3) Informed consent may be withdrawn at any time. If informed consent is 
withdrawn, the program must be discontinued immediately, and the treatment team 
must meet within three working days to modify the individual's treatment plan. 
Withdrawal of consent may be in any form including, but not limited to, passive 
noncompliance, active resistance, or a verbal or other expression of 
unwillingness to continue participating in any aspect of the program. 
(4) The limitation of the right or rights must be reviewed by the physician as 
appropriate but must occur at least on a monthly basis, unless otherwise 
specified. 
(5) Informed consent must be renewed. Written informed consent must be reviewed 
and renewed every six months. 
(c) Any limitation on rights is included as a part of the individual's 
comprehensive treatment plan. The treatment plan also includes a program that 
emphasizes positive approaches and uses positive behavioral interventions. 
(d) It is prohibited for limitation on rights to be used: 
(1) in retribution, as punishment, or as a means of controlling an individual by 
eliciting fear; 
(2) for the convenience of staff or as a consequence of insufficient staff; 
(3) as a substitute for a comprehensive treatment plan; or 
(4) in the absence of positive behavioral interventions. 
(e) Any limitation on rights will not: 
(1) deprive an individual of a basic human need (e.g., a bed at night, food, 
personal clothing, etc.) or the essentials of a normal hospital environment; or 
(2) alter the texture of a food item or use techniques that could result in 
failure to provide a nutritiously adequate diet. Foods used as edible 
reinforcers within a behavior intervention program are evaluated by the 
treatment team, including a qualified dietitian and physician, with 
consideration of the individual's nutritional status, needs, and preferences. 
(f) Additional approval required. Written informed consent must be obtained for 
behavior intervention programs using highly restrictive interventions. 
Additionally, the use of any procedures or programs employing aversive 
techniques, such as, but not limited to, faradic stimulation, require the 
unanimous documented written approval of the medical director of the facility, 
the CEO, and the Ethics Committee.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612422
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: October 1, 1996
Proposal publication date: June 18, 1996
For further information, please call: (512) 206-4516

25 TAC sec.sec.404.166-404.167
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of sec.sec.404.166-404.167, relating to rights of persons receiving 
mental health services. The repeal accommodates the contemporaneous adoption of 
new sec.sec.404.166-404.167 in this issue of the 
Texas Register. 
The repeal enables the addition of new sections to Chapter 404, Subchapter E, 
and the updating of information contained in the repealed sections. 
A public hearing was held in the auditorium of TDMHMR Central Office, 909 West 
45th Street, Austin, Texas, on July 11, 1996. There was no public comment 
concerning the proposed repeal. 
The repeals are adopted under sec.532.015, Texas Health and Safety Code, which 
provides the Texas Board of Mental Health and Mental Retardation with rulemaking 
powers; and under sec.577.010, Texas Health and Safety Code, which authorizes 
the board to adopt rules and standards necessary to ensure the proper care and 
treatment of patients in psychiatric hospitals.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612414
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: October 1, 1996
Proposal publication date: June 18, 1996
For further information, please call: (512) 206-4516

CHAPTER 405.Client (Patient) Care
SUBCHAPTER G.Behavior Therapy Programs
25 TAC sec.sec.405.141-405.155
The Texas Department of Mental Health and Mental Retardation (TDMHMR) adopts the 
repeal of sec.sec.405.141-405.155, concerning behavior therapy programs. The 
sections are replaced by new sections in Chapter 404, Subchapter E of this 
title, relating to rights of persons receiving mental health services. The new 
sections are adopted in this issue of the Texas Register. 
The subchapter is adopted to enable the adoption of the new sections which set 
forth patient protection procedures when rights of individuals are limited and 
when highly restrictive procedures, including aversive procedures, are used. 
A public hearing was held in the auditorium of TDMHMR Central Office, 909 West 
45th Street, Austin, Texas, on July 11, 1996. There was no public comment 
concerning the proposed repeal. 
The repeals are adopted under the Texas Health and Safety Code, Title 7, 
sec.532.015, which provides the Texas Board of Mental Health and Mental 
Retardation with rulemaking powers. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612417
Ann Utley
Chair, Texas MHMR Board
Texas Department of Mental Health and Mental Retardation
Effective date: October 1, 1996
Proposal publication date: June 18, 1996
For further information, please call: (512) 206-4516

TITLE 28. INSURANCE
PART I. Texas Department of Insurance
CHAPTER 7.Corporate and Financial Regulation
SUBCHAPTER F.Reinsurance
28 TAC sec.7.611
The Reinsurance Association of America filed a petition with the Texas 
Department of Insurance requesting the adoption of the proposed amendment to 
sec.7.611(10), concerning Indemnity Reinsurance Agreements-Required Provisions. 
On June 21, 1996, the proposed amendment was published in its corrected form in 
the Texas Register (21 TexReg 5680). The Texas Department of Insurance adopts 
the amendment to sec.7.611(10) as published in the June 21, 1996, issue of the 
Texas Register (21 TexReg 5680) without changes. 
The amendment to sec.7.611(10) is necessary because facultative reinsurance 
functions differently from treaty reinsurance in the marketplace. Generally, 
except for a master-agreement, no other agreement is executed by both parties in 
facultative reinsurance and the reinsurance is reflected in a facultative 
certificate executed only by the reinsurer or its authorized agent. This 
procedure facilitates the reinsuring of certain risks and is the custom in the 
industry. The existing sec.7.611(10) requires that indemnity reinsurance 
agreements include a provision whereby any change or modification to the 
agreement be made by amendment to the agreement and signed by the parties. The 
amendment to sec.7.611(10) will except from this provision any facultative 
certificates duly executed by a property and casualty reinsurer or its duly 
appointed agent.
One commenter supported adoption of the proposed amendment as published in its 
corrected form in the June 21, 1996 issue of the Texas Register (21 TexReg 
5680), stating that the amendment would bring the rule in line with the actual 
practice of cedants and reinsurers in the facultative reinsurance market. The 
commenter further stated that the amendment would prevent inadvertent violations 
of the existing sec.7.611(10), by parties acting in good faith and complying 
with the usual and customary practices of the marketplace. Another commenter 
objected to the amendment stating that the proposed amendment appears to 
increase the regulatory requirements on small to middle sized domestic insurers. 
Long, Burner, Parks & Sealy commented in support of the amendment on behalf of 
the Reinsurance Association of America. Parker, Parks & Rosenthal, L.L.P. 
commented against the amendment on behalf of Insurance Alliance of America. 
The amendments are adopted under the authority of the Articles 1.03A and 5.75-
1(m) of the Insurance Code and sec.2.001.021 of the Government Code. Article 
1.03A authorizes the commissioner to adopt the rules and regulations regarding 
the conduct and execution of the duties and functions of the department only as 
authorized by statute for general and uniform application. Article 5.75-1(m) 
authorizes the commissioner to adopt necessary and reasonable rules under 
Article 5.75-1 to protect the public interest. Section 2001.021 of the 
Government Code authorizes an interested person to petition a state agency to 
request the adoption of a rule and authorizes a state agency to prescribe the 
form for a petition filed under this section and the procedure for its 
submission, consideration, and disposition. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's authority to adopt.
Issued in Austin, Texas, on August 26, 1996.
TRD-9612448
Caroline Scott
General Counsel and Chief Clerk
Texas Department of Insurance
Effective date: September 16, 1996
Proposal publication date: June 21, 1996
For further information, please call: (512) 463-6327

TITLE 30. ENVIRONMENTAL QUALITY
PART I. Texas Natural Resource Conservation Commission
CHAPTER 11.Contracts
30 TAC sec.11.1
The commission adopts new sec.11.1, concerning Historically Underutilized 
Business Program, without changes to the proposed text as published in the May 
28, 1996, issue of the Texas Register (21 TexReg 4670) and will not be 
republished.
This new section adopts by reference the rules of the Texas General Services 
Commission in 1 TAC sec.sec.111.11-111.23 (relating to Historically 
Underutilized Business Certification Program), and establishes guidelines for 
managing the commission's contracting goals for Historically Underutilized 
Businessess. This rulemaking is required by the General Appropriations Act 
(House Bill 1, 74th Legislature, 1995). 
The commission prepared a takings impact assessment of this rule and determined 
that the proposal will not create any burden on private real property rights. A 
public hearing was held in Austin on July 1, 1996. The comment period closed 
July 1, 1996. No written or oral testimony was received on the proposed rule.
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 authorizes the commission to adopt any rules 
necessary to carry out its powers and duties under the Water Code and other laws 
of Texas and to establish and approve all general policy of the commission. The 
adoption is also consistent with the authority granted to the commission to 
enter into contracts under Texas Water Code, sec.5.229.  
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 August 12, 1996.
TRD-9612339
Kevin McCalla
Director, Legal Counsel
Texas Natural Resource Conservation Commission
Effective date: September 13, 1996
Proposal publication date: May 28, 1996
For further information, please call: (512) 239-1966

CHAPTER 111.Control of Air Pollution from Visible Emissions
and Particulate Matter
The commission adopts the repeal of sec.sec.111.101, 111.103, 111.105, and 
111.107, concerning outdoor burning, and new sec.sec.111.201, 111.203, 111.205, 
111.207, 111.209, 111.211, 111.213, 111.215, 111.219, and 111.221, concerning 
outdoor burning. The new sections are added under Subchapter B, Outdoor Burning. 
All existing sections in Chapter 111 become part of Subchapter A, Visible 
Emissions and Particulate Matter. 
Adopted with changes as published in the May 21, 1996, issue of the Texas 
Register (21 TexReg 4395) are sec.sec.111.201, 111.203, 111.205, 111.209, 
111.211, 111.215, and 111.219. 
Adopted without changes are sec.sec.111.207, 111.213, and 111.221. These 
sections will not be republished. 
The new sections replace the existing rules in order to remove inconsistencies 
and ambiguities and interject realistic flexibility. These new sections are 
structured to more adequately relate to current outdoor burning needs. 
Section 111.201, relating to general prohibition, amends the previous 
prohibition by defining the term "executive director" to include staff 
representatives, and by excluding the storage of solid fossil fuels from the 
spontaneous combustion prohibition. 
Section 111.203, relating to definitions, is a new addition to the rule which 
clarifies terms/concepts previously ambiguous and undefined in the existing 
rule, and introduces some new concepts. 
Section 111.205, relating to exception for fire training, streamlines the 
notification procedures by eliminating some of the repetitive, nonessential 
notification requirements which were burdensome to both the fire training 
managers and to the commission regional office staff. 
Section 111.207, relating to exception for fires used for recreation, ceremony, 
cooking, and warmth, is functionally the same as the existing rule. 
Section 111.209, relating to exception for disposal fires, differentiates 
between fires used solely for the disposal of wastes and other forms of outdoor 
burning and regulates them in relation to practical alternatives. In regard to 
domestic waste burning, the rule clarifies allowable burning both in terms of 
waste collection criteria and types of wastes. In burns for landclearing, 
maintenance along water canals, and right-of-way maintenance, this section now 
addresses off-site impacts. New additions specifically address the regulation of 
crop residue burning and brush burning by counties and municipalities for 
detrimental public health and safety considerations. 
Section 111.211, relating to exception for prescribed burn, recognizes the use 
of fire as a positive forest, range, and wildland/wildlife management tool under 
certain circumstances where fire is the most practical alternative. In the case 
of the burning of coastal salt-marsh, the notification criteria and procedures 
have been streamlined. 
Section 111.213, relating to hydrocarbon burning for pipeline breaks and spills, 
now contains a sampling and monitoring requirement, upon executive director 
determination. 
Section 111.215, relating to executive director approval of otherwise prohibited 
outdoor burning, now recognizes that authorization is contingent upon not 
causing a condition of nuisance or traffic hazard. 
Section 111.219, relating to general requirements for allowable outdoor burning, 
now clarifies points which have previously been unclear or ill-defined. Section 
111.219(2) is modified to recognize local government burning ordinance authority 
stipulated in the Texas Clean Air Act (TCAA). Section 111.219(3) has been 
changed to have a more realistic emphasis on avoidance of potential off-site 
impacts to sensitive receptor(s). Section 111.219(5) adds flexibility to the 
previously inflexible 300-foot prohibition by setting wind direction and 
distance from sensitive receptor(s) as the regulatory criteria for extent of the 
burn. Section 111.219(6) has as its principal change the extension of the 
allowable burn hours to one hour after sunrise to one hour before sunset. This 
allows more flexibility while at the same time insuring adherence to the 
appropriate meteorological conditions for proper dispersion. Section 111.219(7) 
is modified to provide more specificity to prohibited burn fuels. 
Section 111.221, relating to responsibility for consequences of outdoor burning, 
has not been changed from the existing rule. 
The commission has prepared a Takings Impact Assessment for these rules pursuant 
to Texas Government Code Annotated Section 2007.043. The following is a summary 
of that assessment. The revision to the existing Outdoor Burning Rules in 
sec.sec.111.101-111.107 of Chapter 111 is undertaken to clarify intent/procedure 
and remove ambiguity, while interjecting realistic flexibility. In addition to 
the protection of air quality for public health purposes, the rules also 
function to protect the public from nuisance and traffic hazard conditions. The 
regulatory requirements contained within the rules are sufficient to minimize 
the risk of harm to individuals and property from smoke/odor, or threat of 
traffic accidents, without imposing a burden upon the property owner or 
inhibiting land use. 
A public hearing was held June 18, 1996, at the Texas Natural Resource 
Conservation Commission complex in Austin. The comment period closed on June 21, 
1996. 
Comments were received from the Amoco Corporation (Amoco), City of Dallas, City 
of Kerrville, Dallas/Fort Worth (DFW) International Airport, Exxon Company, 
U.S.A., Harris County Pollution Control Department, Houston Lighting and Power 
Company (HL&P), Houston Sierra Club's Forestry Subcommittee, King Ranch, 
Properties of the Southwest, Rio Grande Valley Sugar Growers, Inc, Texas 
Eastman, Texas Utilities Services, Inc., United States Department of 
Agriculture's Natural Resources Conservation Service, the United States 
Environmental Protection Agency (EPA), and Rob & Bessie Welder Wildlife 
Foundation. 
GENERAL PROHIBITION. The Rio Grande Valley Sugar Growers, Inc. questioned 
whether the prohibition on burning "except as provided by this subchapter" 
limits their authority to burn as prescribed in commission Order No. 94-35. 
This rule is not intended to change authority previously granted by orders of 
the commission. However, to provide additional clarity, this section is amended 
to read: "...as provided by this subchapter or by orders or permits of the 
commission." 
Texas Utilities Services, Inc. commented that the intent of the proposed rule 
should be clarified to parallel statements made in the preamble to the 1989 
revisions which excluded the storage of coal from this prohibition. Their 
suggested wording is the addition of the sentence, "This prohibition does not 
apply to the storage of solid fossil fuels." 
For consistency with the intent historically expressed in the previous versions 
of these rules, this section is amended to read: "...igniting spontaneously, 
with the exception of the storage of solid fossil fuels, shall not be 
allowed...." sec.DEFINITIONS. City of Dallas suggested that the definition of 
"extinguished" be changed to: "...flames, glowing coals, or smoke." 
The commission has considered the suggested wording change for the term 
"extinguished," and finds it to have merit as glowing coals, while not producing 
smoke themselves, may contribute to further combustion of adjacent materials 
under certain circumstances. Accordingly, the definition has been amended.
City of Dallas suggested that "landclearing operation" be defined as "The 
uprooting, cutting, or cleaning...." 
The commission concurs with the City of Dallas' recommended addition of the term 
"cutting" to the definition of "landclearing operation". However, commission 
believes retention of the term "clearing" is preferential to use of the term 
"cleaning," in that "cleaning of vegetation" can have multiple interpretations 
which may lead to lack of clarity. The definition is amended accordingly. 
Harris County Pollution Control Department suggested that the definition of 
"practical alternative" either contain examples, or that the commission publish 
a policy document listing practical alternatives. 
The commission considered the inclusion of examples in the definition of 
"practical alternative," but found that because there are a myriad of potential 
alternatives, such a listing could not be all inclusive. The "practical 
alternative" analysis will always require an evaluation of the case-specific 
circumstances, utilizing input from commission field staff and the party 
responsible for the burn request. Accordingly, the commission has not made the 
suggested change.
Houston Sierra Club's Forestry Subcommittee suggested that the definition of 
"structure containing sensitive receptor(s)" define the term "sensitive live 
vegetation," contained therein. 
In response to the commenter, the definition of "sensitive live vegetation" is 
amended to incorporate the critical consideration of the vegetation's potential 
to be damaged by smoke and heat. The term is meant to include such things as 
nursery production, mushroom cultivation, pharmaceutical plant production, or 
laboratory experiments involving plants. This explanation is not meant to be a 
definitive list, and contains flexibility to address case-specific situations. 
HL&P stated that because of the lack of definition for the term "outdoor 
burning" and/or additional clarification regarding the definition of "practical 
alternative," it is unclear how 30 TAC Chapter 111 authorizes trench burning. 
HL&P suggested "outdoor burning" be defined to specifically exclude trench 
burners. 
The use of trench burners is a practical alternative under certain 
circumstances. Such use is not covered in this rule, but instead is addressed 
within Standard Exemption Number 97, found in 30 TAC Chapter 116. Accordingly, 
the commission has not made any changes. As to the definition for "outdoor 
burning," this rule incorporates the definition already contained in sec.101.1 
of the commission's General Rules. 
EXCEPTION FOR FIRE TRAINING. Amoco suggested the retention of the existing 
language previously found in sec.111.103(b)(1) with a return to the 10-day 
notification for sec.111.205(a). They suggest sec.111.205(c) be changed to have 
telephone notification 24 hours in advance of the training session as opposed to 
one week. 
In reference to sec.111.205(c), DFW International Airport suggested that no more 
than one telephone notice be required for multiple training sessions within any 
one-week period, provided the initial notice includes all such sessions. 
Exxon Company, U.S.A. commented that increasing the advance notice from 10 days 
to 15 days in sec.111.205(a) does not seem to fulfill the intent of streamlining 
the rule, and suggested the notification time be reduced to a minimum time 
sufficient for commission needs. Also recommended for sec.111.205(c) was annual 
written notification of intent for dedicated training facilities, but no notice 
of individual training events occurring less frequently than once per week. 
However, if it is felt notification for individual events is necessary, Exxon 
recommends telephone notification within one week after the training occurs. 
Texas Eastman suggested that the notification one week in advance of training 
events should be allowed to be either in writing or by telephone. 
The purpose of the notification procedure in sec.111.205(a) is to allow the 
local air pollution control agency or the commission regional office staff 
adequate time to evaluate a proposed burn site when necessary, and to be aware 
of the timing of the burn should they receive inquiries from the public which 
could result in costly and often needless investigations. Regional staff had 
requested a change to fifteen working days in order to have time for site 
investigations. The regulated community feels this time extension is adverse to 
the espoused goal of streamlining. In an effort to accommodate both interests, 
the rule is revised to read, "...not received within 10 working days after...."
In the interest of streamlining the notification procedure, staff concurs that a 
24-hour advanced telephone/facsimile notice is adequate, and also sees the 
utility of allowing multiple training sessions to be reported in an initial 
notification if the sessions are to occur within the same seven-day period. The 
rule is amended to read, "...with a telephone or electronic facsimile notice 24 
hours in advance of any scheduled training session. No more than one such 
notification is required for multiple training sessions scheduled within any 
one-week period, provided the initial telephone/facsimile notice includes all 
such sessions. Both...." 
Texas Eastman recommended that in order to streamline the notification process, 
the frequency cutoff should be increased to monthly for both sec.111.205(b) and 
sec.111.205(c). 
Texas Utilities Services, Inc. suggested that there be only two categories for 
fire-fighting training: (1) facilities that have dedicated training facilities 
that conduct training at least once a week; and (2) other facilities. The "other 
facility" category would require annual written notice of intent and provision 
for a telephone or facsimile notice one week prior to training. City of Dallas 
requested that the frequency in sec.111.205(b) be changed from week to month. 
Exxon suggested that the frequency factor in sec.111.205(b) and sec.111.205(c) 
be clarified in intent to be training which averages once per week during the 
period of time indicated in the annual written notification. 
The purpose in differentiating sec.111.205(b) and sec.111.205(c) was to relieve 
the high-frequency facilities from having to make what amounts to, in many 
cases, daily calls to the regional offices, while retaining a notification 
procedure for the less than routine training situations in order to avert 
needless investigations. Changing the frequency criteria from weekly to monthly 
would undermine the function of the notification process. However, staff 
realizes that the weekly frequency could lead one to interpret that if a weekly 
training session is missed the facility could not qualify under sec.111.205(b). 
Therefore, that section is amended to read: "...fire-fighting training, at which 
training routinely will be conducted...." The intent is to allow flexibility for 
periods where training would not be conducted such as during holiday 
observances. 
The utilization of facsimile machines for notification in lieu of telephone 
notification is felt to be an improvement to the process, and sec.111.205(c) is 
amended to read: "...with a telephone or electronic facsimile notice...." 
Houston Sierra Club's Forestry Subcommittee suggested that there be a 
requirement under sec.111.205(a) for local air pollution control agencies to 
keep notification records. 
The commission does not wish to create any additional unfunded mandates on local 
governments. 
EPA recommended that all burn requests in sec.111.205(a) for training be 
submitted either via certified mail or personal delivery and that all deadlines 
be initiated from that submittal. 
The commission found this comment to have the potential to be unduly burdensome 
to those who live in more remote or rural areas where access to a post office or 
regional office could be difficult. 
DFW International Airport requested that the nonapplicability of the 
requirements of sec.111.219 be more explicit in relation to sec.111.205. They 
suggested that the first paragraph of sec.111.219 conclude as follows: "...when 
specified in any section of this subchapter." 
The commission concurs, and for clarity sec.111.219 is so amended. 
Amoco asserts that the language in sec.111.205(b) and sec.111.205(c) is 
ambiguous and can be interpreted to disqualify dedicated company firefighter 
training areas located in the boundaries of a plant that has another core 
business. 
The commission considered the concern expressed about the use of the term 
"facilities" in the phrase "Facilities dedicated solely for fire-fighting 
training..." possibly being construed to preclude qualification for 
sec.sec.111.205(b) or (c) if such facility is within the boundaries of a plant 
where the core business of the plant was other than fire-fighter training. For 
the purposes of this rule, the facility of reference is only the actual emission 
area of the fire-fighter training. The intent is not to prevent training inside 
a plant with a core business other than fire-fighting training. 
Amoco prefers to notify local air pollution control or health agencies as 
opposed to having to notify the commission regional offices. 
As both the local air pollution control agencies and the commission regional 
offices could receive inquiries/complaints from the public, the notification 
procedure should apply to both. 
EXCEPTION FOR DISPOSAL FIRES. Harris County Pollution Control Department 
recommended that sec.111.209(1) be revised to read: "...when collection of 
domestic waste is not provided or authorized by the local governmental entity or 
local community association having jurisdiction, or when waste collection is not 
readily available through a private collection service in counties having a 
population greater than 1,000,000...." It also was suggested that the definition 
of domestic waste change so that the seasonal burning of leaves be prohibited by 
this exception. Should this prohibition not be incorporated, it was further 
recommended that a rule be drafted permitting commissioners courts of counties 
having a population greater than 1,000,000 to adopt regulations controlling the 
burning of domestic waste within unincorporated areas of that county. 
The suggestion that domestic waste burning should not be allowed when collection 
is authorized by a local community association, or provided by a private 
collection service (absent governmental authorization) poses a problem with 
accountability. Unlike a governmental entity, a community association has no 
legal authority to police/enforce such collection, and it would be difficult for 
the commission to define or determine the meaning of "readily available" 
regarding private collection. Private collection without governmental 
authorization has led, in some situations, to pricing abuses without any 
recourse available to the public. As to county commissioners courts adopting 
regulations for such collection, sec.363.113 of the Comprehensive Municipal 
Solid Waste Management, Resource Recovery, and Conservation Act already requires 
"Each county with a population of more than 30,000...shall review the provision 
of solid waste management services in its jurisdiction and shall assure that 
those services are provided to all persons in its jurisdiction by a public 
agency or private person." This rule is meant to address the needs of the entire 
state, but in no way restricts the right of governmental entities to exercise 
local control. Accordingly, the commission has not changed this rule. 
In regard to sec.111.209(2), Harris County Pollution Control Department 
suggested that the rule is not restrictive enough in that it appears to allow 
the unrestricted burning of animal carcasses by veterinary clinics, and 
therefore, Harris County recommended retention of the existing wording in 
sec.111.103(b)(4). The commission agrees and the section is amended to read, 
"Diseased animal carcass burning when burning is the most effective means of 
controlling the spread of disease." 
Properties of the Southwest submitted that daily notification of individual 
burns under sec.111.209(3) would be burdensome, and recommend that only one 
notice be required for a project entailing multiple days of burning. 
The commission concurs that one notice can suffice for a project entailing 
multiple days of burning, as opposed to daily notification, if the initial 
notice is sufficiently detailed to delineate the scope of the burn, and if the 
scope does not constitute circumvention of the rule for a continual burning 
situation. Accordingly, sec.111.209(3) has been amended. 
Texas Utilities Services, Inc. suggested that sec.111.209(3) be amended to read: 
"On-site burning of trees, brush, and other plant growth for right-of-way 
maintenance, landclearing, and controlled burning along water discharge canals 
when no practical alternative...." 
The commission agrees that sec.111.209(3) should be amended to take into 
consideration maintenance of water discharge canals where no practical 
alternative exists. However, as similar conditions also exist along canals other 
than discharge canals, for example irrigation canals, the wording is made more 
generic to read: "On-site burning of trees, brush, and other plant growth for 
right-of-way maintenance, landclearing operations, and maintenance along water 
canals when no practical alternative...." 
HL&P pointed out that in order to determine if burning is allowed under 
sec.111.209(3), one must determine whether or not a practical alternative to 
outdoor burning exists. 
The commission's intent in sec.111.209(3) is to foster an analysis of practical 
alternatives prior to burning. 
City of Dallas commented that they felt the concept of "rural area" in the 
existing sec.111.103(b)(5) be retained, and requested clarification of the 
concept of: "negatively affected by." 
Texas Eastman commented that the term "negatively affected" in sec.111.209(3) 
and sec.111.209(4) is vague and can be misinterpreted to allow sensitive 
receptors far more protection than "avoidance of potential off-site 
environmental impacts." It suggested the term "negatively affected" be defined 
in terms of nuisance, traffic hazard, or violation of any air quality standard. 
The intent of using the term "negatively affected" in sec.111.209(3) and 
sec.111.209(4) is to connote nuisance, traffic hazard, or violation of an air 
quality standard. 
The idea of retaining the concept of "rural area" in sec.111.209(3) was 
contemplated in detail by the commission. It is almost impossible to 
consistently define "rural" in a manner that is applicable throughout the state, 
in that there are situations within corporate limits which have rural 
characteristics and situations outside municipalities with urban 
characteristics. There is no bright line distinction. Instead, it was found to 
be more appropriate to address potential impacts of outdoor burning as opposed 
to any arbitrary, and also often mobile, boundaries. Therefore, the concept of 
sensitive receptor impacts was instituted. 
Houston Sierra Club's Forestry Subcommittee recommended that in sec.111.209(3) 
and sec.111.209(4) the wording: "...,when possible. Commission approval is not 
required." be removed. In its place, it is suggested "regional approval is 
required" be added. 
As to the suggestion that notification and approval be required in 
sec.111.209(3) and sec.111.209(4), the commission decided that because of the 
number and transitory nature of such burns a mandatory requirement for 
notification and commission approval would be onerous in relation to the level 
of emissions and the nuisance/safety potential. This section has been amended to 
clarify this intent. 
EPA stated that in sec.sec.111.209(3), (4), and (5) when notification prior to 
burning is required, there is no requirement as to how many days prior to the 
burning the notification is due. 
It must be noted that the number and transitory nature of such burns often make 
it impractical to strictly require prior notification. 
Harris County did not see the need for the exception sec.111.209(5) in that they 
felt it should be administered under sec.111.215. 
The rationale for inclusion of sec.111.209(5), even though such activity could 
be accomplished under sec.111.215, was that it streamlined the process for a 
limited scope burn by not requiring local governments to go through the more 
extensive process of sec.111.215 for each individual situation. 
EXCEPTION FOR PRESCRIBED BURN. Houston Sierra Club's Forestry Subcommittee 
recommended that the wording "...,when possible. Commission approval is not 
required." be deleted. In its place, it is suggested, "regional approval is 
required." be added, along with a requirement for recordkeeping by the 
commission regional office. 
As to the suggestion that notification and approval in sec.111.211(1) be 
mandatory, the commission decided that because of the number and transitory 
nature of such burns, mandatory commission notification and approval would be 
onerous. With the additional definitions, the commission believes sufficient 
parameters are established whereby additional requirements would not enhance the 
rule. 
EPA stated that in sec.111.211(1) and sec.111.211(2), when notification prior to 
burning is required, there is no requirement as to how many days prior to the 
burning the notification is due. 
The comment that sec.111.211(1) should have a notification timeframe is not 
relevant in that no mandatory notification is required. As to notification 
timing in sec.111.211(2), the rule requires notification information be received 
fifteen days prior to the burn. 
Additionally, the commission amended the first sentence of sec.111.211(1) to 
read: "...management purposes, with the exception of coastal salt-marsh 
management burning," for clarity. 
King Ranch recommended that salt-marsh management not be addressed separately, 
but instead be considered in sec.111.211(1) as they find it difficult to 
separate salt-marsh and general range in certain areas. If separation of the 
salt-marsh management is continued, it is suggested that Kleberg County be 
deleted from sec.111.211(2) as: (a) the majority of all salt-marsh grass in the 
county is several miles removed from populated areas, and (b) 90% of the salt-
marsh burning for Kleberg County is done by King Ranch, therefore, there is not 
a problem with several property owners burning on the same day. Because of the 
extent of the smoke involved in salt-marsh burning and the potential for sea 
breeze transport to populated areas long distances away from the combustion 
area, sec.111.211(2) should continue to apply all listed counties. 
EXCEPTION FOR HYDROCARBON BURNING. Houston Sierra Club's Forestry Subcommittee 
recommended the rewording of the last sentence to read: "Sampling and monitoring 
will be required to determine and evaluate environmental impacts. The executive 
director will develop sampling and monitoring requirements and guidelines." As 
this section is almost always utilized in emergency situations, a mandatory 
requirement for any form of extensive sampling and monitoring could cause 
unnecessary delays resulting in increased environmental damages, especially in 
situations where, without burning, the hydrocarbons would reach a waterway. The 
commission believes the language is adequate to be protective of air quality 
standards, and that such sampling and monitoring should be left discretionary to 
allow flexibility for each specific situation. 
EXECUTIVE DIRECTOR APPROVAL OF OTHERWISE PROHIBITED OUTDOOR BURNING. EPA 
recommended the rule be modified to read: "...and if the burning will not cause 
or contribute to...a violation of any federal or state primary or secondary 
ambient air standard." 
The commission agrees with this recommendation and the rule is amended 
accordingly. 
GENERAL REQUIREMENTS FOR ALLOWABLE OUTDOOR BURNING. DFW International Airport 
commented that the first paragraph of this section conclude as, "...when 
specified in any section of this subchapter." The commission concurs and the 
section is amended accordingly. 
Houston Sierra Club's Forestry Subcommittee commented that they are concerned 
that this section might be too restrictive in that it could prevent prescribed 
burning of such places as Armand Bayou Nature Center or the Houston Coastal 
Center for ecological purposes just because they are in the corporate limits of 
a city or town as mentioned in sec.111.219(2). 
The comment was considered by the commission and found unwarranted in that such 
a burn may be accommodated under sec.111.215, with the requisite case-by-case 
analysis involved with special situations. 
City of Dallas recommended that sec.111.219(3) keep the existing prohibition of 
sec.111.105(3) concerning predicted wind shifts. 
The suggestion was evaluated by the commission and found to add an inexactness 
to the enforcement process, in that it is very difficult to verify the 
existence/accuracy of a prediction. It is felt the language in sec.111.219(3) is 
not uncertain. The commission believes referenced meteorological conditions in 
this section adequately address the concern. 
City of Dallas suggested that the distance to at least residential and 
commercial properties rather than structures be retained as in existing 
sec.111.105(4). The recommendation was considered by the commission; however, no 
changes were made because it becomes unnecessarily restrictive when a residence 
or commercial activity is on a large tract of land where the structure may be a 
great distance from the platted boundary. This change is in no way intended to 
eliminate concerns involving nuisance or safety. 
Harris County Pollution Control Department suggested that sec.111.219(5) be 
revised to require written approval from persons actually occupying adjacent 
property. 
The comment was discussed by commenters over the course of rule development and 
thoroughly considered by the commission. It was found by the commission that 
limiting such consent to either landowner or tenant could be overly restrictive 
in that it might not adequately recognize lease arrangements. Therefore, 
sec.111.219(5) is amended to read: "...unless prior written approval is obtained 
from the adjacent occupant with possessory control." 
City of Dallas commented that sec.111.219(6)(A) be changed to read "...fires, 
smoldering objects and/or glowing coals...." 
The commission considered the recommendation, but because such coals do not 
smoke as all volatiles have been consumed, such recommendation was not followed. 
If coals cause combustion of adjacent flammable materials which emit smoke, the 
extinguishment requirement would address coals within the definition of 
"extinguished" in sec.111.203. 
Harris County Pollution Control Department commented that sec.111.219(6)(A) 
should be modified to state that fire be attended at all times. 
The suggestion was considered by the commission and found to have merit. This 
subject never arose during the many discussions over the past year, as common 
sense would lead one to presume attendance to monitor a fire. However, 
sec.111.219(6)(A) has been amended to read "...one hour before sunset, and shall 
be attended by a responsible party at all times during the active burn phase 
when the fire is progressing. In cases...." It is not intended that a person 
must be in attendance after the active burn phase when there is no flame or 
smoke potential. 
Properties of the Southwest recommends that sec.111.219(6)(B) be revised to 
read: "...less than six miles per hour (mph)(five knots) or greater than 23 mph 
(20 knots) while the burning is to be conducted." It was felt this amendment 
would clarify that while surface wind speed is predicted to be less than six mph 
in the early morning hours, but within allowable speeds later in the day, a burn 
could commence once the wind increases to allowable speeds. The language "during 
the burn period" in sec.111.219(6)(B) already adequately addresses the point 
that the designated wind speeds only apply during combustion. Harris County 
recommended that sec.111.219(6)(B) be changed to have the maximum allowable wind 
speed be 17 mph. 
City of Kerrville commented that sec.111.219(6)(B) be changed to have a top wind 
speed of 10 mph to inhibit blowing embers. 
The wind speeds referenced in the rule are designed to promote appropriate smoke 
dispersion while at the same time having an upper constraint for safety 
purposes. To lower the upper limit would, in many parts of the state, amount to 
a virtual burning prohibition most of the time. This is especially true on the 
High Plains and in coastal regions. Should local governments choose to have a 
lower wind speed for burning within their corporate limits, it can be done under 
sec.111.219(2). 
Houston Sierra Club's Forestry Subcommittee stated that sec.111.219(7) be 
changed so that the last line read "must" as opposed to the existing "may". The 
suggestion that "may" be changed to "must" in sec.111.219(7) is accepted by the 
commission and the rule is amended accordingly. sec.sec.111.101, 111.103, 
111.105, 111.107 The repeals are adopted under the Texas Health and Safety Code 
(Vernon 1992), the Texas Clean Air Act (TCAA), sec.382.017, which provides the 
commission with the authority to adopt rules consistent with the policy and 
purposes of the TCAA. 

Outdoor Burning
30 TAC sec.sec.111.101, 111.103, 111.105, 111.107 
The repeals are adopted under the Texas Health and Safety Code (Vernon 1992), 
the Texas Clean Air Act (TCAA), sec.382.017, which provides the commission with 
the authority to adopt rules consistent with the policy and purposes of the 
TCAA. 
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 August 26, 1996.
TRD-9612430
Kevin McCalla
Director Legal Division
Texas Natural Resource Conservation Commission
Effective date: September 16, 1996
Proposal publication date: May 21, 1996
For further information, please call: (512) 239-1970

SUBCHAPTER B.Outdoor Burning
30 TAC sec.sec.111.201, 111.203, 111.205, 111.207, 111.209, 111.211, 111.213, 
111.215, 111.219, 111.221, 
The new sections are adopted under the Texas Health and Safety Code (Vernon 
1992), the TCAA, sec.382.017, which provides the commission with the authority 
to adopt rules consistent with the policy and purposes of the TCAA.

sec.111.201.General Prohibition.
No person may cause, suffer, allow, or permit any outdoor burning within the 
State of Texas, except as provided by this subchapter or by orders or permits of 
the commission. Outdoor disposal or deposition of any material capable of 
igniting spontaneously, with the exception of the storage of solid fossil fuels, 
shall not be allowed without written permission of the executive director. The 
term "executive director," as defined in Chapter 3 of this title (relating to 
Definitions), includes authorized staff representatives. 

sec.111.203.Definitions.
Unless specifically defined in the Texas Clean Air Act (TCAA) or in the rules of 
the Texas Natural Resource Conservation Commission (commission), the terms used 
by the commission have the meanings commonly ascribed to them in the field of 
air pollution control. In addition to the terms which are defined by the TCAA, 
the following terms, when used in this chapter, shall have the following 
meanings, unless the context clearly indicates otherwise.
Extinguished- The absence of any visible flames, glowing coals, or smoke. 
Landclearing operation - The uprooting, cutting, or clearing of vegetation in 
connection with conversion for the construction of buildings, rights-of-way, 
residential, commercial, or industrial development, or the clearing of 
vegetation to enhance property value, access or production. It does not include 
the maintenance burning of on-site property wastes such as fallen limbs, 
branches, or leaves, or other wastes from routine property clean-up activities, 
nor does it include burning following clearing for ecological restoration. 
Practical alternative - An economically, technologically, ecologically and 
logistically viable option. 
Prescribed burn - The controlled application of fire to naturally-occurring 
vegetative fuels under specified environmental conditions and confined to a 
predetermined area, following appropriate planning and precautionary measures. 
Structure containing sensitive receptor(s) - A man-made structure utilized for 
human residence or business, the containment of livestock, or the housing of 
sensitive live vegetation. The term "man-made structure" does not include such 
things as range fences, roads, bridges, hunting blinds or facilities used solely 
for the storage of hay or other livestock feeds. The term "sensitive live 
vegetation" is defined as vegetation which has potential to be damaged by smoke 
and heat, examples of which include, but are not limited to: nursery production, 
mushroom cultivation, pharmaceutical plant production, or laboratory experiments 
involving plants.
Sunrise/Sunset - Official sunrise/sunset as set forth in the United States Naval 
Observatory tables available from National Weather Service offices.
Wildland - Uncultivated land other than fallow, land minimally influenced by 
human activity, and land maintained for biodiversity, wildlife forage 
production, protective plant cover, or wildlife habitat. 

sec.111.205.Exception for Fire Training.
(a) Outdoor burning shall be authorized for training fire-fighting personnel 
when requested in writing and when authorized either verbally or in writing by 
the local air pollution control agency. In the absence of such local entities, 
the appropriate commission regional office shall be notified. The burning shall 
be authorized if notice of denial from the local air pollution control agency, 
or commission regional office is not received within 10 working days after the 
date of postmark or the date of personal delivery of the request. 
(b) Facilities dedicated solely for fire-fighting training, at which training 
routinely will be conducted on a frequency of at least once per week, shall 
submit an annual written notification of intent to continue such training to the 
appropriate commission regional office and any local air pollution control 
agency. 
(c) Facilities dedicated solely for fire-fighting training, at which training is 
conducted less than weekly, shall provide an annual written notification of 
intent, with a telephone or electronic facsimile notice 24 hours in advance of 
any scheduled training session. No more than one such notification is required 
for multiple training sessions scheduled within any one-week period, provided 
the initial telephone/facsimile notice includes all such sessions. Both the 
written and telephone notifications shall be submitted to the appropriate 
commission regional office and any local air pollution control agency. 
(d) Authorization to conduct outdoor burning under this provision may be revoked 
by the executive director if the authorization is used to circumvent other 
prohibitions of this subchapter. 

sec.111.209.Exception for Disposal Fires. Outdoor burning shall be authorized 
for: 
(1) Domestic waste burning at a property designed for and used exclusively as a 
private residence, housing not more than three families, when collection of 
domestic waste is not provided or authorized by the local governmental entity 
having jurisdiction, and when the waste is generated only from that property. 
Provision of waste collection refers to collection at the premises where the 
waste is generated. The term "domestic waste" is defined in sec.101.1 of this 
title, (relating to Definitions). Wastes normally resulting from the function of 
life within a residence that can be burned include such things as kitchen 
garbage, untreated lumber, cardboard boxes, packaging (including plastics and 
rubber), clothing, grass, leaves, and branch trimmings. Examples of wastes not 
considered domestic waste which can not be burned, include such things as tires, 
non-wood construction debris, furniture, carpet, electrical wire and appliances. 
(2) Diseased animal carcass burning when burning is the most effective means of 
controlling the spread of disease. 
(3) On-site burning of trees, brush, and other plant growth for right-of-way 
maintenance, landclearing operations, and maintenance along water canals when no 
practical alternative to burning exists and when the materials are generated 
only from that property. Structures containing sensitive receptors must not be 
negatively affected by the burn. Such burning shall be subject to the 
requirements of sec.111.219 of this title (relating to General Requirements for 
Allowable Outdoor Burning). When possible, notification of intent to burn should 
be made to the appropriate commission regional office prior to the proposed 
burn. For a single project entailing multiple days of burning, an initial notice 
delineating the scope of the burn is sufficient if the scope does not constitute 
circumvention of the rule for a continual burning situation. Commission 
notification or approval is not required. 
(4) Crop residue burning for agricultural management purposes when no practical 
alternative exists. Such burning shall be subject to the requirements of 
sec.111.219 of this title, and structures containing sensitive receptors must 
not be negatively affected by the burn. When possible, notification of intent to 
burn should be made to the appropriate commission regional office prior to the 
proposed burn. Commission notification or approval is not required. This section 
is not applicable to crop residue burning covered by an administrative order. 
(5) Brush, trees, and other plant growth causing a detrimental public health and 
safety condition may be burned by a county or municipal government at a site it 
owns upon receiving site and burn approval from the executive director. Such a 
burn can only be authorized when there is no practical alternative, and it may 
be done no more frequently than once every two months. Such burns can not be 
conducted at municipal solid waste landfills unless authorized under sec.111.215 
of this title (relating to Executive Director Approval of Otherwise Prohibited 
Outdoor Burning), and shall be subject to the requirements of sec.111.219 of 
this title. 

sec.111.211.Exception for Prescribed Burn. Outdoor burning shall be authorized 
for: 
(1) Prescribed burning for forest, range and wildland/wildlife management 
purposes, with the exception of coastal salt-marsh management burning. Such 
burning shall be subject to the requirements of sec.111.219 of this title 
(relating to General Requirements for Allowable Outdoor Burning), and structures 
containing sensitive receptors must not be negatively affected by the burn. When 
possible, notification of intent to burn should be made to the appropriate 
commission regional office prior to the proposed burn. Commission notification 
or approval is not required. 
(2) Coastal salt-marsh management burning conducted in Aransas, Brazoria, 
Calhoun, Chambers, Galveston, Harris, Jackson, Jefferson, Kleberg, Matagorda, 
Nueces, Orange, Refugio, and San Patricio Counties. Coastal salt-marsh burning 
in these counties shall be subject to the following requirements: 
(A) All land on which burning is to be conducted shall be registered with the 
appropriate commission regional office using a United States Geological Survey 
map or equivalent upon which are identified significant points such as roads, 
canals, lakes, and streams, and the method by which access is made to the site. 
For large acreage, the map should be divided into manageable blocks with 
identification for each defined block. The information must be received for 
review at least 15 working days before the burning takes place. 
(B) Prior to any burning, notification, either verbal or written, must be made 
to, and authorization must be received from the appropriate commission regional 
office. Notification must identify the specific area and/or block to be burned, 
approximate start and end time, and a responsible party who can be contacted 
during the burn period. 
(C) Such burning shall be subject to the requirements of sec.111.219 of this 
title.

sec.111.215.Executive Director Approval of Otherwise Prohibited Outdoor Burning.
If not otherwise authorized by this chapter, outdoor burning may be authorized 
by written permission from the executive director if there is no practical 
alternative and if the burning will not cause or contribute to a nuisance, 
traffic hazard or to a violation of any federal or state primary or secondary 
ambient air standard. The executive director may specify procedures or methods 
to control or abate emissions from outdoor burning authorized pursuant to this 
rule. Authorization to burn may be revoked by the executive director at any time 
if the burning causes nuisance conditions, is not conducted in accordance with 
the specified conditions, violates any provision of an applicable permit, or 
causes a violation of any air quality standard. 

sec.111.219.General Requirements for Allowable Outdoor Burning.
Outdoor burning which is otherwise authorized shall also be subject to the 
following requirements when specified in any section of this subchapter.
(1) Prior to prescribed or controlled burning for forest management purposes, 
the Texas Forest Service shall be notified. 
(2) Burning must be outside the corporate limits of a city or town except where 
the incorporated city or town has enacted ordinances which permit burning 
consistent with the Texas Clean Air Act, Subchapter E, Authority of Local 
Governments. 
(3) Burning shall be commenced and conducted only when wind direction and other 
meteorological conditions are such that smoke and other pollutants will not 
cause adverse effects to any public road, landing strip, navigable water, or 
off-site structure containing sensitive receptor(s). 
(4) If at any time the burning causes or may tend to cause smoke to blow onto or 
across a road or highway, it is the responsibility of the person initiating the 
burn to post flag-persons on affected roads. 
(5) Burning must be conducted downwind of or at least 300 feet (90 meters) from 
any structure containing sensitive receptors located on adjacent properties 
unless prior written approval is obtained from the adjacent occupant with 
possessory control. 
(6) Burning shall be conducted in compliance with the following meteorological 
and timing considerations: 
(A) The initiation of burning shall commence no earlier than one hour after 
sunrise. Burning shall be completed on the same day not later than one hour 
before sunset, and shall be attended by a responsible party at all times during 
the active burn phase when the fire is progressing. In cases where residual 
fires and/or smoldering objects continue to emit smoke after this time, such 
areas shall be extinguished if the smoke from these areas has the potential to 
create a nuisance or traffic hazard condition. In no case shall the extent of 
the burn area be allowed to increase after this time. 
(B) Burning shall not be commenced when surface wind speed is predicted to be 
less than six miles per hour (mph) (five knots) or greater than 23 mph (20 
knots) during the burn period. 
(C) Burning shall not be conducted during periods of actual or predicted 
persistent low-level atmospheric temperature inversions. 
(7) Electrical insulation, treated lumber, plastics, non-wood 
construction/demolition materials, heavy oils, asphaltic materials, potentially 
explosive materials, chemical wastes, and items containing natural or synthetic 
rubber must not be burned. 
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 August 26, 1996.
TRD-9612431
Kevin McCalla
Director Legal Division
Texas Natural Resource Conservation Commission
Effective date: September 16, 1996
Proposal publication date: May 21, 1996
For further information, please call: (512) 239-1970

PART II. Texas Parks and Wildlife Department
CHAPTER 57.Fisheries
Taking and Possessing Raptors for Falconry Purposes
31 TAC sec.sec.57.301-57.315
The Texas Parks and Wildlife Commission adopts the repeal of sec.sec.57.301-
57.315, concerning Falconry Permits, without changes to the proposed text as 
published in the June 7, 1996, issue of the Texas Register (TexReg 5154). 
The repeals are necessary in order for the department to move falconry 
regulations from 31 TAC Chapter 57, concerning Fisheries, to 31 TAC Chapter 65, 
concerning Wildlife. 
The repeals will function by eliminating regulations that exist elsewhere.
The department received no comments concerning adoption of the repeals. 
The repeals are adopted under Parks and Wildlife Code, Chapter 49, which 
provides the commission with the authority to prescribe rules for taking and 
possessing raptors in this state. 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612426
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 16, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642

CHAPTER 65.Wildlife
The Texas Parks and Wildlife Commission adopts the repeal of sec.sec.65.251-
65.255 and new sec.sec.65.251-65.256, concerning Transporting, Shipping, and 
Exporting Bobcat Pelts. Section 65.255 and sec.65.256 are adopted with changes 
to the proposed text as published in the June 7, 1996, issue of the Texas 
Register (21 TexReg 5153). Sections 65.251-65.254 are adopted without changes 
and will not be republished. The change to sec.65.255 clarifies that any person 
may acquire a Bobcat Dealer Permit. The change to sec.65.256 corrects an 
inaccurate reference to statutory penalties. 
The repeals and new sections are necessary in order to simplify a confusing and 
difficult regulatory program. 
The repeals and new sections will function to eliminate burdensome paperwork and 
reorganize regulatory provisions in the interest of promoting user-friendliness 
and implement the department's statutory duty to regulate the take, possession, 
sale, purchase, importation, and exportation of bobcats in this state. 
The department received seven comments concerning adoption of the rules. Three 
commenters were opposed to the length of the open season and the bag limit. The 
department responds that tagging data does not indicate a need to reduce season 
length or bag limit. No changes were made as a result of the comments. One 
commenter requested a closed season during the time of the year when bobcats are 
reproducing. The department responds that current estimates of take do not 
indicate an impact on the reproductive rates of the resource. No changes were 
made as a result of the comment. One commenter opposed the rules on the basis of 
indiscriminate take of endangered species. The department responds that no 
evidence exists to substantiate a correlation between the take of bobcats and 
the take of endangered species. No change was made as a result of the comment. 
Voice for Animals opposed adoption of the rules. The Texas Furtrappers 
Association commented in favor of adoption of the rules. 

SUBCHAPTER J.Bobcat Proclamation
31 TAC sec.sec.65.251-65.255
The repeals are adopted under Parks and Wildlife Code, Chapter 67, which 
provides the Commission with authority to regulate nongame wildlife resources.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612427
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 16, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642

31 TAC sec.sec.65.251-65.256
The new sections are adopted under Parks and Wildlife Code, Chapter 67, which 
provides the Commission with authority to regulate nongame wildlife resources.

sec.65.255.Bobcat Dealer Permits.
(a) Permit Required. Any person may obtain a bobcat dealer permit. A person who 
buys or trades for untagged bobcat pelts must hold a dealer permit (PWD 410). A 
dealer permit may be obtained by completing and signing a Bobcat Pelt Dealer 
Permit and Tag Voucher (PWD 410). Upon any issuance of pelt tags, a dealer shall 
acknowledge receipt of the tags by signing the tag issuance voucher section of 
PWD 410. 
(b) Reporting Requirements. 
(1) The reporting period for dealers begins May 1 and ends April 30 of the 
following year. By no later than the 30th day following the end of a reporting 
period, a dealer shall submit a completed and signed PWD 406 to department 
headquarters in Austin. The report required by this paragraph shall account for 
each pelt tag used by the dealer during the reporting period. 
(2) All pelt tags in a dealer's possession at the end of the reporting period, 
and a signed list of unused tag numbers, must be returned to the department with 
the annual report. 
(3) A dealer shall immediately notify the department in writing upon discovery 
that a pelt tag has been lost, stolen, destroyed or mutilated. 
(c) Inspection. All pelts, pelt tag inventory, and associated records shall be 
available for inspection by any game warden. 
(d) Unlawful acts. It is unlawful for any dealer to: 
(1) refuse to tag a bobcat pelt presented as being legally taken in this state 
during the tagging period; or 
(2) transfer tags issued to that dealer to any other dealer, or to use tags 
issued to another dealer. 
(e) The department reserves the right to refuse tag issuance to any dealer not 
in compliance with the provisions of this subchapter.

sec.65.256.Penalties.
The penalties for violations of this subsection shall be as prescribed in Parks 
and Wildlife Code, Chapter 67. This agency hereby certifies that the rules as 
adopted have been reviewed by legal counsel and found to be a valid exercise of 
the agency's legal authority. Issued in Austin, Texas on 
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612428
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 16, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642

SUBCHAPTER K.Raptor Proclamation
31 TAC sec.sec.65.261-65.276
The Texas Parks and Wildlife Commission adopts new sec.sec.65.261-65.276, 
concerning Falconry Permits. Sections 65.261, 65.262, 65.265, 65.268, 65.269, 
65.271, and 65.275 are adopted with changes to the proposed text as published in 
the June 7, 1996, issue of the Texas Register (21 TexReg 5154). Sections 65.263, 
65.264, 65.266, 65.267, 65.268, 65.270-65.274, and 65.276 are adopted without 
changes and will not be republished. The change to sec.65.261 clarifies that the 
regulations apply only to raptors indigenous to Texas. The change to 65.262, 
concerning definitions, adds a definition of the term 'imping.' The change to 
65.265 modifies paragraph (4)(B) in order to conform with the provisions of 
Parks and Wildlife Code, Chapter 49, and eliminates the requirement of a master 
class permit as a condition for issuing a raptor propagator's permit. The change 
to sec.65.268 adds language to subsection (b) to make clear that the renewal fee 
for a permit applies only to the holder of a resident permit. The change to 
sec.65.269(f) clarifies that raptors taken under federal depredation permits may 
be retained for falconry purposes. The change to sec.65.271 eliminates redundant 
wording. The change to sec.65.275 removes subsection (a) in order to conform 
with the provisions of Parks and Wildlife Code, Chapter 49, and clarifies that 
the Endangered Species Act does not apply raptors or their progeny possessed 
prior to the effective date of the Act. 
The new sections are necessary in order for the department to discharge its 
statutory duty to regulate the taking and possession of raptors in this state. 
The new sections replace regulations formerly located at 31 TAC Chapter 57, 
concerning Fisheries. 
The new sections, in addition to being restructured and reorganized for 
clarity's sake, will function to define regulatory terminology; delineate 
general and special provisions; set forth the criteria and procedures for permit 
issuance; establish facility standards; provide for reporting requirements and 
fees; establish the seasons and areas for trapping raptors; specify marking 
requirements; set forth regulations concerning the transfer of raptors between 
falconers; and articulate the procedures for falconers who move to or from Texas 
with raptors. 
The department received 11 comments concerning the proposed rules. Seven 
commenters were in favor of adoption of the rules. Two commenters requested that 
offspring of endangered raptors possessed before the effective date of the 
Endangered Species Act be exempted from the regulations governing possession and 
propagation. The department agrees with the commenter and language has been 
added to clarify that the progeny of exempt raptors are also exempt from the 
possession limits and permit requirements for propagation. One commenter 
requested that raptor propagators be allowed to exchange raptors with other 
raptor propagators. The department responds that raptor propagators who possess 
either a general or master class permit may, with department approval, exchange 
raptors with another raptor propagator who also possesses either a general or 
master class permit. No change was made as a result of the comment. One 
commenter requested that raptors not indigenous to Texas be exempted from the 
regulations. The department agrees with the comment and has modified the 
regulations accordingly. One commenter noted that sec.65.265(4) appeared to 
forbid the exchange of wild-caught raptors between propagators and permit 
holders. The department responds that Parks and Wildlife Code, sec.49.011, 
prohibits the buying, selling, bartering, or exchanging of raptors by anyone, 
except for exchanges as authorized by the department for falconry permit 
holders, and that to avoid repetition of statutory provisions, subparagraph 
(B)(ii) has been deleted. One commenter noted that the renewal fee for a 
resident permit seemed to apply to the non-resident permit, and requested that 
this not be the case. The department agrees and has made a change accordingly. 
One commenter stated that sec.65.269(f) was unclear, and seemed to indicate that 
endangered species taken under a depredation permit can only be released. The 
department responds that the provision in question is in addition to other, 
specific conditions of any state or federal permit governing possession of 
endangered species, and requires only that the department authorize a release 
site in the event that an endangered species is released to wild. No changes 
were made as a result of the comment. One commenter requested that the 
nonresident permit be abolished and that nonresidents be allowed to trap raptors 
in Texas. The department replies that Parks and Wildlife Code, sec.49.010, 
requires that a person hunting by means of falconry possess a permit to do so, 
in addition to a hunting license. Parks and Wildlife Code, sec.49.008, limits 
nonresidents to hunting activities only. The department made no changes as a 
result of the comments. The Texas Hawking Association commented in favor of 
adoption of the proposal. 
The new sections are adopted under Parks and Wildlife Code, Chapter 43, 
Subchapter C, which provides the Texas Parks and Wildlife Commission with the 
authority to promulgate rules governing the propagation of protected wildlife, 
and Chapter 49, which provides the commission with the authority to prescribe 
rules for taking and possessing raptors in this state.

sec.65.261.Applicability.
This subchapter applies to all raptors indigenous to state of Texas.

sec.65.262.Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. All other 
words and terms shall have the meanings assigned by Parks and Wildlife Code.
Captive bred-Raptors, including eggs hatched in captivity, from parents that 
mated or otherwise reproduced in captivity.
Eyas-a young raptor taken from the nest or still in the nest.
Holding-Retaining in captivity.
Imping-the use of a feather to replace a broken feather of a raptor.
Mew-an indoor facility for keeping a raptor. 
Raptor-A live migratory bird of the Order Falconiformes or the Order 
Strigiformes. 
Passage bird-An raptor less than one year of age that has left the nest.
Release to the wild-Release of wildlife to an area where it is capable of 
leaving at will. 
Take-To trap or capture, or attempt to trap or capture, a wild raptor. 
Weathering area-Outdoor facilities providing a raptor protection from the 
environment.

sec. 65.265.Permit Classes: Restrictions.
A person who is not a resident of this state may not hold any permit issued 
under this subchapter other than a five-day non-resident permit.
(1) Apprentice class permittees: 
(A) may possess only one of the following: American kestrel (Falco sparverius), 
red-tailed hawk (Buteo jamaicensis), or red-shouldered hawk (Buteo lineatus). 
Any red-tailed hawk or red-shouldered hawk in possession must have been captured 
as a passage bird; and 
(B) may not replace a raptor more than once during any 12-month period. 
(2) General class permittees: 
(A) may not possess more than two raptors; and 
(B) may not replace more than two raptors during any 12-month period. 
(3) Master class permittees: 
(A) may not possess more than three raptors; and 
(B) may not replace more than three raptors during any 12-month period. 
(4) Raptor propagator: 
(A) Qualifications. An applicant for a raptor propagator permit must: 
(i) be a resident of Texas; 
(ii) be 18 years of age or older; and 
(iii) have at least five years of experience in the practice of falconry at the 
apprentice level, or its equivalent. 
(B) Restrictions. Raptor propagators may not possess or breed species of raptors 
listed as endangered unless the propagator can document proof of seven years' 
experience caring for and handling raptors. 

sec.65.269.Trapping Seasons and Collecting Areas. 
(a) The trapping season for raptors begins September 15 and ends December 31. 
The season for taking eyasses begins May 1 and ends June 30. A marked raptor may 
be retrapped at any time. 
(b) Except as expressly authorized in writing by the department, raptors shall 
not be trapped at any time in Brewster, Culberson, El Paso, Hudspeth, Jeff 
Davis, Presidio, or Terrell counties. 
(c) No eggs may be taken from raptor nests. 
(d) Eyasses shall be taken only by a general or master falconer. No person shall 
take more than two eyasses during the season for taking eyasses. 
(e) Only American kestrels (Falco sparverius) and great-horned owls (Bubo 
virginianus) may be taken when over one year old. 
(f) Any raptor other than an endangered species taken under a federal 
depredation (or special purpose depredation) permit may be used for falconry by 
a general or master falconer. Endangered species taken under a depredation 
permit shall not be released to the wild without prior department approval of 
the release site.

sec.65.275.Special Provisions.
Raptors possessed prior to January 15, 1975 and their progeny may be retained 
and shall not be part of the number of raptors authorized by a permit.
This agency hereby certifies that the adoption has been reviewed by legal 
counsel and found to be within the agency's legal authority to adopt. 
Issued in Austin, Texas on August 23, 1996. 
TRD-9612425
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 16, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642

SUBCHAPTER Q.Statewide Fur-bearing Animal Proclamation
31 TAC sec.sec.65.371-65.374, 65.376-65.383, 65.389
The Texas Parks and Wildlife Commission adopts the repeal of sec.sec.65.371-
65.374, 65.376-65.383, and 65.389, and new sec.sec.65.371, 65.372, and 65.374-
65.380, concerning Statewide Fur-bearing Animal and Trapping Proclamation. New 
sec.sec.65.372 and 65.374-65.378 are adopted with changes to the proposed text 
as published in the June 7, 1996, issue of the Texas Register (21 TexReg 5158). 
The repeals and new sec.sec.65.371, 65.379, and 65.380 are adopted without 
change and will not be republished. 
The change to sec.65.372 adds a definition of 'nuisance fur-bearing animal.' The 
change to sec.65.374(c) replaces the reference to specific written authorization 
of the department with a reference to a letter of authorization from the 
wildlife division; deletes subsection (d), which is already a statutory 
provision; and adds new subsection (f), which clarifies that nuisance fur-
bearing animals may be taken by landowners. The change to sec.65.375 corrects an 
inaccurate reference in subsection (a); deletes subsection (c)(2)(B), which 
repeats language already in statute; and adds language to subsection (c)(2)(D) 
to clarify that chemical irritants cannot be used to flush or harry fur-bearing 
animals. The changes to sec.65.376(f) and sec.65.377(c) replace references to 
written authorization of the department with references to a letter of 
authorization from the wildlife division. The change to sec.65.376(e) adds 
language concerning documentation requirements to make the regulation consistent 
with other regulatory requirements for the take of wildlife resources. The 
change to sec.65.377(b) makes a reference to statutory provisions more specific 
The repeals and new sections are necessary in order to simplify a confusing and 
difficult regulatory program. 
The repeals and new sections will function by establishing clear regulatory 
distinctions between recreational and commercial take of fur-bearing animals; 
regulating the commercial propagation of fur-bearing animals; regulating the 
import, export, and release of fur-bearing animals; and by promoting user-
friendliness while implementing the department's statutory duty to conserve the 
wildlife resources of this state. 
The department received 137 comments concerning adoption of the rules. One 
hundred and nine teen commenters requested that the commission ban the use of 
steel leghold traps. The department disagrees with the comments and no change 
was made as a result of public comment. Seventeen commenters were in favor of 
adoption. Organizations commenting against adoption were the Humane Society, 
Wildlife Rescue, Voice for Animals, and Charlynne's Pound Puppies, Doris Day 
Animal League, and Houston Audubon Society . Organizations commenting in favor 
of adoption were the Texas Wildlife Association, Texas and Southwestern Cattle 
Raiser's Association, Animal Damage Control Association, Texas Department of 
Health, Texas Trappers and Furhunter Association, Texas Sheep and Goat Raiser's 
Association, and Sportsmen Conservationists of Texas. 
The repeals and new sections are adopted under Parks and Wildlife Code, Chapter 
71, which provides the Commission with authority to regulate the taking, 
possession, propagation, transportation, exportation, importation, and sale of 
fur-bearing animals. 
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 August 26, 1996.
TRD-9612424
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 13, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642

31 TAC sec.sec.65.371, 65.372, 65.374-65.380
The new sections are adopted under Parks and Wildlife Code, Chapter 71, which 
provides the Commission with authority to regulate the taking, possession, 
propagation, transportation, exportation, importation, and sale of fur-bearing 
animals.

sec.65.372.Definitions.
The following words and terms, when used in this subchapter, shall have the 
following meanings, unless the context clearly indicates otherwise. All other 
words and terms shall have the meanings assigned in Subchapter A of this chapter 
or Parks and Wildlife Code, Chapter 71. 
Commercial harvest-The take of a fur-bearing animal under a trapping license. 
Finished product-The tanned pelt of a fur-bearing animal or any item 
manufactured from the pelt of a fur-bearing animal. 
Nuisance furbearing animal-A furbearing animal that is depredating or a threat 
to human health or safety.
Recreational harvest-The take of a fur-bearing animal under a hunting license, 
or under a trapper's license outside of the season for commercial harvest.

sec.65.374.General Rules.
(a) No person may take fur-bearing animals on public roads and highways or their 
rights-of-way, or in the state-owned riverbeds in Uvalde, Zavala, and Dimmit 
counties. 
(b) Each fur-bearing animal or pelt taken or possessed in violation of this 
subchapter shall constitute a separate offense. 
(c) No person may possess a live skunk or civet cat without a letter of 
authorization from the wildlife division. 
(d) No retail fur buyer may possess undried pelts during the period May 1 
through October 31. 
(e) No wholesale fur dealer or retail fur buyer may purchase pelts from a 
trapper from April 6 through October 31. 
(f) Nuisance furbearing animals may be taken in any number by any means at any 
time.

sec.65.375.Open Seasons; Means and Methods.
(a) Recreational harvest. 
(1) The open season for the recreational harvest of fur-bearing animals is 
September 1 of one year to August 31 of the following year. 
(2) The daily bag limit is one fur-bearing animal and the possession limit is 
two fur-bearing animals. A fur-bearing animal that has been reduced to a 
finished product shall not be considered part of the possession limit. 
(3) Fur-bearing animals, pelts, and carcasses possessed under this subsection 
shall not be sold. 
(b) Commercial harvest. 
(1) The open season for the commercial harvest of fur-bearing animals is 
November 1 of one year through March 31 of the following year. Nutria may be 
taken from September 1 through August 31 of the following year. 
(2) There are no bag or possession limits. 
(3) From April 6 through October 31 no licensed trapper may possess more than 
two undried pelts taken under a trapper's license. 
(c) Means and methods. 
(1) Only the following means and methods are legal for taking fur-bearing 
animals: 
(A) firearms; 
(B) steel leghold and conibear-style traps; 
(C) falconry; 
(D) live or box trap; 
(E) dogs; 
(F) snare; 
(G) lawful archery equipment; 
(H) electronic or hand-held calls; and 
(I) artificial light. 
(2) Exceptions. No person may: 
(A) take river otter with firearms; 
(B) take fur-bearing animals with steel leghold or conibear-style traps, except 
during the open season for commercial harvest; 
(C) set steel leghold or conibear-style traps within 400 yards of any school; or 
(D) use smoke, explosives or chemical irritants of any kind to harry or flush 
fur-bearing animals. 
(3) Special provisions. 
(A) Conibear-style traps with a diagonal opening dimension greater than 10 
inches shall not be set on land or in less than six-inches of water. 
(B) Snares, steel leghold traps, conibear-style traps, and live or box traps 
shall be examined at least every 36 hours. 
(C) Animals taken by the means and methods listed in this section shall be 
removed upon discovery.

sec.65.376.Possession of Live Fur-bearing Animals.
(a) No person other than the holder of a fur-bearing animal propagation license 
may possess a live fur-bearing animal at any time, except as otherwise provided 
in this chapter. 
(b) A propagation license may be issued following an initial facility inspection 
by the department. Additional inspections may be made at department discretion. 
For persons not engaged in selling or trading fur-bearing animals, there is no 
initial facility inspection; however, inspections may be performed at the 
discretion of the department. 
(c) The holder of a fur-bearing animal propagation license shall provide the 
following for each animal in possession: 
(1) a sufficient supply of fresh water at all times; 
(2) shelter from heat and inclement weather; and 
(3) an enclosure of at least 20 inches in height and eight square feet in area. 
Enclosures shall be cleaned daily. 
(d) Offspring of fur-bearing animals held under a propagation permit may be kept 
with their parents or siblings for up to 120 days from birth in an enclosure 
meeting the height and area requirements for a single animal. 
(e) Nothing in this subchapter shall prohibit a taxidermist from possessing for 
taxidermy purposes a fur-bearing animal or the pelt of a fur-bearing animal 
lawfully taken or possessed under this subchapter, provided the animal or pelt 
is accompanied by a wildlife resource document as prescribed by Subchapter A of 
this chapter. 
(f) Live fur-bearing animals may be taken and possessed for three days or less 
for instructional or demonstration purposes pursuant to a letter of 
authorization from the wildlife division.

sec.65.377.Sale or Purchase of Fur-bearing Animals or Their Pelts.
(a) No person other than licensed trappers, retail fur buyers, wholesale fur 
dealers, or fur-bearing animal propagators may sell fur-bearing animals or the 
pelts of fur-bearing animals, and no person other than licensed retail fur 
buyers, wholesale fur dealers or fur-bearing animal propagators may purchase 
fur-bearing animals or their pelts. 
(b) Live fur-bearing animals may be sold only: 
(1) by persons who hold a valid fur-bearing animal propagation license; or 
(2) to persons authorized by permits issued under Parks and Wildlife Code, 
Chapter 43, Subchapter C, or another licensed fur-bearing animal propagator. 
(c) No person shall sell or export live fur-bearing animals outside this state 
without possessing a letter of authorization from the wildlife division. A 
request for authorization shall include written documentation verifying that the 
recipient of the live animals is in compliance with applicable regulations in 
the destination state. A copy of the completed authorization shall accompany the 
animals at all times during shipment or be attached to the shipping container 
used to export the animals. 

sec.65.378.Importation and Release of Fur-bearing Animals or Their Pelts.
(a) No person may import live fur-bearing animals into this state from another 
state or country unless: 
(1) a permit has been issued by the department for such importation and a copy 
of the completed permit accompanies any live fur-bearing animal being imported 
or is attached to any container used to import live fur-bearing animals; 
(2) the imported animals are accompanied by a health certificate signed by a 
veterinarian accredited in the state of origin; and 
(3) if the imported animals are foxes, raccoons, or skunks, a signed letter of 
authorization issued by the Texas Department of Health. 
(b) Imported live fur-bearing animals, live fur-bearing animals previously held 
in captivity, and fur-bearing animals live-trapped as nuisances may not be 
released into the wild without a letter of authorization from the wildlife 
division and the owner of the property where the release occurs. Animals 
released under provision of this subsection must be accounted for in a report 
filed with the department on or before the tenth day of the month following the 
month of release. The report shall list the species, number captured and 
released, date and location of capture, date and location of release, and name 
and address of person authorized to release. 
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 August 26, 1996.
TRD-9612423
Bill Harvey, Ph.D.
Regulatory Coordinator
Texas Parks and Wildlife Department
Effective date: September 13, 1996
Proposal publication date: June 7, 1996
For further information, please call: (512) 389-4642